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October 26, 2007: 

Congressional Addressees: 

Subject: Military Base Realignments and Closures: Transfer of Supply, 
Storage, and Distribution Functions from Military Services to Defense 
Logistics Agency: 

As a result of the 2005 base realignment and closure (BRAC) round, the 
military services are required to transfer to the Defense Logistics 
Agency (DLA) all of their supply, storage, and distribution functions 
at specified depot maintenance locations that are collocated with a DLA 
distribution depot.[Footnote 1] These transfer actions are part of a 
larger BRAC recommendation, commonly referred to as the Supply, 
Storage, and Distribution (SS&D) recommendation, that is intended to 
reduce both the number of supply distribution depots and related excess 
capacity, while providing the Department of Defense (DOD) with a 
logistics base that saves money and enhances the effectiveness of 
logistics support to operational forces. There has been disagreement 
among the services and DLA about whether certain personnel positions 
that include functions inherently involving both supply and maintenance 
operations at the services' industrial depots should transfer to DLA as 
part of this recommendation. The Air Force, Navy, and Marine Corps 
reached agreement with DLA about these positions in January, February, 
and April 2007, respectively. After repeated opposition to the transfer 
of certain positions, in July 2007 the Army agreed to comply with 
direction from the Office of the Secretary of Defense (OSD) on the 
specific functions and positions to transfer. DLA subsequently 
submitted its draft business plan for implementing the SS&D 
recommendation to OSD for approval on September 18, 2007. 

Because of the broad congressional interest in the implementation of 
the 2005 BRAC round recommendations, we prepared this report under the 
Comptroller General's authority to conduct evaluations on his own 
initiative. Our work was in response to concerns raised by several 
congressional offices about possible inefficiencies and disruptions in 
depot maintenance production that could potentially generate higher 
costs at the department's depot maintenance activities and affect 
equipment readiness during a critical time for maintenance and support 
of our nation's warfighters. Our objectives were to determine (1) what 
efforts have been made to determine which supply-related functions will 
transfer to DLA, (2) what are the military services' key concerns in 
implementing the transfer of functions, (3) the extent to which DLA's 
plans establish a transfer process that minimizes disruptions in depot 
maintenance, and (4) what are the estimated costs and savings 
associated with implementing this transfer of functions. This review is 
one in a series of reviews on the implementation of the closures and 
realignments in the BRAC 2005 round that we have undertaken under the 
Comptroller General's authority to conduct evaluations on his own 
initiative. As part of that work, we are currently reviewing the cost 
and savings estimates for the larger SS&D recommendation, as well as 
the progress and challenges in implementing the recommendation. 

To address these objectives, we focused on the 13 service industrial 
sites that are collocated with DLA depots and were included in the BRAC 
SS&D recommendation. We analyzed implementation planning data and 
interviewed officials at various levels within DOD, DLA headquarters, 
the military services' headquarters, and various service industrial 
depots cited in the SS&D recommendation.[Footnote 2] We also spoke with 
industrial depot union representatives for the employees who would 
potentially be affected by the transfers in each of the military 
services. In addition, we reviewed DLA's cost and savings estimates as 
presented in its September 2007 draft SS&D business plan and supporting 
documents. We also relied on interviews with DLA and service officials 
and analyses conducted as part of our ongoing work on implementation of 
the SS&D recommendation. We reviewed DLA's planning actions regarding 
the transfer of functions virtually as they were occurring. While we 
determined that the data presented in DLA's planning documents were 
sufficiently reliable for the purposes of this report, it should be 
noted that BRAC business plans are considered "living" documents and 
the data presented therein represent a point in time as plans are 
subject to change as implementation proceeds. Moreover, since this 
report contains data from the draft business plan for the SS&D 
recommendation, the data used in this report could change if the 
business plan is revised. 

We relied heavily on testimonial evidence as to actions that are 
planned to occur in the future because little other evidence existed at 
the time of our review. Specifically, because the implementation 
planning process is not yet complete and no SS&D functions are expected 
to transfer prior to October 2007, little documentary evidence was 
available to assess DLA and the services' planning efforts. Moreover, 
at the time of our review, only the Air Force and Navy had begun 
detailed implementation planning with DLA at the depot level. Only 
after the BRAC SS&D recommendation is fully implemented can the precise 
effects of the transfer of SS&D functions to DLA on depot maintenance 
be determined. Furthermore, since this review only focused on the 
industrial sites included in the BRAC recommendation, we did not 
include in our review nine other service sites[Footnote 3] that were 
not included in the BRAC recommendation but that were required by the 
Under Secretary of Defense for Acquisition, Technology, and Logistics 
in a June 22, 2005, administrative decision to transfer similar supply- 
related functions and associated personnel to DLA. We conducted our 
review from June 2007 through September 2007 in accordance with 
generally accepted government auditing standards. More detailed 
information on our scope and methodology appears in enclosure I. 

Results in Brief: 

DLA and the services have taken several actions in an effort to reach 
agreement on which SS&D functions and related positions and inventories 
are to transfer to DLA as a result of implementing the 2005 BRAC SS&D 
recommendation. These actions have been ongoing since late 2005 when 
DLA began its planning process for implementing the consolidation of 
SS&D functions across DOD. Some key actions include defining SS&D 
functions at the beginning of the planning process, contracting a study 
to assess the effects and risks associated with the transfers, 
establishing integrated process teams to work through problems and 
concerns and identify potential solutions, and conducting detailed 
analyses of depot positions to identify transfer candidates. DLA has 
also worked with the services to develop comprehensive action plans 
that include specific and detailed actions that identify each task's 
duration, including start and completion dates; percentage completed; 
organization and personnel assigned; criticality of task; and 
milestones. For example, as of June 6, 2007, the action plan for 
implementing the SS&D recommendation at Warner Robins Air Logistics 
Center included these details for 773 organizational areas and tasks. 
As of April 2007, DLA had reached initial agreements with the Air 
Force, Navy, and Marine Corps on which functions and positions are to 
transfer to DLA; however, the Army opposed transferring positions it 
considers related to its production functions. On July 20, 2007, the 
Under Secretary of Defense for Acquisition, Technology, and Logistics 
directed the Army to transfer 191.3 full-time equivalent positions to 
DLA, and the Army subsequently confirmed that it would transfer these 
positions to DLA as directed. 

Although the services have reached agreement with DLA on the specific 
functions to be transferred, officials from all of the services have 
expressed concerns in four key areas regarding the transfers. First, 
officials from all of the services expressed concern that the insertion 
of DLA into the internal operations of their depot maintenance 
activities may hinder their ability to meet depot production schedules 
and maintain equipment readiness. The Army's continued reluctance to 
ultimately reach agreement with DLA regarding the positions to be 
transferred stems from concerns related to its work-in-process 
operations, which comprise highly integrated production and supply 
functions with many of the same personnel performing both functions. 
Army officials maintained that these positions should not transfer to 
DLA because of their production functions. Second, depot maintenance 
officials expressed concern that if the transfer of functions to DLA 
takes place using DLA's existing price structure, it would increase the 
cost of depot maintenance operations and the depots will have to pass 
these additional costs on to their customers by increasing their hourly 
rates, which, in turn, would affect their operation and maintenance 
budgets. Third, officials from each of the services expressed concern 
about the future maintenance, upgrades, and usage of service 
information technology systems transferring with depot maintenance 
supply functions to DLA. Fourth, depot maintenance and service 
officials expressed concerns about several human capital issues, 
ranging from turnover among affected employees and limited promotion 
potential to the possibility of outsourcing transferred positions to 
the private sector. The extent to which any of these concerns may 
actually materialize is unknown, as implementation has not yet begun. 

DLA is developing plans to minimize the risk of disrupting depot 
maintenance, but it faces several challenges. While no plan can 
guarantee that no disruptions will occur, DLA's evolving plans 
incorporate several features that we believe, if implemented as 
intended, are likely to lessen the risk associated with the transfer of 
functions. These features, some of which are designed to address 
challenges faced by DLA and the services, include the transferring of 
SS&D positions on an "as-is, where-is" basis, which means that 
employees filling those positions will perform the same duties at the 
same location. In addition, DLA plans to time phase the transfer of 
SS&D functions across the implementation period, which extends to 
September 2011. The general order of progression begins with the Air 
Force in October 2007, followed in succeeding years by the Navy, then 
the Marine Corps, and then the Army. DLA has established integrated 
process teams along with a plan of action and milestones, and has 
flexibility to adjust the numbers of positions to transfer if further 
analysis warrants. Furthermore, DLA and the Air Force have negotiated a 
memorandum of agreement to establish business rules that set forth the 
requirements and responsibilities for implementation planning. DLA and 
the other services are to complete such agreements as implementation 
continues. Finally, DLA and the services plan to negotiate agreements 
that will establish responsibilities, metrics to measure performance, 
costs, and business rules that should help minimize the risk of 
disrupting depot maintenance. 

Our analysis of the BRAC Commission cost and savings estimates[Footnote 
4] and DLA's planning documents shows that over the fiscal year 2006 to 
2011 BRAC implementation period, estimated costs have increased by 
about $45 million and estimated savings have decreased--by about $1 
billion--for transferring the SS&D functions and associated inventories 
from the military services' industrial depots to DLA. We noted changes 
to the estimates in three key areas: information technology costs, 
civilian personnel savings, and inventory-related savings. First, we 
found that as of September 2007, integrating the services' inventory 
management systems with DLA's systems is expected to cost $79 million-
-an increase of $45 million above the original 2005 BRAC Commission 
estimate. Second, the estimated savings associated with reducing 
civilian personnel are expected to be almost $11 million--a decrease of 
about $13 million--due to the elimination of fewer positions. There are 
no savings associated with the immediate transfer of positions from the 
services to DLA because the transfers are being made on an "as-is, 
where-is" basis. Instead, the estimate for civilian salary savings was 
based on the expectation that DLA would eliminate in the future 6.5 
percent of the positions that transferred from the services' industrial 
depots to DLA, beginning in fiscal year 2007. The 6.5 percent factor 
was used by the BRAC Commission to estimate eliminations and personnel 
savings. DLA has used this same factor to project personnel savings. 
DLA officials told us that they plan to achieve this goal over time 
through attrition. Third, we found that all but about $31 million of 
the initial estimated savings of about $1 billion for transferring SS&D 
functions and associated inventories have been eliminated. The BRAC 
Commission's estimate for transferring SS&D functions and associated 
inventories from the services' industrial depots to DLA was based on 
data generated by DOD during the BRAC decision-making process, and the 
belief that eliminating duplicate inventory--inventory stored by both 
the services and the DLA depots--would produce savings. However, after 
further review, DLA and the services found that the data were flawed. 
For example, war reserve materiel, materiel held for other customers, 
and materiel stored at the Red River Army Depot were incorrectly 
included in the BRAC estimating model. Therefore, the estimated savings 
associated with these items will not occur. Once DLA realized this, it 
replaced the initial estimated savings with about $203 million in 
projected savings of which almost $172 million were derived from 
inventory reduction initiatives that are not directly a result of BRAC 
actions. Finally, cost increases for certain operation and maintenance 
costs may be associated with the transfer of SS&D functions, but at the 
time of our review these cost data were not available to determine the 
extent to which these costs are applicable to the transfer of 
functions. 

In commenting on a draft of this report, DOD concurred in principle 
with our findings and conclusions. DOD further provided comments that 
were intended to clarify its estimates for the savings to be achieved 
for the transfer of supply-related functions that it believes are 
attributable to BRAC. DOD's comments and our evaluation of them are 
discussed on page 23. 

Background: 

On May 13, 2005, the Secretary of Defense made public his 
recommendations for the 2005 BRAC round. The BRAC Commission, 
established by law[Footnote 5] as an independent entity to evaluate 
DOD's recommendations, presented its findings, along with its own 
recommendations, to the President on September 8, 2005. The President 
approved the Commission's recommendations in their entirety and 
forwarded them to Congress on September 15, 2005. When Congress did not 
pass a joint resolution of disapproval of the recommendations, they 
became effective on November 9, 2005. DOD has until September 15, 2011, 
to complete the implementation of all recommendations. In our July 2005 
report on the 2005 BRAC round process and recommendations,[Footnote 6] 
we reported that the 2005 BRAC round was different from prior BRAC 
rounds in that relatively few of the recommendations focused on closing 
active bases. In establishing goals for the 2005 BRAC round, the 
Secretary of Defense expressed his interest in "transforming DOD by 
aligning the infrastructure with the defense strategy"; consequently, 
several of the recommendations from the 2005 round involved business 
process reengineering efforts.[Footnote 7] The selection criteria 
incorporated into the legislation authorizing the 2005 BRAC 
round[Footnote 8] required DOD to give priority to four criteria 
dealing with military value, while the extent and timing of potential 
costs and savings was one of several "other" criteria that were 
required to be considered when finalizing proposed recommendations for 
realignments and closures. 

The SS&D recommendation from the 2005 BRAC round is a business process 
reengineering recommendation that is intended to reconfigure DLA's 
distribution depot network to save money and enhance the effectiveness 
of logistics support to operational forces. It also includes provisions 
to consolidate all SS&D functions and inventories at various designated 
service industrial locations to DLA. The complete text of this 
recommendation is reprinted in enclosure II. In our 2005 report, we 
stated that there was uncertainty regarding the magnitude of savings 
likely to be realized in some aspects of the DLA-managed BRAC 
recommendations, given assumptions regarding expected efficiency gains 
from business process reengineering efforts that had not been 
validated. We reported that the magnitude of the estimated savings was 
uncertain because the estimates were based on assumptions that were 
subject to only limited testing and had not been validated. We found 
that the savings estimates for the DLA-managed BRAC recommendations, 
for the most part, were based on historical documentation, which time 
did not allow us to validate. We reported that this could lead to a 
false sense of savings and lead to premature reductions in affected 
budgets in advance of actual savings being fully realized, as has 
sometimes occurred in past efforts to achieve savings through business 
process reengineering efforts. 

In September 2005, DLA was designated as the business manager for 
implementing the SS&D recommendation within DOD. DLA is responsible for 
developing and updating a business plan for this recommendation and 
coordinating implementation efforts among all of the services. The 
business plan is intended to provide, among other things, details on 
actions and time frames, along with estimated costs and savings 
associated with implementing the recommendations. The SS&D business 
plan was submitted to OSD for approval on September 18, 2007. Under OSD 
direction, DLA is required to update the plan semiannually in February 
and August of each year until implementation actions are complete. Once 
implemented as planned, the SS&D recommendation will change DLA's 
wholesale storage and distribution infrastructure into four hub-and- 
spoke geographical regions within the continental United States, with 
each region having one hub, known as a strategic distribution 
platform,[Footnote 9] and multiple spokes, known as forward 
distribution points.[Footnote 10] Each strategic distribution platform 
is designed to have state-of-the-art capabilities for packaging and 
shipping supplies to its designated customers. Distribution depots, no 
longer needed for regional supply, will be realigned as forward 
distribution points and will provide dedicated receiving, storing, and 
issuing functions solely in support of on-base industrial customers, 
such as maintenance depots, shipyards, and air logistics centers. Under 
this recommendation, forward distribution points will consolidate all 
supply and storage functions supporting industrial activities, to 
include those internal to depots and shipyards, and those at any 
intermediate levels that may exist. Figure 1 identifies the locations 
of the reconfigured SS&D depot system. 

Figure 1: Locations of DLA's Planned Reconfiguration of the Supply, 
Storage, and Distribution Depot System: 

This figure is a map of the locations of DLA's planned reconfiguration 
of the supply, storage, and distribution depot system. 

[See PDF for image] 

Source: DLA. 

[End of figure] 

There are 36 DLA and service SS&D activities, both inside and outside 
of the continental United States. However, only 26 of these activities-
-13 DLA depots that are collocated with 13 of the services' industrial 
facilities--are affected by the SS&D recommendation. One DLA 
distribution depot, located at the Red River Army Depot in Texas, was 
not mentioned by the BRAC Commission in its September 2005 report, and 
thus this depot is not subject to any BRAC 2005 actions. Nine other of 
the services' industrial facilities--two Army depots, one Air Force 
depot, and six Navy industrial activities--would be unaffected by the 
changes, because they are also not included in the BRAC recommendation. 
However, in order to establish a more effective and efficient supply 
chain, an administrative decision made by the Under Secretary of 
Defense for Acquisition, Technology, and Logistics on June 22, 2005, 
directed that the supply and storage functions and associated personnel 
and facilities at these 9 service facilities should also be transferred 
in place to DLA. 

Beginning in October 2007, the Air Force is scheduled to be the first 
service to transfer its SS&D functions to DLA at the Warner Robins Air 
Logistics Center in Georgia. A draft plan of action with milestones has 
been developed and the Air Force is proceeding with the implementation 
of the transfer. The other two air logistics centers, located at Tinker 
Air Force Base in Oklahoma and Hill Air Force Base in Utah, are 
scheduled to transfer their SS&D functions to DLA after Warner Robins. 
In May 2007, the Navy held pre-implementation meetings and established 
pre-implementation integrated process teams with DLA to begin its 
negotiations for developing a similar plan of action and milestones for 
its industrial locations.[Footnote 11] DLA officials told us that 
implementation of the BRAC SS&D recommendation at the Marine 
Corps[Footnote 12] and Army depots[Footnote 13] will follow the Navy's 
implementation. 

DLA and the Services Have Taken Actions to Reach Agreement on Which 
Functions Will Transfer: 

DLA and the services have taken several actions in an effort to reach 
agreement on which SS&D functions and related positions and inventories 
are to transfer to DLA as a result of the 2005 BRAC SS&D 
recommendation. As part of the process of formulating recommendations 
for BRAC, the Supply and Storage Joint Cross-Service Group,[Footnote 
14] which included DLA and service officials, defined supply, storage, 
and distribution services in its May 2005 report as requisitioning, 
receiving, storing, issuing, and distributing supplies and materiel as 
well as materiel management, stock control, materiel acquisition, 
disposal, and reutilization.[Footnote 15] DLA has used this definition 
to guide its actions for implementing the consolidation of SS&D 
functions across DOD. Following the approval of the BRAC 
recommendations in November 2005, DLA and the services began the 
planning process for implementing the SS&D recommendation. Initially, 
as planning efforts got under way, DLA contracted with the Logistics 
Management Institute (LMI) to assess the SS&D operations at all 
affected depots, identify the risks to depot operations of transferring 
these functions, and recommend which functions should transfer to DLA 
at each site. This study included site visits to all affected 
industrial sites by DLA and LMI officials as well as extensive data 
gathering and analyses. Although the study's report recommended that 
DLA be conservative in interpreting which functions it would assume 
responsibility for, DLA and OSD officials believed that the study did 
not take into consideration the language in the BRAC recommendation 
requiring the transfer of "all" SS&D functions to DLA. 

Furthermore, DLA officials conducted visits to affected depots and met 
with key officials to better understand depot operations at each site. 
These visits, in conjunction with the LMI study, helped to identify 
SS&D functions. After these functions were identified in late 2006, DLA 
negotiated agreements with the Air Force and Navy on which SS&D 
positions would transfer and established timelines for these transfers. 
DLA plans to use integrated process teams,[Footnote 16] which will 
include representatives from DLA and the services, to work through 
problems and concerns related to the transfer of functions at each 
affected depot and identify potential solutions. For example, the SS&D 
integrated process team at Warner Robins partnered with the Air Force 
to conduct a manpower study that resulted in an increase of 99 
positions--from 166 to 265--that would transfer to DLA from the Warner 
Robins Air Logistics Center. Similar manpower studies also increased 
the number of positions that are to be transferred to DLA at the Air 
Force's other two air logistics centers. 

The Marine Corps and the Army were more hesitant to transfer the SS&D 
functions to DLA because some of the positions considered for transfer 
included highly integrated production and supply functions, with the 
same personnel performing both functions, and there was not a clear 
distinction as to which positions should transfer. The OSD BRAC Office, 
reporting to the Under Secretary of Defense for Acquisition, 
Technology, and Logistics, subsequently worked with DLA and the two 
services on a position-by-position analysis of jobs at affected Marine 
Corps and Army depots to identify transfer candidates. This analysis 
identified job series, grade, and title; the number of full-time 
equivalent positions held by civilian, military, and contractor 
personnel; major tasks and functions performed; the proposed 
classification of the position (e.g., production, supply, storage, or 
distribution); and the rationale or support for the proposed 
classification. This position analysis facilitated a subsequent 
agreement among the Under Secretary of Defense for Acquisition, 
Technology, and Logistics; DLA; and the Marine Corps on April 30, 2007, 
that supply "begins when a demand signal is generated by a production 
planner or artisan in the production planning system and that all 
subsequent requisition processing, expediting, local purchase, credit 
card purchase, status monitoring, receive, stow, and issue functions, 
etc. that take place before material hand-off into the production 
stream are examples of supply, storage, and distribution activities." 

As of April 2007, DLA had reached initial agreements with the Air 
Force, Navy, and Marine Corps on which functions and positions are to 
transfer to DLA, with the understanding that the number of positions 
may increase or decrease as implementation matures. However, the Army 
opposed transferring positions it considered related to its production 
functions due to concerns about potential impacts on its ability to 
meet maintenance production schedules. On July 20, 2007, after DLA and 
the Army made several unsuccessful attempts to resolve these 
differences, the Under Secretary of Defense for Acquisition, 
Technology, and Logistics directed the Army to transfer 191.3 full-time 
equivalent positions to DLA. These positions were identified using the 
same position analysis and definition of supply agreed upon by the 
Marine Corps. On July 26, 2007, the Army confirmed that it would 
transfer the 191.3 full-time equivalent positions to DLA as directed. 
Table 1 shows the number of full-time equivalent civilian and 
contractor positions anticipated to transfer to DLA at each collocated 
industrial depot as of September 2007. 

Table 1: Number of Full-time Equivalent Civilian and Contractor 
Positions Anticipated to Transfer to DLA at Each Collocated Depot as of 
September 2007: 

Service: Air Force; 
Depot Location: Hill Air Force Base, UT; 
Estimated number of full-time equivalent civilian position transfers: 
231.00; 
Estimated number of full-time equivalent contractor position transfers: 
0; 
Total full-time equivalent position transfers: 231.00. 

Service: Air Force; 
Depot Location: Robins Air Force Base, GA; 
Estimated number of full-time equivalent civilian position transfers: 
265.00; 
Estimated number of full-time equivalent contractor position transfers: 
0; 
Total full-time equivalent position transfers: 265.00. 

Service: Air Force; 
Depot Location: Tinker Air Force Base, OK; 
Estimated number of full-time equivalent civilian position transfers: 
365.00; 
Estimated number of full-time equivalent contractor position transfers: 
0; 
Total full-time equivalent position transfers: 365.00. 

Service: Navy; 
Depot Location: Marine Corps Air Station Cherry Point, NC; 
Estimated number of full-time equivalent civilian position transfers: 
88.00; 
Estimated number of full-time equivalent contractor position transfers: 
0; 
Total full-time equivalent position transfers: 88.00. 

Service: Navy; 
Depot Location: Naval Air Station Jacksonville, FL; 
Estimated number of full-time equivalent civilian position transfers: 
29.00; 
Estimated number of full-time equivalent contractor position transfers: 
42.00; 
Total full-time equivalent position transfers: 71.00. 

Service: Navy; 
Depot Location: Naval Station Norfolk, VA; 
Estimated number of full-time equivalent civilian position transfers: 
120.00; 
Estimated number of full-time equivalent contractor position transfers: 
37.00; 
Total full-time equivalent position transfers: 157.00. 

Service: Navy; 
Depot Location: Naval Station Bremerton, WA; 
Estimated number of full-time equivalent civilian position transfers: 
89.00; 
Estimated number of full-time equivalent contractor position transfers: 
0; 
Total full-time equivalent position transfers: 89.00. 

Service: Navy; 
Depot Location: Naval Station San Diego, CA; 
Estimated number of full-time equivalent civilian position transfers: 
49.00; 
Estimated number of full-time equivalent contractor position transfers: 
36.00; 
Total full-time equivalent position transfers: 85.00. 

Service: Marine Corps; 
Depot Location: Marine Corps Logistics Base Albany, GA; 
Estimated number of full-time equivalent civilian position transfers: 
25.00; 
Estimated number of full-time equivalent contractor position transfers: 
34.00; 
Total full-time equivalent position transfers: 59.00. 

Service: Marine Corps; 
Depot Location: Marine Corps Logistics Base Barstow, CA; 
Estimated number of full-time equivalent civilian position transfers: 
20.60; 
Estimated number of full-time equivalent contractor position transfers: 
43.00; 
Total full-time equivalent position transfers: 63.60. 

Service: Army; 
Depot Location: Anniston Army Depot, AL; 
Estimated number of full-time equivalent civilian position transfers: 
63.11; 
Estimated number of full-time equivalent contractor position transfers: 
5.00; 
Total full-time equivalent position transfers: 68.11. 

Service: Army; 
Depot Location: Corpus Christi Army Depot, TX; 
Estimated number of full-time equivalent civilian position transfers: 
15.53; 
Estimated number of full-time equivalent contractor position transfers: 
40.00; 
Total full-time equivalent position transfers: 55.53. 

Service: Army; 
Depot Location: Tobyhanna Army Depot, PA; 
Estimated number of full-time equivalent civilian position transfers: 
45.66; 
Estimated number of full-time equivalent contractor position transfers: 
22.00; 
Total full-time equivalent position transfers: 67.66. 

Total; 
All transfer sites; 
Estimated number of full-time equivalent civilian position transfers: 
1,405.90; 
Estimated number of full-time equivalent contractor position transfers: 
259.00; 
Total full-time equivalent position transfers: 1,664.90. 

Source: DLA's September 21 2007, draft SS&D business plan. 

[End of table] 

Services Have Several Key Concerns regarding the Transfer of Supply, 
Storage, and Distribution Functions: 

Although each service has agreed to transfer to DLA specific supply, 
storage, and distribution functions, officials from each of the 
services have expressed several key concerns regarding the transfers. 
These concerns include the following: (1) DLA's involvement in depot 
operations may hinder their ability to meet depot production schedules 
and maintain equipment readiness, (2) uncertainty as to the pricing 
mechanism for DLA services, (3) information technology interfaces with 
service and DLA systems, and (4) human capital issues. The extent to 
which any of these concerns may actually materialize is unknown, as 
implementation has not yet begun. 

Services Concerned That DLA's Insertion into Depot Operations May 
Hinder Their Ability to Meet Depot Production Schedules and Maintain 
Equipment Readiness: 

Officials from all four services expressed concern that the insertion 
of DLA into the internal operations of their depot maintenance 
activities may hinder their ability to meet depot production schedules 
and maintain equipment readiness. All stated that as long as they 
receive the proper materiel at the correct time, they had no preference 
as to who provides the materiel. However, they expressed concern that 
DLA may not be able to provide the same level of service that they 
currently provide for themselves. To the extent that the level of 
service provided is lower under DLA, these officials believed it would 
degrade their ability to meet production schedules and maintain 
equipment readiness, which could potentially affect ongoing operations. 
However, DLA officials told us that they have asked the services for 
metrics and baseline data and found that the services may not have all 
of the supply function metrics and historical data needed for DLA to 
benchmark its performance against the level of service that the 
services have provided for themselves. Officials from all of the 
services commented that as the performance metrics are developed for 
the functions transferring to DLA, it would be more beneficial if they 
were tied to meeting depot maintenance production schedules instead of 
those typically associated with supply performance. Development of 
metrics is the focus of one of several integrated process teams 
cochaired by DLA and each service. DLA officials stated that metrics 
are to be jointly agreed to and are to measure support for depot 
maintenance production and traditional supply effectiveness. 

In addition, depot maintenance officials said that they have some 
concerns that DLA may not be able to retain an appropriate staffing 
level to carry out the transferred functions. Service officials said 
that depot commanders currently have the flexibility and authority to 
handle surge requirements or downsize the workforce, adjust operating 
schedules, working hours, and take other staffing actions as needed to 
adjust to varying workload levels and requirements. For example, Army 
depot maintenance officials informed us that a depot can quickly 
rightsize its supply function by moving personnel around to other areas 
of the depot as required. They are concerned that DLA with its smaller 
workforce may not be able to rightsize as quickly to meet surge 
requirements or to reduce unnecessary costs when depot workloads drop 
off. However, since agreements have not yet been reached to define the 
command relationship between the depot commanders and DLA, depot 
command officials are concerned that the depot commanders may not be 
able to establish and modify the work schedules for DLA employees or 
direct them to work overtime during surge periods. Depot command 
officials are also concerned that the depot commanders will have little 
recourse if DLA fails to perform well, and sought authority for depot 
commanders to have input into the performance rating of the DLA 
representative in charge of depot SS&D functions. Furthermore, when 
primary sources of supply cannot be obtained in time to meet schedules, 
depot commanders also have the authority to make purchases with credit 
cards, even though that may not be the most cost-effective source. 
Uncertainty and concern therefore exist among the services as to 
whether this same flexibility would continue with DLA in charge of SS&D 
functions. According to DLA officials, even though the local purchasing 
function is transferring to DLA, the services are not restricted from 
maintaining a purchase card as a contingency measure. 

An integral part of the command and control issue pertains to a process 
referred to as work in process. Work in process consists of the 
components[Footnote 17] and major subassemblies[Footnote 18] removed 
from weapon systems--such as tanks, ships, tracked and wheeled 
vehicles, and aircraft--during disassembly, as well as the new items 
purchased to support weapon system depot maintenance. During 
disassembly, the components and major subassemblies are removed from 
the weapon system, cleaned, and evaluated for future use. Items found 
serviceable are held until they are needed for the reassembly of the 
weapon system. Items needing repair are sent to the depots' back shops 
or subcontractors for repair, and once repaired are held until they are 
needed to support reassembly; other items may be found broken or worn 
beyond repair and must be replaced with new items. In implementing the 
BRAC recommendation, the OSD BRAC Office has distinguished between work-
in-process materiel that is stored within proximity to the depot 
maintenance production line and that which is temporarily stored away 
from the line until it is needed to support weapon system reassembly. 
According to the OSD BRAC Office, the management of materiel within the 
immediate production area is part of the production process and 
consequently is to be retained by the service maintenance depots. 
However, the OSD BRAC Office has defined the management of materiel 
held and stored away from the production area prior to weapon system 
reassembly as an SS&D function that should transfer to DLA. 

Army officials disagree with this distinction and told us that the 
implementation of the SS&D recommendation inserts DLA into the core of 
the Army's depot maintenance mission and breaks the unity of command 
that the depot commanders currently have over the maintenance 
production process. The Army's continued reluctance over time to reach 
agreement with DLA regarding the positions to be transferred stems from 
concerns related to its work-in-process operations. Work in process 
comprises highly integrated production and supply functions, with many 
of the same personnel and equipment performing both functions. Army 
officials maintained that these highly integrated positions should not 
transfer to DLA because of their production functions. In particular, 
the Army is concerned about transferring storage functions and 
positions associated with work-in-process materiel. The Army contends 
that work-in-process materiel should be retained under the depot 
commander's control, regardless of whether it is held on, near, or away 
from the production line. This contention is because the storage and 
distribution of repairable, serviceable, and new materiel is critical 
to supporting the weapon systems' programmed depot maintenance 
schedules, which are ultimately the responsibility of the maintenance 
depot commander. For example, using OSD's definition, depot maintenance 
employees would remove the items from a tactical vehicle as it is 
disassembled and evaluate whether the items require repair work. Items 
not requiring repair would be sent to DLA to be stored until they are 
needed for final reassembly. Items requiring repair would be sent to 
the appropriate depot repair shops and, once repaired, they also would 
be sent to DLA for storage. When needed for final reassembly, the 
depot's production planners would recall the items from DLA for 
distribution to the depot assembly line. According to the Army, these 
internal movements of equipment and materiel would now involve two 
separate organizations and two separate chains of command for what is 
really a single mission--depot maintenance. Without direct control of 
work in process, Army officials told us that a commander's ability to 
make monthly and daily production decisions and rapidly shift resource 
priorities in response to changing customer requirements will be 
severely restricted, which could potentially adversely affect 
readiness. DLA and the OSD BRAC Office disagreed with the Army because 
the recommendation language requires that "all" SS&D functions are to 
transfer. 

The Army elevated its concerns to the Under Secretary of Defense for 
Acquisition, Technology, and Logistics on several occasions, formally 
disagreeing with OSD's definition of work in process and in one 
instance requesting an exception from this definition for the Army. 
However, on July 20, 2007, after a joint assessment of the production 
functions that must transfer to DLA by the Army, DLA, and the DOD 
Office of General Counsel, the Under Secretary of Defense for 
Acquisition, Technology, and Logistics directed the Army to transfer to 
DLA all of the SS&D functions specified in the BRAC recommendation in 
accordance with the OSD definition. On July 26, 2007, the Army agreed 
to comply with OSD's direction. 

The Air Force, Navy, and Marine Corps also have work-in-process 
materiel embedded in their production line depot maintenance 
operations. The Marine Corps' work-in-process operation is very similar 
to the Army's in that components and subassemblies are stored at 
locations away from the production line. While the Marine Corps has 
agreed to transfer all of its SS&D functions to DLA, it shares some of 
the same concerns as the Army about potentially losing control of its 
work in process when the SS&D functions transfer to DLA. The work-in- 
process operations for the Air Force and the Navy's aviation work-in- 
process operations at its fleet readiness centers are also similar to 
the Army's, but their work-in-process materiel is stored in the same 
general area as the production line. As a result, officials from these 
two services stated that they expect to retain control over their work- 
in-process materiel and not transfer this materiel to DLA. 

Finally, Army and Marine Corps depot officials are concerned that 
transferring the storage and distribution management of their work in 
process to DLA will erode many of the gains made in recent years in 
reducing repair cycle time and increasing depot capacity through 
business process improvement initiatives. According to Army and Marine 
Corps depot officials, one initiative that enabled them to reduce 
repair cycle time was moving and temporarily storing work-in-process 
materiel away from the production line until needed. These officials 
believed that transferring this materiel to DLA could produce 
unintended consequences. Specifically, Army and Marine Corps depot 
officials are concerned that the transfer of the storage and 
distribution management of work-in-process to DLA could result in depot 
production managers lacking confidence in the timely return of work in 
process materiel. This could potentially result in depot production 
managers finding ways to avoid sending work in process materiel to 
temporary storage away from the production line, thereby eroding many 
of the efficiencies gained through process improvement initiatives. To 
the extent that such erosion occurs, it could hinder the services' 
ability to meet depot production schedules and maintain equipment 
readiness. 

Services Concerned That Use of DLA's Existing Pricing Structure Would 
Lead to an Increase in the Overall Cost of Depot Maintenance: 

Depot maintenance officials expressed concern that if the transfer of 
production integrated supply functions to DLA takes place using DLA's 
existing price structure, it will increase the cost of depot 
maintenance operations and depots will have to pass these additional 
costs on to their customers by increasing their hourly rates. Customers 
would thus pay more for equipment maintenance, which, in turn, would 
affect their operation and maintenance budgets. According to depot 
officials, under DLA's standard schedule of supply transaction charges, 
customers are charged for each transaction. As a result, they are 
concerned that transferring the integrated supply functions to DLA will 
substantially increase the cost to the depots and their customers if 
DLA retains its current pricing practices. DLA's plans for developing a 
new pricing methodology as it gains experience in managing the depots 
are discussed below, in the section on performance-based agreements. 

Services Concerned about Maintaining and Upgrading Depot Information 
Technology Systems and Their Interfaces with DLA Systems: 

Officials from each of the services expressed concern about the future 
maintenance and upgrades of service information technology systems 
transferring with depot maintenance supply functions to DLA, as well as 
broader implications to the wider service network enterprise resource 
planning systems that are dependent on depot maintenance information. 
DLA's supply organizations use DLA's distribution supply information 
technology system for various supply-related processing functions, such 
as receipt, storage location, issue, and inventory accountability. The 
manner in which DLA's information systems would interface with the 
services' depot maintenance information systems is unclear. For 
example, Air Force officials said that they have agreed to turn their 
maintenance tracking system over to DLA and DLA has agreed to use it. 
However, Air Force officials expressed concerns that when DLA is faced 
with competing resource demands for improvements to information 
technology in the future, DLA may not choose to maintain or upgrade the 
system as the Air Force would and may over time replace the Air Force 
system with DLA's own information technology system in the depot. Air 
Force officials expressed concern that DLA's system might not be 
interoperable with the Air Force's systems, and the Air Force could 
lose its ability to track the status of reparable items, which could 
impede production. In addition, according to Army depot officials, 
DLA's information technology system is not compatible with the standard 
depot systems used by the Army's depots for production control or 
supply storage and retrieval, which are configured to interface with 
the standard depot system. Moreover, the Army is in the process of 
replacing its standard depot system with its major enterprise resource 
planning system--the logistics management program--and is already 
facing a number of challenges with that transition at the one depot 
where it has been implemented thus far. Army depot officials are 
concerned that if DLA replaces the Army systems with its own 
distribution supply system, the transition will disrupt depot 
operations and may not provide the production control and financial 
management interfaces the Army needs to manage its depot maintenance 
operations. Ultimately, Army officials believe that replacing their 
systems with DLA's system will increase DOD's overall investment costs 
for information system development. 

Services Concerned about Human Capital Issues: 

Depot maintenance and service officials expressed concerns about 
several human capital issues, ranging from turnover among affected 
employees and limited promotion potential to the possibility of 
outsourcing transferred positions to the private sector. For example, 
service officials told us that the pending transfers are already 
leading to turnover among affected depot maintenance employees, which 
poses a risk to the success of the "as-is, where-is" transfer concept. 
In anticipation of the transfer, some workers are making decisions to 
retire or are pursuing positions elsewhere in the depots. Tobyhanna 
Army Depot officials, for instance, said that since the pending 
transfer process was announced, six employees who would have been 
identified to transfer to DLA have either retired or found positions in 
other areas of the depot. In addition, according to Army depot 
personnel officials, depot employees expressed concern that their job 
prospects may be more limited in the event that DLA conducted a 
reduction in force after their positions transferred. They stated that 
it is unclear whether depot employees will be able to exercise the bump 
and retreat rights[Footnote 19] that are normally associated with a 
reduction in force within the depot workforce or if they will be 
limited to exercising those rights only within DLA after they become 
DLA employees. Furthermore, some Army employees told us they were 
concerned that their positions would be downgraded by DLA. Employee 
union representatives said that depot employees' future advancement 
potential may be more limited after they are transferred to DLA, unless 
they are willing to move to other DLA locations. For example, the union 
representative at Tobyhanna Army Depot said that some Army employees 
transferred to DLA would be limited to pay levels in wage grades 5 and 
6, unless they were willing to move to DLA operations in Susquehanna, 
Pennsylvania, or Columbus, Ohio. If these employees had remained as 
Army depot employees, they could have potentially advanced to other 
positions at higher pay grades because the Army positions focus on 
multiple tasks and disciplines, whereas the DLA positions have a single-
focused career path. Union officials at Army depots also said that as 
DLA employees, they will no longer be eligible for inclusion in the 
depot's annual bonus awards, which they said could be as high as $1,500 
per employee. These union officials expressed concern that the loss of 
bonus eligibility might create disharmony between employees 
transferring to DLA and the depot employees they must continue to work 
with closely on a day-to-day basis. DLA officials pointed out that 
there are awards and bonus programs of equal value for DLA employees 
and that employee performance in DLA will be rewarded as it is in the 
services. Moreover, other Army employees said they were concerned that 
after becoming DLA employees they would lose the intangible feeling of 
being on the depot maintenance team and the close ties they currently 
feel to the warfighter as Army employees repairing major weapon 
systems. 

Service and depot officials also expressed concern about a goal DLA has 
established for a 6.5 percent reduction in positions over time due to 
expected increases in operational efficiency once they take control of 
the services' SS&D operations. These officials are concerned because 
the depots have instituted several efficiency initiatives and some have 
also undergone A-76 competitions since the time of the 2005 BRAC 
Commission's estimates. As a result, fewer service personnel are 
performing all depot operations, including those SS&D functions that 
will transfer to DLA, and they believe that achievement of the 6.5 
percent position reduction goal could lead to understaffing of the 
depots. DLA officials told us, however, that they plan to achieve this 
goal over time based on their actual experiences in performing the SS&D 
functions at the depots, and any elimination of positions would likely 
be accomplished through attrition. 

Furthermore, officials from all of the services, as well as the 
affected employees and their union representatives, expressed concern 
that an A-76 competition might result in the outsourcing of the depot 
maintenance supply functions to the private sector.[Footnote 20] 
According to union officials, private firms successful in A-76 bids 
typically pay their employees a lower wage and provide fewer benefits 
than would be available in the government positions they replace. Depot 
maintenance officials expressed similar concerns, and added that 
contracting out the functions may hinder the depot commanders' ability 
to address any deficiencies in the management of work in process 
because the A-76 contract would place DLA as an intermediary between 
the depot commander and the contractor performing the functions. 
According to Army depot maintenance officials, in previous A-76 
competitions DLA organizations reduced staffing levels in their 
attempts to compete as the most efficient organization, and 
consequently the Army has had to augment its workforce with depot 
employees to adequately support depot maintenance operations. For 
example, DLA's supply operations at the Tobyhanna Army Depot were 
retained as a government operation following an A-76 competition. 
However, when streamlining operations to compete with the private 
sector, DLA lost some experienced retrograde materiel[Footnote 21] 
inspectors through attritions, and consequently the DLA warehouse 
experienced a backlog of retrograded material that was needed on the 
depot maintenance production line to meet warfighter requirements. To 
address this problem, the depot placed two of its employees permanently 
at the DLA warehouse to assist in the identification of retrograded 
items. 

DLA Is Developing Plans to Minimize the Risk of Disrupting Depot 
Maintenance, but Faces Several Challenges: 

DLA is developing plans to minimize the risk of disrupting depot 
maintenance, but it faces several challenges. While no plan can 
guarantee that no disruptions will occur, DLA's evolving plans 
incorporate several features that we believe, if implemented as 
intended, are likely to lessen the risk associated with the transfer of 
functions. These features, some of which are designed to address 
challenges faced by DLA and the services, include the following: 

* "As-is, where-is" transfer. The transfer of SS&D positions is to 
occur on an "as-is, where-is" basis, which means that employees filling 
those positions will perform the same duties at the same location 
during the same working hours. According to DLA officials, the only 
difference will be that the employees will then work for DLA instead of 
one of the services. To the extent that this construct is implemented, 
there would likely be no disruptions to maintenance production 
schedules because of the transfers in place. However, DLA and service 
officials said that the "as-is, where-is" transfer process may 
encounter some short-term difficulties due to the possibility of 
current service employees deciding to leave their positions before the 
transfer date. If this occurs, DLA may be challenged to quickly fill 
position vacancies and maintain needed expertise to minimize production 
disruptions. 

* Time-phased transfers. According to DLA officials, the transfer of 
SS&D distribution functions is expected to be phased across the 
implementation period, which extends to September 2011. For example, 
the Air Force is expected to begin transferring functions in fiscal 
year 2008, followed by the Navy and Marine Corps in fiscal year 2009, 
and the Army in fiscal year 2010. Additionally, within each service the 
transfers are to take place sequentially at the different depots. For 
example, the Air Force expects to transfer functions at Warner Robins 
Air Force Base Air Logistics Center in early fiscal year 2008, followed 
by Tinker Air Force Base Air Logistics Center in the second quarter of 
fiscal year 2008, and concluding with Hill Air Force Base Air Logistics 
Center in the third quarter of fiscal year 2008. According to DLA 
officials, time phasing of transfers is intended to allow for the 
focused dedication of resources for individual sites. This approach 
also allows for the capture of "lessons learned" and revisions to plans 
as implementation proceeds. In addition, the time-phased approach is 
intended to help overcome the services' apprehension about inserting 
DLA in the internal operations of their depot maintenance activities, 
as discussed above. 

* Integrated process teams and the plan of action and milestones. At 
each transfer site, DLA and the services plan to establish seven 
integrated process teams[Footnote 22] that include representatives from 
DLA and the services to facilitate the detailed planning associated 
with the transfer of functions. The teams are to develop a 
comprehensive action plan that includes specific and detailed actions 
that identify each task's duration, including start and completion 
dates; percentage completed; organization and personnel assigned; 
criticality of task; and milestones. For example, as of June 6, 2007, 
the action plan developed by the seven teams, referred to as the Plan 
of Action and Milestones, for Warner Robins Air Logistics Center 
included these details for 773 organizational areas and tasks. DLA and 
Air Force officials told us that as implementation progresses, they 
intend to develop similar plans to guide the transfers for all other 
affected depots and activities for the Air Force and the other 
services, using the Warner Robins plan as a model. The teams meet 
regularly to discuss implementation issues, work through problems and 
concerns, and identify potential solutions and mitigating actions where 
possible. For example, an early issue involved the ability of 
transferred employees to access the software systems that manage the 
SS&D functions in support of the production line after they transfer to 
DLA. These software systems currently are only accessible by Air Force 
employees. To resolve this issue, the integrated process teams have 
identified a number of possible solutions, one of which is being tested 
through a pilot process. 

* Flexibility on numbers of positions to transfer. While DLA and the 
services initially agreed to an estimated number of full-time 
equivalents to transfer, the exact number of full-time equivalents and 
the specific employees to be transferred at each site will not be 
determined until detailed implementation planning occurs with each 
service at each site. The initial number of full-time equivalents 
agreed to by DLA and the service can be adjusted--either up or down--in 
accordance with the current situation at each site as implementation 
proceeds, if further analysis warrants it. For example, as discussed 
above, based on data developed during the implementation planning 
process, the Air Force is planning to transfer more full-time 
equivalents than originally estimated. 

* Memorandums of agreement. DLA and the services are to negotiate 
memorandums of agreement to establish business rules that set forth the 
requirements and responsibilities for implementation planning and 
activities. As of August 2007, the Air Force was the first service that 
had negotiated a draft memorandum with DLA. The draft memorandum of 
agreement between DLA and the Air Force establishes the membership on 
integrated process teams, leadership, points of contact to resolve 
implementation issues, biweekly teleconference requirements, and the 
Plan of Action and Milestones as the detailed planning document for 
implementation. The memorandum is to be reviewed quarterly and updated 
as necessary in a collaborative effort between DLA and the Air Force. 
The other services will be negotiating similar memorandums of 
agreements, using the Air Force memorandum as a model, and they plan to 
incorporate lessons learned from the Air Force's experiences. 

* Performance-based agreements. DLA and the services plan to negotiate 
performance-based agreements[Footnote 23] that will establish the 
responsibilities, metrics to measure performance, costs, and business 
rules that should help minimize the risk of disrupting depot 
maintenance. The overarching goal for these agreements is for DLA to 
provide the same level of service at the same or less cost as is 
currently provided by the services' SS&D operations. DLA and service 
officials stated that reaching agreement on specific metrics to measure 
the level of service DLA provides will be a challenge. These officials 
also said that reaching agreement on the cost for SS&D functions and 
the mechanism by which DLA will bill the services will be a challenge 
because the data required for these calculations are not readily 
available. At the time of our review, DLA officials told us that they 
do not intend to use the same supply transaction fee schedule they now 
use, although they have not yet developed an alternative price 
methodology. For an unspecified interim period, DLA officials plan to 
maintain the current level of performance at the same cost, operating 
the integrated supply function on a cost reimbursable basis, until 
sufficient information on operating cost and performance is available 
to develop a new pricing methodology. DLA officials told us that they 
plan to be able to offer the depots a pricing methodology that allows 
them to purchase increasing levels of performance based on price. 
Additionally, DLA plans to establish appropriate business rules and 
processes for retail SS&D functions, such as credit card purchases, 
local purchases, and overtime or shift work, which DLA and service 
officials agreed may be a challenge because retail supply functions are 
new to DLA. DLA and OSD officials have stated that they will work with 
depot commanders to ensure that they have the same authorities that 
they currently have to authorize local credit card purchases, which are 
used to enable depot commanders to obtain needed supplies when primary 
sources of supply will not be available in time to meet maintenance 
schedules. With respect to naval shipyards, all of the credit card 
buyers are transferring to DLA, so shipyard commanders will expect DLA 
to acquire all materials when needed. In addition, the September 21, 
2007, business plan includes a provision that the depot commanders will 
provide input into the performance ratings of the DLA maintenance depot 
representatives. 

Estimated Costs Increased and Estimated Savings Decreased for 
Transferring the Services' SS&D Functions to DLA: 

Our analysis of the original BRAC Commission cost and savings 
estimates[Footnote 24] and other documents shows that over the fiscal 
year 2006 to 2011 BRAC implementation period, estimated costs have 
increased by $45 million and estimated savings have decreased--by about 
$1 billion--for transferring the SS&D functions and associated 
inventories from the military services' industrial depots to DLA. We 
noted estimate changes in three key areas: information technology 
costs, civilian personnel savings, and inventory-related savings. 
Specifically, we found that as of September 2007, integrating the 
services' inventory management systems with DLA's systems is expected 
to cost almost $79 million--an increase of $45 million above the 
original 2005 BRAC Commission estimate. In addition, the estimated 
savings associated with reducing civilian personnel are expected to be 
almost $11 million--a decrease of about $13 million--due to the 
elimination of fewer positions. Furthermore, all but about $31 million 
of the initial estimated savings of about $1 billion for transferring 
SS&D functions and associated inventories have been eliminated because 
the potentially duplicative items on which the savings were based were 
not duplicative. Once DLA realized that the estimated savings, which 
were based on flawed data generated during the BRAC decision-making 
process, would not occur, it replaced the initial savings estimate with 
about $203 million in estimated savings. However, about $172 million of 
that revised estimate was derived from initiatives that are not 
directly a result of BRAC actions and is therefore not savings 
attributable to BRAC. Finally, cost increases for certain operation and 
maintenance costs may be associated with the transfer of SS&D 
functions, but at the time of our review these cost data were not 
available to determine the extent to which these costs are applicable 
to the transfer of functions. 

Estimated Information Technology Costs Have Increased: 

Our analysis of the SS&D business plan shows estimated information 
technology costs of transferring SS&D functions and associated 
inventories have increased by $45 million compared to the 2005 BRAC 
Commission estimate. Specifically, the estimated information technology 
costs for integrating each of the four services' current inventory 
management software systems with DLA's systems have increased to almost 
$79 million, an increase of more than 130 percent. The BRAC Commission 
estimate for these costs was about $34 million for the fiscal year 2006-
2011 BRAC time period. However, information technology requirements and 
costs were unknown at the time the BRAC Commission developed its 
estimates, and the $34 million was a placeholder amount that was 
expected to change. A breakdown of the information technology estimated 
cost increases by each depot is in enclosure III. According to service 
officials, these costs may continue to increase once the work of 
integrating DLA's systems with the services' systems actually begins. 
This is because modernization of existing business systems and 
integration of depot production activities have complicated the 
services' ability to accurately identify their information technology 
requirements, which impedes their ability to estimate information 
technology costs. 

Estimated Civilian Salary Savings Have Decreased: 

Our analysis shows that the estimated personnel savings for 
transferring SS&D functions and associated inventories from the 
services' depots to DLA have decreased about $13 million from the 
original 2005 BRAC Commission estimate due to a decrease in estimated 
civilian salary savings. There are no savings associated with the 
immediate transfer of positions from the services to DLA because the 
transfers are being made on an "as-is, where-is" basis, which means 
that transferred employees will perform the same duties at the same 
locations. Instead, the estimate for civilian salary savings was based 
on the expectation that DLA would eliminate in the future 6.5 percent 
of the positions that transferred from the services' industrial depots 
to DLA, beginning in fiscal year 2007. The 6.5 percent factor was used 
by the BRAC Commission to estimate eliminations and personnel savings, 
and DLA has used this same factor to project personnel savings in its 
business plan. DLA officials told us that they plan to achieve this 
goal over time based on actual experiences in performing the SS&D 
functions at the depots, and any elimination of positions would be 
accomplished through attrition. The 2005 BRAC Commission based its 
civilian salary savings estimate of about $24 million on the projected 
elimination of 114 positions sometime after the transfers had taken 
place. However, based on agreements reached between DLA and each of the 
services as of September 2007, only 92 positions--22 fewer positions 
than originally estimated--are expected to be eliminated or 
transferred, which is a reduction of 19 percent. Furthermore, these 
transfers and eliminations will begin later than fiscal year 2007 as 
originally estimated, which reduces the time period in which the 
associated savings can accrue. As of September 2007, no positions have 
been eliminated and no civilian salary savings have occurred because 
implementation of the transfers is not expected to begin until October 
2007. The September 21, 2007, draft business plan estimates that 
civilian salary savings will now be almost $11 million, which is a 
decrease of about $13 million from the original BRAC Commission 
estimate--a reduction of 55 percent. A breakdown of the changes in 
planned eliminations of civilian positions at each of the services' 
industrial depots appears in enclosure III. One of the reasons for 
fewer eliminations is that since the time of the 2005 BRAC Commission's 
estimates, the services' industrial depots have instituted several 
efficiency initiatives and some have also undergone A-76 competitions. 
These actions together have resulted in fewer people performing all 
depot operations, including those SS&D functions that will transfer to 
DLA. 

Estimated Inventory Reduction Savings Mostly Have Been Eliminated: 

Our analysis of the September 21, 2007, SS&D business plan shows that 
all but about $31 million of the BRAC Commission's estimated inventory 
reduction savings of about $1 billion[Footnote 25] have been eliminated 
for the fiscal year 2006-2011 time period. The BRAC Commission's 
estimate for transferring SS&D functions and associated inventories 
from the services' industrial depots to DLA was based on the belief 
that eliminating duplicate inventory--inventory stored by both the 
services and the DLA depots--would produce both onetime and recurring 
savings.[Footnote 26] However, after further review of the potentially 
duplicative items, DLA and the services found that data generated by 
DOD during the BRAC decision-making process were flawed. For example, 
war reserve materiel, materiel held for other customers, and materiel 
stored at the Red River Army Depot were incorrectly included in the 
BRAC estimating model. These items were not actually duplicative and 
thus could not be eliminated. As a result, the savings associated with 
these items will not occur. In addition, the original savings estimate 
included service depots that were either not collocated with DLA depots 
or were outside the continental United States, and therefore these 
items also could not be considered duplicative. 

Once DLA realized that the estimated savings from duplicate inventory 
would not occur as originally planned, it replaced the $1 billion 
initial savings estimate in its business plan with estimated savings 
from four inventory reduction initiatives.[Footnote 27] These four 
initiatives are expected to produce about $203 million in savings 
during the fiscal year 2006-2011 BRAC implementation period.[Footnote 
28] While these initiatives are inventory related and may produce 
savings, we believe that three of these initiatives, totaling about 
$172 million, are not the direct result of BRAC actions and therefore 
are not BRAC savings. However, we believe that the $31 million from a 
DLA initiative is related to eliminating duplicate inventory and thus 
may be appropriately counted as estimated BRAC savings. Furthermore, to 
further reduce the anticipated inventory savings loss, the draft SS&D 
business plan states that a June 21, 2006, Infrastructure Steering 
Group[Footnote 29] decision allowed the inclusion in the SS&D business 
plan of an additional $61 million in savings that occurred in fiscal 
years 2004 and 2005--which was prior to the effective date of the BRAC 
SS&D recommendation. Although the draft SS&D business plan notes that 
these savings are not reflected in the financial displays for the 
fiscal year 2006-2011 BRAC implementation period, we believe that the 
inclusion of these savings in the business plan presents a false 
impression of the estimated savings that are attributable to the BRAC 
SS&D recommendation. 

Additional Cost Increases May Be Associated with the Transfer of SS&D 
Functions as Implementation Proceeds: 

Cost increases in several other areas may be associated with the 
transfer of SS&D functions as implementation proceeds. While the 
business plan shows about $243 million in increased operation and 
maintenance costs, at the time of our review, implementation had not 
proceeded to the point where we could determine how much, if any, of 
these costs could be attributed to the transfer of SS&D functions and 
how much should be attributed to other changes associated with 
reconfiguring DLA's distribution depot network. Currently, the business 
plan shows increased costs of about $115 million to rewarehouse and 
redistribute inventories among the DLA distribution depots. As 
implementation continues it is likely that costs will continue to 
change and, depending on the agreements reached between DLA and the 
services, it is possible that additional costs could be associated with 
the transfer of SS&D functions. 

Concluding Observations: 

In the 2005 BRAC round, the BRAC Commission made several 
recommendations that involve reengineering of business processes 
affecting many activities and installations across DOD. The transfer of 
SS&D functions and consolidation of associated inventories required as 
part of the 2005 BRAC SS&D recommendation represent significant 
transformational actions and changes in the manner in which both the 
military services and DLA carry out SS&D functions at various depot 
maintenance locations. These actions have the potential to improve the 
department's supply-related operations, provide better support to the 
warfighter, and save money. However, they also have the potential to 
adversely affect depot maintenance operations, at least temporarily, as 
new business processes are put in place during a time of higher 
maintenance demands in a wartime environment. This has led to the 
military services expressing concerns about meeting depot maintenance 
production schedules and maintaining equipment readiness and support to 
the warfighter. DLA and the services are in the early stages of 
implementing these required actions, so it is too early to tell whether 
the department's goals will be fully met and the services' concerns 
eased. As of September 2007, DLA and the services have worked together 
to study, analyze, and reach agreement on the applicable SS&D positions 
that will transfer to DLA. While DLA's planning process incorporates 
several key elements that are intended to provide for a smooth 
transition and mitigate the risk of disrupting depot operations, a 
plan, in and of itself, cannot guarantee success. Therefore, continued 
collaboration between the services and DLA and periodic monitoring by 
OSD is critical to ensure that implementation actions are on track and 
that issues that may arise and adversely affect depot operations are 
resolved as implementation proceeds. 

Moreover, while implementation of the transfer of SS&D functions has 
the potential to improve supply-related operations and save money, our 
analyses show that the estimated costs for implementing the transfer 
actions have increased from those put forth by the BRAC Commission and 
that estimated savings have decreased. Furthermore, the current savings 
estimate includes projected savings from several service inventory 
reduction initiatives that were not a direct result of the BRAC 
recommendation, but that were included in the draft business plan to 
reflect potential savings that DOD contends are attributable to BRAC. 
Although further recurring savings may accrue over time as 
implementation proceeds, the magnitude of the actual savings as DLA 
assumes the SS&D functions at specified service depot maintenance 
locations remains to be seen. Because achieving savings is one of 
several BRAC goals and the magnitude of the expected savings under the 
SS&D recommendation is uncertain at this point in time, it is critical 
that the estimated savings attributable to BRAC be monitored, and 
adjusted as necessary, as implementation proceeds so that Congress and 
DOD decision makers have the best data possible to gauge to what extent 
the BRAC savings goal is met. 

Agency Comments and Our Evaluation: 

In comments on a draft of this report, DOD stated that it concurred in 
principle with our findings and conclusions. DOD's comments are 
reprinted in enclosure IV. DOD also provided technical comments, which 
we have incorporated into this report as appropriate. 

DOD further provided comments that were intended to provide clarity to 
the projected savings that it believes are attributable to the BRAC 
SS&D recommendation. We had noted in the report that DLA had replaced 
the initial estimated savings of about $1 billion with about $203 
million in projected savings, of which about $172 million were derived 
from inventory reduction initiatives put forth by the military services 
that are not directly a result of BRAC actions. DOD stated that it 
considered these estimated savings to be "enabled by the BRAC 
recommendation and therefore should be attributable to the 
recommendation." We disagree and continue to believe that the $172 
million in expected savings resulting from the services' initiatives 
should not be counted as BRAC savings. As we stated in our draft 
report, while these initiatives are inventory related and may produce 
savings, we believe that they are not the direct result of BRAC actions 
and therefore are not BRAC savings. These particular savings 
initiatives respond to ongoing regulatory requirements[Footnote 30] to 
identify and dispose of obsolete inventory, or were initiated prior to 
November 2005 when the BRAC recommendations became effective.[Footnote 
31] As a result, because we believe that the associated expected 
savings are not the result of a BRAC action and would have occurred 
regardless of BRAC, we do not believe that these savings should be 
counted as BRAC savings. 

We are sending copies of this report to other congressional committees 
and members; the Secretary of Defense; the Secretaries of the Army, 
Navy, and Air Force; the Commandant of the Marine Corps; and the 
Director, Office of Management and Budget. We will make copies 
available to others upon request. In addition, the report will be 
available at no charge on GAO's Web site at [hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions regarding this report, please 
contact me at (202) 512-4523 or leporeb@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff who made key contributions to 
this report are listed in enclosure V. 

Signed by: 

Brian J. Lepore: 

Director, Defense Capabilities and Management: 

Enclosures - 5: 

List of Congressional Addressees: 

The Honorable Carl Levin: 
Chairman: 
The Honorable John McCain: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Daniel K. Inouye: 
Chairman: 
The Honorable Ted Stevens: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
United States Senate: 

The Honorable Tim Johnson: 
Chairman: 
The Honorable Kay Bailey Hutchison: 
Ranking Member: 
Subcommittee on Military Construction, 
Veterans Affairs, and Related Agencies: 
Committee on Appropriations: 
United States Senate: 

The Honorable Saxby Chambliss: 
United States Senate: 

The Honorable Ike Skelton: 
Chairman: 
The Honorable Duncan L. Hunter: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable John P. Murtha: 
Chairman: 
The Honorable C.W. Bill Young: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives: 

The Honorable Chet Edwards: 
Chairman: 
The Honorable Roger F. Wicker: 
Ranking Member: 
Subcommittee on Military Construction, 
Veterans Affairs, and Related Agencies: 
Committee on Appropriations: 
House of Representatives: 

The Honorable Solomon O. Ortiz: 
Chairman: 
Subcommittee on Readiness: 
Committee on Armed Services: 
House of Representatives: 

The Honorable Walter B. Jones: 
The Honorable Mike Rogers: 
House of Representatives: 
Scope and Methodology: 

[End of section] 

Enclosure I: 

Scope and Methodology: 

To identify the efforts to determine which supply, storage, and 
distribution (SS&D) functions will transfer to the Defense Logistics 
Agency (DLA), we analyzed pertinent documents and reports and 
interviewed officials from the Office of the Secretary of Defense 
(OSD), DLA, and the military services. We also discussed the efforts to 
delineate SS&D functions to be transferred to DLA with service 
officials at affected industrial depots, which are listed below. In 
addition, we obtained and reviewed documentation from OSD's Base 
Realignment and Closure (BRAC) Office and the Army Materiel Command 
concerning the disagreement between DLA and the Army on the definition 
of SS&D and the number of Army positions to be transferred to DLA. We 
also obtained the results of the Air Force's, Army's, and Marine Corps' 
position-by-position analyses of their SS&D functions that were 
considered for transfer to DLA. In particular, we analyzed and reviewed 
the efforts on the part of DLA and Warner Robins Air Logistics Center 
to finalize the number of full-time equivalent positions to be 
transferred to DLA. Furthermore, we reviewed OSD documentation 
concerning the agreements reached between DLA and the Air Force, Navy, 
and Marine Corps regarding the number of positions to be transferred. 

To determine the military services' key concerns in implementing the 
transfer of functions, we reviewed pertinent documents and reports and 
interviewed officials from OSD, DLA, and the military services. 
Additionally, we discussed challenges with service officials and union 
representatives and observed the supply and support operations at some 
of the affected industrial depots listed below. In determining the 
military services' key concerns, there are two specific limitations 
regarding our work. First, no actual "implementation"--that is, 
personnel moves, military construction, or infrastructure reduction-- 
has occurred on the BRAC SS&D recommendation. Actual implementation is 
scheduled to be carried out in a time-phased manner beginning with 
Warner Robins Air Logistics Center in October 2007. Second, the extent 
to which any of the concerns expressed by the military services may 
actually materialize is unknown, as implementation has not yet begun. 

To determine the extent to which DLA's plans establish a transfer 
process that minimizes disruptions in depot maintenance, we analyzed 
pertinent documents and interviewed officials from OSD, DLA, and the 
military services. Further, we discussed with these officials actions 
ongoing or planned to mitigate the risks associated with the transfer 
of SS&D functions to DLA. There are a number of limitations in 
determining the extent to which DLA's plans establish a transfer 
process that minimizes disruptions in depot maintenance. First, there 
have been numerous draft versions of the business plan on SS&D 
management reconfiguration, with the most recent dated September 21, 
2007. DLA submitted the SS&D business plan to OSD for approval on 
September 18, 2007. Because most of the SS&D functions are supposed to 
transfer from fiscal year 2008 to fiscal year 2011, we reviewed DLA's 
planning actions regarding the transfer of SS&D functions virtually as 
they were occurring. Second, as of August 2007, only the Air Force and 
Navy had begun detailed implementation planning with DLA at the depot 
level. DLA and the Air Force plan to transfer SS&D functions at Warner 
Robins Air Logistics Center in October 2007. The Navy was in the 
initial stages of similar planning for the transfer of its functions. 
However, the Marine Corps and Army had not begun conducting any 
implementation planning at the depot level. Third, the implementation 
planning process is referred to by DLA as a living process, in which 
strategies, approaches, milestones, and management controls are 
constantly in flux. Thus, the process is fluid and not yet complete. 
Fourth, due to the incomplete nature of the implementation process, we 
relied heavily on testimonial evidence as to actions that are planned 
to occur in the future because little other evidence existed at the 
time of our review. Specifically, because the implementation planning 
process is not yet complete and no SS&D functions are expected to 
transfer until October 2007, little documentary evidence was available 
to assess DLA and the services' planning and implementation efforts. 
Fifth, sound implementation planning on the part of DLA and the 
services cannot guarantee a transfer process that minimizes disruptions 
in depot maintenance. Only after the BRAC SS&D recommendation is fully 
implemented can the precise effects on depot maintenance of the 
transfer of SS&D functions to DLA be determined. 

To determine the estimated costs and savings associated with 
implementing this transfer of functions, we compared the estimates in 
DLA's draft business plan of September 21, 2007, to the estimates 
approved by the BRAC Commission. Because the BRAC Commission uses 
fiscal year 2005 constant dollars and the business plan contains then- 
year dollars,[Footnote 32] we converted the BRAC Commission's fiscal 
year 2005 constant dollars to then-year dollars to facilitate the 
comparison between the two sets of numbers. We compared these estimates 
by reviewing and analyzing source data and methodology used to generate 
the estimates and calculated projected changes in costs and savings. We 
discussed the reasons for the variances with DLA, service, and 
contractor officials. To assess the reliability of the data and the 
validity of underlying assumptions used to generate estimates of costs 
and savings, we reviewed pertinent Under Secretary of Defense for 
Acquisition, Technology, and Logistics; Supply and Storage Joint Cross- 
Service Group; and DLA regulations and instructions for reporting data 
and interviewed officials at these locations as well as representatives 
from each of the military services knowledgeable about the data and the 
assumptions underlying estimated costs and savings. Based on this, we 
believe that the data used were sufficiently reliable for the purposes 
of this report. It should be noted that the business plans are 
considered "living" documents and the data presented therein represent 
a point in time as plans are subject to change as implementation 
proceeds. Moreover, since this report contains figures from the draft 
business plan for the SS&D recommendation, the data used in this report 
could change if the business plan numbers change when it is approved. 
According to OSD policy, until the SS&D business plan is approved, no 
funds may be obligated for implementation of this recommendation. 

Since this review only focused on the facilities included in the BRAC 
recommendation, we did not include in our review nine other service 
SS&D facilities that were not included in the BRAC recommendation but 
that were required by OSD to transfer their supply and storage 
functions and associated personnel to DLA. The transfer of functions at 
these nine facilities was directed by a June 22, 2005, Under Secretary 
of Defense for Acquisition, Technology, and Logistics administrative 
decision in order to establish a more effective and efficient supply 
chain. 

During the course of our review, we contacted the following offices 
with responsibility for oversight, management, and implementation of 
the SS&D recommendation, and industrial depots specifically affected by 
the transfers: 

Department of Defense: 

* Office of the Under Secretary of Defense for Acquisition, Technology, 
and Logistics, Arlington, Virginia: 

* Office of the Secretary of Defense Base Realignment and Closure 
Office, Arlington, Virginia: 

* Defense Logistics Agency headquarters, Fort Belvoir, Virginia: 

Army: 

* Office of Deputy Chief of Staff--Army Logistics, Arlington, Virginia: 

* United States Army Materiel Command, Fort Belvoir, Virginia: 

* Anniston Army Depot, Anniston, Alabama: 

* Corpus Christi Army Depot, Corpus Christi, Texas: 

* Tobyhanna Army Depot, Tobyhanna, Pennsylvania: 

Navy: 

* Office of Chief of Naval Operations, Arlington, Virginia: 

* Naval Sea Systems Command, Washington Naval Yard, Washington, D.C. 

* Naval Supply Systems Command, Mechanicsburg, Pennsylvania: 

* Fleet and Industrial Supply Center, Norfolk Naval Base, Norfolk, 
Virginia: 

* Fleet Readiness Center-East, Naval Aviation Depot, Cherry Point, 
North Carolina: 

* Fleet and Industrial Supply Center, Naval Aviation Depot, Cherry 
Point, North Carolina: 

* Norfolk Naval Shipyard, Portsmouth, Virginia: 

Air Force: 

* Air Force Materiel Command, Wright-Patterson Air Force Base, Ohio: 

* Warner Robins Air Logistics Center, Warner Robins, Georgia: 

Marine Corps: 

* Marine Corps Logistics Command, Albany, Georgia: 

* Marine Corps Maintenance Center Albany, Albany, Georgia: 

We conducted our work from June 2007 through September 2007 in 
accordance with generally accepted government auditing standards. 

[End of section] 

Enclosure II: 

Text of the BRAC Commission's Approved Supply, Storage, and 
Distribution Management Reconfiguration Recommendation Supply, Storage, 
and Distribution Management Reconfiguration (BRAC 2005 Round 
Recommendation): 

Realign Defense Supply Center Columbus, OH, by disestablishing the 
Defense Distribution Depot Columbus, OH. Relocate the storage and 
distribution functions and associated inventories to the Defense 
Distribution Depot Susquehanna, PA, hereby designated the Susquehanna 
Strategic Distribution Platform. 

Realign Tobyhanna Army Depot, PA, by consolidating the supply, storage, 
and distribution functions and associated inventories of the Defense 
Distribution Depot Tobyhanna, PA, with all other supply, storage, and 
distribution functions and inventories that exist at Tobyhanna Army 
Depot to support depot operations, maintenance, and production. Retain 
the minimum necessary supply, storage, and distribution functions and 
inventories required to support Tobyhanna Army Depot, and to serve as a 
wholesale Forward Distribution Point. Relocate all other wholesale 
storage and distribution functions and associated inventories to the 
Susquehanna Strategic Distribution Platform. 

Realign Naval Station Norfolk, VA, by consolidating the supply, 
storage, and distribution functions and associated inventories of the 
Defense Distribution Depot Norfolk, VA, with all other supply, storage, 
and distribution functions and inventories that exist at Norfolk Naval 
Base and at Norfolk Naval Shipyard to support shipyard operations, 
maintenance, and production. Retain the minimum necessary supply, 
storage, and distribution functions and inventories required to support 
Norfolk Naval Shipyard operations, maintenance and production, and to 
serve as a wholesale Forward Distribution Point. Relocate all other 
wholesale storage and distribution functions and associated inventories 
to the Susquehanna Strategic Distribution Platform. 

Realign Defense Supply Center Richmond, VA, by relocating the storage 
and distribution functions and associated inventories of the Defense 
Distribution Depot Richmond, VA, to the Susquehanna Strategic 
Distribution Platform. Retain the minimum necessary storage and 
distribution functions and associated inventories at Defense 
Distribution Depot Richmond, VA, to serve as a wholesale Forward 
Distribution Point. 

Realign Marine Corps Air Station, Cherry Point, NC, by consolidating 
the supply, storage, and distribution functions and associated 
inventories of the Defense Distribution Depot, Cherry Point, NC, with 
all other supply, storage, and distribution functions and inventories 
that exist at Naval Aviation Depot Cherry Point, NC, to support depot 
operations, maintenance and production. Retain the minimum necessary 
supply, storage, and distribution functions and inventories required to 
support Naval Air Depot Cherry Point, and to serve as a wholesale 
Forward Distribution Point. Relocate all other wholesale storage and 
distribution functions and associated inventories to the Defense 
Distribution Depot Warner Robins, GA, hereby designated the Warner 
Robins Strategic Distribution Platform. 

Realign Robins Air Force Base, GA, by consolidating the supply, 
storage, and distribution functions and associated inventories 
supporting depot operations, maintenance, and production at the Warner 
Robins Air Logistics Center with the supply, storage, and distribution 
functions at the Warner Robins Strategic Distribution Platform. 

Realign Marine Corps Logistics Base, Albany, GA, by consolidating the 
supply, storage, and distribution functions and associated inventories 
of the Defense Distribution Depot Albany, GA, with all other supply, 
storage, and distribution functions and inventories that exist at the 
Maintenance Center Albany, GA, to support depot operations, 
maintenance, and production. Retain the minimum necessary supply, 
storage, and distribution functions and inventories required to support 
the Maintenance Center Albany, GA, and to serve as a wholesale Forward 
Distribution Point. Relocate all other wholesale storage and 
distribution functions and associated inventories to the Warner Robins 
Strategic Distribution Platform. 

Realign Naval Air Station Jacksonville, FL, by consolidating the 
supply, storage, and distribution functions and associated inventories 
of the Defense Distribution Depot, Jacksonville, FL, with all other 
supply, storage, and distribution functions and inventories that exist 
at the Naval Aviation Depot, Jacksonville, FL, to support depot 
operations, maintenance, and production. Retain the minimum necessary 
supply, storage, and distribution functions and inventories required to 
support the Naval Aviation Depot, Jacksonville, FL, and to serve as a 
wholesale Forward Distribution Point. Relocate all other wholesale 
storage and distribution functions and associated inventories to the 
Warner Robins Strategic Distribution Platform. 

Realign Anniston Army Depot, AL, by consolidating the supply, storage, 
and distribution functions and associated inventories of the Defense 
Distribution Depot Anniston, AL, with all other supply, storage, and 
distribution functions and inventories that exist at the Anniston Army 
Depot, AL, to support depot operations, maintenance, and production. 
Retain the minimum necessary supply, storage, and distribution 
functions and inventories required to support Anniston Army Depot, AL, 
and to serve as a wholesale Forward Distribution Point. Relocate all 
other wholesale storage and distribution functions and associated 
inventories to the Warner Robins Strategic Distribution Platform. 

Realign Corpus Christi Army Depot, TX, by consolidating the supply, 
storage, and distribution functions and associated inventories of the 
Defense Distribution Depot, Corpus Christi, TX, with all other supply, 
storage, and distribution functions and inventories that exist at 
Corpus Christi Army Depot, TX, to support depot operations, 
maintenance, and production. Retain the minimum necessary supply, 
storage, and distribution functions and inventories required to support 
Corpus Christi Army Depot, TX, and to serve as a wholesale Forward 
Distribution Point. Relocate all other wholesale storage and 
distribution functions and associated inventories to the Defense 
Distribution Depot Oklahoma City, hereby designated the Oklahoma City 
Strategic Distribution Platform. 

Realign Tinker AFB, OK, by consolidating the supply, storage, and 
distribution functions and associated inventories supporting depot 
operations, maintenance, and production at the Air Logistics Center, 
Oklahoma City, OK, with the supply, storage, and distribution functions 
and inventories at the Oklahoma City Strategic Distribution Platform. 

Realign Hill AFB, UT, by consolidating the supply, storage, and 
distribution functions and associated inventories of the Defense 
Distribution Depot, Hill, UT, with all other supply, storage, and 
distribution functions and inventories that exist at the Ogden Air 
Logistics Center, UT, to support depot operations, maintenance, and 
production. Retain the necessary supply, storage, and distribution 
functions and inventories required to support the Ogden Air Logistics 
Center, UT, and to serve as a wholesale Forward Distribution Point. 
Relocate all other wholesale storage and distribution functions and 
associated inventories to the Defense Distribution Depot, San Joaquin, 
CA, hereby designated the San Joaquin Strategic Distribution Platform. 

Realign Naval Station Bremerton, WA, by consolidating the supply, 
storage, and distribution functions and associated inventories of the 
Defense Distribution Depot, Puget Sound, WA, with all other supply, 
storage and distribution functions and inventories that exist at Puget 
Sound Naval Shipyard, WA, to support shipyard operations, maintenance, 
and production. Retain the minimum necessary supply, storage, and 
distribution functions and inventories required to support Puget Sound 
Naval Shipyard, WA, and to serve as a wholesale Forward Distribution 
Point. Relocate all other wholesale storage and distribution functions 
and associated inventories to the San Joaquin Strategic Distribution 
Platform. 

Realign Naval Station, San Diego, CA, by consolidating the supply, 
storage, and distribution functions and associated inventories of the 
Defense Distribution Depot, San Diego, CA, with all other supply, 
storage, and distribution functions and inventories that exist at Naval 
Aviation Depot, North Island, CA, to support depot operations, 
maintenance, and production. Retain the minimum necessary supply, 
storage, and distribution functions and inventories required to support 
Naval Aviation Depot, North Island, CA, and to serve as a wholesale 
Forward Distribution Point. Relocate all other wholesale storage and 
distribution functions and associated inventories to the San Joaquin 
Strategic Distribution Platform. 

Realign Marine Corps Logistics Base, Barstow, CA, by consolidating the 
supply, storage, and distribution functions and associated inventories 
of the Defense Distribution Depot Barstow, CA, with all other supply, 
storage, and distribution functions and inventories that exist at the 
Maintenance Center Barstow, CA, to support depot operations, 
maintenance, and production. Retain the minimum necessary supply, 
storage, and distribution functions and inventories at Defense 
Distribution Depot Barstow, CA, that are required to support the 
Maintenance Center Barstow, CA, and to serve as a wholesale Forward 
Distribution Point. Relocate all other wholesale storage and 
distribution functions and associated inventories to the San Joaquin 
Strategic Distribution Platform. 

Source: Extract from the 2005 Defense Base Closure and Realignment 
Commission Report to the President, Volume 2 Appendix Q (Commission's 
Final Recommendations). 

[End of section] 

Enclosure III: 

Changes in Costs and Savings Estimates at Each Collocated Maintenance 
Depot: 

Our analysis of the original BRAC Commission estimates and other 
documents shows that transferring the SS&D functions and associated 
inventories from the military services' industrial depots to DLA has 
resulted in an increase in estimated costs and a significant decrease 
in estimated savings. We noted changes in three areas: information 
technology costs, civilian personnel savings, and inventory 
savings.[Footnote 33] Specifically, the estimated information 
technology costs for connecting each of the four services' current 
inventory management software systems with DLA have increased to almost 
$79 million, an increase of more than 130 percent. A breakdown of the 
information technology cost increases by each depot is shown in table 
2. 

Table 2: Changes in Information Technology Cost Estimates for Fiscal 
Years 2006 through 2011 (as of September 2007): 

Dollars in thousands. 

Location: Tobyhanna Army Depot (AD); 
BRAC Commission cost estimate[A]: $1,646; 
Revised cost estimate[A]: $9,413; 
Difference [A]: $7,767. 

Location: Corpus Christi AD; 
BRAC Commission cost estimate[A]: 4,740; 
Revised cost estimate[A]: 12,506; 
Difference [A]: $7,766. 

Location: Anniston AD; 
BRAC Commission cost estimate[A]: 5,660; 
Revised cost estimate[A]: 13,427; 
Difference [A]: $7,767. 

Location: Tinker Air Force Base (AFB)[B]; 
BRAC Commission cost estimate[A]: 5,549; 
Revised cost estimate[A]: 8,049; 
Difference [A]: $2,500. 

Location: Robins AFB[B]; 
BRAC Commission cost estimate[A]: 3,787; 
Revised cost estimate[A]: 6,287; 
Difference [A]: $2,500. 

Location: Hill AFB[B]; 
BRAC Commission cost estimate[A]: 1,820; 
Revised cost estimate[A]: 4,320; 
Difference [A]: $2,500. 

Location: Marine Corps Logistics Base (MCLB) Albany; 
BRAC Commission cost estimate[A]: 1,062; 
Revised cost estimate[A]: 3,662; 
Difference [A]: $2,600. 

Location: MCLB Barstow; 
BRAC Commission cost estimate[A]: 1,703; 
Revised cost estimate[A]: 4,303; 
Difference [A]: $2,600. 

Location: Naval Station (NAVSTA) Bremerton; 
BRAC Commission cost estimate[A]: 1,041; 
Revised cost estimate[A]: 5,541; 
Difference [A]: $4,500. 

Location: NAVSTA Norfolk; 
BRAC Commission cost estimate[A]: 1,851; 
Revised cost estimate[A]: 1,851; 
Difference [A]: 0. 

Location: NAVSTA San Diego; 
BRAC Commission cost estimate[A]: 1,372; 
Revised cost estimate[A]: 5,872; 
Difference [A]: $4,500. 

Location: Naval Air Station (NAS) Jacksonville; 
BRAC Commission cost estimate[A]: 1,861; 
Revised cost estimate[A]: 1,861; 
Difference [A]: 0. 

Location: Marine Corps Air Station (MCAS) Cherry Point; 
BRAC Commission cost estimate[A]: 1,646; 
Revised cost estimate[A]: 1,646; 
Difference [A]: 0. 

Total; 
BRAC Commission cost estimate[A]: $33,738; 
Revised cost estimate[A]: $78,738; 
Difference [A]: $45,000. 

Source: GAO analysis of data provided by DLA. 

[A] Figures are presented in then-year dollars for comparative 
purposes. Commission estimates were originally presented in constant 
dollars, but we converted them to then-year dollars to facilitate 
equitable comparisons. 

[B] We divided the total increase of $7.5 million evenly among Tinker, 
Robins, and Hill Air Force Bases, because the Air Force had not 
identified amounts by depot location. 

[End of table] 

In addition, our analysis shows that the estimated savings for 
transferring SS&D functions and associated inventories from the 
services' depots to DLA are expected to be about $13 million less than 
the original 2005 BRAC Commission estimate due to a decrease in 
estimated civilian salary savings. A breakdown of the changes in 
planned eliminations of civilian positions at each of the services' 
industrial depots appears in table 3. 

Table 3: Planned Civilian Position Eliminations and Recurring Savings 
for the Transfer of SS&D Functions from the Services' Industrial Depots 
to DLA (as of September 2007): 

Dollars in thousands. 

Location: Tobyhanna AD; 
BRAC Commission eliminations: 6; 
Revised eliminations: 3; 
Difference: -3; 
BRAC Commission estimated savings[A: $1,130; 
Revised estimated savings[A]: $516; 
Difference[A]: -$614. 

Location: Corpus Christi AD; 
BRAC Commission eliminations: 17; 
Revised eliminations: 1; 
Difference: - 16; 
BRAC Commission estimated savings[A: 3,202; 
Revised estimated savings[A]: 421; 
Difference[A]: -$2,781. 

Location: Anniston AD; 
BRAC Commission eliminations: 22; 
Revised eliminations: 4; 
Difference: -18; 
BRAC Commission estimated savings[A: 4,143; 
Revised estimated savings[A]: 718; 
Difference[A]: -$3,425. 

Location: Tinker AFB; 
BRAC Commission eliminations: 26; 
Revised eliminations: 24; 
Difference: -2; 
BRAC Commission estimated savings[A: 4,897; 
Revised estimated savings[A]: 1,734; 
Difference[A]: -$3,163. 

Location: Robins AFB; 
BRAC Commission eliminations: 9; 
Revised eliminations: 17; 
Difference: 8; 
BRAC Commission estimated savings[A: 1,693; 
Revised estimated savings[A]: 2,278; 
Difference[A]: $585. 

Location: Hill AFB; 
BRAC Commission eliminations: 7; 
Revised eliminations: 15; 
Difference: 8; 
BRAC Commission estimated savings[A: 2,318; 
Revised estimated savings[A]: 1,088; 
Difference[A]: -$1,230. 

Location: MCLB Albany; 
BRAC Commission eliminations: 3; 
Revised eliminations: 2; 
Difference: -1; 
BRAC Commission estimated savings[A: 565; 
Revised estimated savings[A]: 355; 
Difference[A]: -$210. 

Location: MCLB Barstow; 
BRAC Commission eliminations: 4; 
Revised eliminations: 1; 
Difference: -3; 
BRAC Commission estimated savings[A: 1,434; 
Revised estimated savings[A]: 34; 
Difference[A]: -$1,400. 

Location: NAVSTA Bremerton; 
BRAC Commission eliminations: 4; 
Revised eliminations: 6; 
Difference: 2; 
BRAC Commission estimated savings[A: 1,375; 
Revised estimated savings[A]: 947; 
Difference[A]: -$428. 

Location: NAVSTA Norfolk; 
BRAC Commission eliminations: 5; 
Revised eliminations: 8; 
Difference: 3; 
BRAC Commission estimated savings[A: 942; 
Revised estimated savings[A]: 2113; 
Difference[A]: $1,171. 

Location: NAVSTA San Diego; 
BRAC Commission eliminations: 2; 
Revised eliminations: 3; 
Difference: 1; 
BRAC Commission estimated savings[A: 692; 
Revised estimated savings[A]: 170; 
Difference[A]: -$522. 

Location: NAS Jacksonville; 
BRAC Commission eliminations: 2; 
Revised eliminations: 2; 
Difference: 0; 
BRAC Commission estimated savings[A: 332; 
Revised estimated savings[A]: 136; 
Difference[A]: -$196. 

Location: MCAS Cherry Point; 
BRAC Commission eliminations: 7; 
Revised eliminations: 6; 
Difference: - 1; 
BRAC Commission estimated savings[A: 1,319; 
Revised estimated savings[A]: 408; 
Difference[A]: -$911. 

Total; 
BRAC Commission eliminations: 114; 
Revised eliminations: 92; 
Difference: -22; 
BRAC Commission estimated savings[A: $24,042; 
Revised estimated savings[A]: $10,918; 
Difference[A]: -$13,124. 

Source: GAO analysis of data provided by DLA. 

[A] Figures are presented in then-year dollars for comparative 
purposes. Commission estimates were originally presented in constant 
dollars, but we converted them to then-year dollars to facilitate 
equitable comparisons. 

[End of table] 

[End of section] 

Enclosure IV: 

Comments from the Department of Defense: 

Deputy Under Secretary Of Defense For Logistics And Materiel Readiness: 
3500 Defense Pentagon: 
Washington, DC 20301-3500: 

October 18, 2007: 

Mr. Brian Lepore: 
Director, Defense Capabilities and Management: 
U. S. Government Accountability Office: 
441 G Street, N. W.: 
Washington, DC 20548: 

Dear Mr. Lepore: 

This is the Department of Defense (DOD) response to the GAO draft 
report, GAO-08-121R, "Military Base Realignments And Closures: Transfer 
of Supply, Storage, and Distribution Functions from Military Services 
to Defense Logistics Agency," dated September 27, 2007 (GAO Code 
351056). 

The Department concurs in principle with the draft report's findings 
and conclusions. We have attached two comments that add clarity in 
regards to the projected savings that are attributable to the BRAC 
recommendations. 

The Department appreciates the opportunity to comment on the draft 
report. For further questions concerning this report, please contact 
Colonel Dennis Crimiel, 703-695-6188.

Sincerely, 

Signed by: 

Jack Bell: 

Enclosure: 
As stated: 

GAO Draft Report - Dated September 27,2007 GAO Code 351056/GAO-08-121R: 

"Military Base Realignments And Closures: Transfer of Supply, Storage, 
and Distribution Functions from Military Services to Defense Logistics 
Agency": 

Department Of Defense Comments On The Draft Report:  

Issue 1: Page 7 of the report states "Once DLA realized this, it 
replaced the initial estimated savings with about $203 million in 
projected savings of which almost $172 million were derived from 
inventory reduction initiatives that are not directly a result of BRAC 
actions." 

Issue 2: Page 28 of the report states "Once DLA realized that the 
estimated savings, which were based on flawed data generated during the 
BRAC decision making process, would not occur, it replaced the initial 
savings estimate with about $203 million in estimated savings. However, 
about $172 million of that revised estimate was derived from 
initiatives that are not directly a result of BRAC actions and is 
therefore not savings that are attributable to BRAC." 

Response to Issues 1 & 2: The Department considers the savings 
reflected by DLA as a savings enabled by the BRAC recommendation and 
therefore should be attributable to the recommendation. Only those 
savings that occur during the implementation period (2006- 2011) are 
included in the financial displays of the business plan. 

Overall comment on inventory savings: Regarding inventory savings, the 
AF is further along in projecting inventory savings as they have been 
using an inventory optimization tool (COLT) for a number of years.

[End of section] 

Enclosure V: 

GAO Contact and Staff Acknowledgments: 

GAO Contact: Brian J. Lepore, (202) 512-4523 or leporeb@gao.gov: 

Acknowledgments: In addition to the individual named above, James R. 
Reifsnyder, Assistant Director; John R. Beauchamp; Renee S. Brown; John 
C. Bumgarner; Larry J. Junek; Julia Matta; Charles W. Perdue; Dudley C. 
Roache, Jr; and Virginia M. Saavedra also made significant 
contributions to this report. 

Defense Infrastructure: Challenges Increase Risks for Providing Timely 
Infrastructure Support for Army Installations Expecting Substantial 
Personnel Growth. GAO-07-1007. Washington, D.C.: September 13, 2007. 

Military Base Realignments and Closures: Plan Needed to Monitor 
Challenges for Completing More Than 100 Armed Forces Reserve Centers. 
GAO-07-1040. Washington, D.C.: September 13, 2007. 

Military Base Realignments and Closures: Observations Related to the 
2005 Round. GAO-07-1203R. Washington D.C.: September 6, 2007. 

Military Base Closures: Projected Savings from Fleet Readiness Centers 
Likely Overstated and Actions Needed to Track Actual Savings and 
Overcome Certain Challenges. GAO-07-304. Washington, D.C.: June 29, 
2007. 

Military Base Closures: Management Strategy Needed to Mitigate 
Challenges and Improve Communication to Help Ensure Timely 
Implementation of Air National Guard Recommendations. GAO-07-641. 
Washington, D.C.: May 16, 2007. 

Military Base Closures: Opportunities Exist to Improve Environmental 
Cleanup Cost Reporting and to Expedite Transfer of Unneeded Property. 
GAO-07-166. Washington, D.C.: January 30, 2007. 

Military Bases: Observations on DOD's 2005 Base Realignment and Closure 
Selection Process and Recommendations. GAO-05-905. Washington, D.C.: 
July 18, 2005. 

Military Bases: Analysis of DOD's 2005 Selection Process and 
Recommendations for Base Closures and Realignments. GAO-05-785. 
Washington, D.C.: July 1, 2005. 

Military Base Closures: Updated Status of Prior Base Realignments and 
Closures. GAO-05-138. Washington, D.C.: January 13, 2005. 

Military Base Closures: Assessment of DOD's 2004 Report on the Need for 
a Base Realignment and Closure Round. GAO-04-760. Washington, D.C.: May 
17, 2004. 

Military Base Closures: Observations on Preparations for the Upcoming 
Base Realignment and Closure Round. GAO-04-558T. Washington, D.C.: 
March 25, 2004. 

[End of section] 

Footnotes: 

[1] In this context, supply, storage, and distribution refers to 
various actions to provide repair parts to depot maintenance personnel 
who perform repairs and upgrades on equipment that is needed to 
maintain readiness and support ongoing military operations. 

[2] Anniston Army Depot, Alabama; Corpus Christi Army Depot, Texas; 
Naval Aviation Depot, Cherry Point, North Carolina; Norfolk Naval Base, 
Virginia; Marine Corps Maintenance Center Albany, Georgia; Norfolk 
Naval Shipyard, Virginia; Tobyhanna Army Depot, Pennsylvania; and 
Warner Robins Air Logistics Center, Georgia. 

[3] The nine sites are Davis-Monthan Air Force Base, Arizona; 
Letterkenny Army Depot, Pennsylvania; Naval Air Warfare Center 
Lakehurst, New Jersey; Naval Undersea Warfare Center Keyport, 
Washington; Naval Weapons Station Seal Beach, California; Pearl Harbor 
Naval Shipyard, Hawaii; Portsmouth Naval Shipyard, Maine; Rock Island 
Arsenal, Illinois; and Weapon Station Charleston, South Carolina. 

[4] The BRAC Commission estimates are based on DOD's use of the Cost of 
Base Realignment Actions model, which is not intended to and does not 
present budget quality estimates. Consequently, the costs and savings 
calculated by the model are likely to be different from the costs and 
savings that will actually materialize. The estimates as presented in 
this report are shown in then-year dollars to provide for equitable 
comparative purposes between Commission estimates and current 
estimates. 

[5] Pub. L. No. 101-510, Title XXIX (1990) as amended by Pub. L. No. 
107-107, Title XXX (2001); 10 U.S.C.  2687 note. 

[6] GAO, Military Bases: Analysis of DOD's 2005 Selection Process and 
Recommendations for Base Closures and Realignments, GAO-05-785 
(Washington, D.C.: July 1, 2005). 

[7] Business process engineering can be generally defined as an 
approach for redesigning the way work is done to better support an 
organization's mission and reduce costs. In this context, these 
recommended actions are intended to transform existing distribution and 
procurement processes to increase savings and more efficiently support 
the warfighter. 

[8] National Defense Authorization Act for Fiscal Year 2002, Pub. L. 
No. 107-107, Title XXX (2001). 

[9] A strategic distribution platform provides distribution and storage 
support to designated customers. 

[10] Forward distribution points provide storage and distribution 
support to on-base industrial customers, and selected other local 
customers, and support for reimbursable end items, hard-to-handle 
items, and hazardous items at that location. 

[11] The Navy locations where the SS&D recommendation will be 
implemented are Marine Corps Air Station Cherry Point, Cherry Point, 
North Carolina; Naval Air Station Jacksonville, Jacksonville, Florida; 
Naval Station San Diego, San Diego, California; Naval Station Norfolk, 
Norfolk, Virginia; and Naval Station Bremerton, Bremerton, Washington. 

[12] The Marine Corps locations where the SS&D recommendation will be 
implemented are Marine Corps Logistics Base, Albany, Georgia, and 
Marine Corps Logistics Base, Barstow, California. 

[13] The Army locations where the SS&D recommendation will be 
implemented are Anniston Army Depot, Anniston, Alabama; Corpus Christi 
Army Depot, Corpus Christi, Texas; and Tobyhanna Army Depot, Tobyhanna, 
Pennsylvania. 

[14] Because of the interest in pursuing transformation and fostering 
more jointness across the various defense components, seven joint cross-
service groups addressing education and training, headquarters and 
support activities, industrial, intelligence, medical, supply and 
storage, and technical activities were established early in the BRAC 
decision-making process to formulate potential recommendations to 
achieve these goals. The Supply and Storage Joint Cross-Service Group 
pursued logistics economies to reduce the number of sites and related 
excess capacity across various defense components. 

[15] The Supply and Storage Joint Cross-Service Group report also 
includes requirements determination in its definition, but that was 
subsequently removed from the definition by DLA and the OSD BRAC 
Office. As a result, the services are expected to continue with 
determining requirements, but DLA is also expected to participate as a 
collaborative partner in the requirements determination process. 

[16] DLA plans to establish seven integrated process teams to work 
through problems and concerns and, where possible, identify solutions 
at each transfer site during implementation of the SS&D BRAC 
recommendation. The seven teams are Human Performance, Information 
Technology, Facilities and Equipment, Financial Management, Change 
Management, Supply and Distribution, and Metrics. As of July 2007, 
these seven teams have only been established with the Air Force and 
Navy. 

[17] Components include items such as hydraulics, landing gear, and 
electronics. 

[18] Major subassemblies include items such as engines, transmissions, 
and airframes. 

[19] When an agency conducts a reduction in force, some employees are 
allowed to bump other employees or retreat into other positions. 
"Bumping" means displacing an employee in the same competitive area who 
is in a lower-tenure group (type of appointment category)."Retreating" 
means displacing an employee in the same competitive area who has fewer 
years of service within 

the same tenure group. 

[20] Under the A-76 process, otherwise known as competitive sourcing, 
the military services and other defense components conduct a public/ 
private competition for a commercial activity currently performed by 
government personnel to determine whether it would be cost-effective to 
contract with the private sector for that activity's performance. As of 
fiscal year 2006, DLA had conducted approximately 16 competitive- 
sourcing A-76 reviews, covering 5,019 full-time equivalent government 
positions, with about half of the operations staying with the 
government as the most efficient organization and about half going to 
the private sector. 

[21] Retrograde materiel is broken repairable components from combat 
areas that are returned to depots for repair. 

[22] The seven teams are Human Performance, Information Technology, 
Facilities and Equipment, Financial Management, Change Management, 
Supply and Distribution, and Metrics. 

[23] Performance-based agreements are defined as the negotiated 
agreements between the major stakeholders that formally document the 
performance and support expectations and resources to achieve the 
desired outcome. 

[24] As in all previous BRAC rounds, the BRAC Commission estimates are 
based on DOD's use of the Cost of Base Realignment Actions (COBRA) 
model, which provides a standard quantitative approach to compare 
estimated costs and savings across various proposed recommendations. 
The COBRA model relies to a large extent on standard factors and 
averages but is not intended to and consequently does not present 
budget quality estimates. As a result, the costs and savings calculated 
by the model are likely to be different from the costs and savings that 
will actually materialize. 

[25] In then-year (current) dollars. 

[26] Recurring savings would result from avoiding the costs associated 
with storing inventory. 

[27] These four initiatives were provided by the Army, Air Force, 
Marine Corps, and DLA. They were designed to create efficiencies 
through reducing and phasing out obsolete inventory and improving 
procurement practices. 

[28] The September 2007 draft SS&D business plan states that inventory 
savings associated with four service and DLA inventory reduction 
initiatives were being substituted for the original inventory savings. 
According to DLA officials, this decision was not documented. 

[29] The Infrastructure Steering Group is the governing body that 
oversees implementation and approval of business plans for the 2005 
BRAC round recommendations. 

[30] DOD Supply Chain Materiel Management Regulation, DOD 4140.1-R, 
Section C2.9 Item Reductions (May 23, 2003). 

[31] Of the $172 million, almost $119 million in savings was associated 
with several military services' initiatives that implemented ongoing 
annual regulatory requirements to identify and dispose of obsolete or 
unneeded inventory. Another $53 million in savings during the BRAC 
implementation period was associated with an Air Force inventory 
reduction initiative that was initiated prior to November 9, 2005, when 
the BRAC recommendations became effective. 

[32] Then-year dollars, sometimes called current dollars, reflect the 
level of prices or expected prices at the time of measurement. Constant 
dollars reflect the purchasing power of dollars in a given base year. 

[33] The business plan also indicated that some costs associated with 
disposing of and rewarehousing inventory increased by $115 million. 
However, data were not available to determine how much, if any, of this 
estimated cost increase should be attributed to the transfer of SS&D 
functions, and how much should be attributed to other changes 
associated with reconfiguring the depot system. 

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