Federal Real Property
Progress Made on Planning and Data, but Unneeded Owned and Leased Facilities Remain Gao ID: GAO-11-520T April 6, 2011The federal government holds more than 45,000 underutilized properties that cost nearly $1.7 billion annually to operate, yet significant obstacles impede efforts to close, consolidate, or find other uses for them. In January 2003, GAO designated federal real property management as a high-risk area, in part because of the number and cost of these properties. The Office of Management and Budget (OMB) is responsible for reviewing federal agencies' progress in real property management. In 2007, GAO recommended that OMB assist agencies by developing an action plan to address key obstacles associated with decisions related to unneeded real property, including stakeholder influence. The President's fiscal year 2012 budget proposed establishing a legislative framework for disposing of and consolidating civilian real property, referred to as a Civilian Property Realignment Act (CPRA), which may be designed to address stakeholder influences in real property decision making. This testimony identifies (1) obstacles to effectively managing federal real property, (2) actions designed to overcome those obstacles, including government actions and CPRA, and (3) key elements of the Department of Defense's (DOD) base realignment and closure (BRAC) process that are designed to help DOD close or realign installations and may be relevant for CPRA. To do this work, GAO reviewed GAO reports, other reports, and CPRA.
In designating federal real property management as a high-risk issue in 2003, GAO found that the federal government faced a number of obstacles to effectively managing its real property. These included its lack of strategic focus on real property issues, a lack of reliable real property data, legal limitations, and stakeholder influence. That year, GAO reported that despite the magnitude and complexity of real-property-related problems, there was no governmentwide strategic focus on real property issues and that governmentwide data were unreliable and outdated. GAO also reported then that before disposing of excess property, the General Services Administration is legally required to follow a lengthy screening process, which includes offering the property to other federal agencies and other entities for public uses. Furthermore, stakeholders--including local governments, private real estate interests, and advocacy groups--may have different interests that do not always align with the most efficient use of government resources. Since 2003, the federal government has taken steps to address some of these obstacles and improve its real property management. For instance, the administration and real-property-holding agencies have improved their strategic management of real property by establishing an interagency Federal Real Property Council designed to enhance real property planning processes. The government has also implemented controls to improve the reliability of federal real property data. However, many problems related to unneeded property and leasing have persisted because legal limitations and stakeholder influences remain. GAO's 2007 recommendation that OMB develop an action plan is designed to address these problems. In addition, CPRA proposes an independent board to identify facilities for disposal and consolidation, which could streamline legal requirements and mitigate stakeholder influences. Congress authorized DOD to undergo five BRAC rounds to reduce excess property and realign DOD's workload to achieve efficiencies and savings in property management. The BRAC process, much like CPRA, was designed to address obstacles to closures or realignments, thus permitting DOD to close installations or realign its missions to better use its facilities and generate savings. GAO's prior work on the BRAC process identified certain key elements that may be applicable to managing civilian real property, such as establishing goals and an organizational structure, developing criteria and an analytical framework, using a model to estimate costs and savings, and involving the audit community to better ensure data accuracy. A key similarity between BRAC and CPRA is that both establish an independent board that reviews agency recommendations; a key difference is that the BRAC process created criteria for selecting installations for realignment while CPRA does not include specific criteria to be used to select properties for disposal or consolidation.
GAO-11-520T, Federal Real Property: Progress Made on Planning and Data, but Unneeded Owned and Leased Facilities Remain
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United States Government Accountability Office:
GAO:
Testimony:
Before the Subcommittee on Economic Development, Public Buildings and
Emergency Management, Committee on Transportation and Infrastructure,
House of Representatives:
For Release on Delivery:
Expected at 10:00 a.m. EDT:
Wednesday, April 6, 2011:
Federal Real Property:
Progress Made on Planning and Data, but Unneeded Owned and Leased
Facilities Remain:
Statement of David J. Wise, Director:
Physical Infrastructure Issues:
Brian J. Lepore, Director:
Defense Capabilities and Management Issues:
GAO-11-520T:
GAO Highlights:
Highlights of GAO-11-520T, a testimony before the Subcommittee on
Economic Development, Public Buildings, and Emergency Management,
Committee on Transportation and Infrastructure, House of
Representatives.
Why GAO Did This Study:
The federal government holds more than 45,000 underutilized properties
that cost nearly $1.7 billion annually to operate, yet significant
obstacles impede efforts to close, consolidate, or find other uses for
them. In January 2003, GAO designated federal real property management
as a high-risk area, in part because of the number and cost of these
properties. The Office of Management and Budget (OMB) is responsible
for reviewing federal agencies‘ progress in real property management.
In 2007, GAO recommended that OMB assist agencies by developing an
action plan to address key obstacles associated with decisions related
to unneeded real property, including stakeholder influence. The
President‘s fiscal year 2012 budget proposed establishing a
legislative framework for disposing of and consolidating civilian real
property, referred to as a Civilian Property Realignment Act (CPRA),
which may be designed to address stakeholder influences in real
property decision making.
This testimony identifies (1) obstacles to effectively managing
federal real property, (2) actions designed to overcome those
obstacles, including government actions and CPRA, and (3) key elements
of the Department of Defense‘s (DOD) base realignment and closure
(BRAC) process that are designed to help DOD close or realign
installations and may be relevant for CPRA. To do this work, GAO
reviewed GAO reports, other reports, and CPRA.
What GAO Found:
In designating federal real property management as a high-risk issue
in 2003, GAO found that the federal government faced a number of
obstacles to effectively managing its real property. These included
its lack of strategic focus on real property issues, a lack of
reliable real property data, legal limitations, and stakeholder
influence. That year, GAO reported that despite the magnitude and
complexity of real-property-related problems, there was no
governmentwide strategic focus on real property issues and that
governmentwide data were unreliable and outdated. GAO also reported
then that before disposing of excess property, the General Services
Administration is legally required to follow a lengthy screening
process, which includes offering the property to other federal
agencies and other entities for public uses. Furthermore, stakeholders”
including local governments, private real estate interests, and
advocacy groups”may have different interests that do not always align
with the most efficient use of government resources.
Since 2003, the federal government has taken steps to address some of
these obstacles and improve its real property management. For
instance, the administration and real-property-holding agencies have
improved their strategic management of real property by establishing
an interagency Federal Real Property Council designed to enhance real
property planning processes. The government has also implemented
controls to improve the reliability of federal real property data.
However, many problems related to unneeded property and leasing have
persisted because legal limitations and stakeholder influences remain.
GAO‘s 2007 recommendation that OMB develop an action plan is designed
to address these problems. In addition, CPRA proposes an independent
board to identify facilities for disposal and consolidation, which
could streamline legal requirements and mitigate stakeholder
influences.
Congress authorized DOD to undergo five BRAC rounds to reduce excess
property and realign DOD‘s workload to achieve efficiencies and
savings in property management. The BRAC process, much like CPRA, was
designed to address obstacles to closures or realignments, thus
permitting DOD to close installations or realign its missions to
better use its facilities and generate savings. GAO‘s prior work on
the BRAC process identified certain key elements that may be
applicable to managing civilian real property, such as establishing
goals and an organizational structure, developing criteria and an
analytical framework, using a model to estimate costs and savings, and
involving the audit community to better ensure data accuracy. A key
similarity between BRAC and CPRA is that both establish an independent
board that reviews agency recommendations; a key difference is that
the BRAC process created criteria for selecting installations for
realignment while CPRA does not include specific criteria to be used
to select properties for disposal or consolidation.
View [hyperlink, http://www.gao.gov/products/GAO-520T] or key
components. For more information, contact David Wise at (202) 512-2834
or wised@gao.gov or Brian Lepore at (202) 512-4523 or leporeb@gao.gov.
[End of section]
Chairman Denham, Ranking Member Norton, and Members of the
Subcommittee:
Thank you for the opportunity to testify today on our work related to
excess and underutilized federal real property held by the General
Services Administration (GSA) and other agencies, as well as our work
on the military Base Realignment and Closure (BRAC) process. As we
have previously testified before this Subcommittee, the federal
government occupies more owned and leased buildings than it needs. In
fiscal year 2009, 24 landholding agencies, including the Department of
Defense (DOD), reported 45,190 underutilized buildings with a total of
341 million square feet, or 1,830 more such buildings than they
reported the previous fiscal year. These underutilized buildings cost
$1.66 billion annually to operate and are potentially valuable. The
federal government also leases more property than is cost-efficient,
resulting in millions of dollars of additional costs to the federal
government. Since 2008, GSA has leased more property than it owns
[Footnote 1]--more than 8,000 buildings--even though owning a federal
building is often a more cost-effective way of meeting an agency's
long-term space needs.[Footnote 2] Because of these and other issues,
we designated the management of federal real property as a high-risk
area in January 2003 and retained that designation in our February
2011 high-risk update.[Footnote 3] Similarly, DOD has faced long-term
challenges in managing its portfolio of facilities, halting
degradation of facilities, and reducing unneeded infrastructure to
free up funds to better maintain the facilities that it still uses and
meet other needs. DOD's management of its support infrastructure is
also on our high-risk list, in part because of challenges DOD faces in
reducing excess and obsolete infrastructure.[Footnote 4]
As you know, DOD has been working through the BRAC process to reduce
the amount of unneeded property that it owns and leases. This process,
which is designed to address the obstacles to rightsizing domestic
military installations, may also be applicable to civilian real
property management. Our testimony today will identify (1) obstacles
to effectively managing federal real property, (2) actions designed to
overcome those obstacles such as actions the government has taken and
the legislative framework for disposing of and consolidating civilian
real property proposed in the President's fiscal year 2012 budget,
referred to as the Civilian Property Realignment Act (CPRA), and (3)
key elements of the BRAC process that are designed to help DOD close
or realign installations and may be relevant for CPRA.
[End of section]
To address these objectives, we reviewed previous GAO reports, reports
by the interagency Federal Real Property Council (FRPC), and CPRA. We
performed this work from March 2011 to April 2011 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.
Background:
The federal real property portfolio is vast and diverse--totaling over
900,000 buildings and structures--including office buildings,
warehouses, laboratories, hospitals, and family housing--worth
hundreds of billions of dollars. The six largest federal property
holders--DOD, GSA, the U.S. Postal Service, and the Departments of
Veterans Affairs (VA), Energy, and the Interior--occupy 87.6 percent
of the total square footage in federal buildings. Over all, the
federal government owns approximately 83 percent of this space and
leases or otherwise manages the rest; however, these proportions vary
by agency. For example GSA, the central leasing agent for most
agencies, now leases more space than it owns. After we designated
federal real property as a high-risk area in 2003, the President
signed Executive Order 13327 in February 2004, which established new
federal property guidelines for 24 executive branch departments and
agencies. Among other things, the executive order called for creating
the interagency FRPC to develop guidance, collect best practices, and
help agencies improve the management of their real property assets.
DOD has undergone four BRAC rounds since 1988 and is currently
implementing its fifth round.[Footnote 5] Generally, the purpose of
prior BRAC rounds was to generate savings to apply to other
priorities, reduce property deemed excess to needs, and realign DOD's
workload and workforce to achieve efficiencies in property management.
As a result of the prior BRAC rounds in 1988, 1991, 1993, and 1995,
DOD reported that it had reduced its domestic infrastructure,
transferred hundreds of thousands of acres of unneeded property to
other federal and nonfederal entities, and saved billions of dollars
annually that could be applied to other higher priority defense needs.
The 2005 BRAC round affected hundreds of locations across the country
through 24 major closures, 24 major realignments, and 765 lesser
actions, which also included terminating leases and consolidating
various activities.[Footnote 6] Legislation authorizing the 2005 BRAC
round maintained requirements established for the three previous BRAC
rounds that GAO provide a detailed analysis of DOD's recommendations
and of the BRAC selection process. We submitted our report to Congress
in July 2005 and testified before the BRAC Commission soon thereafter.
[Footnote 7] Since that time, GAO has published annual reports on the
progress, challenges, and costs and savings of the 2005 round, in
addition to numerous reports on other aspects of implementing the 2005
BRAC round.[Footnote 8]
Underlying Obstacles Have Impeded the Government's Ability to Dispose
of Unneeded Property and Reduce Overreliance on Costly Leasing:
When we designated federal real property management as high risk, we
reported that the federal government faced a number of obstacles to
effectively managing its real property. These included a lack of
strategic focus on real property issues, a lack of reliable real
property data, legal limitations, and stakeholder influences in real
property decision making.
Lack of Strategic Focus on Real Property Issues:
In 2003, we reported that despite the magnitude and complexity of real-
property-related problems, there had been no governmentwide strategic
focus on real property issues. Not having a strategic focus can lead
to ineffective decision making, such as choosing to rely too much on
leasing for long-term government property needs. In 2008, we found
that decisions to lease selected federal properties were not always
driven by cost-effectiveness considerations. For example, we estimated
that the decision to lease the Federal Bureau of Investigation's field
office in Chicago, Illinois, instead of constructing a building the
government would own, cost about $40 million more over 30 years. GSA
officials noted that limited availability of upfront capital was one
of the reasons that prevented ownership at that time. Federal budget
scorekeeping rules require the full cost of construction to be
recorded up front in the budget, whereas only the annual lease
payments plus cancellation costs need to be recorded for operating
leases. In April 2007 and January 2008, we recommended that the Office
of Management and Budget (OMB) develop a strategy to reduce agencies'
reliance on costly leasing where ownership would result in long-term
savings. We noted that such a strategy could identify the conditions
under which leasing is an acceptable alternative, include an analysis
of real property budget scoring issues, and provide an assessment of
viable alternatives. OMB concurred with this recommendation but has
not yet developed a strategy to reduce agencies' reliance on leasing.
Lack of Reliable Real Property Data:
In 2003, we found that a lack of reliable real property data
compounded real property management problems. The governmentwide data
maintained at that time were unreliable, out of date, and of limited
value. In addition, certain key data that would be useful for
budgeting and strategic management were not being maintained, such as
data on space utilization, facility condition, historical
significance, security, and age. We also found that some of the major
real-property-holding agencies faced challenges developing reliable
data on their real property assets. We noted that reliable
governmentwide and agency-specific real property data are critical for
addressing real property management challenges. For example, better
data would help the government determine whether assets are being used
efficiently, make investment decisions, and identify unneeded
properties.
Legal Limitations:
In our February 2011 high-risk update,[Footnote 9] we noted that a
third obstacle to consolidating federal properties is the legal
requirements agencies must adhere to before disposing of a property,
such as requirements for screening and environmental cleanup.
Currently, before GSA can dispose of a property that a federal agency
no longer needs, it is required to offer the property to other federal
agencies. If other federal agencies do not have a need for the
property, GSA must then make the property available to state and local
governments and certain nonprofit organizations and institutions for
public benefit uses such as homeless shelters, educational facilities,
or fire or police training centers. As a result of this lengthy
process, GSA's underutilized or excess properties may remain in an
agency's possession for years and continue to accumulate maintenance
and operations costs. Further complicating this issue is that
different agencies have different authorities to enter into leases
with public and private entities for the use of federal property, to
sell real property, and to retain the proceeds from these
transactions. For example, DOD has the authority to both enter into
these leases and retain proceeds for the sale of properties, but the
Department of Justice does not have the authority to do either. In
addition, federal agencies are required by law to assess and pay for
any environmental cleanup that may be needed before disposing of a
property--a process that may require years of study and result in
significant costs. In some cases, the cost of the environmental
cleanup may exceed the costs of continuing to maintain the excess
property in a shut-down status. We have also noted that the National
Historic Preservation Act, as amended, requires agencies to manage
historic properties under their control and jurisdiction and to
consider the effects of their actions on historic preservation. Since
properties more than 50 years old are eligible for historic
designation and the average age of properties in GSA's portfolio is 46
years, this issue will soon become critically important to GSA.
Stakeholder Influences:
Local stakeholders--including local governments, business interests,
private real estate interests, sector construction and leasing firms,
historic preservation organizations, various advocacy groups for
citizens that benefit from federal programs, and the public in
general--often view federal facilities as the physical face of the
federal government in their communities. The interests of these
multiple and often competing stakeholders may not always align with
the most efficient use of government resources and can complicate real
property decisions. For example, as we first reported in 2007, VA
officials noted that stakeholders and constituencies, such as historic
building advocates or local communities that want to maintain their
relationship with VA, often prevent the agency from disposing of
properties.[Footnote 10] In 2003, we indicated that an independent
commission or governmentwide task force might be necessary to help
overcome stakeholder influences in real property decision making.
The Government Has Adopted a More Strategic Focus to Improve Real
Property Management and Has Taken Steps to Increase Data Reliability,
but Other Obstacles Remain:
The administration and real-property-holding agencies have made
progress in a number of areas since we designated federal real
property as high risk in 2003. Specifically, the federal government
has taken steps toward strategically managing its real property and
improving the reliability of its real property data. However, many
problems related to unneeded property and leasing persist because the
government has not addressed the underlying legal limitations and
stakeholder influences which we identified.
As part of the government's efforts to strategically manage its real
property, the administration established FRPC--a group composed of the
OMB Controller and the senior real property officers of landholding
agencies--to support real property reform efforts. Through FRPC, the
landholding agencies have also established asset management plans,
standardized real property data reporting, and adopted various
performance measures to track progress. The asset management plans are
updated annually and help agencies take a more strategic approach to
real property management by indicating how real property moves the
agency's mission forward, outlining the agency's capital management
plans, and describing how the agency plans to operate its facilities
and dispose of unneeded real property, including listing current and
future disposal plans. Although several FRPC member agencies said that
the body no longer meets regularly, it remains a forum for agency
coordination on real property issues and could serve a larger role in
future real property management.
In our February 2011 high-risk update,[Footnote 11] we reported that
the federal government has also taken numerous steps since 2003 to
improve the completeness and reliability of its real property data.
FRPC, in conjunction with GSA, established the Federal Real Property
Profile (FRPP) to meet a requirement in Executive Order 13327 for a
single real property database that includes all real property under
the control of executive branch agencies. FRPP contains asset-level
information submitted annually by agencies on 25 high-level data
elements, including four performance measures that enable agencies to
track progress in achieving property management objectives. In
response to our 2007 recommendation to improve the reliability of FRPP
data, OMB required, and agencies implemented, data validation plans
that include procedures to verify that the data are accurate and
complete.[Footnote 12] Furthermore, GSA's Office of Governmentwide
Policy (OGP), which administers the FRPP database, instituted a data
validation process that precludes FRPP from accepting an agency's data
until the data pass all established business rules and data checks. In
our most recent analysis of the reliability of FRPP data, we found
none of the basic problems we have previously found, such as missing
data or inexplicably large changes between years. In addition,
agencies continue to improve their real property data for their own
purposes. From a governmentwide perspective, OGP has sufficient
standards and processes in place for us to consider the 25 elements in
FRPP as a database that is sufficiently reliable to describe the real
property holdings of the federal government. Consequently, we removed
the data element of real property management from the high-risk list
this year.
In 2007, we recommended that OMB, which is responsible for reviewing
agencies' progress on federal real property management, assist
agencies by developing an action plan to address the key problems
associated with decisions related to unneeded real property, including
stakeholder influences. OMB agreed with the recommendation but has yet
to implement it. However, the administration's recently proposed
legislative framework, CPRA, is somewhat responsive to this
recommendation in that it addresses both legal limitations and
stakeholder influences in real property decision making. According to
the proposal, the purpose of CPRA would be, in part, to "streamline
the current legal framework" and "facilitate the disposal of those
unneeded civilian real properties that are currently subject to legal
restrictions that prevent their disposal." The proposal itself,
however, does not describe how this streamlining would be
accomplished. To address stakeholder influences, CPRA would create an
independent board to recommend federal properties for disposal or
consolidation after receiving recommendations from civilian
landholding agencies. Grouping all disposal and consolidation
decisions into one list that Congress would vote on in its entirety
could help to blunt local stakeholder influences at any individual
site. In addition, CPRA could help to reduce the government's
overreliance on leasing by recommending that the government
consolidate operations from leased space to owned space where
efficient.
Key Elements That Underpin the Process for Closing or Realigning DOD
Installations May Be Applicable to Managing Civilian Real Property:
In our prior work on the BRAC process, we identified certain key
elements underpinning the process, which may be applicable to the
management of real property governmentwide. The BRAC process was
designed to address certain challenges to closures or realignments,
including stakeholder interests, thereby permitting DOD to dispose of
installations or realign its missions to better use its facilities and
generate savings. The 2005 BRAC round followed a historical analytical
framework, carrying many elements of the process forward or building
upon lessons learned from previous rounds. DOD also established a
structured process for obtaining and analyzing data that provided a
consistent basis for identifying and evaluating closure and
realignment recommendations, and DOD used a logical, reasoned, and
well-documented process.[Footnote 13] In addition, we have identified
lessons learned from DOD's 1988, 1991, 1993, and 1995 rounds,[Footnote
14] and we have begun an effort to assess lessons learned from the
2005 BRAC round.
DOD's 2005 BRAC Process:
DOD's 2005 BRAC process consisted of a series of legislatively-
prescribed steps, as follows:
DOD began to develop options for closure or realignment
recommendations. The military departments developed service-specific
installation closure and realignment options. In addition, the Office
of the Secretary of Defense established seven joint cross-service
teams, called joint cross-service groups, to develop options across
common business-oriented functions, such as medical, supply storage,
and administrative activities. These closure and realignment options
were reviewed by DOD's Infrastructure Executive Council--a senior-
level policy-making and oversight body for the entire process. Options
approved by this council were submitted to the Secretary of Defense
for his review and approval. DOD developed hundreds of closure or
realignment options for further analysis which eventually led to DOD's
submitting over 200 recommendations to the BRAC Commission for
analysis and review.
BRAC Commission performed an independent review of DOD's
recommendations. After DOD selected its base closure and realignment
recommendations, it submitted them to the BRAC Commission, which
performed an independent review and analysis of DOD's recommendations.
The Commission could approve, modify, reject, or add closure and
realignment recommendations.[Footnote 15] Also, the BRAC Commission
provided opportunities to interested parties, as well as community and
congressional leaders, to provide testimony and express viewpoints.
The Commission then voted on each individual closure or realignment
recommendation, and those that were approved were included in the
Commission's report to the President. In 2005, the BRAC Commission
reported that it had rejected or modified about 14 percent of DOD's
closure and realignment recommendations.
President approved BRAC recommendations. After receiving the
recommendations, the President was to review the recommendations of
the Secretary of Defense and the Commission and prepare a report by
September 23, 2005, containing his approval or disapproval of the
Commission's recommendations as a whole. Had the President disapproved
of the Commissions' recommendations, the Commission would have had
until October 20, 2005, to submit a revised list of recommendations to
the President for further consideration. If the President had not
submitted a report to Congress of his approval of the Commissions
recommendations by November 7, 2005, the BRAC process would have been
terminated. The President submitted his report and approval of the
2005 Commission's recommendations on September 15, 2005.
Congress allowed the recommendations to become binding. After the
President transmitted his approval of the Commission's recommendations
to Congress, the Secretary of Defense would have been prohibited from
implementing the recommendations if Congress had passed a joint
resolution of disapproval within 45 days of the date of the
President's submission or the adjournment of Congress for the session,
whichever was sooner.[Footnote 16] Since Congress did not pass such a
resolution, the recommendations became binding in November 2005.
Congress established clear time frames for implementation. The BRAC
legislation required DOD to complete recommendations for closing or
realigning bases made in the BRAC 2005 round within the 6-year time
frame ending on September 15, 2011, 6 years from the date the
President submitted his approval of the recommendations to Congress.
In July 2010, in our most recent report on the implementation of the
2005 BRAC recommendations, we reported that many DOD locations are
scheduled to complete actions to implement the recommendations within
months of the deadline, leaving little or no margin for slippage to
finish constructing buildings and to move or hire the needed personnel.
Key Elements That DOD Used to Develop Its 2005 BRAC Recommendations
Could Be Considered in a Civilian Real Property Closure or Realignment
Process:
In developing its recommendations for the BRAC Commission, DOD relied
on certain elements, as follows:
Establish goals for the BRAC process. Prior to the start of the 2005
BRAC round, the Secretary of Defense emphasized the importance of
transforming the military to make it more efficient as part of the
2005 BRAC round. Other goals for the 2005 BRAC process included
fostering jointness among the four military services, reducing excess
infrastructure, and producing savings. Prior rounds were more about
reducing excess infrastructure and producing savings.
Develop criteria for evaluating closures and realignments. DOD
initially proposed eight selection criteria, which were made available
for public comments via the Federal Register. Ultimately, Congress
enacted the eight final BRAC selection criteria.[Footnote 17] In
authorizing the 2005 BRAC round, Congress specified that the following
four selection criteria, known as the "military value criteria," were
to be given priority in developing closure and realignment
recommendations:
* current and future mission capabilities and the impact on
operational readiness of the total force,
* availability and condition of land, facilities, and associated
airspace at both the existing and the potential receiving locations,
* ability to accommodate a surge in the force and future total force
requirements at both the existing and the potential receiving location
to support operations and training, and:
* costs of operations and personnel implications.
[End of section]
In addition to military value, Congress specified that DOD was to
apply the following "other criteria" in developing its recommendations:
* costs and savings associated with a recommendation,
* economic impact on local communities near the installations,
* ability of infrastructure to support forces, missions, and
personnel, and:
* environmental impact.
Additionally, Congress required that the Secretary of Defense develop
and submit to Congress a force structure plan that laid out the
numbers, size, and composition of the units that comprise U.S. defense
forces, for example, divisions, ships, and air wings, based on the
Secretary's assessment of the probable national security threats for
the 20-year period beginning in 2005, along with a comprehensive
inventory of global military installations.[Footnote 18] In
authorizing the 2005 BRAC round, Congress specified that the Secretary
of Defense publish a list of recommendations for the closure and
realignment of military installations inside the United States based
on the force-structure plan and infrastructure inventory, and on the
eight final selection criteria.
Estimate costs and savings to implement closure and realignment
recommendations. To address the cost and savings criteria, DOD
developed and used the Cost of Base Realignment Actions model--known
as COBRA--a quantitative tool that DOD has used since the 1988 BRAC
round to provide consistency in potential cost, savings, and return-on-
investment estimates for closure and realignment options. We reviewed
the COBRA model as part of our review of the 2005 and prior BRAC
rounds and found it to be a generally reasonable estimator for
comparing potential costs and savings among alternatives. As with any
model, the quality of the output is a direct function of the input
data. Also, the COBRA model relies to a large extent on standard
factors and averages and does not represent budget quality estimates
that are developed once BRAC decisions are made and detailed
implementation plans are developed. Nonetheless, the financial
information provides important input into the selection process as
decision makers weigh the financial implications--along with military
value and other factors--in arriving at final decisions regarding the
suitability of various closure and realignment options. However, based
on our assessment of the 2005 BRAC round, actual costs and savings
were different from estimates. As we reported in November 2009,
[Footnote 19] BRAC one-time implementation costs have risen to almost
$35 billion in fiscal year 2010 compared with DOD's initial estimate
of $21 billion in 2005. Similarly, net annual recurring savings have
dropped to $3.9 billion in fiscal year 2010 compared with the $4.2
billion DOD estimated in 2005.[Footnote 20]
Establish a common analytical framework. To ensure that the selection
criteria were consistently applied, the Office of the Secretary of
Defense required the military services and the seven joint cross-
service groups to first perform a capacity analysis of facilities and
functions at specific locations prior to developing recommendations.
The capacity analysis relied on data calls to hundreds of locations to
obtain certified data to assess such factors as maximum potential
capacity, current capacity, current usage, and excess capacity. Then,
the military services and joint cross-service groups performed a
military value analysis for the facilities and functions that included
a facility's or function's current and future mission capabilities,
physical condition, ability to accommodate future needs, and cost of
operations.
Establish an organizational structure. As previously mentioned, the
Office of the Secretary of Defense emphasized the need for joint cross-
service groups to analyze common business-oriented functions. For the
2005 round, as for the 1993 and 1995 rounds, these joint cross-service
groups performed analyses and developed closure and realignment
options in addition to those developed by the military departments. In
contrast, our evaluation of DOD's 1995 round indicated that few cross-
service recommendations were made, in part because of the lack of high-
level leadership to encourage consolidations across the services'
functions.[Footnote 21] In the 1995 round, the joint cross-service
groups submitted options through the military departments for
approval, resulting in few being approved. The number of approved
recommendations that the joint cross-service groups developed
significantly increased in the 2005 round. This was due, in part, to
high-level leadership's ensuring that the options were approved not by
the military services but rather by a DOD senior-level group. Also,
one of these joint cross-service groups developed a number of
recommendations to realign administrative-type functions out of leased
space into DOD-owned facilities.
Involve the audit community to better ensure data accuracy. The DOD
Inspector General and military service audit agencies played key roles
in identifying data limitations, fostering corrections, and improving
the accuracy of the data used in the process. The oversight roles of
the audit organizations, given their access to relevant information
and officials as the process evolved, helped to improve the accuracy
of the data used in the BRAC process and added an important aspect to
the quality and integrity of the data used to develop closure and
realignment recommendations.
There are a number of important similarities and differences between
BRAC and a civilian process as proposed in CPRA. As a similarity, both
BRAC and CPRA employ the all-or-nothing approach to disposals and
consolidations, meaning that once the final list is approved, it must
be approved or rejected as a whole. This approach can help overcome
stakeholders' interests. Another similarity may be the need for a
phased approach. Through the five prior BRAC rounds, DOD has reduced
its domestic infrastructure, transferred hundreds of thousands of
acres of unneeded property to other federal and nonfederal entities,
and saved funds for application to higher priority defense needs.
Similarly, it may take several BRAC-like rounds to complete the
disposals and consolidations of civilian real property owned and
leased by many disparate agencies including GSA, VA, Interior, and the
Department of Energy. On the other hand, an important difference in
the two processes may be the role of the independent board. DOD has
participated in the BRAC process by generating lists of bases to close
and realign that the last four BRAC Commissions have then reviewed. On
the civilian side, however, agencies would provide recommendations to
the proposed civilian board, but the board would ultimately be
responsible for developing the lists of disposals and consolidations.
In closing, the government has made strides toward strategically
managing its real property and improving its real property planning
and data over the last 10 years, but those efforts have not yet led to
sufficient reductions in excess property and overreliance on leasing.
DOD's experiences with BRAC, including establishing criteria and a
common analytical framework up front, could help this effort move
forward.
Chairman Denham, Ranking Member Norton, and Members of the
Subcommittee, this concludes our prepared statement. We will be
pleased to answer any questions that you may have at this time.
For further information on this testimony, please contact David Wise
at (202) 512-2834 or wised@gao.gov regarding federal real property, or
Brian Lepore at (202) 512-4523 or leporeb@gao.gov regarding the Base
Realignment and Closure process. Contact points for our Congressional
Relations and Public Affairs offices may be found on the last page of
this statement. In addition to the contacts named above, Keith
Cunningham, Assistant Director; Laura Talbott, Assistant Director;
Vijay Barnabas; Hilary Benedict; Jessica Bryant-Bertail; Elizabeth
Eisenstadt, Sarah Farkas; Susan Michal-Smith; and Michael Willems made
important contributions to this statement.
[End of section]
Footnotes:
[1] In this testimony, we refer to property that is owned by the
federal government and under the control and custody of GSA as GSA-
owned property.
[2] GAO, Federal Real Property: Strategy Needed to Address Agencies'
Long-standing Reliance on Leasing, [hyperlink,
http://www.gao.gov/products/GAO-08-197] (Washington, D.C.: Jan. 24,
2008).
[3] GAO, High-Risk Series: Federal Real Property, [hyperlink,
http://www.gao.gov/products/GAO-03-122] (Washington, D.C.: January
2003) and High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-11-278] (Washington, D.C.: February
2011).
[4] [hyperlink, http://www.gao.gov/products/GAO-11-278].
[5] The first round in 1988 was authorized by the Defense
Authorization Amendments and Base Closure and Realignment Act, Pub. L.
No. 100-526, Title II (1988) (as amended). Subsequently, additional
BRAC rounds were completed in 1991, 1993, and 1995 as authorized by
the Defense Base Closure and Realignment Act of 1990, Pub. L. No. 101-
510, Title XXIX (1990) (as amended). The latest round--BRAC 2005--was
authorized by the National Defense Authorization Act for Fiscal Year
2002, Pub. L. No. 107-107, Title XXX (2001).
[6] DOD defines a major closure as a closure where plant replacement
values exceed $100 million and a major realignment as an action with a
net loss of 400 or more military and civilian personnel.
[7] GAO, Military Bases: Analysis of DOD's 2005 Selection Process and
Recommendations for Base Closures and Realignments, [hyperlink,
http://www.gao.gov/products/GAO-05-785] (Washington, D.C.: July 1,
2005) and Military Bases: Observations on the 2005 Base Realignment
and Closure Selection Process and Recommendations, [hyperlink,
http://www.gao.gov/products/GAO-05-905] (Washington, DC: July 18,
2005).
[8] See, for example, GAO, Military Base Realignments and Closures:
DOD Is Taking Steps to Mitigate Challenges, but Is Not Fully Reporting
Some Additional Costs, [hyperlink,
http://www.gao.gov/products/GAO-10-725R] (Washington, D.C.: July 21,
2010) and Military Base Realignments and Closures: Estimated Costs
Have Increased While Savings Estimates Have Decreased Since Fiscal
Year 2009, [hyperlink, http://www.gao.gov/products/GAO-10-98R]
(Washington, D.C.: Nov. 13, 2009).
[9] [hyperlink, http://www.gao.gov/products/GAO-11-278].
[10] GAO, Federal Real Property: Progress Made Toward Addressing
Problems, but Underlying Obstacles Continue to Hamper Reform,
[hyperlink, http://www.gao.gov/products/GAO-07-349 (Washington, D.C.:
Apr. 13, 2007).
[11] [hyperlink, http://www.gao.gov/products/GAO-11-278].
[12] [hyperlink, http://www.gao.gov/products/GAO-07-349].
[13] [hyperlink, http://www.gao.gov/products/GAO-05-785].
[14] GAO, Military Bases: Lessons Learned From Prior Base Closure
Rounds, [hyperlink, http://www.gao.gov/products/NSIAD-97-151]
(Washington, D.C.: July 25, 1997).
[15] The BRAC Commission was composed of nine Commissioners appointed
by the President, six of whom were appointed in consultation with the
congressional leadership.
[16] Congress had 45 days (excluding certain adjournments) or until
the adjournment of Congress, whichever came first, to enact a joint
resolution disapproving the recommendations as a whole.
[17] Section 2832 of the Ronald W. Reagan National Defense
Authorization Act for Fiscal Year 2005 (Pub. L. No. 108-375 (2004).
[18] Section 3001 of the National Defense Authorization Act for Fiscal
Year 2002 (Pub. L. No. 107-107 (2001)), amended the Defense Base
Closure and Realignment Act of 1990 (Pub. L. No. 101-510 (1990)) to,
among other things, require DOD to develop a 20-year force structure
plan as the basis for its 2005 BRAC analysis to include the probable
end strength levels and major military force units needed to meet the
probable threats identified by the Secretary and a comprehensive
inventory of military installations worldwide.
[19] [hyperlink, http://www.gao.gov/products/GAO-10-98R].
[20] As we have previously reported, we and the BRAC Commission
believe that DOD's net annual recurring savings estimates are
overstated because they include savings from eliminating military
personnel positions without corresponding decreases in personnel end-
strength. DOD disagrees with our position.
[21] [hyperlink, http://www.gao.gov/products/NSIAD-97-151].
[End of section]
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