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Military Base Realignments and Closures: DOD Needs to Update Savings Estimates and Continue to Address Challenges in Consolidating Supply-Related Functions at Depot Maintenance Locations

GAO-09-703 Published: Jul 09, 2009. Publicly Released: Jul 09, 2009.
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Highlights

As a result of a 2005 Defense Base Realignment and Closure (BRAC) recommendation, the Defense Logistics Agency (DLA) is charged with consolidating supply, storage, and distribution functions at 13 military service depot maintenance locations to streamline operations and save money. The BRAC Commission data indicate that these consolidations would generate net savings of nearly $1 billion through 2011 and about $137 million annually thereafter. Because these actions could affect depot maintenance operations, the conference report accompanying the National Defense Authorization Act for Fiscal Year 2008 directed GAO to assess implementation issues associated with the consolidations. GAO's objectives were to assess (1) DLA's progress and challenges to implement these consolidation actions and (2) the extent to which DLA's most recent cost and savings estimates related to these consolidations differ from those of the BRAC Commission. To meet these objectives, GAO visited three depot locations where consolidation actions had begun, interviewed service and DLA officials, and analyzed estimated cost and savings data.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense In order to provide more accurate and up-to-date information to congressional decision makers and to enhance Office of the Secretary of Defense (OSD's) oversight role, the Secretary of Defense should instruct the Director of the DLA to improve the accuracy of its cost and savings estimates associated with the consolidation of the supply, storage, and distribution (SS&D) functions and inventories at the 13 specified depot locations by removing savings estimates that are not clearly the direct result of 2005 BRAC actions (including savings sometimes referred to as "BRAC enabled").
Closed – Implemented
During our 2009 review of DOD's estimated cost savings resulting from the implementation of the BRAC recommendation to consolidate supply-related functions and inventories at 13 specified maintenance depots where DLA and the military services are co-located, we found that DLA included savings for activities not attributable to BRAC. We recommended that DLA remove those non-BRAC savings from its estimates. DOD concurred and took action. In DOD's August 2009 bi-annual Business Plan, DLA had removed those savings from its estimates. The resulting savings estimate will provide better information for congressional oversight and help maintain public confidence in the BRAC process.
Department of Defense In order to provide more accurate and up-to-date information to congressional decision makers and to enhance OSD's oversight role, the Secretary of Defense should instruct the Director of the DLA to improve the accuracy of its cost and savings estimates associated with the consolidation of the functions and inventories at the 13 specified depot locations by updating its 4-year-old data to reflect the most recent estimate of inventory levels available for consolidation (especially given the wartime demands currently being placed on maintenance depots).
Closed – Implemented
During our review of DOD's estimated cost savings resulting from the implementation of the Base Realignment and Closure (BRAC) recommendation to consolidate supply, storage and distribution (SS&D) functions and inventories at 13 specified maintenance depots where DLA and the military service are co-located, we found that DLA was using 4-year old inventory data for preparing its estimates. Given the activities in Iraq and Afghanistan, the inventory data should be updated. DOD concurred and took action. In DOD's August 2009 bi-annual Business Plan, DLA used updated inventory levels in its current estimate for savings related to this BRAC recommendation. The resulting savings estimate will provide better information for congressional oversight and help maintain public confidence in the BRAC process.
Department of Defense In order to provide more accurate and up-to-date information to congressional decision makers and to enhance OSD's oversight role, the Secretary of Defense should instruct the Director of the DLA to improve the accuracy of its cost and savings estimates associated with the consolidation of the SSD functions and inventories at the 13 specified depot locations by applying current information on the timing of inventory consolidations (specifically, when they will begin and how long they will take) and excluding projected savings for consolidating Army and Marine Corps inventories with DLA.
Closed – Implemented
During our 2009 review of DOD's estimated cost savings resulting from the implementation of the Base Realignment and Closure (BRAC) recommendation to consolidate supply-related functions and inventories at 13 specified maintenance depots where the Defense Logistics Agency (DLA) and the military services are co-located, we found that DLA was using out of date information regarding the timing and extent of inventory consolidations. DOD concurred and took action. In DOD's August 2009 bi-annual Business Plan, DLA used current information regarding a later timetable for inventory consolidations and eliminated any savings from the Army and Marine Corps inventories since there will not be any available to consolidate. The resulting savings estimate will provide better information for congressional oversight and help maintain public confidence in the BRAC process.
Department of Defense In order to provide more accurate and up-to-date information to congressional decision makers and to enhance OSD's oversight role, the Secretary of Defense should instruct the Director of the DLA to improve the accuracy of its cost and savings estimates associated with the consolidation of the SSD functions and inventories at the 13 specified depot locations by revising and finalizing an approved methodology which implements these steps and can be consistently followed by all the services and DLA over time.
Closed – Implemented
According to the DODIG, DLA has developed a methodology for developing its cost estimates for BRAC.

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Topics

Base realignmentsCost analysisCost effectiveness analysisDefense cost controlEmployee transfersLogisticsMilitary basesMilitary forcesMilitary inventoriesMilitary operationsSchedule slippagesStrategic planningCost awarenessCost estimatesConsolidationSavings estimates