Military Base Closures: Issues Related to the Fiscal Year 1999 Budget Request (Letter Report, 07/30/98, GAO/NSIAD-98-169)
Pursuant to a legislative requirement, GAO reviewed the Department of
Defense's (DOD) base closure accounts and its budget request for base
closure activities, focusing on opportunities for offsetting the budget
request for fiscal year (FY) 1999, including the validity of two
proposed military construction (MILCON) projects included in that
request.
GAO noted that: (1) DOD and the military services have reduced the
previous high unobligated balances in the 1990 base closure account; (2)
however, there are opportunities to offset the 1999 budget request; (3)
GAO's analysis of the 1990 account and the FY 1999 base realignment and
closure (BRAC) budget request raises questions about the need for $131.1
million included in the request; and (4) specifically: (a) from the 1990
base closure account, $35.7 million in proceeds generated by BRAC
activities that has not been reported to Congress; $12.5 million
previously allocated but not needed for BRAC 1991 MILCON projects; $7.8
million allocated but not needed for BRAC 1991 operation and maintenance
activities; and $8.5 million previously allocated but not needed for
BRAC 1991 environmental projects; (b) from the FY 1998 BRAC
appropriations, $26 million previously withheld but ultimately was not
needed for other higher priority programs; and (c) from 1999 BRAC budget
request, $40.6 million requested for two separate MILCON projects may no
longer be needed because the requirements for one project have not been
determined and the other has already been funded.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: NSIAD-98-169
TITLE: Military Base Closures: Issues Related to the Fiscal Year
1999 Budget Request
DATE: 07/30/98
SUBJECT: Base closures
Defense budgets
Military bases
Funds management
Military cost control
Base realignments
Military facility construction
Reprogramming of appropriated funds
Unobligated budget balances
Budget cuts
IDENTIFIER: DOD Base Realignment and Closure Account
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO report. Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved. Major **
** divisions and subdivisions of the text, such as Chapters, **
** Sections, and Appendixes, are identified by double and **
** single lines. The numbers on the right end of these lines **
** indicate the position of each of the subsections in the **
** document outline. These numbers do NOT correspond with the **
** page numbers of the printed product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
** A printed copy of this report may be obtained from the GAO **
** Document Distribution Center. For further details, please **
** send an e-mail message to: **
** **
** <info@www.gao.gov> **
** **
** with the message 'info' in the body. **
******************************************************************
Cover
================================================================ COVER
Report to Congressional Committees
July 1998
MILITARY BASE CLOSURES - ISSUES
RELATED TO THE FISCAL YEAR 1999
BUDGET REQUEST
GAO/NSIAD-98-169
Military Base Closures
(709306)
Abbreviations
=============================================================== ABBREV
BRAC - base realignment and closure
DLA - Defense Logistics Agency
DOD - Department of Defense
MILCON - military construction
MTMC - Military Transportation Management Command
O&M - operation and maintenance
OUSD - Office of the Under Secretary of Defense
Letter
=============================================================== LETTER
B-279056
July 30, 1998
Congressional Committees
Senate Report 105-52, dated July 22, 1997, on the 1998 Military
Construction Appropriations Bill requested the continuation of our
annual review of the Department of Defense's (DOD) base closure
accounts and its budget request for base closure activities.
Specifically, this report discusses opportunities for offsetting the
budget request for fiscal
year 1999, including the validity of two proposed military
construction (MILCON) projects included in that request. Our scope
and methodology are described in appendix I.
BACKGROUND
------------------------------------------------------------ Letter :1
In the late 1980s, DOD decided to close excess military bases because
changing national security requirements had resulted in a military
base structure that was larger than needed. Consequently, the
Congress enacted base realignment and closure (BRAC) legislation that
instituted base closure rounds in 1988, 1991, 1993, and 1995. For
the 1991, 1993, and 1995 rounds, the legislation required DOD to
complete all closures and realignments within 6 years from the date
the President sent the BRAC Commission's recommendations and his
approval to the Congress. Closure and realignment actions for the
1988 and 1991 rounds were required to be completed by September 30,
1995, and July 10, 1997, respectively. Actions for the 1993 and 1995
rounds are to be completed by July 3, 1999, and July 15, 2001,
respectively.
The Congress established two base closure accounts to fund the
closure rounds. The first account, the DOD base closure account,\1
funded BRAC activities for the 1988 round and the second account, the
DOD base closure account 1990,\2
funded BRAC activities for the 1991, 1993, and 1995 rounds.
DOD's authority to obligate 1988 base closure account funds to close
or realign bases expired on September 30, 1995. After that date,
funds in the 1988 account ceased to be available for new
obligations\3 and may only be used to adjust and liquidate
obligations already charged to the account.\4 Unobligated funds in
the account must remain there until the Congress transfers them or
the account is closed. According to DOD officials, the account will
be closed on September 30, 2000.\5 Appendix II discusses the status
of funds in the 1988 account.
A different set of rules applies, however, to the 1990 base closure
account. Funds in that account are available for an indefinite
period.\6 New obligations may be incurred and old obligations
liquidated against the account until the Secretary of the Defense
closes it. As a consequence of the 6-year implementation period for
the 1991, 1993, and 1995 rounds, the period provided to obligate
appropriated funds differs by BRAC round. For example, after July
10, 1997, unobligated funds\7 in the account were not available to
incur new obligations for BRAC 1991 closure or realignment actions,
except for (1) environmental restoration and mitigation, and property
management and disposal activities at BRAC 1991 sites and (2)
adjusting and liquidating obligations properly charged to the BRAC
1991 round.
The Congress, in appropriating funds to the 1990 base closure
account, gave DOD the flexibility to allocate funds by military
service, budget function, and BRAC installation.\8 The Congress
recognized the complexities of realigning and closing bases and of
providing for environmental restoration and mitigation. As a result,
appropriations to the 1990 account are structured in a manner that
permits the Secretary of Defense to redistribute unobligated balances
as appropriate to avoid delays and complete realignments and
closures, along with environmental actions.
In March 1998, DOD requested more than $1.7 billion for the BRAC
program in fiscal year 1999.\9 As shown in table 1, the amount
requested is getting smaller each year as more implementation actions
are completed. In November 1997, the Office of the Under Secretary
of Defense (OUSD) Comptroller reported that approximately 97 percent
of the $15.8 billion made available for all four BRAC rounds was
obligated.
Table 1
Comparison of DOD's Fiscal Year 1999
Budget Request with the 1997 and 1998
Appropriations
(Dollars in thousands)
1997 1998
appropriation appropriation 1999 budget
BRAC rounds s s request
------------------------- ------------- ------------- -------------
1991 $352,800 $116,754
1993 971,925 768,702 $433,464
1995 1,182,749 1,175,398 1,297,240
======================================================================
Total $2,507,474 $2,060,854 $1,730,704
----------------------------------------------------------------------
--------------------
\1 The DOD base closure account (sometimes called the 1988 base
closure account) was established by section 207(a)(1) of the Defense
Authorization Amendments and Base Closure and Realignment Act of 1988
(P.L. 100-526).
\2 The 1990 base closure account was established by section
2906(a)(1) of the Defense Base Closure and Realignment Act of 1990
(P.L. 101-510).
\3 DOD financial regulations define obligations as amounts of orders
placed, contracts awarded, services received, and similar
transactions during an accounting period that will require payment.
\4 DOD Office of General Counsel's memorandum, Aug. 30, 1995.
\5 Unless otherwise specifically provided by law, an expired fixed
appropriation account is generally available for adjusting and
liquidating obligations properly chargeable to that account for 5
years following its period of availability for obligations. At the
end of this 5-year expiration period, the account is closed and all
balances are permanently canceled. Any subsequent obligation
adjustments or payments incurred against canceled accounts are funded
with current appropriations.
\6 In the case of the 1990 base closure account, the unobligated
balance and unliquidated obligations were $1.8 billion and $2.7
billion, respectively, on Feb. 28, 1998. These amounts include $2.1
billion appropriated in Sept. 1997 for fiscal year 1998.
\7 DOD financial regulations define unobligated funds as balances of
budgetary authority that remain available for obligation.
\8 DOD financial regulations define allocations as distributions of
funds to an operating agency.
\9 DOD base realignment and closure, revised budget request for
fiscal year 1999, Mar. 1998.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :2
DOD and the military services have reduced the previous high
unobligated balances in the 1990 base closure account. However,
there are opportunities to offset the 1999 budget request. Our
analysis of the 1990 account and the fiscal year 1999 BRAC budget
request raises questions about the need for $131.1 million included
in the request. Specifically:
-- From the 1990 base closure account, $35.7 million in proceeds
generated by BRAC activities that has not been reported to the
Congress; $12.5 million previously allocated but not needed for
BRAC 1991 MILCON projects; $7.8 million allocated but not needed
for BRAC 1991 operation and maintenance (O&M) activities; and
$8.5 million previously allocated but not needed for BRAC 1991
environmental projects.
-- From the fiscal year 1998 BRAC appropriations, $26 million
previously withheld but ultimately was not needed for other
higher priority programs.
-- From the 1999 BRAC budget request, $40.6 million requested for
two separate MILCON projects may no longer be needed because the
requirements for one project have not been determined and the
other has already been funded.
FUNDING OPPORTUNITIES TO OFFSET
THE 1999 BRAC BUDGET REQUEST
------------------------------------------------------------ Letter :3
Our analysis of the base closure account and the fiscal year 1999
BRAC budget request raises questions about the need for $131.1
million included in the request. Our questions center on (1) whether
the budget request could be offset by using unreported proceeds from
BRAC actions, and funds in the 1990 account are still needed for the
BRAC 1991 round and (2) why fiscal year 1998 appropriations were
withheld from the BRAC program for other purposes but never used.
Further, the 1999 BRAC budget request contains funds for two MILCON
projects that may no longer be needed in fiscal year 1999.
UNREPORTED PROCEEDS FROM
BRAC ACTIVITIES COULD BE
USED TO OFFSET THE REQUEST
---------------------------------------------------------- Letter :3.1
The military services collected $35.7 million more in proceeds from
land sales and leases at closing or realigning bases than reported in
the 1999 BRAC budget request (see table 2). Although estimated
proceeds from land sales and leases are usually used to offset budget
requests,\10 the $35.7 million in unreported proceeds has not been
used for the reasons that are discussed below.
Table 2
Unreported Proceeds From Land Sales and
Leases by Military Service
(Dollars in thousands)
Actual receipts
----------------------------
Reported Unreport
Land proceeds ed
Military service sales Leases Total \a proceeds
-------------------- -------- -------- -------- -------- --------
Air Force\b $15,729 $5,262 $20,991 [$9,703] $20,991
\c
Army 111,463 542 112,005 108,080 3,925
Navy 9,617 4,140\d 13,757 2,991 10,766
======================================================================
Total $136,809 $9,944 $146,753 $111,071 $35,682
----------------------------------------------------------------------
Note: Cumulative figures.
\a Reported in the DOD base realignment and closure revised budget
request for fiscal year 1999, March 1998.
\b As of February 1998, only $9.6 million and $4.1 million from the
Air Force's BRAC land sales and leases, respectively, had been
deposited into the 1990 base closure account. The remaining
proceeds, of the $20,991, are being transferred from a suspense
account to the 1990 account.
\c According to Air Force officials, $9.7 million reported as
proceeds in the 1999 BRAC budget request was not proceeds from land
sales or leases. The $9.7 million was collections from the city of
Chicago for costs resulting from the closure of the O'Hare
International Airport Air Force Reserve Station, Illinois. The city
proposed the closure, and it is financing the full cost of
replacement facilities, moving, and related environmental analyses
and cleanup activities.
\d Includes utility fees.
Statutes and DOD guidance state that proceeds from the transfer,
lease, or disposal of property due to the BRAC process shall be
deposited into the base closure account.\11 Proceeds deposited by a
particular military service will generally be allocated to that
service's BRAC program. However, according to an official from the
OUSD Comptroller, Defense Finance and Accounting Service financial
reports do not show that the $35.7 million in unreported proceeds was
deposited into the account by the responsible military service.
--------------------
\10 Section 2906(a) of the 1990 Defense Base Closure and Realignment
Act (P.L. 101-510) provides that proceeds received from the lease,
transfer or disposal of any property at a military installation
closed or realigned under the act shall be deposited into the 1990
base closure account. See also
10 U.S.C 2667(D)(5). According to DOD officials, DOD Financial
Management Regulation (vol. 12, ch. 13) Fiscal Policy for Base
Closure and Realignment, requires these proceeds to be reported in
the annual DOD budget estimate request.
\11 Memorandum for the assistant secretaries of the military
services, DOD base closure account, from DOD Principal Deputy
Comptroller, Jan. 3, 1990, and memorandum for the assistant
secretaries of the military services, financial management policy and
procedures for base closure and realignment, from the DOD Deputy
Comptroller (Management Systems), Dec. 21, 1993.
AIR FORCE PROCEEDS
-------------------------------------------------------- Letter :3.1.1
The $21 million in proceeds collected by the Air Force was not
reported in the 1999 budget request because procedures for fund use
have only recently been finalized and, as a result, program officials
did not have constructive receipts of those proceeds. Documents
indicate that the Defense Finance and Accounting Service started
developing specific disposition guidance in July 1992. While the
guidance was being developed, the proceeds were held in a suspense
(temporary holding) account. When the disposition guidance was
finalized in 1998, Air Force officials initiated actions to transfer
the funds from the suspense account to the 1990 base closure account.
As of May 1998, only $9.6 million and $4.1 million from the Air
Force's land sales and leases, respectively, had been deposited into
the 1990 account. Air Force officials plan to report those proceeds
in the budget submission for fiscal year 2000.
Further, Air Force officials said that they plan to use these
proceeds to partially offset unbudgeted costs (about $107.4 million
in fiscal
year 1998) related to the closure and realignment of McClellan Air
Force Base, California, and Kelly Air Force Base, Texas.\12 Because
the decisions and plans for these BRAC actions were not finalized
until November 1997 and not approved until February 1998, the Air
Force did not budget for them in the fiscal year 1998 BRAC budget
submission. As a result, Air Force officials told us that they will
have a funding shortfall for its BRAC program in fiscal year 1998.
--------------------
\12 On May 7, 1998, Air Force officials provided cost estimates that
indicate the Air Force will need an additional $263.8 million for
fiscal years 1998 and 1999 or a total of $335.4 million for fiscal
years 1998-2003 to fund recent changes in the closure and realignment
of these two bases. The revised closure and realignment plan
accelerates the departure of employees and related costs, such as
severance and leave pay, civilian change of station costs,
procurement of equipment and supplies, transportation of things, and
minor construction. Further, the total estimated cost of personnel
and realignment has increased as a result of additional information
on locations and population dispersion. We did not validate these
revised requirements.
ARMY PROCEEDS
-------------------------------------------------------- Letter :3.1.2
According to an Army official responsible for the BRAC program, $3.9
million in unreported proceeds for the Army was collected after the
fiscal year 1999 budget submission and no estimate was included in
the submission because of the uncertainties in collecting revenues
from BRAC land sales and leases. The Army had planned to use the
$3.9 million to offset the budget submission for fiscal year 2000.
NAVY PROCEEDS
-------------------------------------------------------- Letter :3.1.3
According to Navy officials, $9.3 million of the $10.8 million in
unreported proceeds was received after the Navy's 1999 budget request
was submitted to DOD in September 1997 and, as a result, that amount
was not included in the submission. Further, these officials are
reluctant to include estimated proceeds in the annual budget process
because of the uncertainties in collecting BRAC revenues. For
example, in the budget request for fiscal
year 1997, the Navy estimated $243.9 million in land sales for the
BRAC 1993 round. However, due primarily to less emphasis on selling
surplus land and a greater emphasis on economic benefits of
transferring the property to nearby communities, there were no
proceeds. As a result, Navy officials had to restructure the Navy's
BRAC program to meet this shortfall. In addition, the Navy does not
routinely include lease revenues in its budget submissions but
budgets for these proceeds to pay for caretaking costs on closing
installations.
FUNDS ALLOCATED FOR BRAC
1991 MILCON REQUIREMENTS
COULD BE USED TO OFFSET THE
REQUEST
---------------------------------------------------------- Letter :3.2
During March and April of 1998, the military services had $12.5
million of unobligated and unliquidated funds that was no longer
required to support previously valid BRAC 1991 MILCON projects (see
table 3). We found no instances where these funds were initially
allocated or obligated for unsupported MILCON requirements. Program
requirements tend to change, and in some cases disappear, as base
closure and realignment actions are implemented. Although the
services have reprogrammed some funds to other BRAC requirements, the
$12.5 million represents additional available funding that was not
anticipated at the time the fiscal year 1999 budget request was
submitted to the Congress.
Table 3
Funding Available for Withdrawal and
Deobligation From BRAC 1991 MILCON
Projects
(Dollars in thousands)
Funds available for
----------------------
Deobligati
Military service/major command Withdrawal on Total
---------------------------------- ---------- ---------- ==========
Air Force
----------------------------------------------------------------------
Army Corps of Engineers\a $197 $197
Air Combat Command 25 25
Air Education and Training Command 93 $22 115
Air Force Reserve 25 20 45
Air National Guard 104 104
Naval Facilities Engineering 48 48
Command
Army
----------------------------------------------------------------------
Army Corps of Engineers\b 11,278 11,278
Navy
----------------------------------------------------------------------
Naval Facilities Engineering 693 693
Command
======================================================================
Total $12,463 $42 $12,505
----------------------------------------------------------------------
Note: Withdrawal, in this case and in the following tables, is the
transfer of unobligated funds between an agency's accounts and
subaccounts and deobligation is the cancellation or downward
adjustment of previously recorded obligations.
\a These funds were initially allocated to the Air Force for specific
BRAC MILCON projects. The Air Force BRAC Office reallocated the
funds to Army Corps of Engineers to construct the specified projects.
\b These funds were initially allocated to the Army for specific BRAC
MILCON projects. The Army BRAC Office reallocated the funds to the
Army Corps of Engineers to construct the specified projects.
Source: Interviews in March and April 1998 with officials from the
major commands. The Air Force's figures, except for the Army Corps
of Engineers, were generated by the Office for Financial Management
and Comptroller, Directorate of Budget Investments (Construction),
during its review of account balances with the intent of realigning
available funds to offset the Air Force's unfunded BRAC requirements
in fiscal year 1998.
According to the Office of Management and Budget Circular No. A-34,
Instructions on Budget Execution, recoveries of prior year
obligations that have been deobligated are available for new
obligations if their period of availability has not expired. An
official from the OUSD Comptroller Office said that the military
services should periodically review their unobligated balances and
unliquidated obligations so that the funds can be used for unfunded
requirements. Although the DOD Financial Management Regulation
provides financial policy and procedures for base closure and
realignment actions, the regulation does not specify procedures for
reviewing (1) unobligated balances and promptly obligating funds to
valid requirements when original requirements no longer exist and (2)
unliquidated obligations and promptly deobligating excess obligations
when final costs are known. Program officials from several major
commands said that validating the need for their unliquidated
obligations was not a priority until 1998.\13
In February 1998, the Army initiated a review of its unliquidated
balances for the BRAC MILCON program.\14 The Chief of the Army BRAC
Office said that, although BRAC execution significantly improved
during fiscal year 1997, poor execution in the first half of the
fiscal year continued to be a problem. A particular area of concern
was the large carryover balance of unobligated funds appropriated
prior to fiscal year 1998. During the review, program officials
verified that execution of the 1998 program had started.
Also in February 1998, the Air Force initiated a review of the
unobligated balances and unliquidated obligations for its BRAC
program.\15 During the review, program officials verified the
requirements for their unobligated balances and unliquidated
obligations. As a result, Air Force officials identified funds that
were no longer needed to support previously valid program
requirements. The Air Force intends to realign these available
funds, shown in tables 3, 4, and 5, to offset the 1998 funding
shortfall resulting from the closure and realignment of McClellan and
Kelly Air Force Bases.
--------------------
\13 Our recent audit of the federal government's fiscal year 1997
consolidated financial statements identified billions of dollars in
DOD unreconciled cash disbursement activity. As a result of these
accounting problems, DOD has not recorded all obligations and
expenditures to specific budgetary accounts. See Financial Audit:
1997 Consolidated Financial Statements of the United States
Government (GAO/AIMD-98-127, Mar. 31, 1998).
\14 Memorandum for Commander, U.S. Army Corps of Engineers, BRAC
execution review; from the Chief, Army BRAC Office; Feb. 13, 1998.
\15 Memorandum for distribution, BRAC unobligated balances and
unliquidated obligations, from the Deputy Assistant Secretary
(Budget) and the Deputy Assistant Secretary of the Air Force
(Installation), Feb. 26, 1998.
FUNDS ALLOCATED FOR BRAC
1991 O&M ACTIVITIES COULD BE
USED TO OFFSET THE REQUEST
---------------------------------------------------------- Letter :3.3
During March and April 1998, the military services allocated $7.8
million from the 1990 base closure account to fund BRAC 1991 O&M
requirements that no longer existed (see table 4). Similar to
allocations for MILCON projects, we found no instances where funds
were initially allocated or obligated for invalid O&M requirements.
Although the services have reprogrammed some funds to other BRAC
requirements, the $7.8 million represents additional available
funding that was not anticipated at the time the fiscal year 1999
budget request was submitted to the Congress.
Table 4
Funding Available for Withdrawal and
Deobligation From BRAC 1991 O&M
Activities
(Dollars in thousands)
Funds available for
----------------------
Deobligati
Military service/major command Withdrawal on Total
---------------------------------- ---------- ---------- ==========
Air Force
----------------------------------------------------------------------
Air Force service organizations $691 $691
Air Combat Command 1,245 $3 1,248
Air Education and Training Command 183 38 221
Air Force Reserve 31 25 56
Air Mobility Command 1 27 28
Air National Guard 2,149 2,149
Army
----------------------------------------------------------------------
Army Materiel Command 6 1,706 1,712
Army Medical Command 255 255
Army Training and Doctrine Command 557 557
U.S. Army Forces Command 134 134
Navy
----------------------------------------------------------------------
Naval Facilities Engineering 756 756
Command
======================================================================
Total $6,008 $1,799 $7,807
----------------------------------------------------------------------
Source: Interviews in March and April 1998 with officials from the
major commands. The Air Force's figures were also generated by the
Office for Financial Management and Comptroller, Directorate of
Budget Investments (Construction), during its review of account
balances with the intent of realigning available funds to offset the
Air Force's unfunded BRAC requirements in fiscal year 1998.
The OUSD Comptroller Office has reduced unobligated O&M balances in
the 1990 base closure acount. During the review of the services'
budget requests for fiscal year 1999, the OUSD Comptroller Office
deferred $34.5 million (requested by the Army and the Air Force) to
later years because of poor execution of O&M funds in fiscal years
1995, 1996, and 1997.\16 The Comptroller Office concluded that
requesting more funds than can be obligated during a year ties up
valuable budget resources that could be used more effectively.
--------------------
\16 Based on unobligated O&M balances for fiscal years 1995-97, the
reviewing official had initially recommended that $17 million and
$35.5 million requested by the Army and the Air Force, respectively,
be deferred from fiscal year 1999 to fiscal year 2000. Subsequently,
the recommended reduction for the Air Force was decreased to $17.5
million.
FUNDS ALLOCATED TO BRAC 1991
ENVIRONMENTAL PROJECTS COULD
BE USED TO OFFSET THE
REQUEST
---------------------------------------------------------- Letter :3.4
During March and April 1998, the military services allocated $8.5
million from the 1990 base closure account for BRAC 1991
environmental requirements that no longer existed (see table 5).
Similar to allocations for MILCON projects and O&M activities, we
found no instances where these funds were initially allocated or
obligated for invalid requirements. Although the services have
reprogrammed some funds, this amount represents additional available
funding that was not anticipated at the time the fiscal year 1999
budget request was submitted to the Congress.
Table 5
Funding Available for Withdrawal and
Deobligation From BRAC 1991
Environmental Projects
(Dollars in thousands)
Funds available for
----------------------
Deobligati
Military service/major command Withdrawal on Total
---------------------------------- ---------- ---------- ==========
Air Force
----------------------------------------------------------------------
Air Force service organizations $1,440 $2,127 $3,567
Air Combat Command 3,390 3,390
Air Education and Training Command 85 393 478
Army
----------------------------------------------------------------------
Army Medical Command 149 149
U.S. Army Forces Command 374 374
Navy
----------------------------------------------------------------------
Naval Air Systems Command 1 357 358
Naval Facilities Engineering 174 174
Command
======================================================================
Total $5,239 $3,251 $8,490
----------------------------------------------------------------------
Source: Interviews in March and April 1998 with officials from the
major commands. The Air Force's figures were generated by the Office
for Financial Management and Comptroller, Directorate of Budget
Investments (Construction), during its review of account balances
with the intent of realigning available funds to offset the Air
Force's unfunded BRAC requirements in fiscal year 1998.
The Air Force Audit Agency has issued the following two reports
expressing concern about the use of funds allocated to BRAC
environmental projects.
-- In September 1995, the audit agency reported that BRAC funding
did not match requirements and obligation rates could be
improved by streamlining procedures for environmental
contracting and providing better guidance to the major
commands.\17
-- In April 1997, the agency reported that the Air Force had $20.8
million in excess to its BRAC environmental requirements.\18
Neither the team leaders nor funding management personnel could
accurately account for environmental restoration costs by
project.
In October 1997, the Army Assistant Chief of Staff for Installation
Management expressed his concern about the poor financial performance
of the Army BRAC environmental program.\19 Although the Army had
obligated over $1.1 billion for BRAC environmental restoration, over
$339 million remained unliquidated. According to the Assistant Chief
of Staff, the entire BRAC program was vulnerable to budget reductions
and reprogramming actions if the Army's major commands did not act
quickly to reduce the unliquidated balance. He concluded that the
balance should be reduced to use idle environmental funds
productively. As a result of this effort, the Army reduced its
unliquidated balance for its BRAC environmental projects.
--------------------
\17 Review of the Base Closure Account, Air Force Audit Agency
(Project 94058022, Sept. 1, 1995).
\18 Environmental Cleanup at Bases Selected for Closure, Air Force
Audit Agency (Project 96052039, Apr. 7, 1997).
\19 Memorandum for distribution: BRAC Environmental Program
Disbursements (Outlays), from the Army Assistant Chief of Staff for
Installation Management, Oct. 31, 1997.
FUNDS APPROPRIATED AND
PREVIOUSLY WITHHELD FROM
BRAC ACTIVITIES IN FISCAL
YEAR 1998 COULD BE USED TO
OFFSET THE REQUEST
---------------------------------------------------------- Letter :3.5
DOD withheld $26 million appropriated in fiscal year 1998 from the
BRAC program that could be used to offset the fiscal year 1999 BRAC
budget request. In December 1997, based on the administration's
estimated savings from a lower than expected inflation rate, the OUSD
Comptroller Office withheld these BRAC funds from the military
services. Although the $26 million was put in a holding account for
potential reprogramming for other higher priority programs, the money
was never used for these programs. An official in the OUSD
Comptroller Office said that withholding these funds did not
adversely affect the BRAC program because the services were able to
carry out their programs as budgeted due to a lower inflation rate.
The OUSD Comptroller Office released the funds to the services for
BRAC activities on March 24, 1998. Thus, the $26 million represents
additional available funding that was not anticipated at the time the
fiscal year 1999 budget request was submitted to the Congress.
THE 1999 BUDGET REQUEST
CONTAINS FUNDS FOR TWO
MILCON PROJECTS THAT ARE NO
LONGER REQUIRED
---------------------------------------------------------- Letter :3.6
The 1999 BRAC budget request contains $40.6 million for two MILCON
projects for which requirements have not been determined or have
already been funded. The two projects are an Army medical warehouse
($31 million) and an Army headquarters building for the Military
Transportation Management Command (MTMC) ($9.6 million).
$31 MILLION REQUESTED FOR
A WAREHOUSE BEFORE
REQUIREMENTS HAVE BEEN
DETERMINED
-------------------------------------------------------- Letter :3.6.1
The Defense Logistics Agency (DLA) requested $31 million that
requested to build a Deployable Medical Systems warehouse for the
Army, although the requirements for the warehouse had not been
determined. Recently, DLA officials questioned the Army's estimated
requirements for the warehouse.
In it's June 1997 report, the DOD Inspector General recommended
withholding the $31 million requested until officials decided where
the warehouse should be located.\20 Although DLA adequately justified
the requirements for the BRAC 1995 project, the Army had not decided
whether DLA should continue to provide the reimbursable support for
the Deployable Medical Systems, or where it wanted the workload
performed. In response to the DOD recommendation, DLA has agreed not
to program MILCON funds until it has a commitment from the Army on
where to locate the warehouse. Although the Army has decided that
the warehouse and related operations should be located at Hill Air
Force Base, Utah, the size of the warehouse still has not been
determined.
In March 1998, DLA officials expressed reservations about maintaining
the full scope of the warehouse as requested in the 1999 BRAC budget
request.\21 According to Army planning documents provided to DLA, the
$45.3 million programmed for the project in fiscal year 1998 is
estimated to decrease to $6.1 million in fiscal year 2005. The two
major causes for this decrease are the projected reduction in the
Army force structure and the potential impact of a medical
reengineering initiative. In addition, the Army has decided not to
move two programs (the Associated Support Items of Equipment Repair
Program and Reserve Component Hospital Decrement Program) of the
Deployable Medical Systems mission to Hill Air Force Base as planned.
Instead, these programs will be moved to the Sierra Army Depot,
California.
As of May 4, 1998, DLA officials were revalidating these requirements
and resizing the project. According to one agency estimate, a
50-percent reduction in the Deployable Medical Systems mission
equates to a 43-percent reduction in the project's square footage.
However, as of May 4, 1998, DLA officials were unable to provide a
revised cost estimate that could be included in the 1999 budget
request for this project. Historically, the OUSD Comptroller Office
has withheld funds for MILCON projects when requirements are
undecided.
--------------------
\20 Defense Base Realignment and Closure Budget Data for the
Relocation of Deployable Medical Systems to Hill Air Force Base,
Ogden, Utah; Office of the Inspector General, DOD; June 26, 1997.
\21 Memorandum for the Commander, Defense Distribution Center, from
the Executive Director, DLA-Resource, Planning & Performance, Mar.
30, 1998.
$9.6 MILLION REQUESTED
FOR HEADQUARTERS BUILDING
HAS ALREADY BEEN FUNDED
-------------------------------------------------------- Letter :3.6.2
In the 1999 budget request, the Army requested $9.6 million for a
MTMC headquarters building that has already been funded. The Army
needed the funds to renovate one building and construct an addition
at Fort Eustis, Virginia, to support the relocation and consolidation
of MTMC Oakland Army Base and the Bayonne Military Ocean Terminal,
New Jersey. However, DOD and Army officials said that BRAC funds
have already been awarded for the project and the reprogramming
action should be completed by June 1998. As a result, it no longer
needs the $9.6 million included in the 1999 budget request for the
MTMC headquarters building.
CONCLUSIONS
------------------------------------------------------------ Letter :4
DOD and the military services have reduced the previous high
unobligated balance in the 1990 base closure account. However, our
analysis of the 1990 account and the fiscal year 1999 BRAC budget
request raises questions about the need for $131.1 million included
in the request. Our questions center on the potential (1) use of
unreported proceeds from BRAC actions, unused funds allocated to the
BRAC 1991 round, and withheld BRAC appropriations from fiscal year
1998 to offset equivalent amounts of funding included in the 1999
budget request and (2) need for funding requested for two MILCON
projects, where the requirements for one project have not been
determined and the other has already been funded.
MATTERS FOR CONGRESSIONAL
CONSIDERATION
------------------------------------------------------------ Letter :5
As the Congress develops the budget authority for DOD's base closure
activities in fiscal year 1999, it may wish to consider appropriating
up to $131.1 million less than DOD is requesting in its fiscal year
1999 BRAC budget submission because prior year funds are available to
meet these requirements and the request to fund two MILCON projects
could be eliminated.
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :6
In commenting on a draft of this report, DOD did not concur that its
request should be reduced by $131.1 million. Specifically, DOD
stated that (1) $35.7 million in unreported proceeds generated by
BRAC activities is unavailable to offset fiscal year 1999
requirements because the proceeds have been or will be reprogrammed
to cover unfunded requirements, (2) $54.8 million in unobligated
balances\22 is unavailable as an offset since it has already been
earmarked for other unfunded requirements, (3) $40.6 million for two
separate MILCON projects is unavailable for offset because previously
approved actions that were deferred until 1999 still need to be fully
funded, and (4) reductions of this magnitude will eliminate the
management flexibility envisioned by the Congress and, adversely
impact DOD's ability to close installations and speed the economic
recovery of affected communities.
We continue to believe the Congress may wish to consider
appropriating up to $131.1 million less than DOD requested in its
fiscal year 1999 BRAC budget because prior year funds are available
to meet requirements and the request to fund two MILCON projects can
be eliminated. DOD's fiscal
year 1999 budget request did not reflect $35.7 million in proceeds
that was collected but not included in the request. Public law and
DOD guidance provide that proceeds generated from BRAC actions be
reported in DOD's annual budget estimate request. Further, the
military services have reprogrammed some funds to other BRAC
requirements; however, $54.8 million in unobligated balances
represents additional available funding that was not anticipated at
the time the fiscal year 1999 budget request was submitted to the
Congress. After the budget submission, the major commands and the
Army Corp of Engineers found that the requirements for these funds no
longer existed and could provide no evidence where they would use the
unobligated balances.
Also, the 1999 budget request contains $40.6 million for two MILCON
projects that are no longer needed. DLA officials continue to
question the Army's $31 million in requirements for a medical
warehouse and could not provide a revised cost estimate for inclusion
in the 1999 budget request. In addition, DOD agreed that the $9.6
million requested for the MTMC headquarters building has already been
funded. While DOD said this $40.6 million could be used to fund
other actions that had been deferred, we found no evidence of
deferred actions that still needed to be fully funded.
Finally, regarding DOD's concern that reductions of the magnitude
suggested by our report would limit management flexibility envisioned
by the Congress and adversely impact the Department's ability to
close installations, we agree that the Congress provided the
Department with flexibility to reprogram funds. At the same time,
the Congress approves funding and the OUSD Comptroller Office makes
funds available to the DOD components based on their official,
detailed budget justification and financial plan. At the time we
completed our review, only the Air Force, indicated a specific need
associated with the funds we identified as available to offset DOD's
fiscal year 1999 budget request. The Air Force told us they planned
to use the funds to help reduce a shortfall in the money needed to
close two bases. However, the OUSD Comptroller Office has not yet
formally approved the reprogramming of these funds.
--------------------
\22 This $54.8 million includes $12.5 million for BRAC 1991 MILCON
projects; $7.8 million for BRAC 1991 O&M activities; $8.5 million for
BRAC 1991 environmental projects; and $26 million for fiscal year
1998 BRAC appropriations withheld but ultimately not needed for other
higher priority programs.
---------------------------------------------------------- Letter :6.1
We are sending copies of this report to the Secretaries of Defense,
the Army, the Navy, and the Air Force; the Director, Office of
Management and Budget; and other interested parties. We will also
make copies available to others upon request.
Please contact me at (202) 512-8412 if you or your staff have any
questions concerning this report. Major contributors to this report
are listed in appendix IV.
David R. Warren, Director
Defense Management Issues
List of Congressional Committees
The Honorable Conrad Burns
Chairman
The Honorable Patty Murray
Ranking Minority Member
Subcommittee on Military Construction
Committee on Appropriations
United States Senate
The Honorable Strom Thurmond
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate
The Honorable Ron Packard
Chairman
The Honorable Bill Hefner
Ranking Minority Member
Subcommittee on Military Construction
Committee on Appropriations
House of Representatives
The Honorable Floyd D. Spence
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on National Security
House of Representatives
SCOPE AND METHODOLOGY
=========================================================== Appendix I
During our review, we interviewed and obtained data from Department
of Defense (DOD) officials, including those from the Defense
Logistics Agency (DLA), Defense Finance and Accounting Service, the
DOD Inspector General, Air Force, Army, and Navy. Within the Air
Force, we met with officials of the Office of the Chief of Staff, the
Office for Financial Management and Comptroller, the Air Force Base
Conversion Agency, the Air Combat Command, the Air Education and
Training Command, the Air Mobility Command, and the 11th Wing. Army
officials we met with were the Assistant Chief of Staff for
Installation Management, the Office of the Comptroller, the Corps of
Engineers, the U.S. Army Forces Command, the
Communications-Electronics Command, the Materiel Command, the Medical
Command, the Military Traffic Management Command (MTMC), the Training
and Doctrine Command, and the Army Military District of Washington.
Within the Navy, we met with officials of the Naval Facilities
Engineering Command, Office of the Comptroller, Naval Air Systems
Command, Naval Sea Systems Command, and Naval Audit Service.
To identify funding opportunities for offsetting DOD's budget
request, we focused on identifying prior year appropriations that had
not been obligated or liquidated and that may be available to fund
base realignment and closure (BRAC) activities during fiscal year
1999. Because BRAC actions for the 1988 and 1991 rounds were
required to be completed by
September 30, 1995, and July 10, 1997, respectively, we questioned
the need for the unobligated funds and unliquidated obligations that
were still allocated for these rounds. We examined a variety of DOD
and military services budget and financial documents; analyzed
implementation legislation for the base closure accounts; examined
budget execution data for BRAC military construction (MILCON),
operations and maintenance, and environmental funds; compared
execution data with the Office of Management and Budget and DOD
guidance and goals; assessed initiatives to improve financial
performance; and reviewed guidance on the use of funds in the base
closure accounts and recent audits that focused on unobligated
balances and unliquidated obligations in the accounts.
We discussed the need for the unobligated funds and unliquidated
obligations (in the 1988 base closure account) for the 1988 round
with officials from DOD, the military services, and several major
commands to determine their availability to fund other BRAC
requirements. Additionally, we discussed the need for the
unobligated funds and unliquidated obligations (in the 1990 base
closure account) for the 1991 round with officials from DOD, the
military services, and several major commands to identify funding
that may be available during fiscal year 1999 that was not
anticipated at the time the BRAC budget request was submitted to the
Congress. Our 1998 audit of the federal governments fiscal year 1997
consolidated financial statements identified billions of dollars in
DOD unreconciled cash disbursement activity. As a result of these
accounting problems, we reconciled the reported unliquidated
obligations with the major commands to verify that all transactions
had been recorded for those BRAC projects and activities with
balances that could be deobligated. We also compared data on
proceeds from land sales and leases with those reported in the 1999
budget request to identify BRAC revenues that had not been reported
to the Congress and not used to offset DOD's budget requests for
fiscal year 1999 and prior years.
To validate DOD's budget request for fiscal year 1999, including the
MILCON projects, we reviewed fiscal year 1999 and prior year budget
requests and supporting justifications for DOD, DLA, Defense
Information Systems Agency, and military services. We obtained and
reviewed data on requirements to support the budget request for
selected bases and subaccounts. We reviewed Office of Management and
Budget and DOD guidance on the preparation and justification of
budget requests, policy guidance and submission requirements for the
fiscal year 1999 BRAC budget request and prior budget requests,
internal review procedures for validating budget submissions from
major commands, and DOD program budget decision documents. We
compared data on recently completed BRAC actions with the 1999 budget
request to verify that budgeted requirements were still valid.
We also compared the amounts requested for operations and maintenance
activities and environmental projects at installations in the 1999
budget request with their unobligated balances and unliquidated
obligations. We discussed the results of this comparison with
officials from DOD, the military services, and several major commands
to verify that additional appropriations were needed to fund 1999
requirements for these installations. We reviewed recent audits that
have focused on MILCON projects in the 1999 budget request and prior
requests to determine the magnitude, scope, and results of the
audits. To verify MILCON requirements we compared the audit results
with the MILCON projects included in the 1999 budget request to
determine whether the results were reflected in the budget request.
We discussed our comparison with officials from DLA and the military
services to determine whether the MILCON projects and requirements
were still valid.
In performing this review, we used the same accounting systems,
reports, and statistics the military services use to monitor their
BRAC programs. We did not independently determine the reliability of
this information.
We conducted our review from December 1997 to May 1998 in accordance
with generally accepted government auditing standards.
STATUS OF FUNDS IN THE 1988 BASE
CLOSURE ACCOUNT
========================================================== Appendix II
On February 28, 1998, the 1988 base closure account contained $45.8
million in unobligated funds.\1 As shown in figure II.1, this funding
is up from $30.6 million in September 1996. According to program
officials, this increase occurred because the military services
deobligated funds from requirements that no longer exist. Program
requirements tend to change, and in some cases disappear, as BRAC
actions are implemented. As the services' deobligation process
continues, the unobligated balance in the 1988 account will increase.
Figure II.1: Unobligated
Balances in the 1988 Base
Closure Account Since September
30, 1996
(See figure in printed
edition.)
Source: Appropriation Status by Fiscal Year Program and Subaccounts,
DDCOMP (M) 1002s, as dated above.
Program officials stated, pursuant to a DOD Office of General
Counsel's memorandum, the $45.8 million in unobligated funds in the
1988 account will be used only to adjust and liquidate obligations
that have already been charged to the account. Although several
officials believe this requirement is likely not to be significant,
there is no DOD criteria for determining the amount to reserve in
expired accounts for this potential requirement. An official in the
Office of the Under Secretary of Defense (Comptroller) said that he
would reserve $25.8 million in the 1988 account to make any future
adjustments and liquidations.
(See figure in printed edition.)Appendix III
--------------------
\1 On Feb. 28, 1998, unliquidated obligations in the account totaled
$136.3 million.
COMMENTS FROM THE DEPARTMENT OF
DEFENSE
========================================================== Appendix II
(See figure in printed edition.)
The following are GAO's comments on the letter from the Under
Secretary of Defense (OUSD) Comptroller, dated June 18, 1998.
GAO COMMENTS
1. We continue to believe that the Congress may wish to consider
offsetting DOD's 1999 budget request by $35.7 million in unreported
proceeds from land sales and leases that was not reflected in the
DOD's or the military services' 1999 budget request submissions.
Public law and DOD financial management regulations and guidance
provide that proceeds received from the transfer, lease, or disposal
of property due to the BRAC process shall be deposited into the 1990
base closure account and shall be reported in the annual DOD budget
estimate request. At the time we completed our review, we found no
evidence, nor had DOD provided supporting documentation to show the
$35.7 million had been or would be reprogrammed to cover
unanticipated fiscal year 1998 expenses or for the requirement to
transfer proceeds to a reserve account associated with the transfer
or disposal of a commissary or nonappropriated fund facility.
2. We agree that the military services have reprogrammed some funds
to other BRAC requirements. We also recognize that program
requirements tend to change, and in some cases disappear, as base
closure and realignment actions are implemented. However, the $54.8
million in unobligated balances represents additional available
funding that was not anticipated at the time the fiscal year 1999
budget request was submitted to the Congress in February 1998. The
$54.8 million was identified during interviews in March and April
1998 with officials from the services' major commands and the Army
Corps of Engineers. As a result of reviews of their unobligated
balances and unliquidated obligations during February, March, and
April 1998, the major commands and the Army Corps of Engineers found
that the requirements for these funds no longer existed. At the time
of our review, DOD, the Army, and the Navy could not provide
supporting documentation that showed where they would use the
unobligated balances, nor did they identify plans to redesignate for
other BRAC needs those funds we identified as potentially available
to offset DOD's fiscal year 1999 budget request. Only the Air Force,
in May 1998 after DOD submitted its budget estimate, identified a
need to use some of these funds to reduce a shortfall it identified
for two closing bases.
3. We continue to believe that the 1999 BRAC budget request contains
$40.6 million for two separate military construction projects that
are no longer required. DOD requested $31 million for DLA to build a
medical warehouse for the Army, even though the requirements for the
warehouse have not been determined. As of May 4, 1998, DLA officials
continued to question the Army's requirements for the warehouse and
were unable to provide a revised cost estimate for the project that
could be included in the 1999 budget request. It has been the OUSD
Comptroller's policy to not fund MILCON projects where requirements
are not determined. DOD agreed that the Army's MTMC headquarters
building request for $9.6 million had already been funded. DOD
asserts that these funds are still needed to refund previously
approved actions where the funds were reprogrammed to accommodate an
accelerated construction schedule. However, at the time of our
review, we found no evidence of deferred actions that still needed to
be fully funded.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV
NATIONAL SECURITY AND
INTERNATIONAL AFFAIRS DIVISION,
WASHINGTON, D.C.
Barry W. Holman, Associate Director
Thomas J. Howard, Assistant Director
William W. Crocker III, Assistant Director
Mark A. Little, Evaluator-in-Charge
Claudia J. Dickey, Evaluator
NORFOLK FIELD OFFICE
Tracy W. Banks, Evaluator
RELATED GAO PRODUCTS
Military Base Closures: Detailed Budget Requests Could Improve
Visibility (GAO/NSIAD-97-170, July 14, 1997).
Military Bases: Cost to Maintain Inactive Ammunition Plants and
Closed Bases Could Be Reduced (GAO/NSIAD-97-56, Feb. 20, 1997).
Military Base Closures: Reducing High Costs of Environmental Cleanup
Requires Difficult Choices (GAO/NSIAD-96-172, Sept. 5, 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).
Closing Maintenance Depots: Savings, Workload, and Redistribution
Issues (GAO/NSIAD-96-29, Mar. 4, 1996).
Military Bases: Case Studies on Selected Bases Closed in 1988 and
1991 (GAO/NSIAD-95-139, Aug. 15, 1995).
Military Bases: Environmental Impact at Closing Installations
(GAO/NSIAD-95-70, Feb. 23, 1995).
Military Bases: Reuse Plans for Selected Bases Closed in 1988 and
1991 (GAO/NSIAD-95-3, Nov. 1, 1994).
*** End of document. ***
|
NEWSLETTER
|
|
Join the GlobalSecurity.org mailing list
|
|
|
