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Chapter 15

INFRASTRUCTURE

Installations provide the foundation for all Department of Defense forces and are where DoD’s forces live, work, and participate as members of local communities. To keep America’s defense posture strong and enhance quality of life for military members and families, DoD’s installations and facilities infrastructure must be technologically and functionally sound. The Department must sustain and continually reshape this foundation so military facilities can adapt to changing requirements supporting readiness and quality of life.

INSTALLATIONS OVERVIEW

Overarching Goals and Objectives

The Department has the world’s largest infrastructure—with a physical plant valued at over $500 billion and a landmass that reaches 40,000 square miles. However, the Department is encumbered with obsolete and excess facilities. These facilities drain resources the Department could otherwise spend on modernization and readiness. As such, the Department is pursuing a three–pronged strategy—eliminate excess infrastructure, consolidate or restructure the operation of support activities, and demolish unneeded buildings. Base Realignment and Closure (BRAC) is an integral part of DoD’s readiness and modernization plans to right–size and reshape installations to match changing military mission requirements. However, Congress has not authorized additional BRAC rounds. Nevertheless, the Department continues its efforts to streamline functions and infrastructure.

INSTALLATIONS POLICY AND MANAGEMENT

Policy Development and Management Through the Installations Policy Board

In an effort to foster consistent policy application and management data for installations across the Services and defense agencies, the Department established the Installations Policy Board. This integrating and coordinating board will minimize the resource commitments DoD must make, eliminating duplicative Integrated Process Teams and other policy and working groups. With the Installations Policy Board, the Department will nurture synergy among the various installation initiatives being worked by DoD.

Facilities Requirements and Sustainment

FACILITIES SUSTAINMENT MODEL

The Department has embarked on an effort to create a Facilities Sustainment Model to normalize facilities sustainment requirements across all DoD components and allow for analysis by facility type. A prototype model has been tested and is now in development for use in future programs and budgets. The model is highly dependent on accuracy of inventory records, so a concentrated effort is underway to improve those records to better support the model.

INSTALLATIONS READINESS REPORTING

The FY 1999 Defense Authorization Act required the Secretary of Defense to establish a comprehensive annual readiness reporting system. The Act prescribed that the system measures the capability of units, training establishments, and defense installations and facilities to conduct wartime missions and support the forces. The initial report is due to Congress by April 1, 2000, and will include outputs from existing DoD facility condition assessment systems.

JOINT USE/REGIONALIZATION

The Department is pursuing ways to maximize joint use of facilities and installations and encouraging DoD components to maximize use of current facilities before programming new construction. Installations in the same region are joining forces to procure services such as electrical supply, base maintenance and repair, communication services, and other base operating support services.

ENHANCED USE LEASING

The Department’s June 8, 1999, comprehensive report on enhanced use leasing provided an assessment of DoD’s authority to outlease non–excess real and personal property. The report concluded that the authority to lease non–excess property, as authorized under United States Code Title 10, Section 2667, has served the Department well. However, this authorization has limitations that if removed would enable DoD to use its underutilized capacity more effectively and further reduce installation support costs.

DEMOLITION AND FACILITY DISPOSAL

To save operation and maintenance dollars and improve safety through the removal of abandoned facilities, the Department must be aggressive in its facility disposal efforts. As part of the Defense Reform Initiatives (DRI), the Department’s facilities strategic plan calls for the demolition and disposal of approximately 80 million square feet of obsolete and excess facilities by FY 2003. The Department remains on track toward meeting this DRI goal.

FORCE PROTECTION

Terrorist attacks demonstrated the vulnerability of DoD’s facilities where military and civilian personnel work and live. Antiterrorism Force Protection considerations must now be considered in military construction planning and minimum prescriptive standards have been promulgated. The Department is also identifying criteria and priorities for modifying existing DoD facilities.

Right–Sizing the Base Infrastructure

THE CASE FOR ADDITIONAL BASE REALIGNMENT AND CLOSURE

Securing legislative authority for future BRAC rounds is absolutely critical to enhance national security. Divesting unnecessary base infrastructure permits DoD to use resultant savings to improve the fighting capabilities and quality of life for all service members. DoD’s civilian and military leadership strongly supports legislation for additional BRAC rounds. However, the Department’s repeated legislative proposals for BRAC rounds have not been supported by Congress. The need for additional BRAC rounds is firmly based on the following:

· The Department must eliminate excess base infrastructure and make the remaining more efficient.

· The BRAC process will generate significant savings and cost avoidance. The General Accounting Office (GAO) and the Congressional Budget Office (CBO) share this view. DoD estimates net cumulative savings of approximately $14.5 billion by 2001 and annual recurring savings of approximately $5.7 billion. The CBO believes these estimates are reasonable.

· BRAC allows the Department to reshape base infrastructure to match changing mission and other requirements and is an essential part of an overall reshaping strategy.

· The Department is committed to helping BRAC impacted communities succeed with economic redevelopment efforts.

ALTERNATIVES TO BASE REALIGNMENT AND CLOSURE

The Department continues to pursue initiatives to make installations more cost effective and to reshape base infrastructure to changing mission requirements. The benefits of these alternatives cannot approach the benefits gained through a BRAC process. However, the value of the alternatives is substantial. Alternatives include, but are not limited to, the following:

· Demolition of excess buildings to avoid paying for a capability that is no longer cost effective.

· Leasing of underutilized real property to generate added value, either cash or by receiving in–kind consideration, to offset infrastructure funding shortfalls.

· Development of detailed options for increased use of competitive sourcing and privatization.

ASSISTING COMMUNITIES AFFECTED BY BASE REALIGNMENT AND CLOSURE

For a BRAC community to succeed, the Department must provide easy and quick access to real estate facilities on closed bases to expedite the creation of new jobs and revenues to support planned redevelopment.

IMPROVEMENTS TO THE BASE REUSE PROCESS

On October 5, 1999, the President signed legislation that provides for no cost transfers of Economic Development Conveyance (EDC) property in order to eliminate delays resulting from prolonged negotiations over fair–market value. The new authority also allows the Department to modify existing EDC agreements, where appropriate. In addition, interim and model leases are in place to serve as boilerplates for the standard federal lease requirements. Under the new authority, DoD redirects the focus of property conveyances from a cumbersome real estate deal to a rapid and smooth transition of job–creating and income–producing assets. The Department is also working to ensure better consistency across the Services when implementing new and modifying existing EDC agreements.

The Department is committed to helping communities by aggressively working to complete environmental restoration activities at most current BRAC sites by 2007. DoD conducted restoration activities at 4,800 sites, at over 200 BRAC installations. Additionally, the Department invested $5.0 billion to accomplish this goal and projects that it will invest additional $1.9 billion after FY 2001 to complete work at all BRAC sites. The redevelopment of closed bases has created approximately 50,000 new jobs and more than 1,200 tenants.

Several early transfers of surplus base property have been completed using Section 334 of the Comprehensive Environmental Response, Compensation, and Liability Act. This law gives DoD the authority to encourage early transfer of property at closing military installations by providing local government and developers an incentive to purchase environmental insurance, and partnering with public and private stakeholders in the cleanup and property transfer process. In addition, DoD is working with the private sector to improve the environmental remediation and contracting process.

Military Housing Requirements, Construction, and Housing Privatization

STANDARDIZING AND VALIDATING THE REQUIREMENTS

Central to the Department’s military housing program is the process for determining how much on–base housing is needed. Audit reports by the GAO, CBO, and the DoD Inspector General (IG) criticized the Department’s use of three different processes for determining housing requirements and understating the availability of private sector housing, thereby inflating the required number of housing units in the DoD inventory. To address these concerns, the Department is working to develop a single model for determining on–base housing needs using a set of standard DoD–wide factors along with flexible variables that accommodate Service differences. This model is important in determining the number of housing units that need to be constructed or maintained on–base and for determining the size of housing privatization projects.

MILITARY FAMILY HOUSING PRIVATIZATION

Approximately two–thirds of DoD’s 282,000 government–owned houses are in need of extensive renovation or replacement. Fixing this problem using only traditional military construction will take 30 years and $16 billion. The Department’s Military Housing Privatization Initiative (MHPI), signed into law in 1996, began a five–year test of authorities provided by Congress to help solve the housing problem. MHPI enables the Department to decrease its up–front construction expenses and eliminate the operations, maintenance, and management costs that are incurred over the life of traditional housing construction projects through private sector leverage. DoD has a goal to privatize 30,000 housing units by FY 2000.

DoD is evaluating proposals for a 114 housing unit project at Marine Corps Logistics Base, Albany, Georgia, and has awarded a 2,663 housing unit project at Fort Carson, Colorado. The Department issued Request for Proposals for 670 units at Robins Air Force Base (AFB), Georgia; 712 units at Marine Corps Base Camp Pendleton, California; 150 units at Kingsville, Texas; 300 units at Everett, Washington; 828 units at Elmendorf AFB, Alaska; 812 units at South Texas; 763 units at New Orleans, Louisiana; and 3,248 units at San Diego, California. DoD’s most recent project is a Request for Qualification for 6,631 units at Fort Hood, Texas; 5,482 existing units and construction of 1,149 units. DoD issued at least ten project solicitations in 1999.

HOUSING ALLOWANCES AND MILITARY CONSTRUCTION/PRIVATIZATION STRATEGIES

The Department provides housing for military members and their families either by paying allowances for members to live in private–sector housing or by assigning families to government–owned or leased housing. The GAO reported, "DoD’s policy of relying primarily on private–sector housing to meet military family housing needs is cost effective." Studies by both the CBO and the DoD IG showed that, compared to the cost of providing military housing, the government’s cost is significantly less when military members and families are paid housing allowances and live in private housing. With two–thirds of DoD’s married members receiving monetary compensation instead of government housing, integrating the housing allowance system within the overall housing strategy is critical. With this in mind, the Deputy Under Secretary of Defense for Installations created the DoD Housing Policy Panel to support this strategy concept. The Panel, under the leadership of the Installations Policy Board, is charged with developing the integrated strategy for using housing allowances, construction, and privatization to improve housing conditions for the Department’s military members.

DEVELOPING THE RIGHT MIX OF MILITARY CONSTRUCTION AND PRIVATIZATION

Three years ago, the Department set a goal to eliminate inadequate military housing, worldwide, by 2010. A key element in achieving this goal was embodied in the effort to develop installation–level family housing master plans. These plans would detail, base–by–base, the housing inventory, the number of Service–defined inadequate housing units requiring renovation, and the means for improving the units. Additionally, these plans provided the estimated cost to revitalize, replace, privatize, or demolish the inadequate inventory. This was the Department’s first attempt at determining a mix of construction and privatization to meet the 2010 housing goal.

The value of the family housing master plans was not lost on Congress. The House Appropriations Committee directed the Services to submit Family Housing Master Plans in July 2000. The Services are already working with the Office of the Secretary of Defense staff to refine existing plans by integrating the requirements identified in the House report and additional allowance information.

Utility Privatization and Energy Management

With over $2.3 billion spent annually by DoD on energy for buildings and facilities, the DRI Report identified the need to rethink the approach to managing the Department’s resources, directing that DoD should manage energy, not power infrastructure. The Department is privatizing its utility infrastructure, where practicable, by September 30, 2003. This action will use the capital and expertise of the private sector to maintain and upgrade the electric, water, wastewater, and natural gas systems that support DoD installations. The military departments identified over 2,400 individual utility systems as candidates for privatization.

The Department has embarked on an aggressive program to integrate fully its energy and utilities management programs (infrastructure, commodity purchase, and conservation efforts). To do so, the Department will explore ways to exploit the potential synergy between utility privatization, competitive procurement of energy commodities (electricity and natural gas), and implementation of energy and water conservation measures. DoD will also take advantage of the changing electricity market as the states restructure.

In 1997, DoD stood up the Defense Energy Support Center (DESC), which is involved in all facets of the Department’s energy program, with primary emphasis on energy procurement and conservation efforts. DESC serves as the implementing agency for the DoD Direct Supply Natural Gas program. The objective of this program is to obtain the most cost–effective supply of natural gas as a replacement for petroleum fuels or local utility high cost natural gas service for DoD installations while maintaining full energy service reliability. DESC and the military departments are actively working rate intervention issues, consolidating electrical loads between installations and regions to take advantage of better rates. DESC also actively tracks and reports on the progress states are making in restructuring the electricity market.

DoD continues to make great progress in reducing its energy consumption and meeting the President’s FY 2010 goal, directed by Executive Order 13123, of 35 percent reduction compared to FY 1985 consumption. To continue this trend, the Department and the Services budgeted $93 million in FY 1999 for energy conservation projects ($47 million of Energy Conservation Investment Program and $46 million from the Services’ Operation and Maintenance accounts).

DoD’s strategy for conserving energy and water resources in existing structures focuses on using private sector capital to finance energy–saving investments through shared savings contracts and area–wide agreements. The Department has multi–regional Energy Savings Performance Contracts (ESPCs), which cover all 50 states and the District of Columbia, with a combined private sector investment capacity of more then $3.2 billion. Additionally, DESC awarded a comprehensive ESPC for the Military District of Washington. This contract uses $70 million in private–sector investments to install energy savings measures in over 800 buildings on five bases and will save 600 million British Thermal Units of energy, and 50 million gallons of water per year. Carbon emissions will be reduced by 86,000 tons per year. The Services continue to actively pursue demand–sided management agreements with the public utilities.

The Department’s strategy for reducing energy and water consumption in new buildings calls on the Services to take advantage of new design techniques and energy efficient materials. The Department intends to use the principles of sustainable design in future construction, where it has been determined to produce the lowest life–cycle costs. Sustainable design methods use the most energy efficient and environmentally sustainable products, optimize architectural design to incorporate local natural conditions, such as day–lighting and passive/active solar and solar–thermal applications, and provide for indoor workplace environmental quality. Demonstration projects undertaken by the military departments show this approach to design produces 30 to 50 percent in energy savings with minimal investment.

Competitive and Strategic Sourcing

OVERARCHING DEFENSE REFORM INITIATIVE GOALS AND OBJECTIVES

One of the four initiatives underlying the Department’s overarching reform efforts is to compete its commercial activities and apply market mechanisms to improve quality, reduce costs, and respond to customer needs. Experience demonstrates that competition yielded both significant savings and increased readiness for each of the military departments. Thus, competitive sourcing is a major pillar of the business strategy for defense enunciated in the DRI Report. There is $11.7 billion in funding for readiness and modernization of defense programs that depends upon successfully implementing Department’s current competition plans. By FY 2005, the Department plans to study 245,500 positions to achieve these savings.

COMMERCIAL ACTIVITIES AND INHERENTLY GOVERNMENTAL INVENTORY

In January 1999, the Department completed a comprehensive inventory and review to appropriately identify candidates for competition. The inventory and review of all civilian and military positions determined which positions within the Department are:

· Inherently governmental.

· Commercial activities exempt from competition.

· Commercial activities available for competition under the Office of Management and Budget (OMB) Circular A–76.

About 2,950,000 positions were identified. After removal of military personnel, civilian personnel statutorily exempt from competitive sourcing, and inherently governmental functions, about 308,000 positions were identified as potential candidates for competitive sourcing.

COMPETITIVE SOURCING AND STRATEGIC SOURCING STRATEGIES

As a result of the traditional A–76 competitive sourcing program, the Department saves about 35 percent on service costs and will reduce manpower involved in commercial activities by about 24 percent. Although the program works well, a broader approach to the traditional A–76 competitive sourcing program could lead to greater savings and efficiencies and more opportunities for competition. This broader approach, called Strategic Sourcing, complements the A–76 program and is consistent with the reinvention goals expressed in the DRI and the competitive sourcing process described in OMB Circular A–76.

Strategic sourcing is not avoidance of A–76. Rather, this approach is more logical and allows the Department to move beyond theoretical debates about what is inherently governmental because it shifts focus back to actual program implementation. Strategic sourcing allows the Department to make wiser business decisions with an enterprise–wide versus compartmentalized approach. This approach looks across the entire organizational spectrum at all functions, including those that are exempt from the traditional A–76 process, as well as commercial activities, to determine if the function should be retained, eliminated, or revised. This is a more logical approach because most organizations have an embedded mixture of functions that are both inherently governmental and commercial in nature.

UPDATING DOD DIRECTIVES AND INSTRUCTIONS

The Department undertook a thorough review of its Commercial Activities Program to update and clarify its existing policies and procedures and to establish a comprehensive policy on strategic sourcing. Interim guidance on competitive sourcing and strategic sourcing will address the establishment of performance measures, cost comparisons between public and private sector bids, administrative appeals process, and waivers for cost comparisons. The directive and instruction on the Commercial Activities Program and the Strategic Sourcing Program are scheduled for publication in May 2000.

REDUCING TOXIC CHEMICAL RELEASES

Between 1994 and 1997, the Department eliminated 56 percent of toxic chemical releases, three years ahead of the President’s goal for a 50 percent reduction by 1999. To meet this goal and cut environmental compliance costs, DoD increased emphasis on pollution prevention by focusing on smart business decisions, achieving life–cycle reduction, and seeking pollution prevention solutions for compliance requirements. DoD funds invested in pollution prevention produced a 54 percent return on investment over a five–year period. The benefits of pollution prevention spending are reflected in reduced pollution and fewer enforcement actions against DoD.

Ensuring Continued Access to Test and Training Lands

Over two–thirds of the lands used by the military in the United States are identified as withdrawn public lands—lands that would otherwise be administered by the Department of Interior for multiple–use purposes. These withdrawn public lands, located in Arizona, Nevada, New Mexico, and Alaska, represent some of the premier test and training facilities used by the Services. The FY 2000 National Defense Authorization Act renews over 7.2 million acres of public lands for military use. The authority to use these lands for military purposes was set to expire in FY 2001.

Environmental Cleanup

The goals of the Department’s environmental cleanup program are to minimize the risk to people and the environment, restore contaminated sites to productive use, and build trust with DoD stakeholders. The Department ranks cleanup sites according to relative risk factors to ensure adequate funds are available to clean sites that pose the greatest risk. Of the sites planned for cleanup over the next six years, 45 percent are in the highest relative risk category and will receive 62 percent of available funding. DoD measures success in contaminated site restoration by identifying the number of sites having a cleanup remedy in place or a completed cleanup response. DoD has completed cleanup efforts, with the exception of long–term remedial operations and monitoring, at more than half of the Department’s installations. Finally, the Department is continually building partnerships with stakeholders, while seeking innovative ways to do business. In FY 1998, DoD entered into a voluntary cleanup agreement with the Commonwealth of Pennsylvania—the first of its kind—which will allow all parties to achieve timely, cost–effective cleanups at facilities not included on the National Priorities List by harmonizing innovative provisions of state law with federal requirements.

CONCLUSION

The Department is diligently striving to reshape its installations to match the needs of its military forces in the 21st century. The Department will continue to focus on a multi–part strategy which not only involves eliminating excess infrastructure, but includes privatization of housing and utilities, competitive and strategic sourcing, enhanced outleasing of underutilized real property and facilities, streamlined energy management, improved standards and conditions for critical facilities, and responsible environmental stewardship.

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