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Military Bases: Lessons Learned From Prior Base Closure Rounds (Chapter Report, 07/25/97, GAO/NSIAD-97-151).

GAO reported on lessons learned from the base realignment and closure
(BRAC) rounds held in 1988, 1991, 1993, and 1995, focusing on: (1)
lessons related to savings, costs, and economic impact and improvements
needed in the Department of Defense's (DOD) process for identifying
bases for realignment and closure; and (2) what legislative actions
would be needed if further BRAC rounds were to be authorized.

GAO noted that: (1) lessons have been learned from prior BRAC rounds
that can be used to improve the BRAC process should future rounds be
authorized; (2) these lessons relate to the amount of savings and
up-front costs associated with closing bases and the economic impact on
communities confronted with the loss of jobs; (3) data indicate that
savings from base closures, though not well-documented, are expected to
be substantial; (4) however, net savings form BRAC were not generated as
quickly as initially estimated because the costs of closing bases and
environmental cleanup were high and offset the savings; (5) firm data on
expected savings have been difficult to obtain primarily because DOD
accounting systems, like all accounting systems, track expenses and
disbursements, not savings; (6) furthermore, DOD guidance does not
require that the services' BRAC savings estimates be developed
consistently, well-documented, or updated annually to reflect changes
that occur during implementation; (7) also, large revenues initially
expected to be generated from land sales have not occurred; (8) some
cost avoidances are not fully captured in DOD's savings estimates
because defense budget plans do not reflect future costs such as
long-term recapitalization costs; (9) while defense civilian job loss
and other adverse effects on communities are an inescapable byproduct of
base closures, at least in the short term, recent studies indicate that,
in a number of communities, the local economies appeared to be able to
absorb the economic losses, though some communities are faring better
than others; (10) however, in some cases, it is too soon to tell what
the ultimate economic impact will be; (11) given the historical
difficulty of closing bases, new legislation is needed if there are
going to be future base closures; (12) DOD has proposed that Congress
authorize two additional BRAC rounds; (13) the outcome of potential
future BRAC rounds could be improved by resolving, in advance, key
organizational and policy issues, such as which service or services will
be responsible for which support functions and whether some facilities
will be managed jointly; (14) the Office of the Secretary of Defense
will have to exercise strong leadership to overcome the services'
long-standing parochialism and inability to agree on significant
cross-service consolidations in common support areas; and (15) the Secr*

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-97-151
     TITLE:  Military Bases: Lessons Learned From Prior Base Closure 
             Rounds
      DATE:  07/25/97
   SUBJECT:  Base closures
             Base realignments
             Cost effectiveness analysis
             Defense economic analysis
             Defense cost control
             Military bases
             Obsolete facilities
             Surplus federal property
             Federal agency reorganization
             Employee transfers
IDENTIFIER:  DOD Quadrennial Defense Review
             DOD Fast Track Cleanup Program
             DOD Cost of Base Realignment Action Program
             
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Cover
================================================================ COVER


Report to the Congress

July 1997

MILITARY BASES - LESSONS LEARNED
FROM PRIOR BASE CLOSURE ROUNDS

GAO/NSIAD-97-151

Military Bases

(709209)


Abbreviations
=============================================================== ABBREV

  AAA - Army Audit Agency
  BRAC - base realignment and closure
  CBO - Congressional Budget Office
  CRS - Congressional Research Service
  COBRA - Cost of Base Realignment Actions
  DOD - Department of Defense
  GAO - General Accounting Office
  IG - Inspector General
  OSD - Office of the Secretary of Defense
  QDR - Quadrennial Defense Review
  PRV - plant replacement value

Letter
=============================================================== LETTER


B-274612

July 25, 1997

To the President of the Senate and the
Speaker of the House of Representatives

This report focuses on lessons learned from the base realignment and
closure rounds held in 1988, 1991, 1993, and 1995.  We undertook this
work so that a systematic assessment of experiences would be
available should the Department of Defense (DOD) request and Congress
authorize additional base closure rounds.  In transmitting the
results of the 1997 Defense Quadrennial Review to Congress on May 19,
1997, the Secretary of Defense stated his intent to ask Congress to
authorize two additional base closure rounds. 

We are addressing this report to you in keeping with our practice of
reporting to Congress on the recommendations and selection process
employed by DOD in each of the three most recent base closure rounds,
as initially required by the 1990 Defense Base Closure and
Realignment Act (P.L.  101-510).  We have identified lessons related
to savings, costs, and economic impact and improvements needed in
DOD's process for identifying bases for realignment and closure.  We
have also included matters for congressional consideration if
Congress contemplates legislation for future base closure rounds. 

We are sending copies of this report to the Chairmen and Ranking
Minority Members, Senate Committee on Appropriations, Subcommittee on
Defense; Senate Committee on Armed Services; House Committee on
Appropriations, Subcommittee on National Security; House Committee on
National Security; the Secretaries of Defense, the Army, the Navy,
and the Air Force; and the Directors of the Defense Logistics Agency
and the Defense Investigative Service.  We will make copies available
to others upon request. 

This report was prepared under the direction of David R.  Warren,
Director, Defense Management Issues, who may be reached on (202)
512-8412 if you or your staff have any questions.  Major contributors
to this report were Barry W.  Holman, Marian H.  Harvey, and
Kay D.  Kuhlman. 

James F.  Hinchman
Acting Comptroller General
of the United States


EXECUTIVE SUMMARY
============================================================ Chapter 0


   PURPOSE
---------------------------------------------------------- Chapter 0:1

Special legislative authorities were enacted in 1988 and 1990 to
overcome impediments to base closures.  These authorities provided
the basis for four rounds of base realignments and closures (BRAC)
between 1988 and 1995.  Despite anticipated completion of those
rounds by 2001, the Department of Defense (DOD) continues to retain
significant amounts of excess, costly infrastructure.  Retaining this
excess capacity drains resources needed for facilities maintenance
and other priorities such as weapon systems modernization. 
Anticipating that DOD might request Congress to authorize additional
BRAC rounds, GAO initiated this review to address (1) what lessons
could be learned from prior rounds as they related to savings, costs,
and economic impact; (2) what legislative actions would be needed if
further BRAC rounds were to be authorized; and (3) what improvements,
if any, would be needed in DOD's process for identifying bases for
realignment and closure. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:2

Closing unneeded defense facilities has historically been difficult
because of public concern about the economic effects of closures on
communities and the perceived lack of impartiality of the
decision-making process.  It was made even more difficult by
legislation enacted in the 1970s that required DOD to notify Congress
of proposed closures and to prepare economic, environmental, and
strategic consequence reports.  These requirements effectively
precluded bases from being closed between 1977 and 1988.  However,
legislation enacted in 1988 (P.L.  100-526) supported a special
commission chartered by the Secretary of Defense to identify bases
for realignment and closure and provided relief from certain
statutory provisions that had hindered DOD's past efforts.  With this
legislation, a BRAC round was completed in 1988.  Congress later
passed the Defense Base Closure and Realignment Act of 1990 (Title
XXIX,
P.L.  101-510), which created an independent commission and
authorized three BRAC rounds in 1991, 1993, and 1995.  The four
rounds resulted in decisions to close 97 out of 495 major domestic
installations and many smaller ones and to realign other facilities. 
The legislation authorizing these rounds expired at the end of 1995,
and DOD's authority to close or realign bases reverted to the 1970's
legislation under which DOD, in effect, was unable to close bases. 

Although the 1995 BRAC round produced decisions to close 27 major
domestic bases, issues were raised about how some decisions were
implemented.  This was most evident as it related to the
implementation of BRAC decisions at Air Force depots in Texas and
California.  As a result, there is considerable controversy today
over those decisions. 

Despite these recent BRAC rounds, DOD continues to maintain large
amounts of excess infrastructure, especially in its support
functions, such as maintenance depots, research and development
laboratories, and test and evaluation centers.  Each service
maintains its own facilities and capabilities for performing many
common support functions and, as a result, DOD has overlapping,
redundant, and underutilized infrastructure.  DOD has taken some
steps to demolish unneeded buildings on various operational and
support bases; consolidate certain functions; privatize, outsource,
and reengineer certain workloads; and encourage interservicing
agreements--however, these are not expected to offset the need for
additional actions.  At the same time, DOD officials recognize that
significant additional reductions in excess infrastructure
requirements in common support areas could come from consolidating
workloads and restructuring functions on a cross-service basis,
something that has not been accomplished to any great extent in prior
BRAC rounds.  GAO recently added defense infrastructure to its list
of high-risk federal programs needing increased attention and
planning to avoid waste and mismanagement.\1

The Secretary of Defense's 1997 Quadrennial Defense Review, which
assessed defense strategy, programs, and policies, included the issue
of future base closures in the infrastructure portion of the review. 
In his May 19, 1997, report to Congress on the results of this
review, the Secretary asked Congress to authorize domestic base
closure rounds in 1999 and 2001.  That recommendation was endorsed by
the National Defense Panel, the independent, congressionally mandated
board that is reviewing the work of the Quadrennial Defense Review
and completing its own review of defense issues.  Earlier the
Secretary announced that he had established a Task Force on Defense
Reform to go beyond the work of the Quadrennial Defense Review; to
examine ways to consolidate functions; eliminate duplication of
efforts; and recommend organizational reforms, reductions in
management overhead, and streamlined business practices. 


--------------------
\1 High Risk Series:  Defense Infrastructure (GAO/HR-97-7, Feb. 
1997). 


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3

Lessons have been learned from prior BRAC rounds that can be used to
improve the BRAC process should future rounds be authorized.  These
lessons relate to the amount of savings and up-front costs associated
with closing bases and the economic impact on communities confronted
with the loss of jobs.  Data indicate that savings from base
closures, though not well-documented, are expected to be substantial. 
However, net savings from BRAC were not generated as quickly as
initially estimated because the costs of closing bases and
environmental cleanup were high and offset the savings.  Firm data on
expected savings have been difficult to obtain primarily because DOD
accounting systems, like all accounting systems, track expenses and
disbursements, not savings.  Furthermore, DOD guidance does not
require that the services' BRAC savings estimates be developed
consistently, well-documented, or updated annually to reflect changes
that occur during implementation.  Also, large revenues initially
expected to be generated from land sales have not occurred.  Some
cost avoidances are not fully captured in DOD's savings estimates
because defense budget plans do not reflect future costs such as
long-term recapitalization costs.\2

While defense civilian job loss and other adverse effects on
communities are an inescapable byproduct of base closures, at least
in the short term, recent studies indicate that, in a number of
communities, the local economies appeared to be able to absorb the
economic losses, though some communities are faring better than
others.  However, in some cases, it is too soon to tell what the
ultimate economic impact will be.  Several federal programs appear to
have helped cushion the impact of closing bases on individuals and
communities. 

Given the historical difficulty of closing bases, new legislation is
needed if there are going to be future base closures.  DOD has
proposed that Congress authorize two additional BRAC rounds.  The
expired 1990 BRAC legislation, as amended, established a sound
process for identifying bases for closure and realignment, and it is
widely viewed as a model for any future BRAC legislation.  Some
individuals expressed concern over the role of politics in the
process.  GAO recognizes that no public policy process, especially
one as open as BRAC, can be completely removed from the U.S. 
political system.  The process has several checks and balances to
keep political influences to a minimum, but the success of these
provisions requires that all participants of the process adhere to
the rules and procedures.  If future BRAC rounds are authorized,
decisions will need to be made regarding the number of rounds, when
they should be held, and how they will relate to other legislation
dealing with downsizing and restructuring DOD's laboratories and test
and evaluation facilities. 

The outcome of potential future BRAC rounds could be improved by
resolving, in advance, key organizational and policy issues, such as
which service or services will be responsible for which support
functions and whether some facilities will be managed jointly.  The
Office of the Secretary of Defense will have to exercise strong
leadership to overcome the services' long-standing parochialism and
inability to agree on significant cross-service consolidations in
common support areas.  The Secretary's Task Force on Defense Reform,
as a follow-on effort to the Quadrennial Defense Review, could help
address some of these key organizational and policy issues.  If there
are future BRAC rounds, a DOD joint working group will also be needed
to initiate improvements in DOD's BRAC processes and decision-making
tools and ensure greater consistency in the services' processes.  For
example, further improvements can be made to the model used by DOD to
estimate the costs and savings of closing and realigning facilities. 
Finally, if there are future BRAC rounds, DOD needs to ensure full
audit access to all parts of DOD's BRAC process and to use the
current discount rate tied to the U.S.  Treasury's borrowing rate to
calculate the net present value of BRAC savings estimates. 


--------------------
\2 Cost avoidances are defined as avoidance of costs that have not
been budgeted, whereas cost savings are defined as cost reductions
from an approved budget that result in program funds being recouped
or used elsewhere. 


   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4


      IMPORTANT LESSONS LEARNED
      ABOUT SAVINGS, CLOSURE
      COSTS, AND ECONOMIC IMPACT
      FROM PRIOR BRAC ROUNDS
-------------------------------------------------------- Chapter 0:4.1

DOD's experience with bases closed in prior rounds provides some
lessons about the amount of savings and high up-front costs
associated with base closures and the affect of closures on
communities.  Costs associated with closing bases can be significant,
and it may take several years before savings offset these costs and
annual recurring savings begin.  DOD projects that the cost of BRAC
during the implementation period from 1990 to 2001 will reach $23
billion.  Over time, DOD's projections show that savings begin to
offset costs with annual net savings increasing yearly and reaching
$4.4 billion in fiscal year 2001.  Once implementation costs have
been fully offset, including environmental restoration costs, DOD
projects that the recurring savings, or cost avoidance, will amount
to $5.6 billion per year.  However, the exact amount of actual
savings realized from BRAC actions is uncertain because of the way in
which initial cost estimates were developed, subsequent changes in
cost estimates, lack of updates to the savings estimates, and
inherent limitations in DOD's accounting systems. 

Confusion and uncertainty over savings expected from BRAC occurred in
part because initial costs and savings estimates, not of budget
quality and rigor, were developed by DOD components when initially
considering bases for closure or realignment.  DOD's policy was to
exclude environmental cleanup costs in initial BRAC decision-making
because environmental cleanup of bases was expected to occur, over
time, whether a base closed or not.  GAO has agreed with DOD's
approach of excluding these costs from its initial BRAC decisions. 
GAO has also agreed that environmental restoration costs are a
liability to DOD regardless of its base closure decisions.  After the
BRAC decisions were finalized, DOD added environmental cleanup costs,
as it prepared new estimates of BRAC costs and savings to formulate
its budget requirements for implementing BRAC decisions; such costs
must be funded from the BRAC account.  The susequent inclusion of
environmental cleanup costs increased the cost estimates for BRAC
actions relative to the estimates reported by the BRAC Commission. 
The addition of environmental cleanup costs to the BRAC budget
estimates, as well as changes that occur in the estimates over time
and land sales revenues that were less than initially anticipated,
has had the effect of delaying the point in time in which savings
would overtake and offset the implementation costs. 

In addition to these changes in the cost estimates, the services'
BRAC savings estimates have been inconsistently developed and poorly
documented, and not consistently updated annually, although DOD is
required to report savings annually.  A sound methodology for
estimating savings that includes updating the savings estimates when
a significant change occurs during implementation of a BRAC decision
is important because DOD relies on these savings for future defense
programs.  A primary reason DOD has not tracked savings effectively
is because DOD's accounting systems, like all accounting systems, are
designed to track expenses and disbursements, not savings or
long-term cost avoidances.  Determining savings requires a separate
analysis, which was usually done when DOD components developed their
budgets for implementing BRAC decisions.  The absence of efforts to
update projected savings indicates the need for additional guidance
and emphasis from DOD on accumulating and documenting updated savings
data on a comprehensive and consistent basis.  Such efforts will also
be important to tracking savings should additional BRAC rounds be
authorized. 

At the same time, GAO recognizes that it may not always be practical
to fully capture some savings or costs avoided from base closures. 
For example, defense budgets do not project long-term
recapitalization costs beyond planned military construction projects. 
The avoidance of these recapitalization costs as a result of base
closures could be significant, but the amount is difficult to
estimate with any degree of precision.  As a result, despite the need
for greater emphasis on capturing and updating savings, some level of
imprecision is likely to continue. 

Maximizing savings from BRAC is also difficult in that BRAC cost and
savings objectives compete with other policy and legislative
requirements.  Requirements related to disposal and reuse of excess
military facilities limit opportunities for savings by reducing land
sale revenues.  On the other hand, options exist for reducing the
high costs associated with environmental restoration; however, they
require trade-offs among cleanup costs, cleanup schedules, and base
reuse goals. 

DOD estimates that approximately 107,000 defense civilian jobs will
have been eliminated as a result of prior BRAC rounds--actions that
will be spread over approximately a 12-year period by the time all of
the BRAC actions have been implemented, not later than 2001.  While
this is a significant number, several federal programs assist DOD
employees and communities in adjusting to base closures.  For
example, through the priority placement program, more than 23,000 of
DOD employees have found jobs in other defense and government
activities though some may have had to relocate outside of their
community to find comparable jobs.  Some employees who choose to stay
in their communities may be unable to match their previous income. 
Federal programs and grants available to communities have helped to
somewhat cushion the blow of base closures and helped communities
develop plans for base reuse and economic revitalization.  While the
full economic impact of base closures on communities will not be
known for some time, early studies suggest that the local economies
of a number of communities appear able to absorb the economic loss
from base closures, though some communities are faring better than
others. 


      BRAC LEGISLATION WILL BE
      NEEDED IF FUTURE ROUNDS ARE
      HELD
-------------------------------------------------------- Chapter 0:4.2

The 1990 BRAC legislation, as amended, provided the framework for the
BRAC processes that were used to successfully complete the three most
recent BRAC rounds.  That legislation, which expired in 1995, is seen
by many officials as a model for the new legislation that would be
needed for any future BRAC rounds.\3 Key elements of the BRAC
legislation that DOD and BRAC Commission officials said contributed
to the success of prior rounds included (1) the establishment of an
independent commission and nomination of commissioners by the
President, in consultation with the congressional leadership; (2) the
development of clearly articulated, published criteria for
decision-making; (3) use of data certified as to its accuracy; (4)
the requirement that the President and Congress accept or reject in
their entirety the lists of closures adopted by the BRAC Commission;
and (5) the creation of tight time frames to force the process to
reach decisions in a timely manner.  The legislation also required
that GAO assess DOD's BRAC decision-making process and
recommendations.  Additional audit coverage by the DOD Inspector
General and service audit agencies evolved over time and helped
ensure that the data and analyses associated with the decision-making
process were accurate and complete. 

Issues critical in any proposal for future BRAC rounds are the number
of rounds and when they should be held.  The 1990 BRAC legislation
authorized three rounds at 2-year intervals in 1991, 1993, and 1995. 
Most DOD and Commission officials GAO interviewed said it is likely
that more than one BRAC round will be needed to eliminate excess
infrastructure.  Some thought each round should be authorized
separately and DOD should make every effort to close as many excess
facilities as possible.  Others noted the advantages of multiple
rounds, including continuity and expertise in DOD and Commission
staff, payment of closure costs over a longer period of time, and
possible force structure changes and technological advances that
suggest the need for continuing assessment of and revisions to the
infrastructure.  Given the amount of advance work that goes into
planning for a BRAC round, up to 18 months advance lead time could be
required to make optimum preparations for another BRAC round. 

Additionally, Congress would need to consider whether other
legislation is still required for downsizing and restructuring DOD's
laboratories and test and evaluation facilities.  Legislation enacted
as part of the defense authorization act in 1996 requires DOD to
formulate a 5-year plan for consolidating, restructuring, and
revitalizing these facilities.  That legislation also charged DOD
with identifying legislation needed to implement the plan. 


--------------------
\3 In this review, GAO did not did not analyze the parts of the
legislation that dealt with the implementation of BRAC decisions,
including property disposal and base reuse. 


      DOD'S BRAC PROCESS SHOULD BE
      IMPROVED IF FUTURE ROUNDS
      ARE AUTHORIZED
-------------------------------------------------------- Chapter 0:4.3

DOD and Commission officials stressed that strong, decisive
leadership on the part of the Secretary of Defense will be key to the
success of any future BRAC rounds.  Although DOD completed four
rounds, it did not reduce as much infrastructure as it had originally
planned.  In particular, DOD missed opportunities to reduce
infrastructure in the area of support functions such as depots,
medical facilities, training, and laboratories and test facilities,
where cross-service consolidations and interservicing were possible. 

The Office of the Secretary of Defense (OSD) emphasized the need for
cross servicing in the 1993 round, and even more so in 1995, when
special cross service teams were set up to work in parallel with the
services' BRAC processes to identify cross-service alternatives. 
Parochial interests and disagreements among the services over
evaluation of their facilities were barriers to achieving significant
cross-service agreements in 1993 and 1995.  Various officials
suggested that intervention by the Secretary of Defense would be
needed to resolve these issues, foster increased cross servicing, and
reduce infrastructure in these areas in any future BRAC rounds.  The
Secretary's Task Force on Defense Reform, as a follow-on to the
Quadrennial Defense Review, as well as the National Defense Panel,
could help address some of these key organizational and policy
issues. 

DOD improved its decision-making processes in each of the BRAC
rounds.  It strengthened its approach to data gathering and analysis
and improved computer models used for analyses.  Now DOD has the
opportunity to further strengthen its processes before any future
round.  For example, despite efforts to improve the model DOD used to
estimate the costs of closing and realigning facilities, several
officials noted the need for further improvements to ensure greater
consistency and completeness in how the services use the model.  DOD
can also strengthen the process to promote greater consistency in how
the services apply the decision criteria to ensure a fair and open
process.  If there are future BRAC rounds, a DOD joint working group
will be needed to initiate improvements in DOD's BRAC processes and
decision-making tools and ensure greater consistency among the
services' processes.  For example, the Air Force needs to improve the
clarity and visibility of its BRAC decision-making process.  Also, if
there are future BRAC rounds, GAO believes that DOD and the BRAC
Commission should use the discount rate tied to the U.S.  Treasury's
borrowing rate to calculate the present worth of future savings,
known as the net present value.  Finally, DOD would also need to
ensure full audit access to all parts of DOD's BRAC process. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5

GAO has already reported that DOD needs to develop an overall
strategic plan for accomplishing its fiscal and operational goals
that, among other things, considers the need and timing for future
BRAC rounds.\4 Because substantial opportunities exist to achieve
future savings through cross-service consolidations in common support
areas, GAO believes that it is very important to resolve the policy
issues that have limited cross-service consolidations in the past. 
Accordingly, if Congress agrees with DOD's proposal and authorizes
future BRAC rounds, GAO recommends that the Secretary of Defense

  -- work with the Task Force on Defense Reform and the National
     Defense Panel to address, in advance of any future BRAC round,
     the important organizational and policy issues in the various
     cross-service areas that would facilitate the process of making
     further infrastructure reductions;

  -- convene a DOD joint working group, as soon as practical, to
     develop policy guidance, improve BRAC processes and
     decision-making tools, and ensure greater consistency among the
     services' processes;

  -- use the current discount rate tied to the U.S.  Treasury's
     borrowing rate to calculate the net present value of BRAC
     savings estimates; and

  -- ensure full audit access to all parts of DOD's BRAC process. 

Whether or not Congress authorizes future BRAC rounds, DOD also needs
to improve its periodic updating and reporting of savings projected
from prior BRAC decisions.  This information is needed to strengthen
DOD's budgeting process and ensure that correct assumptions are being
made regarding expected reductions in base operating costs. 
Accordingly, GAO recommends that the Secretary of Defense provide
guidance to ensure that its components have and follow a clear and
consistent process for updating savings estimates associated with
prior BRAC decisions. 


--------------------
\4 High Risk Series:  Defense Infrastructure(GAO/HR-97-7, Feb. 
1997). 


   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
---------------------------------------------------------- Chapter 0:6

If Congress considers legislation for future BRAC round(s), it may
wish to (1) model it on the 1990 BRAC legislation as a starting
point, (2) pass such legislation early to allow the lead time needed
for DOD and the Commission to organize their processes, and (3)
consider the relationship between any new BRAC authority and section
277 of the National Defense Authorization Act for Fiscal Year 1996
pertaining to laboratories and test and evaluation facilities. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:7

In commenting on a draft of this report, DOD concurred with GAO's
conclusions and recommendations (see app.  III for DOD's comments). 


INTRODUCTION
============================================================ Chapter 1

Historically, closing unneeded military bases has not been easy, in
part, because of the public's concern about the effects of closures
on communities and their economies and questions about the
impartiality of the decision-making process.  That perspective led to
significant legal and administrative barriers to base closures in the
1970s and 1980s.  However, special legislative authorities enacted in
1988 and 1990 provided the means to deal with these concerns and
overcome the barriers.  Those authorizations allowed four rounds of
base realignment and closure (BRAC) decision-making to occur in 1988,
1991, 1993, and 1995. 


   EVOLUTION OF EFFORTS TO CLOSE
   EXCESS MILITARY BASES
---------------------------------------------------------- Chapter 1:1

The Department of Defense (DOD) initiated actions during the 1960s
and early 1970s to reduce its military basing infrastructure.  The
process for identifying candidates for closure and realignment was
almost completely developed by the Office of the Secretary of Defense
(OSD), with little input from the military departments or Congress. 
More than 60 major bases were closed.  However, the extent of these
base closure actions, with the cumulative economic impact and the
lack of oversight of the decision-making process, fostered concern
about the fairness of the process and set the stage for congressional
resistance to future base closures. 


      LEGISLATIVE IMPEDIMENTS TO
      BASE CLOSURES IN THE 1970S
      AND 1980S
-------------------------------------------------------- Chapter 1:1.1

Congressional actions in the 1970s, such as denying funding for base
closures, made it increasingly difficult for DOD to unilaterally
close and realign military bases.  In 1977, Congress enacted
legislation, reflected in
10 U.S.C.  2687, which essentially halted additional base closures. 
Under section 2687, the closure of any military installation in the
United States with at least 300 authorized civilian positions or the
realignment of any installation involving a reduction of more than
1,000 civilian employees or more than 50 percent of the
installation's authorized civilian workforce could not take place
until the Secretary of Defense had evaluated the "fiscal, local
economic, budgetary, environmental, strategic, and operational
consequences of such closure or realignment." If the Secretary found,
as a result of these evaluations, that the individual base closure or
realignment should proceed, the Secretary had to notify Congress of
the proposed closure or realignment and wait 30 legislative days or
60 calendar days, whichever was longer, before proceeding.  The
time-consuming processes associated with implementing these
requirements effectively stopped individual closure actions.  As a
consequence, no major domestic military bases were closed between
1977 and 1988. 


      STEPS TO OVERCOME BARRIERS
      AND DEVELOP A FAIR AND
      CREDIBLE BASE CLOSURE
      PROCESS
-------------------------------------------------------- Chapter 1:1.2

The suggestion to use an external commission to add independence and
credibility to the base closure process came in a 1983 report by the
President's Private Sector Survey on Cost Control, known as the Grace
Commission.  However, action to implement this recommendation did not
come until about 5 years later. 

In May 1988, as the defense budget and force size were beginning to
decrease and future reductions were expected, the Secretary of
Defense chartered a commission to consider military bases for
closure.  That action was later undergirded by special legislation
enacted in October 1988
(P.L.  100-526) only for the 1988 BRAC round.  It authorized a
special commission to identify proposed closures and realignments and
provided relief from certain statutory provisions that had hindered
the base closure process.  The 1988 BRAC round produced decisions to
close 16 major domestic bases.  Even so, concerns existed about the
fairness and impartiality of the process, in part, because the
commission was appointed by and reported directly to the Secretary;
also, concerns were expressed that the list of proposed closures
unfairly targeted districts represented by certain members of
Congress.\1

New efforts by the Secretary in January 1990 to initiate the closure
of 35 additional bases and the realignment of 20 others--without
special enabling legislation--encountered difficulty and were not
completed.  Problems included varying processes used by the services
to derive their proposed closures, OSD's failure to provide specific
guidance to the military services and defense agencies on how to
evaluate bases for possible closure or realignment, and the
difficulty in completing the extensive studies required by 10 U.S.C. 
2687.  Concerned again that political influence may have affected the
Secretary's January 1990 proposals, Congress passed the Defense Base
Closure and Realignment Act of 1990 (P.L.  101-510) halting any major
closures, except those meeting the new act's requirements.  That
legislation authorized BRAC rounds in 1991, 1993, and 1995.\2

The 1990 legislation created an independent Defense Base Closure and
Realignment Commission appointed by the President, in consultation
with Congress, and outlined specific procedures, roles, and time
lines for DOD, the Commission, the President, and Congress to follow. 
That legislation provided the foundation for a process whereby the
Secretary of Defense would make recommendations for closing and
realigning military bases, relying on (1) clearly articulated,
published criteria used in selecting candidate bases; (2) the review
of his proposals by the Commission; (3) acceptance or rejection of
the Commission's recommendations in their entirety by the President;
and (4) final acceptance or rejection of the recommendations in their
entirety by Congress.  The legislation also imposed clear milestone
dates by which key players in the process, such as the Secretary, the
Commission, the President, and Congress, had to complete their
assigned roles. 

While the time frames specified by the legislation for
decision-making during a BRAC round are compressed into a 6-month
period, much greater advance working time is required within DOD to
provide policy guidance, establish BRAC decision-making organizations
within the services and defense agencies (hereafter referred to as
DOD components), and begin the process of identifying candidate bases
to be studied for potential closure and realignment.  Thus, the
actual decision-making process can take between 18 months and 2
years.  As specified in the 1990 legislation, DOD has up to 6 years
to complete BRAC closures and realignments commencing from the time
the President transmits the Commission's recommendations to Congress. 
(See app.  I for a summary of the BRAC decision-making process,
including key legislative requirements associated with the 1990 act.)

The 1990 legislation required us to provide the BRAC Commission and
Congress with a detailed analysis of the Secretary's recommendations
and selection process.  For the 1995 round, the 1990 legislation, as
amended, required that our report be completed within 45 days of the
Secretary's making public his list of recommended closures and
realignments.\3

(At the end of this report is a list of our reports completed in
response to this legislative provision, as well as our other recent
reports dealing with the BRAC process and the implementation of BRAC
decisions.)

BRAC closure and realignment decisions are binding and can only be
changed by subsequent legislative actions.  During the 1993 and 1995
rounds, BRAC Commissions dealt with proposals from the Secretary to
change prior BRAC decisions.  For example, in 1995, 27 of the 146
recommendations DOD submitted to the BRAC Commission were changes to
prior Commissions' decisions.  Such changes may be required as DOD
proceeds with implementing BRAC decisions and finds that (1) aspects
of some decisions were based on inaccurate cost estimates and are,
therefore, cost prohibitive; (2) unforeseen events, such as
organizational restructuring, make implementation of the initial
decisions impossible, or (3) unforeseen circumstances or inaccurate
analyses interfere with mission requirements.  Most changes to BRAC
decisions were needed to change the receiving site of a mission or an
activity that was moving from a base scheduled to be closed or
realigned. 


--------------------
\1 At the request of the Chairmen and the Ranking Minority Members,
House and Senate Committees on Armed Services, we examined the
Commission's methodology, findings, and recommendations.  We made
recommendations for improving management controls and methodology
should there be future base closure studies.  See Military Bases:  An
Analysis of the Commission's Realignment and Closure Recommendations
(GAO/NSIAD-90-42, Nov.  29, 1989). 

\2 With the expiration of the 1990 BRAC legislation on December 31,
1995, procedures and authority to close or realign bases reverted to
10 U.S.C.  2687. 

\3 We further supported the work of the BRAC Commission by loaning
some of our staff to the Commission to assist in its own analyses. 


   RESULTS OF RECENT BRAC ROUNDS
   AND THE QUADRENNIAL DEFENSE
   REVIEW
---------------------------------------------------------- Chapter 1:2

The four BRAC rounds completed between 1988 and 1995 produced
decisions to close 97 out of DOD's 495 major domestic military
installations and numerous smaller installations and to realign many
others.\4 DOD reported that by the end of fiscal year 1996, it had
closed about 58 percent of the 97 bases; DOD projects that over 80
percent will have been closed by the end of fiscal year 1997.  DOD
has until 2001 to complete the BRAC actions authorized by the 1990
legislation.  However, in many instances, DOD has sought to expedite
the schedule of planned closures in recent years to hasten the point
that it nets savings from the closures.  DOD estimates that when all
of the recommendations have been implemented, it will have closed
about 20 percent of its major domestic bases and believes it has
positioned itself to achieve long-term reductions in the overall
costs of operating its bases.  (See app.  II for a list of military
installations closed by the four BRAC rounds that DOD designated as
major military installations.)

Although the 1995 BRAC round produced decisions to close 27 major
domestic bases, issues were raised about how some decisions were
implemented.  This was most evident as it related to the
implementation of BRAC decisions at Air Force depots in Texas and
California.  As a result of this situation and other concerns, such
as the amount of savings from base closures, there is considerable
controversy today over whether further base closure actions should be
authorized. 

Notwithstanding the results of the four recent BRAC rounds, DOD
officials recognized, even while they were finishing the 1995 round,
that they had missed OSD's goal in terms of reductions needed through
base closures.  DOD calculated that the first three BRAC rounds
reduced the plant replacement value (PRV)\5 of DOD's domestic
facilities by 15 percent.  It established a goal for the fourth round
of reducing PRV by an additional 15 percent, for a total of 30
percent.  When the Secretary announced his recommendations for base
closures and realignments in 1995, OSD projected that if all of the
Secretary's recommendations were adopted, the total PRV would be
reduced by 21 percent, nearly a third less than OSD's goal.\6 The
Chairman of the Joint Chiefs of Staff testified before the BRAC
Commission in 1995 that excess basing capacity would remain after the
1995 round and cited the need for future base closure authority.  DOD
officials recognize that significant reductions in excess
infrastructure in common support areas could come from consolidating
workloads and restructuring these functions on a cross-service basis,
something that has not been accomplished to any great extent in prior
BRAC rounds. 

Since the 1995 BRAC round, DOD and service officials have recognized
that they continue to maintain aging and excess infrastructure that
they cannot afford.  As a result, the services are pursuing a number
of initiatives to reduce the costs of maintaining their
infrastructure, including demolishing aging and excess facilities
that are no longer needed and that drain resources that should be
used to maintain and repair needed facilities,\7

renewing efforts to outsource and privatize various operations,
consolidating and regionalizing some support operations, and placing
greater emphasis on interservicing and intraservicing support.  In
one instance, Congress mandated that the Secretary develop a plan to
consolidate and restructure the services' laboratories and test and
evaluation infrastructure by the year 2005.\8 While demolition will
help to reduce excess facilities on some bases, the other initiatives
underway or planned by DOD could result in additional excess
facilities. 

Over the past 7 years, we have called attention to critical
government operations that are highly vulnerable to waste, fraud,
abuse, and mismanagement by designating them as high-risk areas.  One
area of focus has been accountability and cost-effective management
of defense programs.  Our February 1997 series of reports on
high-risk areas included defense infrastructure as a new high-risk
area.\9 Our defense infrastructure report noted that DOD is spending
funds to operate and maintain aging, underutilized, and excess
infrastructure and that setting forth a clear framework for a reduced
infrastructure is key to avoiding waste and inefficiency.  It further
noted that the Secretaries of Defense, Army, Navy, and Air Force need
to give greater structure to their efforts to attain infrastructure
reductions by developing an overall strategic plan and using a
variety of means to achieve reductions.  Those means could include
consolidations, privatization, outsourcing, reengineering, and
interservicing agreements.  It further stipulated that DOD should
consider the need and timing for future BRAC rounds, as suggested by
the 1995 BRAC Commission and other groups. 


--------------------
\4 Military installations can be a base, camp, post, station, yard,
center, or leased facility.  As we reported in 1995, the number of
bases recommended for closure or realignment in a given BRAC round is
often difficult to tabulate precisely because closure decisions are
not necessarily complete closures and closures vary in size.  The
term "base closure" often conjures up the image of a larger facility
being closed than may actually be the case.  The same is true with
facilities designated by DOD as major closures.  This report relies
on DOD's characterization of which bases are to be considered major. 

\5 PRV is defined as the cost to replace current facilities using
today's construction costs and standards.  PRV is recognized as an
imprecise measure, one that is calculated differently by each
service.  However, it was a key measure used by OSD to establish its
goals for base closures. 

\6 The 1995 BRAC Commission did not approve all of the Secretary's
recommendations and it added other bases to the closure list.  Since
that time, OSD has not recalculated the net reduction in PRV. 

\7 The magnitude of this funding problem was highlighted in our
recent report showing that during the past 10 years, service funding
devoted to real property maintenance of facilities had declined
nearly 40 percent, while the square footage of space to be maintained
worldwide had declined only about 10 percent.  See Defense
Infrastructure:  Demolition of Unneeded Buildings Can Help Avoid
Operating Costs (GAO/NSIAD-97-125, May 13, 1997). 

\8 See section 277 of the National Defense Authorization Act for
Fiscal Year 1996 (P.L.  104-106). 

\9 High-Risk Series:  Defense Infrastructure (GAO/HR-97-7, Feb. 
1997). 


      REPORT OF THE 1997
      QUADRENNIAL DEFENSE REVIEW
      CALLS FOR ADDITIONAL BRAC
      CLOSURES
-------------------------------------------------------- Chapter 1:2.1

The National Defense Authorization Act for Fiscal Year 1997
(P.L.  104-201) required that the Secretary of Defense, in
consultation with the Chairman of the Joint Chiefs of Staff, conduct
a Quadrennial Defense Review (QDR).  This review was to be a
comprehensive examination of the defense strategy, force structure,
force modernization plans, budget plans, infrastructure, and other
elements of the defense program through the year 2005.  In his May
19, 1997, report to Congress outlining the results of the review, the
Secretary recommended that BRAC rounds be held in 1999 and 2001. 
That recommendation was endorsed by the National Defense Panel, the
independent, congressionally mandated, board that is reviewing the
work of the QDR and completing its own review of defense issues. 

As the QDR was being finalized, the Secretary established a follow-on
Task Force on Defense Reform to go beyond the recommendations of the
QDR and develop a blueprint for further streamlining and reform of
DOD's organization and procedures.  By November 30, 1997, the Task
Force is to report to the Secretary with its recommendations for
organizational reforms, reductions in management overhead, and
streamlined business practices in DOD.  It will focus on OSD, the
defense agencies, DOD field activities, and the military departments. 
One goal of the Task Force is to eliminate unneeded organizations,
functions, and personnel.  The Task Force is to work closely with the
National Defense Panel. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:3

Despite four rounds of base closures from 1988 to 1995, numerous
indicators show that the services continue to retain excess
infrastructure.  Retaining this excess capacity drains resources
needed for facilities maintenance requirements and other important
priorities such as weapon systems modernization.  Anticipating that
DOD might request Congress to authorize additional BRAC rounds, we
initiated this review to determine (1) what lessons could be learned
from prior rounds as they relate to savings, costs, and economic
impact; (2) what legislative actions would be needed if further BRAC
rounds were to be authorized; and (3) what improvements, if any,
would be needed in DOD's process for identifying bases for closure
and realignment. 

We relied primarily on our prior work in discussing the lessons
learned from prior BRAC rounds as they relate to savings, costs, and
economic impact.  However, to the extent possible, we updated
information.  To obtain current information on BRAC costs and savings
estimates, we used DOD's fiscal year 1998-99 biennial budget
estimates for the BRAC accounts as set forth in the justification
data submitted to Congress in February 1997.  We also interviewed DOD
Inspector General (IG) and Army Audit Agency officials who were
reviewing selected BRAC costs and savings estimates to determine
their validity. 

To determine what legislative actions would be needed if further BRAC
rounds were to be authorized and what improvements, if any, would be
needed in DOD's process for identifying bases for closure and
realignment, we interviewed DOD officials who participated in the
1995 round and, in some cases, prior rounds.  The officials were from
OSD, the Departments of the Army, Air Force, and Navy; Defense
Investigative Service; and Defense Logistics Agency.  We also
interviewed commissioners and selected staff from the BRAC 1995
Commission, DOD IG and service audit agency officials, and our staff
who worked on the 1995 round.  In addition, we reviewed reports and
documents from OSD, defense agencies, the military services, the BRAC
1995 Commission, DOD IG, the service audit agencies, and others, as
well as our own, to identify key issues and lessons learned.  After
our initial round of interviews and analyses of documents, we
prepared a consolidated list of main points related to our three
objectives and conducted selected follow-up interviews to determine
consensus on key points and modify reportable issues as warranted. 

To obtain private sector views, we interviewed representatives from
Business Executives for National Security, the National Association
of Installation Developers, and the International City and County
Management Association. 

We focused primarily on parts of the 1990 BRAC legislation that
governed the process used to identify bases for closure and
realignment.  We did not examine portions of the legislation and
process dealing with implementation of BRAC decisions. 

We conducted our work between August 1996 and May 1997 in accordance
with generally accepted government auditing standards. 


IMPORTANT LESSONS FROM PRIOR BRAC
ROUNDS REGARDING SAVINGS, CLOSURE
COSTS, AND ECONOMIC IMPACT
============================================================ Chapter 2

Experiences from previous BRAC rounds provide some important lessons
should future BRAC rounds be considered.  They point to the
importance of data pertaining to expected savings, the up-front costs
of closures, and the impact of job losses from base closings on local
communities.  Questions about the amount of savings have been fueled
by limitations in how DOD develops and maintains current data on
expected BRAC savings and the high up-front costs of implementing the
BRAC recommendations.  How individuals and communities would recover
from base closures has been a long-standing concern and was a primary
reason base closures were blocked in the past. 

Available data suggest that savings from BRAC closures and
realignments are expected to be substantial.  However, up-front costs
have been higher than initially estimated; thus, net savings have not
been realized as quickly as hoped.  Also, because DOD has not
adequately tracked changes in initial savings estimates, questions
have existed about the reliability of savings projections.  At the
same time, DOD has opportunities to reduce or contain closing costs. 
Also, recent experiences suggest that the economic impact of base
closures has been cushioned to some extent by federal programs and
assistance to affected individuals and communities.  Early studies
suggest that, while some communities are affected economically more
than others, the effects in a number of instances have been
relatively limited. 


   SAVINGS FROM PRIOR BRAC ROUNDS
   ARE EXPECTED TO BE SUBSTANTIAL,
   ALTHOUGH NOT ALWAYS
   WELL-DOCUMENTED
---------------------------------------------------------- Chapter 2:1

We have consistently concluded that while changes in cost estimates
had occurred and tracking savings was difficult, significant net
savings were still likely, but generally were going to take longer to
achieve than initially estimated.  DOD projects that, on an annual
basis, savings from the recent BRAC rounds began to exceed the cost
of implementing the closures and realignments in fiscal year 1996,
with a net savings of $100 million that year and increasing
incrementally each year thereafter to $4.4 billion in 2001.  It
projects that the cumulative total savings from BRAC actions from the
past four BRAC rounds will begin to exceed the total cumulative costs
in fiscal year 1998.  DOD projects that the total cumulative costs of
implementing BRAC actions will be $23 billion during the 1990 to 2001
implementation period.\1 However, DOD also expects to incur an
additional $3.3 billion in BRAC-related environmental restoration
costs beyond 2001.\2 DOD projects that once those costs have been
fully offset, it will realize annual recurring savings or cost
avoidances of $5.6 billion from closures and realignments.  These
savings are reflected in DOD's budgets through reduced funding levels
to the base operating accounts.  However, questions have existed
about the reliability of these savings projections because of changes
that occur over time and limitations in DOD's efforts to track the
changes. 

Up-front costs associated with closing bases can be significant and
it may take several years before savings offset these costs and
annual recurring savings begin.\3 The costs of implementing BRAC
recommendations have been greater than DOD initially estimated
because land sale revenues were less than projected, particularly in
the earlier rounds, and the costs of environmental cleanup were
added.  As a result, the point at which estimated savings began to
offset the costs of closure was delayed, which raised the question of
whether savings were being realized from BRAC.  DOD's current
projection for annual recurring savings of $5.6 billion, once
implementation costs have been recouped, is $400 million less than
the $6 billion DOD initially projected after submitting its 1995
recommendations to the BRAC Commission. 


--------------------
\1 Implementation costs encompass (1) constructing new facilities at
gaining bases to accommodate organizations transferred from closing
bases, (2) remedying environmental problems on closing bases, and (3)
moving personnel and equipment from closing to gaining bases. 
However, in calculating its costs and savings, DOD does not include
the cost of federal economic assistance provided to communities
affected by base closures.  Our 1996 report on the first three BRAC
rounds identified about $780 million in such assistance.  This cost,
while significant in the short term, is a one-time cost that will not
impact recurring savings from BRAC in the long run.  See Military
Bases:  Closure and Realignment Savings Are Significant, but Not
Easily Quantified (GAO/NSIAD-96-67, Apr.  8, 1996). 

\2 Even though Congress established a 6-year period for closing a
base, there are no statutory deadlines for the environmental cleanup
process. 

\3 The 1988 and 1990 acts authorizing base closure rounds established
closure accounts to fund one-time costs to close or realign bases
identified in the BRAC process.  There are two accounts.  BRAC I was
established to fund base closures in the 1988 round.  BRAC II was
established to fund base closures in the 1991, 1993, and 1995 rounds. 
The revenues generated from land sales are required to be deposited
into this account to offset closure and realignment costs. 


      VARIOUS FACTORS ACCOUNT FOR
      UNCERTAINTY IN THE AMOUNT OF
      SAVINGS FROM BRAC
-------------------------------------------------------- Chapter 2:1.1

Changes and uncertainties regarding BRAC implementation costs and
savings have been caused by a variety of factors, beginning with how
the estimates were initially calculated and later updated or tracked. 
Figure 2.1 highlights a variety of factors that have made it
difficult to fully identify and track savings from closures or led to
changing estimates of costs over time which affected when savings
would begin to offset the costs. 

   Figure 2.1:  Why BRAC Savings
   Are Difficult to Track and
   Estimates Change Over Time

   (See figure in printed
   edition.)

   Source:  Our analysis.

   (See figure in printed
   edition.)

DOD derived initial BRAC cost and savings estimates from the Cost of
Base Realignment Actions (COBRA) model, which was used in each of the
past four BRAC rounds to develop comparative costs of alternative
actions.  This model, while useful for initial BRAC decision-making,
was not intended to produce budget quality data and was not used to
develop the cost estimates in the budgets for implementing BRAC
decisions.  Furthermore, the model was not used by the Army and the
Navy to develop the savings estimates that were reported in DOD's
budget justifications for the BRAC accounts.  As we previously
reported, the Air Force used the COBRA estimates, with adjustments
for inflation and recurring cost increases at gaining bases, as the
basis for developing its savings estimates.\4

Differences between COBRA and budget quality data used in
implementing BRAC decisions include the following.  COBRA estimates,
particularly those based on standard cost factors, are averages,
which are refined for budget purposes.  Further, COBRA costs are
expressed in constant-year dollars;\5 budgets are expressed in
then-year (inflated) dollars.  Also, COBRA savings estimates reflect
the potential closing of a single location and may include broader,
DOD-wide costs and savings, recognizing the various DOD-wide impacts
of closing installations such as the costs and savings of multiple
tenants.  BRAC budget estimates, however, are component specific,
making it difficult to precisely compare costs and savings between
the two sets of data for a given recommendation.  Additionally, COBRA
estimates do not include the cost of environmental restoration, in
keeping with DOD's long-standing policy of not considering such costs
in its BRAC decision-making, whereas BRAC budget estimates do.\6 We
have concurred with DOD not considering these costs in developing its
cost and savings estimates as a basis for base closure
recommendations.  At the same time, we agree with DOD's position that
environmental restoration costs are a liability to it regardless of
its base closure decisions; and we note, these costs are substantial. 

A fundamental limitation in DOD's ability to identify and track
savings from BRAC closures and realignments is that DOD's accounting
systems, like all accounting systems, are oriented to tracking
expenses and disbursements, not savings.\7 Savings estimates are
developed by the services at the time they are developing their
initial BRAC implementation budgets and are reported in DOD's BRAC
budget justifications.  Because the accounting systems do not track
savings, updating these estimates requires a separate data tracking
system.  The lack of updates is problematic because the initial
estimates are based on forecasted data that can change during actual
implementation, thereby increasing or decreasing the amount of
savings. 

We previously found that most of the services and defense agencies
did not update their initial estimates of BRAC savings once initial
implementing budgets were developed.  The BRAC 1990 legislation
required that, for fiscal year 1993 and thereafter, DOD submit annual
budgets estimating the cost and savings of each closure or
realignment, as well as the period in which savings were to be
achieved.  We believe the savings estimates should be updated to the
extent possible to more accurately reflect the expected savings from
BRAC actions in the budget submissions sent to Congress.  The lack of
updates was recently confirmed by a draft Army Audit Agency (AAA)
report, which noted that the Army did not require its major commands
to update their savings estimates annually or when events occurred
that significantly affected the amount of savings.\8 Based on an
initial review of BRAC costs and savings reported by the Air Force
and the Navy, DOD IG officials told us the same is true for the Air
Force but the Navy has a process for updating its savings estimates. 
A Navy official also told us that the Navy's savings estimates were
reviewed annually and revised during the budget review process. 
Other DOD officials said that while cost data would be updated in
preparing budget requests, original savings estimates were not likely
to be updated.  DOD officials said that savings estimates are not
updated because DOD's accounting systems do not track savings.\9 Some
OSD and service officials said that DOD components do not have an
incentive to separately track savings for fear that their budgets
would be reduced as a result.  Without this information, Congress and
DOD are uncertain about the net savings being achieved from BRAC. 
This information is important for prior BRAC decisions and will also
be important should future BRAC rounds be authorized.  DOD is
depending on BRAC savings for future defense programs--thus, the
importance of sound estimates of projected savings. 

Our experience in examining BRAC implementation issues has also
identified fluctuations and variances in the cost estimates.  We have
reported on some instances where elements of BRAC costs were
overstated and others that were understated.  Our report on 1988 and
1991 closures and realignments noted that the overall cost of
military construction and operations and maintenance associated with
the BRAC accounts had decreased.\10

The same report also showed that DOD's experience with environmental
restoration estimates showed that initial cost estimates can increase
significantly once detailed remediation studies and tests are
completed.  We noted one instance, for example, where an initial
cleanup cost estimate increased from $11 million to over $114
million.  DOD officials said that estimates of environmental cleanup
costs could increase from the initial estimates as additional
environmental studies are completed, more work is identified, and
cleanup time lines are accelerated.  AAA is auditing the
environmental cleanup costs of closing Army bases. 

DOD audit agencies have also reviewed various aspects of the cost and
savings from BRAC.  The DOD IG has completed a series of audits
comparing most budget requests for BRAC military construction
projects with the COBRA estimates, which showed that the budget
requests, on average, were 7.9 percent less than original
estimates.\11 We have reported that the Army, over time, found that
BRAC-related personnel costs were less than initially forecast.  More
recently, AAA completed an audit of the costs and savings estimates
for 10 Army BRAC sites.  Its draft report indicates that while AAA's
cost estimates were much higher than COBRA's, in large part due to
including environmental cleanup costs, they were less than those in
the Army's implementation plans.\12 It also validated that the
closures would result in substantial net savings.  The DOD IG is
examining the other services' past budgets to determine actual BRAC
costs and savings. 


--------------------
\4 Military Bases:  Closure and Realignment Savings Are Significant,
but Not Easily Quantified (GAO/NSIAD-96-67, Apr.  8, 1996). 

\5 These represent the value of expenditures or costs expressed in
terms of purchasing power of a single base year.  This excludes the
effect of general inflation. 

\6 This policy is based on the fact DOD is obligated to restore
contaminated sites on military bases regardless of whether they are
closed.  While such costs are not included in COBRA, they are
included in developing BRAC implementation budgets; such costs must
be funded from the BRAC account. 

\7 See Military Bases:  Closure and Realignment Savings Are
Significant, but Not Easily Quantified (GAO/NSIAD-96-67, Apr.  8,
1996).  We have also reported on fundamental problems with DOD's
ability to accumulate reliable cost information.  See High Risk
Series:  Defense Financial Management (GAO/HR-97-3, Feb.  1997). 

\8 1995 Base Realignment and Closure Savings Estimates (AA 97-225,
draft as of June 1997). 

\9 The difficulties associated with estimating and updating savings
from a major organizational restructuring are not unique to DOD.  Our
recent examination of restructuring costs of defense contractors
revealed that restructuring savings were not recorded in contractors'
accounting records.  Therefore, neither the amount nor the nature of
the savings could be determined by reviewing the accounting records. 
We found that savings were therefore an estimate of a cost avoidance
over
5 years.  We also reported that the initial estimate of restructuring
savings was simple in concept because the critical assumption was
made that everything else, except for the restructuring, was the same
after a business combination as before.  Because things were never
the same, it was difficult to precisely identify actual savings
several years after the initial estimate was prepared.  See Defense
Restructuring Costs:  Information Pertaining to Five Business
Combinations (GAO/NSIAD-97-97, Apr.  1, 1997). 

\10 Military Bases:  Revised Cost and Saving Estimates for 1988 and
1991 Closures and Realignments (GAO/NSIAD-93-161, Mar.  31, 1993). 

\11 Summary Report on the Audit of Defense Base Realignment and
Closure Budget Data for FYs 1995 and 1996, Office of the Inspector
General, U.  S.  Department of Defense, Report No.  96-093, April 3,
1996.  We did not independently verify the accuracy of the data. 

\12 1995 Base Realignment and Closure Savings Estimates (AA 97-225,
draft as of June 1997). 


      SOME SIGNIFICANT POTENTIAL
      SAVINGS ARE NOT CAPTURED IN
      BRAC SAVINGS ESTIMATES
-------------------------------------------------------- Chapter 2:1.2

Inherent limitations in DOD's accounting systems, as well as the
nature of the BRAC process, preclude capturing all potential savings
or cost avoidances from BRAC actions.\13

For example, DOD's facilities are about
44 years old, on average, and must be replaced or revitalized at some
point.  However, COBRA and BRAC budget estimates only captured
short-term recapitalization costs that were programmed in the
services' budgets.  Also, COBRA cost estimates for the repair and
maintenance of facilities were based on average expenditures.  It is
likely that these estimates underestimated potential future costs,
since DOD has significantly reduced its spending for the repair and
maintenance of its facilities for the past
10 years, which has led to concerns on the part of some defense
officials about growing backlogs in maintenance and repair.  As we
noted in our report on facilities infrastructure and demolition,
DOD's funding for maintenance and repair has declined about 40
percent over the last 10 years, which is far greater than the
reduction in square footage of space to be maintained.  Thus, base
closures can be viewed as representing the avoidance of potentially
significant costs that otherwise would be associated with facilities'
revitalization at some point in the future. 


--------------------
\13 Cost avoidances are defined as avoidance of costs that have not
been budgeted, whereas cost savings are defined as cost reductions
from an approved budget that result in program funds being recouped
or used elsewhere. 


      BRAC NET SAVINGS HAVE BEEN
      MINIMIZED BY POLICY AND
      LEGISLATIVE REQUIREMENTS
      IMPACTING LAND SALES
-------------------------------------------------------- Chapter 2:1.3

Maximizing savings from base closures is limited by the policy and
legislative requirements governing property disposal that reduce
opportunities for the selling of base property.  One reason for the
increase in initial cost estimates from BRAC closures was DOD's
overly optimistic estimates of land sales revenues, especially in the
earlier rounds.  Originally, DOD expected to sell land from closed
bases and apply the revenues to offset BRAC closure costs. 
Significant revenues from land sales were initially projected, but
the number of acres sold and the amount of proceeds were less than
anticipated.  For example, in 1990, DOD estimated that the sale of
property on military bases closed by BRAC 1988 could raise about $2.4
billion in revenues.  In fact, DOD only received about $65.7 million
in revenue from land sales on those bases between 1990 and 1995.  The
overestimated land sale revenues resulted partly because DOD
overestimated the value of the land and, more significantly, because
it did not take into account the effect of priorities set in law for
disposal of government property. 

Once property is no longer required by a federal agency, the property
is offered to other federal agencies to satisfy their requirements. 
Property that is not selected by federal agencies is declared surplus
to the federal government.  At that point, the Federal Property and
Administrative Services Act of 1949 authorizes disposal of the
property through a variety of means, including public or negotiated
sale and transfers to states and local governments for public benefit
purposes.  Additionally, a 1993 amendment to the BRAC legislation,
section 2903 of title XXIX of the National Defense Authorization Act
for Fiscal Year 1994, states that under certain circumstances,
surplus real property can be transferred to local redevelopment
authorities under economic development conveyances for economic
development and job creation purposes.  This section was created to
enable communities to act as master developers by obtaining property
under more flexible finance and payment terms than previously
existed.  For example, a community can request property at less than
fair market value if it can show the discount is needed for economic
development. 

As shown in figure 2.2, local reuse authorities generally seek
surplus property under one of the public benefit transfer or economic
development authorities because these can be no-cost or no-initial
cost acquisitions.  If the property reuse does not meet the
requirements for these conveyances, then the local reuse authorities
can still pursue a negotiated sale without competing with other
interested parties.  Any surplus property that remains is available
for sale to the general public. 

   Figure 2.2:  Usual Procedures
   for Transferring Property

   (See figure in printed
   edition.)

   Source:  Our analysis.

   (See figure in printed
   edition.)

The disposal of property by public benefit transfer, economic
development conveyance, or noncompetitive negotiated sale can
significantly reduce the amount of revenues to offset the cost of
implementing BRAC decisions.  For example, the golf course at Myrtle
Beach Air Force Base, South Carolina, was conveyed through a public
benefit transfer to the city of Myrtle Beach.  By doing so, the
government relinquished the opportunity to sell the property for $3.5
million to a private developer who intended to use it as a public
golf course. 


      OPTIONS EXIST FOR REDUCING
      ENVIRONMENTAL COSTS, BUT
      REQUIRE TRADE-OFFS AMONG
      COMPETING OBJECTIVES
-------------------------------------------------------- Chapter 2:1.4

Environmental cleanup of closing bases creates a significant cost
that offsets the amount of savings that can be expected from base
closures.  While we and others have reported the tendency for
environmental cleanup costs to increase from the initial cost
estimates as more detailed environmental studies are completed, we
have also noted that options for reducing these costs exist.  Our
1996 report on the high costs of environmental cleanup noted several
options for reducing cleanup costs at closing bases.\14 However, we
also noted that these options may adversely affect programmatic
goals, thereby presenting decisionmakers with difficult choices in
developing a cost-effective environmental cleanup program.\15 The
options include

  -- deferring or extending certain cleanup actions,

  -- modifying laws and regulations,

  -- adopting more cost-effective cleanup technologies, and

  -- sharing costs with the ultimate user of the property. 

Deferring or extending cleanup actions may delay property transfer
and reuse, hurt the economic revitalization of communities affected
by the closure process, and harm the environment and health. 
Modifying laws and regulations may increase environmental risk,
thereby increasing public resistance and dissatisfaction.  Adopting
more cost-effective cleanup technologies may delay the program
because new technologies under development may not be available for
years and may not be more cost-effective than existing technologies. 
Sharing costs with the ultimate user could present problems because
of unknown future liabilities and difficulty in establishing the
value of the property. 

The Congressional Budget Office (CBO) has reported that DOD could
reduce costs by delaying expensive remediation projects when
contamination poses no imminent threat and cost-effective technology
is lacking.\16 CBO has also stated that in the long run, new cleanup
technologies represented the best hope of addressing environmental
problems with available DOD funds.  A potential opportunity for
reducing costs may be found in the Department of Energy, which, in
some cases, has successfully placed more emphasis on remediation and
less on planning by using "removal actions," which shortened or
eliminated some of the planning steps normally required before
remediation could begin.  For example, removal actions have been used
for treating groundwater and surface water, excavating and disposing
of contaminated soil, or leaving waste in place and covering it with
a protective barrier. 

DOD implemented a Fast-Track Cleanup Program as part of the
President's July 1993 base closure reinvestment plan to speed the
recovery of communities affected by the BRAC program.  A key element
of the cleanup program is the cooperative relationship between state
and federal regulators and the installation restoration program
manager--the BRAC cleanup team.  This team approach is intended to
reduce the time to establish and execute cleanup plans.  The program
also seeks better integration of cleanup efforts with
community-planned base reuse, and it may also help to contain some
environmental cleanup costs.  DOD reports that over the past 3 years,
the program, with DOD and regulators working together, has reduced
150 years of cleanup project work and avoided over $150 million in
costs. 

Congress has provided some legislative relief to facilitate rapid
reuse of military property while the long process of environmental
cleanup proceeds.  The National Defense Authorization Act for Fiscal
Year 1996 included provisions to increase the feasibility of interim
leases, allowing leasing of some parcels to communities that require
environmental remediation.  More recently, section 334 of the
National Defense Authorization Act for Fiscal Year 1997 contains a
provision allowing DOD to transfer parcels of land that are not fully
cleaned up, if the state's governor agrees.  DOD, in consultation
with the Environmental Protection Agency, is working on a policy to
guide this early transfer authority process uniformly.  DOD is
encouraging communities affected by BRAC actions to use this new
authority.  DOD officials believe that this authority should provide
significant benefits for affected communities, but it is unclear how
it will affect environmental cleanup costs. 


--------------------
\14 Military Base Closures:  Reducing High Costs of Environmental
Cleanup Requires Difficult Choices (GAO/NSIAD-96-172, Sept.  5,
1996). 

\15 We have not taken a position on these options because of policy
and legislative implications associated with them.  Rather, we have
presented them in the context of trade-offs they represent so that
congressional and defense decisionmakers have the information for
their consideration as they explore ways to reduce program costs
while achieving environmental cleanup goals. 

\16 Closing Military Bases:  An Interim Assessment, CBO, December
1996. 


   FEDERAL PROGRAMS AND LOCAL
   ECONOMIES HAVE HELPED TO
   CUSHION THE EFFECTS OF BASE
   CLOSURES ON EMPLOYEES AND
   COMMUNITIES
---------------------------------------------------------- Chapter 2:2

While defense civilian job loss and other adverse effects on
communities are an inescapable byproduct of base closures, at least
in the short term, recent studies indicate that, in a number of
communities, the local economies appeared to be able to absorb the
economic losses, though some communities are faring better than
others.  Various programs and benefits have been provided to assist
employees and communities affected by base closures.  While these
programs may not have eliminated the pain individuals and communities
experience when confronted with the loss of employment and economic
activity, there are a variety of indications that these programs have
helped to cushion the impact.  However, in some cases, it is too soon
to tell what the ultimate impact will be. 

To help communities to successfully transform closing bases into new
opportunities, federal agencies provided over $780 million in direct
financial assistance to areas affected by the 1988, 1991, and 1993
BRAC rounds.  This assistance was in numerous forms--planning
assistance to help communities determine how they could best develop
the property, training grants to provide the workforce with new
skills, and grants to improve the infrastructure on bases.  DOD
estimates that civilian reuse of former bases has created over 30,000
new jobs.  For example, state prison facilities and small
manufacturing companies will replace 900 defense civilian jobs at
Chase Naval Air Station, Beeville, Texas, with 1,500 new jobs. 

Several programs and benefits have also been available to assist DOD
employees in adjusting to base closures.  For example, through the
priority placement program, many DOD employees found jobs in other
defense and government activities.  In another program, homeowners'
assistance, DOD has offered to buy workers' homes if they cannot be
sold or to provide compensation for some property value losses.  In
addition, federal, state, and local governments provide other types
of assistance, such as unemployment insurance payments and job
training, to employees affected by base closures. 

DOD projections show that BRAC will have a very small impact on the
total U.S.  workforce.  DOD estimates that BRAC actions will result
in the loss of about 107,000 defense civilian jobs over approximately
a 12-year period, thus ameliorating the economic effects of the job
losses in the short term.  While thousands of DOD civilian employees
have or will be adversely affected by BRAC actions, about 23,000 of
these employees have already found other employment through DOD's
priority placement program.  However, some of these placements may
have required the employees to relocate to a job outside the
community.  Employees who looked for jobs in their commuting area may
have had to accept jobs with lower incomes. 

Base closures also have an indirect impact on jobs in a local
community due to the decline of economic activity from the
installation and defense personnel who leave the community.  In a
1996 RAND report on the effects of military base closures on three
local communities, RAND concluded that "while some of the communities
did indeed suffer, the effects were not catastrophic (and) not nearly
as severe as forecasted."\17 RAND's analysis showed that the burden
of defense cutbacks such as base closures tended to fall more on
individuals and companies rather than on the community.  For example,
a base with large civilian employment might displace many workers,
but the overall unemployment rate of the community might remain
relatively stable.  According to the study, the effects on the local
community were especially cushioned when a base was near or within a
metropolitan area because the large economy absorbs any job loss or
economic impact.  RAND found, like others, that the impact on
nonurban communities could be greater than on urban communities. 
However, it demonstrated that economies of all types of communities
can also be affected by longer term patterns of population and
economic growth; the redirection of retirees' retail and medical
expenditures from the base to the local community; and the withdrawal
of working spouses from the local labor market, freeing up jobs for
local citizens. 

In a June 1996 report, the Congressional Research Service (CRS)
analyzed employment level data and found that 33 of 163 localities
affected by BRAC actions had unemployment rates of 5.9 percent or
more in May 1995.\18 However, a majority of the localities had
unemployment rates that were near to or well below the U.S.  rate of
5.7 percent.  Of the 33 localities, 22 were concentrated in three
states:  California (14 localities), Louisiana
(5 localities), and Texas (3 localities).  CRS concluded from its
analysis that most communities affected by BRAC actions from any one
of the BRAC rounds "have a relatively low degree of economic
vulnerability to job losses that are estimated to result from these
actions." CRS also analyzed the effect of the 1995 round on state
employment rates and concluded that the 1995 round would have little
effect on the employment levels in the
22 affected states, with job losses amounting to 0.4 percent or less
of total state jobs. 


--------------------
\17 The Effects of Military Base Closures on Local Communities:  A
Short-Term Perspective, RAND National Defense Research Institute,
1996.  The report used a case study approach to examine the impact on
nearby communities of three base closures in California; George Air
Force Base, Fort Ord, and Castle Air Force Base.  We did not
independently test the validity of the study results. 

\18 Military Base Closures Since 1988:  Status and Employment Changes
at the Community and State Level, CRS, June 17, 1996.  We did not
independently test the accuracy of the data. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 2:3

The experience from the past BRAC rounds has raised concerns about
the amount of actual savings from base closures and the impact of
closures on communities.  However, available data indicate that
savings from BRAC should be substantial.  At the same time, precisely
quantifying actual savings is difficult for a variety of reasons, and
questions remain about the overall accuracy of DOD's estimates. 
Since DOD's accounting systems do not track savings, updating the
savings estimates requires some effort on the part of DOD components. 
We have found that the savings estimates were not always updated and
that guidance for estimating and updating the savings estimates has
been insufficient.  In some cases, certain cost elements affecting
the savings estimates have not been updated to reflect significant
changes that have occurred as implementation proceeds.  Such changes
could increase or decrease the amount of expected savings and need to
be identified since DOD is relying on savings from BRAC to free up
funds for other defense areas.  Improved guidance on estimating
savings could benefit current efforts to track savings from previous
rounds and will likely be important should there be future rounds. 
However, we also found difficulties in estimating and fully capturing
some savings from BRAC, suggesting that despite the need for greater
emphasis on capturing and updating savings, some level of imprecision
is likely to continue. 

A significant up-front cost of base closures is environmental cleanup
of base property.  Though DOD has taken several steps to facilitate
progress in cleaning up property on closing bases, more improvement
is needed from all participants in the cleanup process.  DOD,
Congress, regulators, and communities will need to continue working
together to find cost-effective solutions to environmental
restoration of closing bases, recognizing that some trade-offs among
cost, reuse, and time may be necessary. 

Though the closing of a base can be a traumatic event to any
community, early studies and experience provide examples of
communities that are recovering from the economic impact and loss of
jobs.  The federal government provides several forms of assistance to
affected communities, and bases are being successfully reused. 


   RECOMMENDATION
---------------------------------------------------------- Chapter 2:4

Whether or not Congress authorizes future BRAC rounds, DOD needs to
improve its periodic updating and reporting of savings projected from
prior BRAC decisions.  This information is needed to strengthen DOD's
budgeting process and ensure that correct assumptions are being made
regarding expected reductions in base operating costs.  Accordingly,
we recommend that the Secretary of Defense provide guidance to ensure
that its components have and follow a clear and consistent process
for updating savings estimates associated with prior BRAC decisions. 


AUTHORIZING LEGISLATION NEEDED IF
FUTURE BRAC ROUNDS ARE TO BE HELD
============================================================ Chapter 3

Special enabling legislation used in the three most recent BRAC
rounds expired at the end of 1995.  Should the need to authorize one
or more additional rounds in the future arise, similar legislation
would be needed.  Questions would likely be raised concerning the use
of and changes to the previous legislative authority, the number of
rounds to be authorized, and the timing for such rounds.  It is
unclear how legislation dealing with the consolidation and
restructuring of DOD's laboratories and test facilities would relate
to any new BRAC legislation. 


   1990 LEGISLATION PROVIDES AN
   EFFECTIVE MODEL FOR FUTURE BRAC
   ROUNDS
---------------------------------------------------------- Chapter 3:1

The Defense Base Closure and Realignment Act of 1990, as amended,
authorized the Secretary of Defense, with the approval of the
President and Congress, to close and realign military bases and
dispose of excess property as determined during the three most recent
BRAC rounds.  Many individuals who participated in the BRAC process,
including officials from OSD, the services, and the 1995 Commission,
widely agreed that the 1990 legislation, as amended, provided a sound
framework for closing and realigning bases.  Some individuals
expressed concern over the role of politics in the process.  We
recognize that no public policy process, especially one as open as
BRAC, can be completely removed from the U.S.  political system.  The
process has several checks and balances to keep political influences
to a minimum, but the success of these provisions requires that all
participants of the process adhere to the rules and procedures. 

Key elements of the legislation that address historic concerns about
the fairness and objectivity of the base closing process include

  -- selection criteria for identifying candidates for closure and
     realignment that are made available for public comment;

  -- an independent commission to review DOD's proposed closures and
     alignments and finalize a list of proposed closures and
     realignments to be presented to the President and, subject to
     the President's approval, to Congress;

  -- requirement for the BRAC Commission to hold public hearings;

  -- data certified as to their accuracy;

  -- imposition of specific time frames for completing specific
     portions of the process;

  -- requirement for the President and Congress to accept or reject
     the Commission's recommendations in their entirety; and

  -- an external audit of the BRAC process. 

Although DOD and other officials agreed that the legislation should
serve as a model for additional rounds, some believed the time lines
mandated by the legislation were tight.  The process began when the
Secretary of Defense made recommendations for base closure and
realignments to the BRAC Commission.  The Commission proposed
additions and deletions to the Secretary's recommendations and then
submitted its analysis of the Secretary's recommendations along with
its own recommendations to the President, who transmitted the
approved recommended list to Congress.  These milestone dates
occurred within 6 months.  The time lines for each step of the
process were tight to force the participants at each stage to pass on
their decisions to the next group of decisionmakers.  Though some
officials told us that they could have used more time for analysis,
most agreed the time lines should be tight because they kept the
process moving and helped force decisions. 


   ISSUES TO CONSIDER IN ENACTING
   FUTURE BRAC LEGISLATION
---------------------------------------------------------- Chapter 3:2

Consideration of new BRAC legislation would include determining how
many rounds to authorize, when the future round(s) would be held, and
how much lead time would be required to undertake a BRAC round. 


      HOW MANY ADDITIONAL ROUNDS
      ARE NEEDED? 
-------------------------------------------------------- Chapter 3:2.1

We received various comments about the number of future BRAC rounds
that might be needed.  For example, the Defense Science Board's 1996
summer study, published in November 1996, noted that there is still
considerable excess base capacity in DOD.  It suggested three
additional rounds of base closures, one every other year.  The May
1997 report of the QDR recommended two additional BRAC rounds:  one
in 1999 and another in 2001. 

Some individuals suggested that efforts should be made to accomplish
additional base closures with one additional BRAC round, but some
suggested that more than one might be needed because closing all of
the excess bases in one round might be cost prohibitive.  In our 1995
report to Congress and the BRAC Commission concerning the Secretary
of Defense's recommendations for closures and realignments, we
reported that the high up-front cost of closures was a factor in some
bases not being recommended for closure in that round.\1 The extent
to which this would be the case in future BRAC rounds could be
dependent on the willingness of DOD, and Congress, to make the
up-front investment needed to close unneeded military bases.\2

Some officials suggested that current efforts within DOD and the
services to outsource, privatize, and consolidate certain functions
and activities could help reduce infrastructure requirements,
indicating even more need for base closures.  To what extent and how
quickly these efforts will identify or produce additional excess
capacity remain to be seen.  Privatization and outsourcing are
expected to take place over the next several years, and the results
will likely not be fully known for inclusion in any additional base
closure action taken within the next few years. 

One DOD official said that whether or not another BRAC round is held
in the near term, a BRAC effort might be needed within the next 10 to
15 years based on developments in advanced weapon systems that could
provide the United States with much greater war-fighting capabilities
and lead to changes in DOD's force and infrastructure requirements. 
Such developments suggest that more than one BRAC round might be
needed in the future.  Views varied whether more than one round
should be authorized at a time.  One official said that if more than
one BRAC round is necessary, only one round should be authorized at a
time because DOD should be required to validate the need for a BRAC
round each time and maximize its results.  Another official suggested
that multiple rounds should be authorized, if possible, because
congressional willingness to authorize additional rounds would
decrease over time.  This official noted that subsequent rounds could
be canceled if OSD leadership later determined they were not needed. 
The National Defense Panel, in its May 15, 1997, endorsement of the
Secretary's plan to request authority for two additional BRAC rounds,
also stipulated that permanent BRAC authority would be most desirable
to facilitate adjustments in the base structure as needs and forces
change. 

Our own experience with the BRAC process and assessment of the
situation cause us to believe that if future BRAC rounds are
considered, the maximum number of closures should be accomplished in
the fewest rounds possible to minimize the (1) anxiety and turmoil
associated with the BRAC process and (2) potential investment costs
at installations that might be closed in the future.  Such
investments could occur as DOD continues its efforts to revitalize
its facilities, such as new housing programs in which DOD is looking
to leverage private sector resources. 


--------------------
\1 Military Bases:  Analysis of DOD's 1995 Process and
Recommendations for Closure and Realignment (GAO/NSIAD-95-133, Apr. 
14, 1995). 

\2 The up-front investments include the costs of environmental
cleanup, relocation, and military construction at the receiving
sites.  See chapter 2 for more information on BRAC closure costs. 


      WHEN SHOULD FUTURE ROUNDS BE
      HELD? 
-------------------------------------------------------- Chapter 3:2.2

The 1995 BRAC Commission noted that in 1995 the Secretary of Defense
suggested the need for an additional round of closures and
realignments in 3 to 4 years, after DOD had absorbed the effects of
the closures and realignments from the 1995 and earlier rounds.  The
Commission noted that DOD would be implementing the closures and
realignments of the 1995 and prior BRAC rounds through the end of
this decade and possibly to 2001, the end of the statutory period
authorized for completing closures from the 1995 round.  Thus, it
recommended that Congress authorize another base closure commission
similar to the prior commissions for 2001.  Others, including some
congressional members, have stated that future BRAC rounds should not
be held until DOD has had time to implement decisions of prior
rounds.  As already noted, the May 1997 QDR report recommended BRAC
rounds in 1999 and 2001. 

That some view additional BRAC actions as a pressing need is seen in
the recommendation of the Defense Science Board's 1996 summer study: 
it suggested that three additional BRAC rounds be held--in 1997,
1999, and 2001.  However, given the lengthy time frames required to
initiate and execute a BRAC round, as indicated in chapter 1 and
appendix I, 1999 would appear to be the earliest practical date for
any future BRAC round.  Several officials suggested that any future
BRAC round should not be held in an election year because of
political concerns that can arise during the BRAC process.  Based on
our experience with the BRAC process, we agree.  Given that
congressional or presidential elections will be held in 1998 and
2000, those would be less desirable years in which to hold a BRAC
round and finalize BRAC decisions.  Thus, 1999 or 2001 is the most
practical date for future BRAC rounds, although 1999 might be
difficult from a planning standpoint, particularly if the intent is
to maximize reductions with just one additional BRAC round. 


      HOW SOON WOULD AUTHORIZING
      LEGISLATION BE NEEDED? 
-------------------------------------------------------- Chapter 3:2.3

Given the history of previous BRAC rounds, at least 12 to 18 months
advance planning time, if not longer, would be needed to plan for a
future BRAC round.  While the time frames specified by the
legislation for decision-making during a BRAC round are compressed
into a 6-month period, much greater advance working time is required
to provide policy guidance, establish BRAC decision-making
organizations within the services and defense agencies (otherwise
referred to as DOD components), and begin the process of identifying
candidate bases to be studied for potential closure and realignment. 
Thus, the actual decision-making process can take between 18 months
and 2 years.  (See app.  I for a summary of the BRAC decision-making
process, including key legislative requirements associated with the
1990 act.)

For a BRAC round to be held in 1999, legislation should be enacted
during the 1997 legislative session.  The need for early action on
legislation before a future BRAC round is underscored by the fact
that, unlike recent BRAC rounds, the termination of recent BRAC
authority resulted in a complete shut down of the BRAC Commission
organization and termination of staff who had been kept in place
between recent BRAC rounds.  Likewise, many staff in DOD and the
services who provided continuity from one BRAC round to another have
moved on to other work or retired.  Therefore, it is uncertain to
what extent future BRAC rounds will benefit from the experience and
knowledge of many of the past BRAC participants. 

The loss of institutional knowledge and experience in the BRAC
process, particularly within DOD and the services, could marginally
add to the lead time required to prepare for a future BRAC round. 
This situation, along with the normal lead time required to initiate
a BRAC program, will need to be considered in authorizing any future
BRAC round. 


   RELATIONSHIP OF BRAC TO OTHER
   POTENTIAL LEGISLATION FOR
   RESTRUCTURING LABORATORIES AND
   TEST FACILITIES
---------------------------------------------------------- Chapter 3:3

One related situation that might need to be addressed in the realm of
new BRAC legislation is the possible relationship between new BRAC
authority and DOD's plans for implementing section 277 of the
National Defense Authorization Act for Fiscal Year 1996.  This
section directed the Secretary of Defense to develop a 5-year plan to
consolidate, restructure, and revitalize DOD's laboratories and test
and evaluation centers.  The Secretary is to specify the actions
needed to consolidate the laboratories and centers into as few
facilities as practical and possible, by October 1, 2005. 

DOD's 1996 Vision 21 report to the President and Congress summarizes
reductions made in DOD laboratory and center infrastructure through
the BRAC processes and outlines how DOD will develop a detailed plan
for the laboratories and centers for the 21st century by July 1998.\3
One option in the report is to reduce the laboratory and test and
evaluation infrastructure each by at least 20 percent.  It remains to
be seen if this option will result in the (1) consolidation of
organizations and operations on an intraservice or interservice basis
and (2) elimination of enough excess capacity so that additional
facilities can be closed.  A Vision 21 study team is developing a
questionnaire to collect data for the analysis of facilities that
will be used as a basis for decision-making.  However, given the
limited success of similar studies in the past, including BRAC 1995,
we question whether service officials, operating on their own, will
be able to agree on large-scale consolidations, restructuring, and
interservicing.  This issue is further discussed in chapter 4. 

Section 277 also stipulated that in developing a plan for
restructuring these facilities, DOD should identify any legislation
needed to accomplish the effort.  The May 1997 QDR report noted that
DOD would seek authority for two additional BRAC rounds and for the
restructuring of laboratories, research, development, and test
facilities.  It did not stipulate to what extent separate legislative
provisions, apart from BRAC authority, might be sought for these
facilities or to what extent they would be studied apart from the
traditional BRAC process.\4 It should be noted, however, some of
these facilities are collocated with other mission functions on given
installations.  Also, given the large land areas associated with some
test ranges, the potential for single or joint use of some of these
facilities by combat forces and testing organizations could be
considered, thereby providing expanded training capabilities and
greater efficiencies in base operating costs; this, in turn, could
result in a base closure elsewhere.  Thus, even if a separate study
process is used to examine consolidation and restructuring of
laboratories, research, development, and test facilities, the BRAC
process would appear to be the most appropriate process to consider
closing or realigning bases on which these functions reside. 


--------------------
\3 Report to the Congress:  Vision 21, The Plan for 21st Century
Laboratories and Test and Evaluation Centers of the Department of
Defense, April 30, 1996. 

\4 We are reviewing successful laboratory consolidations undertaken
by the federal government, the private sector, and a foreign
government agency that resulted in cost savings or more efficient
operations, with a view toward identifying applications to the U.S. 
government. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 3:4

Officials we contacted generally told us that the 1990 legislation
provided a sound framework for closing and realigning military bases. 
If future legislation is considered, DOD and Congress will need to
address how many rounds to authorize and when to hold them.  Various
views have been expressed concerning the number and timing of BRAC
rounds.  Ideally, any future legislation should try to minimize the
anxiety and turmoil associated with the BRAC process by maximizing
results in the fewest number of rounds.  These goals will have to be
balanced by budget and planning realities, recognizing that closure
rounds may also need to coincide with force structure changes and
budget constraints.  The timing of future rounds should reflect (1)
the past practice of avoiding rounds during election years and (2)
the lead time needed for DOD and the Commission to organize and
educate a new group of people.  Finally, future BRAC rounds might
have to incorporate other initiatives such as the consolidation of
laboratories and test and evaluation facilities mandated by section
277. 


   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
---------------------------------------------------------- Chapter 3:5

If Congress considers legislation for future BRAC round(s), it may
wish to (1) model it on the 1990 BRAC legislation as a starting
point, (2) pass such legislation early to allow the lead time needed
for DOD and the Commission to organize their processes, and (3)
consider the relationship between new BRAC authority and section 277
of the National Defense Authorization Act for Fiscal Year 1996
pertaining to laboratories and test and evaluation facilities. 


STEPS DOD CAN TAKE TO ENHANCE
DECISION-MAKING SHOULD THERE BE
FUTURE BRAC ROUNDS
============================================================ Chapter 4

The 1990 BRAC legislation and the processes for executing that
legislation established a strong, workable process for BRAC
decision-making.  Even so, DOD and its components improved their
processes during each round to overcome shortcomings.  If Congress
authorizes future BRAC rounds, DOD and its components will have the
opportunity to further improve their processes.  The greatest
improvement, however, will require strong OSD leadership to resolve
important policy issues before any future BRAC rounds. 


   SUCCESS WILL DEPEND ON
   RESOLUTION OF KEY ISSUES BEFORE
   FUTURE BRAC ROUNDS
---------------------------------------------------------- Chapter 4:1

In prior rounds, the Secretary of Defense's list of bases recommended
for closure and realignment was little more than a collection of the
lists the services submitted to him.  Although large amounts of
excess capacity were identified DOD-wide, especially in the support
functions, each service resisted moving its work to the other
services' facilities.  While the BRAC process dealt with basing
decisions effectively, it did not provide an effective forum for
resolving cross-service policy issues.  Officials said that the
success of any future BRAC round would depend on stronger leadership
by the Secretary of Defense to address key policy issues before the
round begins. 

In the 1993 round, OSD directed the services to prepare integrated
proposals, with cross-service inputs, to streamline DOD depot
maintenance activities and increase efficiency.\1

Each service was to identify its excess maintenance capacity, and
each was assigned lead responsibility for a specific maintenance
area.  However, as noted in our report on the 1993 BRAC process, no
BRAC recommendations resulted from these efforts.  According to
several service officials at that time, the services had difficulty
overcoming their narrow view of their own depots; thus, a general
consensus could not be reached, especially on issues pertaining to
estimating costs.  Also, the short time frame within which the
services had to complete their work impeded this cross-servicing
effort.\2

For the 1995 BRAC round, OSD again required the services to explore
opportunities for the cross-service use of common support assets in
the areas of (1) maintenance depots, (2) laboratories, (3) test and
evaluation facilities, (4) undergraduate pilot training, and (5)
medical treatment facilities.  To facilitate this process, DOD
established separate cross-service working groups in each of these
areas that complemented the BRAC review organizations operating
within each of the services.  The groups were supposed to propose
alternatives for the services to consider.  Although these groups
identified large amounts of excess capacity across DOD, few
facilities were closed, and the services' final recommendations for
closures and realignments in these areas moved very little work from
one service's facilities to another. 

Officials indicated that, in retrospect, the cross-service groups had
little impact on service decisions in the 1995 round for several
reasons.  First, key policy decisions that could drive
decision-making had not been made in advance.  For example, executive
agents for specific functions were not designated nor were joint or
lead-service responsibilities assigned.  Second, the groups provided
their proposals late in the process, when the services were
completing analyses of their own installations.  Finally, the
services continued to differ about how to assess and compare their
facilities. 

An overarching concern of participants in the process was that OSD
provided insufficient leadership to bring about the services'
agreement to share assets, consolidate workloads, or reduce excess
capacity in common support functions--decisions that the services,
because of their individual, parochial interests, could or would not
make.  Service officials said that if further BRAC rounds occur,
up-front decisions must be made about which service(s) will be
responsible for which functions.  They said that service parochialism
remains such that the Secretary of Defense must make the tough
decisions, not the services.  We believe the Secretary's Task Force
on Defense Reform, in conjunction with the QDR and its National
Defense Panel, could help resolve some of the organizational and
policy issues that would contribute to the success of future rounds
of base closures, should Congress authorize them. 

In his May 19, 1997, report to Congress on the QDR, the Secretary
asked Congress to authorize domestic base closure rounds in 1999 and
2001.  On May 15, 1997, the Secretary announced that he had
established a high-level Task Force on Defense Reform to go beyond
the recommendations of the QDR and develop a blueprint for further
streamlining and reforming DOD's organizations and procedures.  The
Task Force is to report to the Secretary by November 30, 1997, and is
to recommend organizational reforms, reductions in management
overhead, and streamlined business practices.  It will focus on OSD,
the defense agencies, DOD field activities, and the military
departments.  One goal of the Task Force is to eliminate unneeded
organizations, functions, and personnel.  The Task Force is to work
closely with the National Defense Panel, an independent,
congressionally mandated review board that will assess the
Quadrennial Defense Review. 

Opportunities for future cross-service cooperation and consolidation
include, and extend beyond, the five support functions considered in
BRAC 1995.  The following examples illustrate the types of actions
that could result in reduced excess capacity, minimized support
costs, and the success of future BRAC rounds, if made in advance of
the round. 

  -- Decide what lead responsibilities will be assigned to each
     service in cross-service areas, such as depot maintenance,
     training, and medical facilities, and what operational
     responsibilities will be assigned to a joint or OSD-led agency. 

  -- Determine to what extent (1) DOD medical infrastructure is
     needed to meet war-fighting requirements and (2) capacity
     exceeding those requirements will be retained for use by
     military dependents and retirees. 

  -- Determine what core support work needs to be done in house. 

  -- Determine to what extent OSD and the Joint Chiefs of Staff will
     emphasize joint basing in the future as they increase joint
     training and operations. 

  -- Assess the potential for the increased sharing of bases on an
     interservice or intraservice basis to maximize the use of
     available training ranges and other facilities. 

  -- Determine, to the extent practical, whether (1) overseas basing
     is likely to continue at the current level or be reduced and (2)
     contingent capacity for basing in the United States needs to be
     retained. 

  -- Ensure that each service has fully assessed the potential for
     organizational restructuring and realignments in light of recent
     force structure reductions and changes. 


--------------------
\1 A Joint Chiefs of Staff Executive Working Group's study of DOD
maintenance depots concluded then that the depots had between 25 and
50 percent excess capacity and that the service depots had
unnecessary duplication.  Our recent work indicates that, based on
maximum potential capacity measurements, and considering funding and
workload reductions that have occurred in recent years, DOD is
expected to still have excess depot capacity of about 50 percent in
fiscal year 1999.  (See Defense Depot Maintenance:  Uncertainties and
Challenges DOD Faces in Restructuring Its Depot Maintenance Program,
GAO/T-NSIAD-97-111, Mar.  18, 1997). 

\2 Military Bases:  Analysis of DOD's Recommendations and Selection
Process for Closures and Realignments (GAO/NSIAD-93-173, Apr.  15,
1993). 


   IMPROVEMENTS WARRANTED IN OTHER
   ASPECTS OF DOD'S PROCESS FOR
   IDENTIFYING BASES FOR CLOSURE
---------------------------------------------------------- Chapter 4:2

As indicated in chapter 2, the officials we interviewed said the
basic framework for BRAC rounds outlined in the 1990 legislation
should not be changed.  They also said the eight criteria used for
BRAC decision-making and the priority given to military value in
selecting bases for closure and realignment had served the process
well and should be retained.  A former BRAC commissioner noted that
one of the key elements of the BRAC process has been its consistency
over time.  But several officials believed the way in which some of
the criteria were used in the decision-making process could be
improved.  For example, DOD could improve the COBRA model, the
questionnaires for collecting data from bases, and audit access. 


      SOUNDNESS OF CRITERIA
-------------------------------------------------------- Chapter 4:2.1

The 1990 BRAC legislation required that the Secretary of Defense
publish in the Federal Register the selection criteria proposed by
DOD in making recommendations for closure and realignment and provide
the opportunity for public comment.  The eight criteria adopted by
DOD for the 1991 BRAC round were not changed in the two succeeding
rounds.  The first four criteria provided DOD's assessment of
military value and were given the greatest weight in the BRAC
selection process.\3 The remaining four criteria dealt with return on
investment (when accrued savings would outweigh cost of closure),
environmental and economic impacts, and the ability of both existing
and potential receiving communities' infrastructures to support
forces, missions, and personnel. 


--------------------
\3 Only the Air Force included the fifth criteria, return on
investment (including cost of closure), in its initial analysis of
its bases and did not establish a distinct military value for its
bases.  This and other factors noted in our 1995 report contributed
to a lack of clarity in the Air Force's BRAC decision-making process. 


      SUGGESTIONS FOR
      STRENGTHENING HOW THE
      CRITERIA ARE USED FOR MAKING
      DECISIONS
-------------------------------------------------------- Chapter 4:2.2

While most officials we contacted said the eight BRAC criteria should
be retained, some identified ways to improve how DOD and its
components used the criteria for decision-making.  They were
particularly concerned with the high costs of environmental
restoration (criteria 8) and the exclusion of these costs from BRAC
decision-making.\4

Some noted that high closing costs in general were an impediment to
more closures in the 1995 round and said that those costs, as well as
environmental restoration costs, could be even more problematic in
the future.  Likewise, the 1995 report of the BRAC Commission
recognized continuing concerns about the exclusion of environmental
restoration costs and recommended that the policy be reviewed for any
future base closures.  On the other hand, several officials we
interviewed pointed out the difficulty of determining the full cost
of environmental restoration before completing detailed remediation
studies.  There is no consensus on this issue.  One official
suggested DOD include the estimated cost of accelerated or unique
environmental restoration costs, to the extent known during the
decision-making stage of the process, in its COBRA calculations. 

Despite significant DOD efforts to improve the COBRA model during
previous BRAC rounds, several officials pointed out shortcomings
during the 1995 round.\5 The 1995 BRAC Commission's report noted that
even after four rounds, the services still differed about how to use
the COBRA model to estimate savings and costs in areas like
personnel, moving costs, and locality pay.  Since the model was used
to make comparisons between bases, greater consistency in its
application was an issue to BRAC Commission personnel and others who
examined BRAC issues on a cross-service basis.  Some officials
suggested that if there are future rounds, DOD and the services
should begin working in advance to enhance the completeness and
consistency of COBRA cost factors and analyses within and among DOD's
components, to the extent practical.  Some recognized that given the
nature and time frames of the BRAC decision-making process, it was
not likely that the COBRA model, or any other model, would provide
budget quality data before closure decisions are finalized. 

Another cost-related issue of some concern involved DOD's and the
1995 BRAC Commission's use of a discount rate to calculate the
present worth of future savings, known as the net present value.  The
1995 BRAC Commission expressed concern with DOD's use of a yearly
revised discount rate, preferring a standardized rate that could be
used to compare projected net savings in each round.  In 1991, DOD
used a 10-percent discount rate; in 1993, a 7-percent rate; and in
1995, a 2.75-percent rate.  The lower the discount rate, the greater
the net present value of savings.\6 Our April 1995 report on DOD's
BRAC 1995 round noted that DOD had used a discount rate tied to the
U.S.  Treasury's borrowing rate--an approach that we and others
considered appropriate for analyzing programs in which a given
objective is to be achieved at the lowest cost.  At that time, most
preliminary BRAC 1995 COBRA analyses were done by DOD components, and
the discount rate was 2.75 percent for 20-year programs.  That rate
was revised by the Office of Management and Budget to 4.85 percent
about a month before the Secretary announced the bases recommended
for closure and realignment.  However, DOD did not change its COBRA
analyses to use the revised discount rate, nor did the BRAC
Commission use the revised rate in its subsequent analyses.  If in
any future rounds DOD plans to use a discount rate, we believe that
the U.S.  Treasury's borrowing rate is an appropriate one to use, but
its use should be tied to the currently approved rate.  The value of
using a real-world discount rate that reflects the current cost to
the government of borrowing could be lost if discount rates were
artificially set simply for the purpose of equal comparisons among
BRAC rounds. 

Some individuals suggested that DOD and its components, in comparing
commercial and industrial-type facilities, should emphasize the cost
of doing business.  In examining the history of BRAC, we found that
this issue had been raised in discussions within DOD in earlier BRAC
rounds.  DOD believed that the cost of doing business may be more
important for industrial-type activities than for operational bases
but that decisions to close or realign industrial activities must be
based on an activity's ability to contribute to defense missions and
readiness capabilities.  In the 1995 round, DOD considered issuing
policy guidance emphasizing that the cost of doing business is an
important part of military value for industrial activities and that
it should be examined under the fourth criteria, which is "cost and
manpower implications."


--------------------
\4 Environmental restoration cost is a separate issue from
environmental impact, which is included in the eight BRAC criteria. 
The environmental impact criterion required that the components
consider the impact of BRAC actions on such environmental issues as
threatened or endangered species, wetlands, flood plains, water
supplies, and air quality, it did not deal with the issue of the cost
of environmental restoration. 

\5 See Military Bases:  Analysis of DOD's 1995 Process and
Recommendations for Closure and Realignment (GAO/NSIAD-95-133, Apr. 
14, 1995) for a summary of efforts to improve the COBRA model prior
to the 1995 round. 

\6 Our 1995 report on DOD's recommendations for base closures noted
that the 20-year net present value on projected savings from the
Secretary's proposals was nearly $22 billion using a 2.75-percent
discount rate; conversely, the savings would be approximately $17
billion using a 4.85-percent discount rate. 


      DATA GATHERING AND ANALYSIS
-------------------------------------------------------- Chapter 4:2.3

A number of officials commented on the lengthy data requests that
bases had to respond to in conjunction with DOD components'
assessments of their bases.  While some saw this as a growing burden
and questioned to what extent all of the data were actually used in
decision-making, others saw benefits in having the extensive data to
fully assess individual bases.  Some also saw a benefit in having
consistent data requests and analyses from one round to the next.  No
clear consensus for any change seemed to emerge other than that prior
BRAC rounds had eliminated all but the best bases and that
distinguishing between individual bases could become increasingly
difficult in future rounds.  The implications were that a few
characteristics could be key to distinguishing between some bases in
the future and should be kept in mind by the components in developing
their data calls. 

Several officials we interviewed also noted that in BRAC 1995 some
bases had to respond to data requests from a cross-service group as
well as to data requests from their service headquarters.  This was
an extra burden and could be avoided if cross-service reviews were
completed before the services' BRAC processes began. 


      AUDIT COVERAGE
-------------------------------------------------------- Chapter 4:2.4

The 1990 BRAC legislation required that we provide the BRAC
Commission and Congress a detailed analysis of the Secretary of
Defense's recommendations and selection process.  The service audit
agencies and, in BRAC 1995, the DOD IG were also extensively involved
in auditing the process to better ensure the accuracy of data used in
decision-making and enhance the overall integrity of the process.  In
most instances, service audit agencies and the DOD IG made
assessments of special cost or analytical models used in
decision-making and verified data entries and output pertaining to
these models.  They referred errors to the components on a real-time
basis to ensure needed corrections were made.  In most cases, we
provided broader monitoring of the process and reviewed and assessed
the results of the audit agencies' work.  In selected instances, we
observed the work of the audit agencies in making their assessments. 
Originally, our report was to be completed within 30 days of the date
of the Secretary of Defense's making public the list of bases
recommended for closure and realignment; the legislation as amended,
gave us 45 days to complete our report on the 1995 BRAC round. 

The tight time frames under which we operated required that we have
access to the BRAC decision-making processes as they were unfolding
within DOD and the services, rather than after the Secretary had
submitted his recommendations to the Commission.  Accordingly, we
monitored the process for nearly a year before the Secretary
submitted his proposals to the 1995 Commission and made a more
detailed analysis once the list was finalized.  We also coordinated
with the service audit agencies and the DOD IG, which audited the
individual components' data gathering and analysis processes.  Our
broader, DOD-wide focus allowed us to compare and contrast processes
the components used and to identify potential problem areas while the
processes were still underway and resolution was most needed. 

DOD and its components granted us varying degrees of access to their
processes.  For example, the Defense Logistics Agency, which
encountered problems in the 1993 round, invited us to monitor all
phases of its decision-making process in 1995, including
executive-level sessions at which BRAC issues were discussed and
decisions made.  This greatly facilitated our ability to monitor the
process as it was unfolding and provided us with opportunities to
address issues and potential problem areas during the process. 
Somewhat less, but reasonable, levels of access were granted by other
DOD components, except for the Air Force.  The Air Force granted very
limited direct access to its process until after the Secretary of
Defense announced his recommendations on
February 28, 1995.  This limited our ability to fully assess the Air
Force's process.\7 If we are to play a monitoring role in any future
BRAC round, this issue needs to be addressed. 


--------------------
\7 Several officials noted that the transparency of BRAC
decision-making was less clear in the Air Force than in the other DOD
components.  This and other factors raised many questions about the
openness and objectivity of the Air Force's process and heightened
concerns about politicization of the BRAC process in 1995. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 4:3

If there are future BRAC rounds, as requested by the Secretary of
Defense on May 19, 1997, DOD can improve its process for deciding
which bases to recommend for closure and realignment.  Most
importantly, DOD must resolve certain policy issues in advance to
ensure the success of a future BRAC round.  In particular, the
services must share assets, consolidate workloads, and reduce excess
capacity in common support functions; up-front decisions must be made
about which service(s) will be responsible for which functions; and
the services must fully assess the potential for organizational
restructuring in view of recent force structure reductions. 
Resolution of these and other issues requires strong, decisive
leadership by the Secretary of Defense.  We believe the Secretary's
Task Force on Defense Reform, in conjunction with the Quadrennial
Defense Review and its National Defense Panel, could help the
Secretary deal with these issues. 

Other improvements to DOD's BRAC decision-making processes are also
desirable, should legislation be enacted authorizing one or more
future BRAC rounds.  Several steps could be taken to more fully and
consistently capture costs and savings associated with BRAC options
being considered.  These include clear and timely policy guidance and
early joint-service efforts to improve the COBRA model and any other
BRAC decision-making tools and to ensure more consistency among the
services in applying these tools and the BRAC criteria.  In
particular, the Air Force needs to improve the clarity and visibility
of its BRAC decision-making process. 

Given DOD's obligation to clean up bases whether they are closed or
not and the difficulty of determining the cost of environmental
restoration before completing detailed remediation studies, we
continue to believe that this is not a cost of closure and should not
be included as a factor in deciding which bases to close.  However,
to the extent there are marginal costs associated with expedited
cleanup resulting from BRAC closures, DOD may want to examine the
feasibility of including these costs in its costs and savings
analyses.  If there are future BRAC rounds, we believe DOD and the
BRAC Commission should use the discount rate tied to the U.S. 
Treasury's borrowing rate to calculate the present worth of future
savings, known as the net present value.  Finally, if we are to play
a monitoring role in any future BRAC round, we must have full access
to all parts of DOD's BRAC processes. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 4:4

If Congress authorizes future BRAC rounds, we recommend that the
Secretary of Defense

  -- work with the Task Force on Defense Reform and the National
     Defense Panel to address, in advance of any future BRAC round,
     the important organizational and policy issues in the various
     cross-service areas discussed in this chapter to facilitate the
     process of making further infrastructure reductions;

  -- convene a DOD joint working group, as soon as practical, to
     develop policy guidance, improve BRAC processes and
     decision-making tools, and ensure greater consistency among the
     services' processes;

  -- use the current discount rate tied to the U.S.  Treasury's
     borrowing rate to calculate the net present value of BRAC
     savings estimates; and

  -- ensure full audit access to all parts of DOD's BRAC process. 


THE BASE REALIGNMENT AND CLOSURE
PROCESS
=========================================================== Appendix I

The Department of Defense's (DOD) recent base realignment and closure
(BRAC) rounds in 1991, 1993, and 1995 have typically taken at least
1-1/2 years from the time DOD initiated the process until the time
expired in which Congress approved the recommendations.  Under this
process, services and defense agencies, acting on DOD guidance,
evaluate their bases, identify candidates for closure and submit
their recommendations to the Secretary of Defense who, after
reviewing the recommendations, submits a consolidated list of
recommendations to the BRAC Commission.  The Commission reviews the
Secretary's list and may add bases for closure consideration or
delete bases from the Secretary's recommendations.  After completing
its analysis and holding public hearings related to the proposed
closures, the Commission adopts a list of proposed closures that are
forwarded to the President who may either accept the recommendations
in their entirety or reject the recommendations, in whole or in part,
and provide the Commission and Congress the reasons for that
disapproval.  If the President disapproves any of the
recommendations, then the Commission shall transmit a revised list of
recommendations to the President.  Assuming presidential acceptance
of the list, as occurred in prior rounds, the list is forwarded to
Congress, which likewise must reject the list in its entirety or it
becomes final.  Figure I.1 refers to the 1995 round to illustrate the
key steps in the process and time lines. 

   Figure I.1:  Activities and
   Time Line of the BRAC Process
   in 1995

   (See figure in printed
   edition.)

Many aspects of the recent BRAC processes were mandated by the 1990
BRAC legislation, as amended.  The mandates

  -- Authorized an independent commission of eight members appointed
     by the President, by and with the advise and consent of the
     Senate.  The nomination of individuals is in consultation with
     the Speaker and the Minority Leader of the House of
     Representatives and the Majority and Minority leaders of the
     Senate. 

  -- Specified time lines for decisions by the Secretary of Defense,
     the President, the BRAC Commission, and Congress. 

  -- Authorized the BRAC Commission to add and/or delete bases
     to/from the Secretary's list of proposed closures and
     realignments. 

  -- Required the Commission to hold public hearings. 

  -- Required the Secretary to publish in the Federal Register the
     selection criteria proposed by DOD in making recommendations for
     closure and realignment and provide the opportunity for public
     comment.  Figure I.2 shows the criteria adopted by DOD and used
     in each round. 

   Figure I.2:  BRAC Criteria

   (See figure in printed
   edition.)

   Source:  DOD.

   (See figure in printed
   edition.)

  -- Stipulated that decisions to close defense facilities with
     authorization for at least 300 civilians must be made under the
     BRAC process.  Decisions to realign defense facilities
     authorized at least 300 civilian that involve a reduction of
     more than 1,000 civilians, or 50 percent or more of the
     civilians authorized, also had to undergo the BRAC process.  DOD
     components retained the option of including
     facilities/activities that fell below the threshold. 

  -- Required all bases to be compared equally against DOD's
     selection criteria and the current force structure plan. 

  -- Required that information used in the BRAC decision-making
     process be certified; that is, that the information was accurate
     and complete to the best of the originator's knowledge and
     belief.  This requirement was added for the 1993 round and was
     designed to overcome concerns about the consistency and
     reliability of data used in the process;

  -- Stipulated that if the President accepted the BRAC Commission's
     recommendations in their entirety, then the recommendations were
     to be sent to Congress for its consideration.  If the President
     disapproved the recommendations, in whole or in part, then the
     President shall transmit to the Commission and Congress the
     reasons for disapproval, and the Commission shall be asked to
     send the President a revised list of recommendations. 

  -- Stipulated that Congress had to accept the Commission's
     recommendations in their entirety.  If Congress rejected the
     recommendations through a joint resolution, then the Secretary
     could not carry out any closure or realignment recommended by
     the Commission. 

  -- Stipulated that specific BRAC appropriation accounts be created
     to ensure sufficient funding is provided for implementing the
     closure and realignment decisions. 

  -- Required us to submit a detailed analysis of the Secretary's
     recommendations and selection process to Congress and the
     Commission. 

In addition to the key elements that were required by the 1990 BRAC
legislation, DOD, in implementing the BRAC process, adopted the
following procedures. 

  -- The services and defense agencies used the same analytical tools
     for assessing the (1) cost and savings associated with BRAC
     actions and (2) potential economic impact on communities
     affected by those actions. 


  -- The services and defense agencies developed and implemented
     internal control plans that identified how they intended to
     conduct their BRAC process, ensure accurate data collection and
     analyses, and document decisions. 

  -- Service audit agencies and the DOD Inspector General (IG)
     audited the process to better ensure the accuracy of data used
     in decision-making and enhance the overall integrity of the
     process. 

  -- The Joint Chiefs of Staff reviewed the list of closures and
     realignments proposed by the services and defense agencies to
     assess impact on national security. 

The major difference between the 1995 round and the previous rounds
was DOD's 1995 requirement that the services and defense agencies
explore opportunities for the cross-service use of common support
assets.  The Office of the Secretary of Defense (OSD) organized
cross-service review groups to propose alternatives for the
components to consider in the following five functional areas:  (1)
maintenance depots, (2) laboratories, (3) test and evaluation
facilities, (4) undergraduate pilot training, and (5) medical
treatment facilities. 


MAJOR CLOSURE DECISIONS FROM
RECENT BASE CLOSURE ROUNDS
========================================================== Appendix II



   (See figure in printed
   edition.)



   (See figure in printed
   edition.)

   Source:  DOD.

   (See figure in printed
   edition.)

   Note:  Military installations
   can be a base, camp, post,
   station, yard, center, or
   leased facility.  As we
   reported in 1995, the number of
   bases recommended for closure
   or realignment in a given BRAC
   round is often difficult to
   tabulate precisely because
   closure decisions are not
   necessarily complete closures
   and closures vary in size.  The
   term "base closure" often
   conjures up the image of a
   larger facility being closed
   than may actually be the case. 
   The same is true with
   facilities designated by DOD as
   major closures.  This report
   relies on DOD's
   characterization of which bases
   are to be considered major and
   which are closures versus
   realignments.  For example, the
   BRAC 1995 decision regarding
   Kelly Air Force Base, Texas is
   characterized as a major base
   realignment, not a closure. 
   Therefore, it is not listed on
   this table.

   (See figure in printed
   edition.)




(See figure in printed edition.)Appendix III
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
========================================================== Appendix II



(See figure in printed edition.)



(See figure in printed edition.)


RELATED GAO PRODUCTS
============================================================ Chapter 1

BRAC DECISION-MAKING PROCESS

Military Bases:  Analysis of DOD's 1995 Process and Recommendations
for Closure and Realignment (GAO/NSIAD-95-133, Apr.  14, 1995). 

Military Bases:  Analysis of DOD's Recommendations and Selection
Process for Closures and Realignments (GAO/NSIAD-93-173, Apr.  15,
1993). 

Military Bases:  Observations on the Analyses Supporting Proposed
Closures and Realignments (GAO/NSIAD-91-224, May 15, 1991). 

Military Bases:  An Analysis of the Commission's Realignment and
Closure Recommendations (GAO/NSIAD-90-42, Nov.  29, 1989). 

BRAC IMPLEMENTATION:  COSTS,
SAVINGS, AND REUSE

Military Bases:  Cost to Maintain Inactive Ammunition Plants and
Closed Bases Could be Reduced (GAO/NSIAD-97-56, Feb.  20, 1997). 

Navy Nuclear Power School (GAO/NSIAD-97-21R, Nov.  22, 1996). 

Military Bases:  Update on the Status of Bases Closed in 1988, 1991,
and 1993 (GAO/NSIAD-96-149, Aug.  6, 1996). 

Military Bases:  Potential Reductions to the Fiscal Year 1997 Base
Closure Budget (GAO/NSIAD-96-158, July 15, 1996). 

Military Bases:  Closure and Realignment Savings Are Significant, but
Not Easily Quantified (GAO/NSIAD-96-67, Apr.  8, 1996). 

Military Bases:  Case Studies on Selected Bases Closed in 1988 and
1991 (GAO/NSIAD-95-139, Aug.  15, 1995). 

Military Bases:  Reuse Plans for Selected Bases Closed in 1988 and
1991 (GAO/NSIAD-95-3, Nov.  1, 1994). 

Military Bases:  Revised Cost and Saving Estimates for 1988 and 1991
Closures and Realignments (GAO/NSIAD-93-161, Mar.  31, 1993). 

Military Bases:  Transfer of Pease Air Force Base Slowed by
Environmental Concerns (GAO/NSIAD-93-111FS, Feb.  3, 1993). 

ENVIRONMENTAL RESTORATION

Military Base Closures:  Reducing High Costs of Environmental Cleanup
Requires Difficult Choices (GAO/NSIAD-96-172, Sept.  5, 1996). 

Environmental Protection:  Status of Defense Initiatives for Cleanup,
Compliance, and Technology (GAO/NSIAD-96-155, Aug.  2, 1996). 

Federal Facilities:  Consistent Relative Risk Evaluations Needed for
Prioritizing Cleanups (GAO/RCED-96-150, June 7, 1996). 

Nuclear Waste:  Greater Use of Removal Actions Could Cut Time and
Cost for Cleanups (GAO/RCED-96-124, May 23, 1996). 

Military Bases:  Environmental Impact at Closing Installations
(GAO/NSIAD-95-70, Feb.  23, 1995). 

Environment:  DOD's New Environmental Security Strategy Faces
Barriers (GAO/NSIAD-94-142, Sept.  30, 1994). 

BRAC RELATED

Base Operations:  Challenges Confronting DOD as It Renews Emphasis on
Outsourcing (GAO/NSIAD-97-86, Mar.11, 1997). 

Defense Infrastructure:  Demolition of Unneeded Buildings Can Help
Avoid Operating Costs (GAO/NSIAD-97-125, May 13, 1997). 

Defense Outsourcing:  Challenges Facing DOD As It Attempts to Save
Billions in Infrastructure Costs (GAO/T-NSIAD-97-110, Mar.  12,
1997). 

Military Bases:  Cost to Maintain Inactive Ammunition Plants and
Closed Bases Could be Reduced (GAO/NSIAD-97-56, Feb.  20, 1997). 

Defense Infrastructure (GAO/HR-97-7, Feb.  1997). 

Future Years Defense Program:  Lower Inflation Outlook Was Most
Significant Change From 1996 to 1997 Program (GAO/NSIAD-97-36, Dec. 
12, 1996). 

Defense Acquisition Infrastructure:  Changes in RDT&E Laboratories
and Centers (GAO/NSIAD-96-221BR, Sept.  13, 1996). 

Air Force Aircraft:  Consolidating Fighter Squadrons Could Reduce
Costs (GAO/NSIAD-96-82, May 6, 1996). 

Army Aviation Testing:  Need to Reassess Consolidation Plan
(GAO/NSIAD-96-87, Mar.  15 1996). 

DOD Training:  Opportunities Exist to Reduce the Training
Infrastructure (GAO/NSIAD-96-93, Mar.  29, 1996). 

DOD Infrastructure:  DOD's Planned Finance and Accounting Structure
Is Not Well Justified (GAO/NSIAD-95-127, Sept.  18, 1995). 

DEPOT MAINTENANCE

Defense Depot Maintenance:  Uncertainties and Challenges DOD faces in
Restructuring Its Depot Maintenance Program (GAO/T-NSIAD-97-111, Mar. 
18, 1997). 

Air Force Depot Maintenance:  Privatization-in-Place Plans Are Costly
While Excess Capacity Exists (GAO/NSIAD-97-13, Dec.  31, 1996). 

Navy Depot Maintenance:  Cost and Savings Issues Related to
Privatizing-in-Place at the Louisville, Kentucky Depot
(GAO/NSIAD-96-202, Sept.  18, 1996). 

Army Depot Maintenance:  Privatization Without Further Downsizing
Increases Costly Excess Capacity (GAO/NSIAD-96-201, Sept.  18, 1996). 

Defense Depot Maintenance:  DOD's Policy Report Leaves Future Role of
Depot System Uncertain (GAO/NSIAD-96-165, May 21, 1996). 

Defense Depot Maintenance:  More Comprehensive and Consistent
Workload Data Needed for Decisionmakers (GAO/NSIAD-96-166, May 21,
1996). 

Defense Depot Maintenance:  Privatization and the Debate Over the
Public-Private Mix (GAO/T-NSIAD-96-148, Apr.  17, 1996). 

Depot Maintenance:  Opportunities to Privatize Repair of Military
Engines (GAO/NSIAD-96-33, Mar.  5, 1996). 

Closing Maintenance Depots:  Savings, Workload, and Redistribution
Issues (GAO/NSIAD-96-29, Mar.  4, 1996). 

Aerospace Guidance and Metrology Center:  Cost Growth and Other
Factors Affect Closure and Privatization (GAO/NSIAD-95-60, Dec.  9,
1994). 


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