Military Base Closures: Detailed Budget Requests Could Improve Visibility (Letter Report, 07/14/97, GAO/NSIAD-97-170)
The Senate report accompanying the 1997 Military Construction
Appropriations Bill required GAO to continue its annual review of the
Base Realignment and Closure (BRAC) accounts and make recommendations on
the validity of the Defense Department's (DOD) proposed budget request
for base closure activities. Four rounds of military base closings--in
1988, 1991, 1993, and 1995--have taken place. DOD is requesting $2.1
billion for BRAC in fiscal year 1998, including $40.7 million for
expenses remaining from the 1988 round, $215.1 million for the 1991
round, $629.7 million for the 1993 round, and $1,175.4 million for the
1995 round. This request is about $400 million less than the 1997
appropriation and about $1.8 billion less than the 1996 appropriation.
GAO's review of the 1998 request showed that data required to support
continued funding for the 1988 and 1991 closure rounds were identified
in the aggregate without detailed information about individual bases;
however, the information provided for the 1993 and 1995 rounds contains
these details. Lack of detailed information for the 1988 and 1991 rounds
limits the visibility of planned expenditures and estimated savings for
these bases. In past studies, GAO found high unobligated balances and
inaccurate cost estimates in BRAC funding. GAO's current review found
the high unobligated balances being reduced.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: NSIAD-97-170
TITLE: Military Base Closures: Detailed Budget Requests Could
Improve Visibility
DATE: 07/14/97
SUBJECT: Base closures
Unobligated budget balances
Special fund accounts
Defense budgets
Reprogramming of appropriated funds
Budget outlays
Property disposal
Presidential budgets
Military bases
IDENTIFIER: DOD Base Realignment and Closure Account
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Cover
================================================================ COVER
Report to Congressional Committees
July 1997
MILITARY BASE CLOSURES - DETAILED
BUDGET REQUESTS COULD IMPROVE
VISIBILITY
GAO/NSIAD-97-170
Military Base Closures
(709214)
Abbreviations
=============================================================== ABBREV
BRAC - base realignment and closure
DOD - Department of Defense
Letter
=============================================================== LETTER
B-275852
July 14, 1997
The Honorable Conrad Burns
Chairman
The Honorable Patty Murray
Ranking Minority Member
Subcommittee on Military Construction
Committee on Appropriations
United States Senate
Senate Report 104-287, dated June 20, 1996, on the 1997 Military
Construction Appropriations Bill required us to continue our annual
review of the base realignment and closure (BRAC) accounts and make
recommendations on the validity of the Department of Defense's (DOD)
proposed budget request for base closure activities. This report
responds to that request.
BACKGROUND
------------------------------------------------------------ Letter :1
In the late 1980s, DOD decided it needed to close numerous military
bases because changing national security needs resulted in a base
structure that was larger than required. Consequently, the Congress
enacted legislation that instituted BRAC rounds in 1988, 1991, 1993,
and 1995. BRAC legislation required that bases be closed within a
6-year period. Bases selected for closure in the 1988 round were
required to be closed by September 30, 1995, and bases in the 1991
round must be closed by September 30, 1997. Bases in the 1993 and
1995 rounds are to be closed by September 30, 1999, and September 30,
2001, respectively.
The Congress established two BRAC accounts to fund closure rounds.
The first account funded BRAC activity for the 1988 round, and the
second account funded BRAC activity in the 1991, 1993, and 1995
rounds. The Congress appropriates funds to these accounts by part,
and parts I through IV correspond to the individual rounds. After
September 30, 1995, funds needed for 1988 round closures are funded
from the second BRAC account. Because DOD is committed to the
environmental restoration of closing bases, additional funds may be
needed for environmental restoration, along with continuing
transition costs such as property management and disposal beyond the
6-year closure period.
DOD is requesting $2.1 billion for BRAC in fiscal year 1998. This
request includes $40.7 million for the 1988 round, $215.1 million for
the 1991 round, $629.7 million for the 1993 round, and $1,175.4
million for the 1995 round. The request is about $400 million less
than the fiscal year 1997 appropriation and about $1.8 billion less
than the fiscal year 1996 appropriation.
Our past reviews of BRAC funding have disclosed high unobligated
balances and inaccurate budget cost estimates. In July 1996, we
reported that the fiscal year 1997 budget could be reduced by $148
million because prior year appropriations were available to fund 1997
requirements.\1 We also reported that BRAC budget information was not
as effective as it could be for monitoring BRAC expenditures because
the budgets historically overstated operations and maintenance and
military construction costs and understated environmental costs. In
September 1995, we reported high unobligated balances of funds for
the 1988 closure round in the months before the expiration of the
round.\2 (A list of our recent related reports on BRAC financing is
provided at the end of this report.)
--------------------
\1 Military Bases: Potential Reductions to the Fiscal Year 1997 Base
Closure Budget (GAO/NSIAD-96-158, July 15, 1996).
\2 Military Bases (GAO/NSIAD-95-215R, Sept. 8, 1995).
RESULTS IN BRIEF
------------------------------------------------------------ Letter :2
Because the first BRAC account for 1988 base closures is no longer
funded and part II (1991 closure round) of the second BRAC account
will no longer be funded after September 30, 1997, DOD included
continuous funding requirements for 1988 and 1991 base closure
activities in part III of its fiscal year 1998 appropriation request.
Our review of the supporting documentation in DOD's fiscal year 1998
budget justification books showed that data required to support
continued funding for the 1988 and 1991 closure rounds was identified
in the aggregate without detailed information by individual bases;
however, the information provided for the 1993 and 1995 closure
rounds contains these details. The lack of detailed information for
the 1988 and 1991 closure rounds limits visibility of planned
expenditures and adjustments to estimated savings for these bases.
Further, if the current trend of prolonged environmental restoration
costs continues and detailed justification data continues to decrease
for older BRAC rounds, less visibility of planned expenditures and
changes to estimated savings will result.
The high unobligated balances in the BRAC account that we reported
last year are being reduced. If DOD continues to obligate BRAC funds
at the current rate, unobligated balances will decline from $986.5
million at the beginning of fiscal year 1997 to $200 million at the
end of the fiscal year. In addition, DOD and the Air Force reduced
their 1998 BRAC appropriation requests by a total of $124 million to
control future unobligated balances.
SUPPORTING BUDGET REQUEST
INFORMATION VARIES BY CLOSURE
ROUND
------------------------------------------------------------ Letter :3
DOD's current approach for providing support in the budget
justification books reduces visibility over planned expenditures for
individual bases. Funds for BRAC closure rounds have generally been
requested by part under BRAC accounts except where the 6-year closure
period for individual rounds has lapsed. After September 30, 1995,
the Congress provided continued funding needed for environmental
restoration and transition for bases closed in the 1988 closure
round--but included it in the second BRAC account established to fund
the 1991, 1993, and 1995 closure rounds.
For fiscal year 1998, DOD has continued its practice of not
requesting funds by specific BRAC rounds once the 6-year closure
period has passed. Thus, with the impending closure of the 1991
closure round (part II) on September 30, 1997, DOD included funding
requests for both the 1988 and 1991 closure rounds as part of its
funding requirements for part III (1993 round). The 1998 part III
request includes $40.7 million for the 1988 round and $98.3 million
for the 1991 round.\3 The supporting documentation for these requests
is limited to aggregate amounts for environmental restoration,
property management, and disposal. Unlike the submissions for the
1993 and 1995 rounds, the requests did not detail the funds required
at the base level. Therefore, the Congress has less visibility over
how the funds are to be expended.
DOD officials believe the information provided to the Congress in the
budget request is adequate. Further, they believe that the level of
information provided reduces DOD's budget justification paperwork and
review processes.\4 In the future, DOD plans to continue grouping
funds needed for closed bases still in transition with funds being
requested for bases of subsequent rounds not yet closed.
In addition to reducing congressional visibility, requesting funding
for closed bases still in transition as part of bases not yet
officially closed can cause savings estimates to be misstated for
each category of bases. To support its budget request, DOD provides
the Congress each year with savings estimates by round. These
estimates are affected if costs from completed rounds are included in
the appropriation parts that fund active rounds. For example, by
requesting $139 million for 1988 and 1991 round environmental
restoration, property management, and property disposal costs in part
III (1993 round) of the appropriation, the 1993 net savings estimate
is understated by 12.3 percent for fiscal year 1998 and 3.6 percent
for the 6-year closure period.
--------------------
\3 The DOD fiscal year 1998 request for the 1991 round is $215.1
million. Of this amount, the Navy requested $116.8 million in a
separate 1991 round budget justification book. The remaining $98.3
million is in part III (1993 round).
\4 DOD normally submits a justification book for each closure round
by service. By requesting post-closure funding as part of active
round requests, DOD can avoid preparing separate justification books
for closure costs that exist beyond the initial 6-year period.
UNOBLIGATED BALANCES HAVE
DECLINED
------------------------------------------------------------ Letter :4
The Senate Committee on Appropriations has expressed concern
regarding the slow pace of BRAC obligations and the resulting high
unobligated balances. Congressional rescissions and DOD actions
reduced unobligated balances by the end of fiscal year 1995, but
these balances increased in fiscal year 1996.
In July 1996, we reported that unobligated balances in the BRAC
account could be much higher at the end of fiscal year 1996 if
obligation rates were not increased. DOD's data indicated that
unobligated balances increased from $374.8 million at the end of
fiscal year 1995 to $986.5 million at the end of fiscal year 1996.
As shown in table 1, this increase was relative to both the prior
year appropriation and the overall amount appropriated for BRAC since
it began.
Table 1
Unobligated BRAC Balances at the End of
Fiscal Years 1995 and 1996
(Dollars in millions)
Percent of Percent of
all BRAC prior fiscal
Unobligated appropriation year BRAC
Fiscal year balance s appropriation
------------------------- ------------- ------------- -------------
1995 $374.8 3.9 13.5
1996 $986.5 7.4 25.3
----------------------------------------------------------------------
DOD originally estimated that unobligated balances would remain high
through fiscal year 1997 and the start of fiscal year 1998.
According to DOD's fiscal year 1998 BRAC budget request, unobligated
balances would be about $1.1 billion at the beginning of that fiscal
year. DOD now indicates that these balances are going to be much
lower. Service officials cited two examples of reasons for the
decrease: the Army's plans to obligate $176 million for construction
at Fort Leonard Wood and the Navy's increased priority on obligating
and liquidating BRAC funds.
Our analysis of DOD's fiscal year 1997 BRAC obligation data indicates
that unobligated balances could be much lower at the start of fiscal
year 1998 than the $1.1 billion estimated in DOD's budget. As of
March 31, 1997, unobligated balances in the BRAC accounts totaled
$1.8 billion. During the first half of fiscal year 1997, DOD
obligated $1.6 billion. If DOD continues to obligate BRAC funds at
this rate, unobligated balances would decline to $200 million at the
start of fiscal year 1998. DOD has also taken actions to control
future unobligated balances. For example, the Air Force reduced its
1998 BRAC budget request by $54 million. In addition, DOD reduced
the overall fiscal year 1998 BRAC appropriation request by another
$70 million. Both DOD and the Air Force cited the need to reduce
unobligated balances as the reason for decreasing the amount of their
requests.
MATTER FOR CONGRESSIONAL
CONSIDERATION
------------------------------------------------------------ Letter :5
Some funding will continue to be needed for closure costs beyond the
6-year period allowed for bases to officially close, and the number
of closed bases will continue to increase. Consequently, the
Congress may wish to consider requiring DOD to provide more complete
information in its budget requests for closed rounds that is
comparable to the information supplied for active ones. Although
this requirement would result in some additional justification
paperwork for DOD, it would afford the Congress better visibility
over the use of funds for all affected bases.
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :6
DOD provided oral comments on a draft of this report. DOD officials
agreed with our assessment that high unobligated balances in the BRAC
account are being reduced significantly. However, they did not
concur with our concern that DOD's current practice of providing
limited data for the earlier rounds under part III reduces
congressional visibility over BRAC spending and savings. The
officials stated that the data submitted in the budget justification
books, along with other financial data, provide the Congress with
sufficient visibility and that any additional data needed can be
easily obtained from the military services. Further, the officials
said that this approach reduces paperwork and any associated review
processes.
After considering DOD's comments, we revised the focus of our Matter
for Congressional Consideration in our draft report. Instead of
focusing on possible changes in the current approach to appropriating
BRAC funds, we refocused that section on the adequacy of supporting
information provided in DOD's BRAC budget requests. We believe that
1988 and 1991 round data provided in part III (1993 round) is not in
sufficient detail to provide the Congress with adequate visibility
for budget deliberations. Although 1988 and 1991 round planned
expenditures and estimated savings are presented in the budget
submission within the subaccounts (e.g., environmental and operations
and maintenance), they are not presented at the base level. Because
DOD currently excludes base-level information in its budget
submissions, the Congress does not have a complete picture of planned
expenditures and changes to estimated savings by base. We believe
that this data will become more important to the Congress as the
amount of funding for closed rounds is likely to increase and
detailed information over a larger share of the budget request is
reduced. Although DOD may have to do some additional paperwork, we
believe that submitting fully detailed justifications for each round
will provide the Congress with more complete information to exercise
its oversight role.
DOD officials also provided technical clarifications to the report.
We considered these comments and made changes where appropriate.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :7
Our review of the fiscal year 1998 BRAC budget focused on current
budget execution. We reviewed DOD reports to identify the overall
availability of prior year funds. To determine if the prior year
funds were being used in a timely manner, we reviewed (1) budget
execution data for BRAC environmental and operations and maintenance
funds and (2) Inspector General audits of construction projects. We
also compared DOD backup budget material with the budget request
submitted to the Congress to validate the amount of the
appropriations request.
In performing this review, we used the same accounting systems,
reports, and statistics the services use to monitor their programs.
We did not independently determine the reliability of this
information.
We conducted our work from October 1996 to May 1997 in accordance
with generally accepted government auditing standards.
---------------------------------------------------------- Letter :7.1
We are sending copies of this report to the Chairmen and Ranking
Minority Members of relevant congressional committees and
subcommittees; the Secretaries of Defense, the Army, the Navy, and
the Air Force; the Director of the Office of Management and Budget;
and other interested parties. We will also make copies available to
others on request.
Please contact me at (202) 512-8412 if you or your staff have any
questions about this report. Major contributors to this report were
John Klotz, Tom Monahan, Robert Poetta, and Randy Jones.
David R. Warren, Director
Defense Management Issues
RECENT GAO REPORTS RELATED TO BASE REALIGNMENT AND CLOSURE COSTS,
SAVINGS, AND FINANCING
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).
Military Bases: Case Studies on Selected Bases Closed in 1988 and
1991 (GAO/NSIAD-95-139, Aug. 15, 1995).
*** End of document. ***
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