Many BRAC Recommendations Not Expected to Show Savings, GAO Finds
The $14.1 billion, or 67 percent, escalation in costs to implement the 2005 round of base closures, along with the concomitant 72 percent drop in projected savings, has been widely discussed, especially since January when Defense Secretary Leon Panetta revealed the Pentagon’s intention to ask for a new BRAC authority.
The jump in the number of recommendations that are not expected to yield savings over a 20-year period had not been clear earlier, however. DOD now is expecting 75 out of 182 recommendations, or 41 percent, approved by the BRAC Commission to have a negative 20-year net present value, meaning that after 20 years upfront implementation costs still will outweigh savings, according to a new report by the Government Accountability Office.
In comparison, only four recommendations proposed by DOD in all four prior BRAC rounds combined were not projected to show a positive 20-year net present value, the congressional watchdog agency said.
For BRAC 2005 as a whole, the 20-year net present value of savings of $35.6 billion estimated by the commission in 2005 fell 72 percent to $9.9 billion, based on fiscal year 2011 data used by the department in its budget submission to Congress. The lower savings estimate is primarily due to the huge increase in one-time implementation costs.
The GAO reported highlighted nine recommendations that experienced a plunge of $1 billion or more in their projected 20-year net present value, including three that experienced a drop of at least $2 billion in estimated savings.
On the cost side, the agency identified 14 of the 182 recommendations that accounted for $10.2 billion, or 72 percent, of the round’s $14.1 billion rise in one-time implementation costs. Total costs for BRAC 2005 reached $35.1 billion.
GAO’s analysis of those 14 projects revealed that higher construction costs resulted primarily from requirements for new construction projects and additions to planned projects. Other reasons for cost increases included increased operation and maintenance costs — such as for furnishings to outfit new and renovated buildings and information technology needed to equip additional facilities — and higher environmental restoration costs.