This is the accessible text file for GAO report number GAO-03-274 
entitled 'Defense Infrastructure: Changes in Funding Priorities and 
Strategic Planning Needed to Improve the Condition of Military 
Facilities' which was released on February 19, 2003.



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GAO:



Report to Congressional Committees:



February 2003:



DEFENSE INFRASTRUCTURE:



Changes in Funding Priorities and Strategic Planning Needed to Improve 

the Condition of Military Facilities:



GAO-03-274:



GAO Highlights:



Highlights of GAO-03-274, a report to

Congressional Committees



Why GAO Did This Study:



GAO prepared this report in response to its basic legislative

responsibilities. Its objectives are threefold: (1) to examine the

historical funding trends and their impact on the condition of the

active forces’ facilities, (2) to evaluate the consistency of the

services’ information on facility conditions, and (3) to assess the

Department of Defense’s (DOD) long-term strategic plan and

objectives to improve facility conditions.



GAO is recommending that the Secretary of Defense direct the

service secretaries to reassess the funding priorities attached to

sustaining and improving their facilities. Also, GAO is

recommending that the Secretary



* instruct the services to implement a consistent,

departmentwide process to assess, rate, and validate facility

conditions;



* revise DOD’s facilities strategic plan to include detailed

information on specific actions, time frames, responsibilities,

and funding levels;



* clarify DOD’s guidance by specifying the organizational

level at which its stated objectives should be achieved;

and



* direct the services to develop comprehensive performance

plans.



In commenting on a draft of this report, DOD agreed with the

recommendations and outlined actions to address them.



What GAO Found:



While the amount of money the active forces have spent on facility

maintenance has increased recently, DOD and service officials said 

these amounts have not been sufficient to halt the deterioration of 

facilities. Too little funding to adequately maintain facilities is 

also aggravated by DOD’s acknowledged retention of facilities in 

excess of its needs. From fiscal year 1998 to 2001, obligations for 

facility maintenance rose by 26 percent with increases coming from 

higher annual budget requests, congressional designations that 

exceeded those requests, supplemental appropriations, and the 

services’ movement of funds to maintenance projects. Funding for 

military construction also increased during this period. However, 

military reports and testimonies state that these amounts have been 

insufficient, and GAO’s recent visits to installations document the 

deteriorated conditions of facilities.



There is a lack of consistency in the services’ information on 

facility conditions, making it difficult for Congress, DOD, and the 

services to direct funds to facilities where they are most needed and 

to accurately gauge facility conditions. Although DOD developed a 

standard rating scale to summarize facility conditions (C-ratings), 

each service has the latitude to use its own system for assessing 

conditions, including the types of facility raters, assessment 

frequencies, appraisal scales, and validation procedures.



Although DOD has a strategic plan for facilities, it lacks 

comprehensive information on the specific actions, time frames, 

responsibilities, and funding needed to reach its goals. Also, DOD has 

set up three objectives to improve its facility conditions—to fully 

fund sustainment, to achieve a 67-year average recapitalization rate 

by fiscal year 2007, and to improve facility conditions so

that deficiencies have limited effects on military mission achievement 

by fiscal year 2010. However, the services have not proposed to fully 

fund all the objectives and have developed funding plans to achieve 

others that have unrealistically high rates of increase during the 

out-years. At the same time, the services have not developed 

comprehensive performance plans to implement DOD’s vision for 

facilities.



Highlights Figure:



[See PDF for image]



[End of figure]



www.gao.gov/cgi-bin/getrpt?GAO-03-274.

To view the full report, including the scope and methodology, click 

on the link above. For more information, contact Barry W.Holman at 

(202) 512-8412.



Contents:



Letter:



Results in Brief:



Background:



Many Facilities Remain in Deteriorated Condition, Even with Increase in 

Maintenance and Military Construction Funding:



Military Services’ Data on Facility Conditions Are Inconsistent:



Weaknesses in Strategic Plan and Key Objectives Limit the Services’ 

Ability to Sustain and Improve Facility Conditions:



Conclusions:



Recommendations for Executive Action:



Agency Comments:



Appendix I: Scope and Methodology:



Appendix II: DOD’s Facilities Life-Cycle Management Model:



Appendix III: How Operation and Maintenance Funds Are Moved during the 

Fiscal Year:



Appendix IV: Comments from the Department of Defense:



Appendix V: GAO Contact and Staff Acknowledgments:



Glossary:



Tables:



Table 1: Definitions of Installations’ Readiness Report C-Ratings:



Table 2: Types of Facilities Included in the Nine Facility Classes:



Table 3: Comparison of DOD’s and the Services’ C-rating Definitions:



Table 4: Comparison of Basic Characteristics of Services’ Facility 

Condition Assessment Systems:



Figures:



Figure 1: Primary Funding Sources for DOD’s Facility Management Program 

in Fiscal Year 2002:



Figure 2: Requested, Congressionally Designated Initially, and 

(Reported) Obligated Facility Maintenance Funding Levels for the Active 

Military Services, Fiscal Years 1998 through 2001:



Figure 3: Requested and Appropriated Military Construction Funding 

Levels for the Active Military Services, Fiscal Years 1998 through 

2002:



Figure 4: World War II-Era Wood Building at Fort Bragg, North Carolina:



Figure 5: Structurally Unsound Warehouse at Fort Leavenworth, Kansas:



Figure 6: Choked and Clogged Water Pipes at Pope Air Force Base, North 

Carolina:



Figure 7: Crumbling Concrete Outside Cargo Center at Whiteman Air Force 

Base, Missouri:



Figure 8: Cracked and Broken Runway Surface at Naval Base Coronado, 

California:



Figure 9: Garden Hose and Sprinkler Cooling Portable Generator at Naval 

Air Station Oceana, Virginia:



Figure 10: Corroded Air-Conditioning System Valves at Quantico Marine 

Corps Base, Virginia:



Figure 11: Outdoor Portable Facilities Used to Supplement Inadequate 

Indoor Facilities at Quantico Marine Corps Base, Virginia:



Figure 12: Military Services’ Proposed Sustainment Funding, Fiscal 

Years 2002 through 2009:



Figure 13: Flow Chart of the Movement of Sustainment Funds to Other 

Purposes in Fiscal Year 2002:



Figure 14: Sustainment Obligations as a Percentage of Requirements at 

Installations We Visited, Fiscal Year 2002:



Figure 15: Projected Average Recapitalization Rate by Military Service, 

Fiscal Years 2002 through 2009:



Figure 16: Total Restoration and Modernization Funding Proposed by 

Military Service, Fiscal Years 2002 through 2009:



Figure 17: Projected Facilities Service Life and Performance with Full 

Sustainment and Modernization:



Figure 18: Lost Facilities Service Life and Performance without Full 

Sustainment:



Figure 19: DOD’s Budget and Obligation Process for Operation and 

Maintenance Funds:



Abbreviation:



DODDepartment of Defense:



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February 19, 2003:



Congressional Committees:



Department of Defense (DOD) installations and facilities are critical 

to supporting U.S. military forces, but they have not been sufficiently 

maintained or recapitalized for years. Defense facilities are durable 

capital assets that, if properly built and sustained, have useful lives 

ranging from 50 years and beyond. However, in the absence of proper 

maintenance, these facilities perform poorly and decay prematurely. 

Without periodic recapitalization, they can become obsolete and no 

longer be cost-effectively renovated and must be replaced with new 

construction. Consequently, DOD and active military service officials 

report that 68 percent of facility classes rated by major commands are 

in such a deteriorated condition that they negatively affect the 

quality of life of military personnel and their families and their 

ability to achieve their mission.[Footnote 1] Some officials estimate 

that it will cost tens of billions of dollars spread over 6 to 9 years 

to restore DOD’s facilities, along with a steady, predictable stream of 

sustainment and recapitalization funding after that to prevent problems 

from reoccurring. DOD and Congress have recognized the need to fully 

fund maintenance and recapitalization of facilities, as well as to 

reduce the department’s inventory of facilities through an upcoming 

round of base realignments and closures scheduled for fiscal year 

2005.[Footnote 2]



We prepared this report under our basic legislative responsibilities. 

We are providing it to you because of your oversight responsibilities 

for DOD’s facilities. This report (1) examines the historical funding 

trends for facility maintenance and military construction (including 

budget requests, initial congressional designations,[Footnote 3] and 

obligations) and their impact on the condition of the active forces’ 

facilities, (2) evaluates the consistency of the services’ information 

on facility conditions to help ensure that funding decisions 

effectively target facilities in greatest need and reported ratings 

accurately measure facility condition improvements, and (3) assesses 

the department’s long-term strategic plan and objectives to sustain and 

improve the condition of facilities. This is one of several reviews 

that we have underway examining various aspects of facility conditions 

in the department. We are also reviewing the physical condition of and 

maintenance and recapitalization plans for military reserve facilities 

and the management of housing for unaccompanied personnel.



In performing our work for this review, we examined DOD’s budget 

requests, congressional designations, and obligations data for 

facilities maintenance and construction since fiscal year 1998. In 

addition, we visited 10 military installations and met with officials 

of the department, the services, and six major commands to review the 

management and physical condition of their facilities.[Footnote 4] 

During our visits to installations, we discussed the evaluation methods 

and the condition assessment processes with the facility raters and 

reviewers and toured various facilities to observe their physical 

condition and deficiencies. We reviewed each service’s system for 

assessing facility conditions and compared this information across the 

services. We also examined DOD’s plans and objectives to address the 

condition of facilities. We did not attempt to validate DOD’s reported 

requirements for the sustainment of its facilities, nor did we validate 

DOD’s facility inventory database. We conducted our work between 

February and November 2002 in accordance with generally accepted 

government auditing standards. A more thorough description of our scope 

and methodology is in appendix I.



Results in Brief:



Although funding for facility maintenance and military construction 

increased during the past few years, DOD and service officials said 

these amounts must compete with other defense programs and priorities 

and have fallen short of what is needed to halt the deterioration of 

facilities used by the active military forces. From fiscal year 1998 to 

fiscal year 2001, the department’s reported obligations for facility 

maintenance rose by 

26 percent, from $3.8 billion to $4.8 billion.[Footnote 5] In general, 

these funding increases resulted from four primary sources: the 

military services’ moderately higher annual funding requests, except in 

fiscal year 2000; congressionally designated funding that was above the 

amounts requested by the services; supplemental appropriations; and the 

movement of funds into facility maintenance from other operating 

accounts at the end of each fiscal year. During fiscal years 1998 

through 2002, appropriations for military construction also rose from 

$2.1 billion to $4.1 billion. In fiscal year 2003, appropriations for 

military construction were $4.07 billion. Even with the funding 

increases in facility upkeep and military construction, DOD officials 

said that these amounts have been insufficient to contain the 

deterioration of military facilities.[Footnote 6] In addition, the 

services have pointed out in both congressional testimony and various 

reports that their funding requests for facility upkeep have to compete 

with other defense programs and priorities and have been consistently 

below what is needed. At the same time, department officials also 

acknowledge having facilities in excess of their needs, which they 

expect to address in a new base realignment and closure round planned 

for fiscal year 2005. The deteriorated condition of military facilities 

is further documented in DOD-wide ratings that show that 68 percent of 

facility classes rated by major commands are in such poor condition 

that they cannot fully support military missions, and in our own visits 

to 10 U.S. military installations where we found instances of leaking 

roofs, rotting piers, mold-covered child development centers and 

administrative buildings, and deteriorated warehouses.



While deteriorated facilities are common on many installations, there 

is a lack of consistency in the services’ information on facility 

conditions, making it difficult for DOD and the services to direct 

funds to facilities where they are most needed and to measure progress 

in improving facilities. Although DOD has established a standard rating 

scale to summarize the condition of facilities in terms of their 

ability to support military missions, the military services, and in 

some cases major commands within a service, have the latitude to use 

their own systems to develop and validate their ratings. According to 

DOD’s guidance, the services can implement the department’s rating 

scale without modifying their existing assessment processes. Our 

analysis shows that the services use different kinds of facility raters 

and procedures, assessment scopes and frequencies, appraisal scales, 

and validation procedures, all of which result in inconsistencies and a 

lack of comparability in their ratings. Without a consistent cross-

service system for assessing facility conditions and developing 

ratings, DOD and the services cannot be assured that their funding 

decisions effectively target facilities in greatest need and reported 

ratings accurately measure progress in facility condition improvements. 

Therefore, Congress may be relying on inconsistent data in its 

oversight responsibilities.



DOD has developed a facilities strategic plan and adopted three key 

objectives for the services to sustain and improve the condition of 

their facilities, but both the plan and the objectives have weaknesses. 

While the plan offers an overall vision for managing facilities, it 

lacks comprehensive information on the specific actions, time frames, 

assigned responsibilities, and resources that are needed to meet that 

vision. Although not part of the plan, three key objectives are meant 

to help the services begin reversing the trend of deteriorating 

facilities. These objectives are to fully fund sustainment starting in 

fiscal year 2004, reach a 67-year average recapitalization 

rate[Footnote 7] for the services’ facilities by fiscal year 2007, and 

improve the condition of facilities so that deficiencies have only a 

limited effect on mission performance by fiscal year 2010.[Footnote 8] 

The department is unlikely to achieve these objectives, however, 

because the military services do not propose to fully fund all of them 

or have developed funding plans that have unrealistically high rates of 

increase in the out-years when compared with previous funding trends 

and against other defense priorities. Moreover, achieving these 

objectives at the service level still allows for a wide range of 

sustainment funding and facility deficiencies at the installation 

level. For example, in the case of the first objective to fully fund 

sustainment, we found that even though the services intended to fund 

sustainment between 78 and 98 percent of requirements in fiscal year 

2002, sustainment funding at 7 of the 10 installations we visited, in 

fact, ranged from 35 to 77 percent of their requirements at year’s 

end.[Footnote 9] During our visits to major commands and installations, 

we found that sustainment funds can be reduced or held back at the 

service headquarters, major command, and installation levels to cover 

more pressing needs or emerging requirements. Installation officials 

told us that, as a result of these holdbacks and movements, it was 

difficult for them to make or implement rational plans for maintaining 

their facilities. In addition, the services have not developed 

comprehensive performance plans to implement the department’s vision 

for facilities that provides specific metrics to measure performance 

and credible and realistic funding plans to sustain and recapitalize 

facilities. On a positive note, the department and the services have 

undertaken some recent initiatives that are designed to improve the 

department’s ability to monitor and hold accountable the services’ 

facility management programs. Among these initiatives are the 

department’s development of a facilities assessment database, a 

handbook specifying the standard costs to maintain different types of 

facilities, and a model to calculate annual sustainment costs for 

facilities as well as an Army effort to centralize and streamline its 

facility management program to prevent major commands from moving 

maintenance funds to other programs. For several years, the Navy has 

had a less centralized regional program to manage its installations, 

which did not prevent the movement of sustainment funds from facilities 

early in fiscal year 2002. While the Navy is now moving toward a more 

centralized management structure similar to the Army’s facility 

management program, it is too early to assess the potential success of 

either facility program.



We are recommending that the Secretary of Defense direct the service 

secretaries to reassess the funding priorities the services have 

attached to sustaining and improving the condition of their facilities 

relative to other needs and funding limitations. In addition, we are 

recommending that the Secretary of Defense (1) instruct the services to 

implement a consistent, departmentwide process to assess the condition 

of facilities and develop a method to validate the ratings; (2) revise 

the department’s facilities strategic plan to provide comprehensive 

information on specific actions needed, time frames, responsibilities, 

and resources; (3) clarify the department’s guidance by specifying the 

organizational level to which its three stated objectives should be 

achieved; and (4) direct the services to develop comprehensive 

performance plans that implement the department’s facilities strategic 

plan and provide specific metrics to measure performance and credible 

and realistic funding plans to sustain and recapitalize facilities. In 

comments on a draft of this report, DOD concurred with our 

recommendations. The department also provided technical 

clarifications, which we incorporated as appropriate.



Background:



In the United States, the active military services are responsible for 

nearly 380,000 facilities, with an estimated plant replacement value of 

over $435 billion.[Footnote 10] These facilities include buildings, 

such as barracks, administrative space, classrooms, hangars, 

warehouses, maintenance buildings, churches, and child development 

centers, as well as non-buildings, such as runways, roads, railroads, 

piers, and utility structures and systems. If family housing were 

included, the total number of facilities would rise to more than 

524,000, with a plant replacement value of more than $477 

billion.[Footnote 11]



Funding for Facilities:



Historically, the military services used their own metrics, 

terminology, and accounting structures to manage their facilities. In 

fiscal year 2002, DOD replaced the operation and maintenance funded 

real property maintenance program with two distinct activities and 

accounting structures for (1) sustainment and (2) restoration and 

modernization, having already created a separate accounting structure 

for demolition and disposal in fiscal year 1999. In addition, DOD has 

developed a model for estimating sustainment funding needs, and it is 

developing a model for forecasting restoration and modernization 

funding requirements. The Army and the Air Force began using the 

sustainment and restoration and modernization programs in fiscal year 

2002, while the Navy and the Marine Corps asked for and were given 

permission to delay implementation of these new programs until fiscal 

year 2003.



Operation and maintenance funds primarily support sustainment 

activities, which are designed to keep facilities in good working 

order. Sustainment funds cover expenses for all recurring maintenance 

costs and contracts, as well as for major repairs of nonstructural 

facility components (e.g., replacing the roof or repairing the air-

conditioning system) that are expected to occur during a facility’s 

life cycle. Restoration includes repair and replacement work to restore 

facilities damaged by inadequate sustainment, excessive age, natural 

disaster, fire, accident, or other causes. Modernization includes 

altering, or modernizing, facilities to meet new or higher standards, 

accommodate new functions, or replace structural components. Both 

operation and maintenance and military construction monies fund these 

activities, as well as demolition and disposal activities. A fourth 

activity--new construction--is also funded with both military 

construction and operation and maintenance monies. This activity 

involves the construction of new buildings and other facilities, 

referred to as new footprint projects.[Footnote 12] There are 

limitations to the amount of operation and maintenance funds that can 

be used for new construction and the alteration or conversion of 

existing facilities: a maximum of $750,000 per project or up to $1.5 

million if the project is designed to correct a deficiency that 

threatens life, health, or safety.[Footnote 13] As figure 1 

illustrates, overlapping funding sources support DOD’s sustainment, 

restoration, and modernization of military facilities, along with its 

demolition program and new military construction.



Figure 1: Primary Funding Sources for DOD’s Facility Management Program 

in Fiscal Year 2002:



[See PDF for image]



[End of figure]



Notes: GAO’s analysis of DOD data.



The military services also use military pay; working capital funds; 

research, development, test, and evaluation funds; and host nation 

support funds to sustain and recapitalize facilities.



According to DOD, fully funding sustainment is the most cost-effective 

approach to managing facilities because it provides the most 

performance over the longest period of time for the least investment. 

Without adequate sustainment, expected service life is reduced and 

facilities must be recapitalized sooner than expected. Yet, even with 

adequate sustainment, over time facilities eventually either physically 

wear out or become obsolete. An obsolete facility is one that is 

irrelevant to present-day missions regardless of its condition; for 

example, a firehouse built in 1930 that is too narrow or too short to 

accommodate modern fire trucks. Once facilities reach the end of their 

expected service life, they must be replaced or extensively renovated 

or modernized--referred to as recapitalization--if they are to continue 

providing adequate performance. DOD estimates that an average 

recapitalization rate of 67 years allows fully sustained facilities to 

meet their requirements.[Footnote 14] In fiscal year 2002, DOD’s 

average recapitalization rate was 101 years, and it is projected to 

increase to about 150 years in fiscal year 2003. Recapitalization 

investments can also be made periodically throughout a facility’s 

service life, which extends service life and delays the need for 

replacement. Moreover, even after recapitalization investments are 

made, facility performance can rapidly decline in the absence of 

adequate sustainment.



Rating of Facilities:



In an attempt to standardize the rating of facilities across the 

services and to provide a measure of facility conditions, DOD issued 

its first Installations’ Readiness Report in 1999. Within the report, 

the services’ major commands report on each of their nine facility 

classes using a scale of C-1 through C-4, as defined in table 

1.[Footnote 15] For example, a C-4 rating is an indication that a 

facility class for a specified installation or major command has 

deficiencies that require workarounds or effectively preclude 

satisfactory mission accomplishment. According to DOD’s guidance to the 

services, they could implement this readiness reporting system without 

modifying their existing assessment processes. As a result, all four 

services are using different systems to assess facility conditions and 

develop C-ratings. However, reporting their ratings to DOD requires the 

services to implement additional processes to summarize information by 

major commands using C-ratings for facility classes.



Table 1: Definitions of Installations’ Readiness Report C-Ratings:



Rating: C-1; Definition: Only minor facility deficiencies with 

negligible impact on capability to perform missions.



Rating: C-2; Definition: Some facility deficiencies with limited impact 

on capability to perform missions.



Rating: C-3; Definition: Significant facility deficiencies that prevent 

performing some missions.



Rating: C-4; Definition: Major facility deficiencies that preclude 

satisfactory mission accomplishment.



[End of table]



Source: DOD.



The nine facility classes are groupings of like facilities. These 

facility classes are similar to the groupings traditionally used for 

military construction budgets and are consistent with the real property 

inventories the military services maintain. Table 2 lists the nine 

classes with examples of the types of facilities included in each 

class.



Table 2: Types of Facilities Included in the Nine Facility Classes:



Facility class: Operations and training; Types of facilities: 

Airfields, piers and wharves, training ranges and classrooms, recruit 

facilities, armories, aircraft parking and hangars, refueling hydrants, 

and flight simulators.



Facility class: Mobility; Types of facilities: Facilities directly 

related to mobilization of forces, including staging areas and 

transportation systems.



Facility class: Maintenance and production; Types of facilities: 

Vehicle and avionics maintenance shops, tactical equipment shops, 

aircraft maintenance hangars, foundries, and ammunition 

demilitarization.



Facility class: Research, development, testing, and evaluation; Types 

of facilities: Test chambers, laboratories, and research buildings.



Facility class: Supply; Types of facilities: Warehouses, hazardous 

material storage, and ammunition storage.



Facility class: Medical; Types of facilities: Hospitals and medical and 

dental clinics.



Facility class: Administrative; Types of facilities: Office space and 

computer facilities.



Facility class: Community and housing; Types of facilities: Family 

housing, barracks and dormitories, dining halls, recreation and 

physical fitness facilities, child development centers, fire and police 

stations, visitors’ quarters, and elementary and high schools.



Facility class: Utilities and ground improvements; Types of facilities: 

Power production, distribution, and conservation systems; water and 

sewage systems; roads and bridges; water pollution abatement; 

wastewater treatment facilities; fuel storage tanks; and containment 

areas.



[End of table]



Source: DOD.



In fiscal year 2001, DOD reported that 68 percent of facility classes 

rated by the services’ major commands received C-3 or C-4 ratings, 

indicating that they were in such deteriorated condition that they 

negatively affected the quality of life of military personnel and their 

families and their ability to achieve their mission. For example, the 

Army Forces Command did not rate any of its facility classes as C-1, 

but it rated its medical class as C-2 and its remaining eight classes 

as C-3. During the same period, the Navy’s Pacific Fleet did not rate 

any of its facility classes as C-1 or C-2, but it rated its community 

and housing class as C-4 and its remaining seven classes as C-3. The 

Pacific Fleet does not report ratings for the mobility class.



Strategic Plan and Objectives for Facilities:



DOD has labored in recent years to develop its Defense Facilities 

Strategic Plan, which outlines a set of initiatives over a 20-year 

period that are directly linked to the plan’s vision, mission, and 

goals.[Footnote 16] The vision set forth in the plan is to have 

installations and facilities available when and where needed to 

effectively and efficiently support missions. To achieve its vision, 

the plan’s strategic goals are to (1) locate, size, and configure 

defense installations and facilities to meet the requirements of 

today’s and tomorrow’s force structures; (2) acquire and sustain 

defense installations and facilities to provide mission-ready 

installations with quality living and work environments; (3) leverage 

resources--money, people, and equipment--to achieve the proper balance 

between requirements and available funding; and (4) improve facility 

management and planning by embracing best business practices and taking 

advantage of modern asset-management techniques and performance-

assessment metrics.



In addition to the broad goals set forth in its strategic plan, DOD 

established three key objectives. The objectives are (1) to fully fund 

sustainment, starting in fiscal year 2004; (2) to achieve an average 

recapitalization rate of 67 years, by fiscal year 2007; and (3) to 

concentrate funding so as to eliminate C-3 and C-4 facility ratings, 

bringing the ratings up to a minimal C-2 level by fiscal year 2010. As 

a point of reference, although there were no specific funding targets 

for fiscal year 2002, the military services intended to fund 

sustainment between 78 and 98 percent of requirements and reach an 

average recapitalization rate between 63 and 163 years in fiscal year 

2002. As well, departmentwide facility ratings show that major commands 

rated 68 percent of facility classes C-3 or C-4. DOD gradually phased 

in its guidance to the services on sustainment beginning in fiscal year 

2002 when it instructed the services to fund sustainment to the maximum 

extent possible. For fiscal year 2003, DOD instructed the services to 

attempt to fully fund sustainment to the levels specified by its 

facilities sustainment model.[Footnote 17] For fiscal year 2004 and 

thereafter, DOD instructed the services to fully fund sustainment to 

the levels defined by the facilities sustainment model. To reduce the 

recapitalization rate and eliminate C-3 and C-4 ratings, facilities 

need to be fully sustained.



The Defense Facilities Strategic Plan also notes that DOD needs to 

better focus its sustainment and restoration and modernization dollars 

to cost-effectively operate and maintain its facilities to support its 

military missions. The plan states that DOD should only fund 

sustainment and restoration and modernization of those facilities that 

are needed. As authorized by Congress in 2001, DOD intends to reduce 

its inventory of facilities as the result of closing some installations 

and by consolidating overlapping activities within and across the 

services through a round of base realignments and closures scheduled 

for fiscal year 2005.



Prior GAO Reports:



We have conducted a number of reviews where we identified areas in 

which DOD and the services could improve their facilities management 

program. Since 1997, we have identified DOD infrastructure management 

as a high-risk area. In 2001, we reported that DOD needed to develop a 

comprehensive long-range plan for its facilities infrastructure that 

addresses facility requirements, recapitalization, and maintenance and 

repair needs.[Footnote 18] We updated this report in January 2003, as 

well as designated federal real property as a new high-risk area at the 

same time.[Footnote 19] In September 1999, we reported on the 

management of DOD’s facility maintenance and repair programs and 

recommended that the Secretary of Defense (1) develop a way to link 

needs assessment with both resource allocations and tracking systems 

that show whether high-priority needs are receiving funding, (2) 

establish standardized condition assessment criteria, and (3) have the 

services adopt a valid engineering-based assessment system for 

facilities maintenance.[Footnote 20] In February 2000, we reported on 

the funding amounts that Congress had designated for DOD’s operation 

and maintenance subactivities and compared the amounts with DOD’s 

obligations for those same subactivities.[Footnote 21] We found that 

DOD consistently moved operation and maintenance funds into and out of 

certain activities, usually because they were needed elsewhere. In a 

June 2002 report, we examined the condition of barracks used to house 

military recruits in basic training and concluded that, to varying 

degrees, most barracks were in significant need of repair, although 

some were in better condition than others.[Footnote 22]



Many Facilities Remain in Deteriorated Condition, Even with Increase in 

Maintenance and Military Construction Funding:



While the amounts of money DOD devoted to facility maintenance and 

military construction increased between fiscal year 1998 and 2001 and 

fiscal year 1998 and 2002, respectively, DOD and service officials said 

these amounts have to compete with other defense programs and 

priorities and have been insufficient to restrain the deterioration 

and/or obsolescence of facilities used by the active forces. In 

general, the funding increases for facility maintenance resulted from 

moderately higher annual requests by the services, except in fiscal 

year 2000; congressionally designated funding that was higher than that 

requested by the services; supplemental appropriations; and the 

services’ movement of funds to maintenance projects at the end of each 

fiscal year. The funding increase in military construction resulted 

primarily from congressional designations greater than initially 

requested by DOD. Even with these increases, funding has fallen short 

of what is needed to reverse the deteriorated state of many facilities, 

as highlighted in recent congressional testimony and various studies 

conducted by the services. Recent departmentwide facility ratings show 

that major commands rated 68 percent of facility classes C-3 or C-4. 

Our visits to 10 military installations further underscored the scope 

of the deteriorated conditions.



Facility Maintenance Funding Increased from Fiscal Year 1998 to Fiscal 

Year 2001:



DOD’s reported obligations for facility maintenance, funded with 

operation and maintenance monies, show an increase between fiscal year 

1998 and 2001.[Footnote 23] Moreover, these obligations were always 

more than the services originally requested or that Congress initially 

designated. As figure 2 shows, the amounts that DOD requested for 

facility maintenance fluctuated between 1998 and 2001, increasing 

overall from $3.5 billion in fiscal year 1998 to just above $4.6 

billion in fiscal year 2001. During the same period, Congress 

consistently designated more funding for facility maintenance than DOD 

had requested. In addition, DOD’s reported obligations for facility 

maintenance increased from over $3.8 billion in fiscal year 1998 to 

more than $4.8 billion in fiscal year 2001, a 26 percent increase 

during fiscal years 1998 through 2001, unadjusted for inflation.



Figure 2: Requested, Congressionally Designated Initially, and 

(Reported) Obligated Facility Maintenance Funding Levels for the Active 

Military Services, Fiscal Years 1998 through 2001:



[See PDF for image]



[End of figure]



Notes: GAO’s analysis of DOD and congressional data.



Some of this increase is a result of internal adjustments among 

accounts. For example, during this period, some services moved 

research, development, test, and evaluation funds budgeted for the 

maintenance and repair of research, development, test, and evaluation 

facilities into the operation and maintenance budget.



Fiscal year 2002 data are not included above because obligations data 

were not available during our review.



While some funding increases for facility maintenance resulted from 

moderately higher requests by the services (except in fiscal year 

2000), most of the growth stemmed from congressionally designated 

funding that was above that requested by the services; supplemental 

appropriations that increased facility maintenance funding in each 

fiscal year; and the services’ internal movement of funds into facility 

maintenance from other operation and maintenance-funded programs, such 

as operating tempo programs.[Footnote 24] According to a DOD official, 

some of the growth in the reported maintenance funding resulted from 

internal adjustments among accounts--intrabudget transfers from other 

appropriations to facility maintenance. The services also moved funds 

out of facility maintenance to other programs such as base operations 

and force readiness during this period; however, the outward movements 

of funds were generally less than the amounts moved into facility 

maintenance. For example, during fiscal year 2000, the Army initially 

moved $6.8 million out of facility maintenance to base operations 

support but, by the end of the fiscal year, had moved more than $10 

million back into facility maintenance from base operations support. In 

addition, it is important to note that in fiscal year 2000, DOD split 

its budget request for facilities between $2.8 billion for facility 

maintenance and $1.8 billion for quality of life enhancements.[Footnote 

25] DOD specifically requested funds for quality-of-life enhancements 

in fiscal year 2000 to reduce the services’ facility maintenance 

backlog and to repair barracks, dormitories, and related facilities. 

Although Congress initially designated only slightly more funds 

(approximately $64 million) for facility maintenance than DOD 

requested, in its conference report Congress moved more than $1.6 

billion from DOD’s quality-of-life enhancements into facility 

maintenance.



DOD has considerable flexibility in using operation and maintenance 

funds and can move them in several ways. Congress makes appropriations 

at the aggregated account level--that is, for the Army, the Air Force, 

the Navy, the Marine Corps, and the Defense-wide operation and 

maintenance accounts. However, to indicate how it expects operation and 

maintenance funds to be spent, Congress designates, in its conference 

report on annual appropriations acts, specific amounts for each 

subactivity group, such as sustainment, restoration and modernization, 

or base operations. As discussed further in appendix III, DOD has broad 

discretion in how it uses operation and maintenance funds.



Military Construction Appropriations Increased from Fiscal Year 1998 to 

Fiscal Year 2002:



At the same time that DOD’s reported obligations for facility 

maintenance increased, appropriations for military construction also 

rose. However, the amounts that DOD requested for military construction 

fluctuated between fiscal year 1998 and 2001, from nearly $1.6 billion 

in fiscal year 1998, down to about $1.2 billion in fiscal year 2000, 

and up to more than $3.9 billion in fiscal year 2002. During the same 

period, as figure 3 shows, Congress consistently appropriated more 

funding for military construction than DOD had requested by adding 

construction projects. Although the appropriated amounts slightly 

decreased between fiscal year 1998 and 1999 and again between fiscal 

year 2000 and 2001, total appropriations increased from $2.1 billion in 

fiscal year 1998 to more than $4.1 billion in fiscal year 2002, a 95 

percent increase, unadjusted for inflation.[Footnote 26]



Figure 3: Requested and Appropriated Military Construction Funding 

Levels for the Active Military Services, Fiscal Years 1998 through 

2002:



[See PDF for image]



[End of figure]



Notes: GAO’s analysis of DOD and congressional data.



This table does not include yearly obligated amounts for military 

construction because such funds are available for obligation over a 5-

year period. For example, funds appropriated in fiscal year 1998 can be 

obligated through fiscal year 2002.



In fiscal year 2000, DOD requested less in military construction funds 

than it had asked for in the previous two fiscal years but it also 

requested advance appropriations for fiscal year 2001 totaling more 

than $1.5 billion for the active services.[Footnote 27] Congress did 

not appropriate funds for the advance appropriation request but 

appropriated military construction funds for fiscal year 2000 that were 

greater than the initial request. In its report on the fiscal year 2000 

military construction appropriation bill, the Senate Committee on 

Appropriations noted that the use of advance appropriations was not 

consistent with the long-standing policy of fully funding military 

construction and directed DOD to fully fund all military construction 

projects in future budget requests. The Committee also noted that it 

was concerned about DOD’s continued lack of investment in military 

facilities and indicated that the fiscal year 2000 military 

construction request failed to request sufficient funds to support 

DOD’s efforts to modernize, renovate, and improve aging facilities. In 

fiscal year 2002, the administration requested $3.9 billion--$1.72 

billion more than requested in fiscal year 2001--for military 

construction to help eliminate the most seriously degraded facilities 

and reduce the recapitalization rate.



Testimony and Studies Indicate that Services Have Underfunded Facility 

Maintenance:



Even with the growth in funding for facility maintenance and military 

construction, DOD and service officials said the amounts have fallen 

short of what is needed to stop the deterioration and obsolescence of 

facilities used by the active forces. In testimony in April 2001 before 

the House Committee on Armed Services, Military Installations and 

Facilities Subcommittee, officials from the military services 

attributed deteriorated facility conditions to consistent 

underfunding. For example, Army officials testified that average 

facility maintenance funding since the early 1990s was approximately 60 

percent of what was needed. These officials also testified that 

available maintenance funding met only 70 percent of their needs in 

fiscal year 2001. Likewise, Air Force officials testified that facility 

maintenance funding shortfalls have hindered the service’s efforts to 

sustain and operate Air Force facilities and only allow the Air Force 

to provide day-to-day maintenance for facilities. Navy and Marine Corps 

officials also testified that their services consistently underfunded 

facility maintenance.



In addition to congressional testimony, DOD and the military services 

have issued a number of recent reports that further underscore the 

insufficiency of funding for facility maintenance. In its annual 

financial reports, DOD reported that its deferred maintenance increased 

from $35.9 billion in fiscal year 1998 to $50 billion in fiscal year 

2001--a $14.1 billion increase in 3 years. However, it is important to 

note that in fiscal year 2001, DOD stopped reporting deferred 

maintenance because it found deferred maintenance to be inaccurate, 

subjective, and unverifiable. In the Installations’ Readiness Report 

for fiscal year 2001, the services reported that 68 percent of their 

facility classes rated by major commands were C-3 or C-4. In a report 

on its facilities investment plan, the Air Force indicated that, since 

fiscal year 1998, operation and maintenance facilities funding was 

limited to 1 percent of the service’s total plant replacement 

value.[Footnote 28] However, the full 1 percent rarely reached Air 

Force installations because the funds were moved to other needs or used 

to pay for critical repairs or upgrades to facilities, which are not 

considered maintenance activities. Based on DOD’s facilities 

sustainment model, 1 percent of plant replacement value is not enough 

to fully sustain facilities. In a 2002 report on the Navy’s facilities 

maintenance program, the Naval Audit Service stated that the Navy 

historically understated its maintenance requirements and used its 

facility maintenance funds to resolve funding shortfalls in other Navy 

programs.[Footnote 29] The Naval Audit Service concluded that, as a 

result of these movements and the resulting reductions in maintenance 

funding at the beginning of the fiscal year, it is difficult for the 

Navy to make or implement rational plans for maintaining and repairing 

its facilities.



Deteriorated Condition of Military Facilities:



Although we found new construction and renovations of buildings taking 

place, we also observed numerous examples of deteriorated conditions of 

military facilities during our visits to 10 installations across the 

country. Moreover, we noted that while facilities may appear to be in 

relatively good condition on the exterior, their interior conditions 

may be less so with deteriorated heating, air-conditioning, and 

ventilation systems and other deficiencies. Among the deficiencies 

observed were:



* buildings closed due to excessive mold and mildew;



* motor pools forced to perform vehicle maintenance outdoors on gravel 

lots;



* administrative offices located in converted wooden barracks built in 

the 1940s;



* maintenance performed on expensive electronic equipment inside 

temporary structures with inadequate heating, air-conditioning, or 

ventilation systems; and:



* runways policed regularly by base personnel to pick up debris and 

identify cracked pavement.



In the following sections, we describe some of the facility 

deficiencies we observed at each of the 10 military installations we 

visited.



Deficiencies Observed at Army Installations:



Established in 1918, Fort Bragg, North Carolina, is home to the 82nd 

Airborne and its three brigades. At Fort Bragg, we observed a number of 

newly constructed facilities, such as a medical center and a youth 

center, as well as many facilities that were in relatively poor 

condition. For example, we saw wooden buildings that were constructed 

during World War II and were still in use for a variety of purposes, 

including administrative space and storage. In fiscal year 2001, Fort 

Bragg’s administrative facilities were rated C-4, which is defined by 

DOD as having major deficiencies that preclude satisfactory completion 

of the mission. These wooden buildings contain nearly 2 million square 

feet, or about 7 percent of the installation’s total facility space. 

Figure 4 shows the exterior walls of one of these badly deteriorating 

buildings; the paint on the walls was peeling and there were several 

holes in the wood. In addition, a number of temporary structures were 

in use, including sheds used for administration and training at a 

vehicle maintenance yard. At this location, personnel also performed 

maintenance on vehicles on a gravel lot where dirt and debris sometimes 

got into engine parts and compromised the quality of their work.



Figure 4: World War II-Era Wood Building at Fort Bragg, North Carolina:



[See PDF for image]



[End of figure]



Fort Leavenworth, Kansas, which was established in 1827, is home to the 

Combined Arms Center that educates officers in operational command and 

staff functions, the Command and General Staff College, the National 

Simulation Center, and the U.S. Disciplinary Barracks. At Fort 

Leavenworth, we saw a newly constructed prison and a recently renovated 

visiting officers’ quarters but also numerous deteriorated facilities, 

including a warehouse with a broken structural wood beam, as shown in 

figure 5. Notwithstanding this hazard, personnel still worked in this 

facility daily. In fiscal year 2001, Fort Leavenworth’s supply 

facilities, which include warehouses, were rated C-4.



Figure 5: Structurally Unsound Warehouse at Fort Leavenworth, Kansas:



[See PDF for image]



[End of figure]



Deficiencies Observed at Air Force Installations:



Pope Air Force Base, North Carolina, established as Pope Field in 1919, 

is currently home to the 43rd Airlift Wing, which provides airlift 

support to adjacent Fort Bragg. While we saw buildings at Pope that 

appeared to be in good condition on the outside, officials advised us 

to drink only bottled water because the installation’s water pipes were 

so thoroughly clogged with rust and sediment that the water was 

considered unsafe to drink. Figure 6 shows some of the water pipes that 

were removed from a renovated building. Base officials told us that the 

fire station’s ventilation system was unable to adequately remove 

diesel fire engine exhaust from the air. We also learned that crumbling 

concrete and a decaying storm drainpipe required the base’s main runway 

to be shut down in February 2002. While the runway and one taxiway were 

being repaired, all flight operations, equipment, and personnel had to 

be transferred to other installations for 30 days--at a cost of over 

$800,000. We were also told the runway was policed regularly to clean 

up debris and identify cracked pavement. The base’s operations and 

training facility class, including runways and taxiways, was rated C-4 

in fiscal year 2001.



Figure 6: Choked and Clogged Water Pipes at Pope Air Force Base, North 

Carolina:



[See PDF for image]



[End of figure]



Whiteman Air Force Base, Missouri, established in 1942 as Sedalia Army 

Air Field, is a former missile base that is now home to the Air Force’s 

B-2 bombers. Even with new construction to accommodate B-2 maintenance 

operations, the facilities exhibited a number of problems. Crumbling 

pavement outside the entrance of a main cargo center threatened to 

topple loaded forklift machinery (see fig. 7). A 48-year-old wood frame 

warehouse had safety, lighting, and electrical code violations and a 

leaky roof. The warehouse also had a loading dock that forklift 

operators were told not to use because the dock’s cracked and pitted 

concrete might not support the weight of the machinery. In fiscal year 

2001, the base’s supply facility class, including warehouses, was rated 

C-4.



Figure 7: Crumbling Concrete Outside Cargo Center at Whiteman Air Force 

Base, Missouri:



[See PDF for image]



[End of figure]



Los Angeles Air Force Base, California, officially designated as Los 

Angeles Air Force Station in 1964, is the current home of the Air Force 

Space and Missile Systems Center whose mission involves acquisition and 

research, development, and testing of missile systems. Base officials 

told us that a number of buildings had asbestos in the interior walls 

and ceilings, and we observed peeling lead-based paint on the exterior 

surfaces. The officials also told us that at one of the base’s computer 

laboratories the asbestos levels in the floor tiles were too high to 

risk removing them. The base’s research, development, testing, and 

evaluation facilities were rated C-4 in fiscal year 2001. Officials 

also showed us the main electrical substation for the base, which used 

1930s-era equipment and was difficult to repair because parts were no 

longer available. The substation once caught fire and was shut down; 

there was a great deal of difficulty getting it completely operational. 

Some of its wiring was still covered with asbestos insulation.



Deficiencies Observed at Navy Installations:



At Naval Station San Diego, California, established in 1922 and 

homeport to 89 Pacific Fleet ships, we observed several deteriorated 

facilities, including piers with broken wooden fenders and cracked 

concrete. One pier could not support heavy loading equipment. In 

addition, officials told us the heating, ventilation, and air-

conditioning systems at the radar school have only been minimally 

maintained for many years due to a lack of funds. In fiscal year 2001, 

Naval Station San Diego’s operations and training class, of which these 

facilities are part, was rated C-3, which is defined by DOD as having 

significant deficiencies that prevent performing some missions.



During our visit to Naval Base Coronado, California, which was 

established as Naval Air Station North Island in 1917 and is comprised 

of the naval air station, Naval Amphibious Base Coronado, and five 

other activities, we observed a severely deteriorated runway with large 

sections of cracked and broken concrete that had, on at least one 

occasion, caused minor damage to aircraft using the runway (see fig. 

8). The operations and training facility class, including runways, at 

Naval Base Coronado was rated C-3 in fiscal year 2001. Moreover, 

officials told us that the base continually dealt with large problems 

created by small maintenance problems that were not addressed. For 

instance, they told us a toilet, which did not shut off properly, 

flooded out one building, resulting in $140,000 in cleanup costs. We 

also saw one of the base’s child development centers, which was 

permanently closed in January 2002 because of severe problems with mold 

that had rotted the support structure underneath the building’s floor. 

The building’s closure, which affected more than 160 children for whom 

alternate care had to be found, had a significant impact on the quality 

of life of military families at this base.



Figure 8: Cracked and Broken Runway Surface at Naval Base Coronado, 

California:



[See PDF for image]



[End of figure]



At Naval Station Norfolk, Virginia, established in 1917 and homeport 

for 76 ships and 138 aircraft, we observed several facilities under 

renovation, but we also saw many deteriorated facilities, including a 

large warehouse that was evacuated because the wooden beams supporting 

the roof broke. Likewise, during our visit to Naval Air Station Oceana, 

Virginia, established in 1952 and home to 23 aircraft squadrons 

assigned to both the Atlantic and Pacific Fleets, we saw several newly 

constructed facilities, some of which were replacing obsolete 

facilities. Still, officials told us that sections of the 

installation’s aircraft intermediate maintenance depot, the Navy’s only 

F-14 aircraft electronics maintenance support center, frequently shut 

down because the facility’s failing air-conditioning system could not 

adequately cool room temperatures to the levels necessary for aircraft 

repair equipment to function. As a result, according to base personnel, 

there was a backlog of aircraft parts that needed repairs, grounding 

some aircraft and forcing sailors to work long hours to make up the 

backlog. In fiscal year 2001, Naval Air Station Oceana’s maintenance 

and production facilities, including avionics maintenance shops, were 

rated C-4. Figure 9 shows the aircraft intermediate maintenance depot’s 

portable generator, used to supplement the internal air-conditioning 

system, being cooled by a garden hose and a sprinkler to prevent 

overheating. In addition, officials told us that some barracks at Naval 

Air Station Oceana were not occupied because their heating, 

ventilation, and air-conditioning systems were not maintained, allowing 

mold and mildew to grow in walls, carpeting, and ceilings--all of which 

must be replaced. Personnel who occupied these buildings had to find 

housing off base.



Figure 9: Garden Hose and Sprinkler Cooling Portable Generator at Naval 

Air Station Oceana, Virginia:



[See PDF for image]



[End of figure]



Deficiencies Observed at Quantico Marine Corps Base, Virginia:



Quantico Marine Corps Base, Virginia, established in 1917, serves two 

primary roles--as the location where Marine Corps’ concepts, doctrine, 

training, and equipment are developed and as the focal point for Marine 

Corps’ professional military education. While we saw a number of new 

buildings in good exterior condition, we also saw a number of older, 

deteriorated facilities at the base. For example, we observed buildings 

with doors falling off their frames, barracks room walls cracked and 

covered with mold, and air-conditioning systems close to failure. In 

one building with a mess hall, living quarters, and classrooms, base 

officials showed us corroded valves from the air-conditioning system 

(see fig. 10). They told us that the system, which was imported from 

India in 1999, constantly leaked and had corroded the two valves in 

only one year. They added that because the system was only one of three 

in use in the United States, it was difficult to obtain the parts 

needed to repair it.



Figure 10: Corroded Air-Conditioning System Valves at Quantico Marine 

Corps Base, Virginia:



[See PDF for image]



[End of figure]



Although the base’s operations and training facility class was rated C-

2 in fiscal year 2001, we visited two old classroom buildings that were 

still in use but did not have adequate indoor bathroom facilities. As 

figure 11 shows, personnel must use outdoor portable facilities at one 

training location.



Figure 11: Outdoor Portable Facilities Used to Supplement Inadequate 

Indoor Facilities at Quantico Marine Corps Base, Virginia:



[See PDF for image]



[End of figure]



Military Services’ Data on Facility Conditions Are Inconsistent:



The information that the services have on the condition of their 

facilities is inconsistent across the services, making it difficult for 

Congress, DOD, and the services to direct funds to facilities that are 

in most need of repair and to measure progress in improving facilities. 

Although DOD established a standard rating scale to summarize facility 

conditions and ability to support military mission, each service has 

the latitude to use its own system for developing and validating the 

ratings. According to DOD’s guidance to the services, they can 

implement this rating scale without modifying their existing assessment 

processes. We found that the services, and in some cases major commands 

within a service, employ different types of facility raters and 

procedures, assessment scopes and frequencies, appraisal scales, and 

validation procedures. This lack of consistency makes it difficult for 

DOD and the services to direct funds to facilities that are in most 

need of repair and to accurately measure the progress of improvements 

in facility conditions. Therefore, Congress may be relying on 

inconsistent data in its oversight responsibilities.



DOD Established a Standard Rating Scale to Summarize Facility 

Conditions:



In fiscal year 1999, DOD developed a standard rating scale for 

summarizing the condition of military facilities using C-ratings and 

adopted the Installations’ Readiness Report as its method for reporting 

facility conditions to Congress. DOD issued the Installations’ 

Readiness Report to fulfill its reporting requirement to Congress under 

section 117 of title 10 of the United States Code, which specifies that 

DOD measure the capability of defense installations and facilities to 

provide appropriate support to forces in the conduct of their wartime 

missions. DOD adopted the report as a method for including the 

condition of installations and facilities in its readiness reporting 

system, in which commanders rate the readiness of their units to carry 

out required missions, and to help in the decision-making process on 

how to allocate facility maintenance and construction funds. Regardless 

of the creation of the standard scale for summarizing facility 

conditions, each service has the latitude to develop its own C-rating 

definitions and facility condition assessment system. DOD’s guidance to 

the services state that they can implement this readiness reporting 

system without modifying their existing assessment processes.



Services Use Different C-rating Definitions:



Although DOD developed a standard rating scale, the services’ C-ratings 

have a somewhat different focus and definitions than DOD’s. DOD’s 

C-rating definitions focus on the impact of facility deficiencies on 

mission accomplishment and do not specify whether it is the mission of 

the personnel who use the facilities or the mission of the facilities. 

In general, the services’ C-rating definitions focus on the impact of 

deficiencies on the ability of facilities to support or perform their 

assigned or required missions. For example, the mission of a child 

development center is to provide safe and adequate care for the 

children of military families. As a result, C-ratings are not 

consistently defined across DOD and the services. Table 3 compares 

DOD’s and the service’s C-rating definitions.



Table 3: Comparison of DOD’s and the Services’ C-rating Definitions:



Rating: C-1; DOD: Only minor facility deficiencies with negligible 

impact on capability to perform missions; Army: Almost all required 

facilities on hand; meet unit/activity needs and Army standards; very 

minor, if any, functional deficiencies; facilities fully supports 

mission performance; Air Force: Only minor deficiencies with negligible 

impact on the facility class’ capability to support assigned missions; 

Navy: Ready for all missions, having only minor deficiencies with 

negligible impact on capability to perform required facility missions; 

Marine Corps: Ready for all missions, having only minor deficiencies 

with negligible impact on capability to perform required facility 

missions.



Rating: C-2; DOD: Some facility deficiencies with limited impact on 

capability to perform missions; Army: Most required facilities on hand; 

meet unit/activity needs and partly meet Army standards; minor 

functional deficiencies; facilities supports majority of assigned 

missions; Air Force: Some facility deficiencies with limited impact on 

the facility class’ capability to support assigned missions; Navy: 

Ready for bulk of missions, having some deficiencies with limited 

impact on capability to perform required facility missions; Marine 

Corps: Ready for bulk of missions, having some deficiencies with 

limited impact on capability to perform required facility missions.



Rating: C-3; DOD: Significant facility deficiencies that prevent 

performing some missions; Army: Majority of required facilities on 

hand; meet majority of unit/activity needs; do not meet Army standards; 

some functional deficiencies; impairs mission performance; Air Force: 

Major facility deficiencies that significantly degrade the facility 

class’ ability to support assigned missions; Navy: Ready for some 

portions of missions, having significant deficiencies that prevent 

performing some facility missions; Marine Corps: Ready for some 

portions of missions, having significant deficiencies that prevent 

performing some facility missions.



Rating: C-4; DOD: Major facility deficiencies that preclude 

satisfactory mission accomplishment; Army: Less than 60 percent of 

required facilities on hand; facilities do not meet unit/activity needs 

or Army standards; major functional deficiencies; significantly impair 

mission performance; Air Force: Critical facility deficiencies that 

preclude the facility class’ support of assigned missions; Navy: Not 

ready for missions, having major deficiencies that preclude 

satisfactory accomplishment of facility missions; Marine Corps: Not 

ready for missions, having major deficiencies that preclude 

satisfactory accomplishment of facility missions.



[End of table]



Source: DOD and the services.



Note: GAO’s analysis of DOD and service data.



Although none of the C-ratings measures the impact of facility 

conditions on readiness, DOD’s reporting of the ratings in its annual 

Installations’ Readiness Report to Congress attempts to link facility 

conditions to military readiness. However, some service officials told 

us that it is difficult to gauge the affect of facility conditions on 

military mission or readiness. For example, an Atlantic Fleet official 

said it is hard to quantify how a leaking roof affects the Navy’s 

readiness to protect sea lanes.



Services Have Different Assessment Systems for Developing and 

Validating Ratings:



In determining C-ratings for its facility classes, each service 

developed its own system for assessing and validating its facility 

conditions. Table 4 compares the basic characteristics of the 

assessment systems used by the four services to develop C-ratings.



Table 4: Comparison of Basic Characteristics of Services’ Facility 

Condition Assessment Systems:



Rating system characteristic: Name; Service: Army: Installation Status 

Report; Service: Air Force: Installations’ Readiness Report; Service: 

Navy: Installation Readiness Reporting System; Service: Marine Corps: 

Commanding Officer’s Readiness Reporting System.



Rating system characteristic: Facility raters and procedures; Service: 

Army: Building occupants/users assess facilities using facility 

condition assessment worksheets; Service: Air Force: Building 

occupants/users, engineers, engineering technicians, and facility 

managers report facility deficiencies for which repair projects are 

programmed; Service: Navy: Engineers, engineering technicians, and 

certified journeymen assess facilities and classify identified 

deficiencies as critical or deferrable; Service: Marine Corps: 

Technicians and skilled craftsmen assess facilities.



Rating system characteristic: Assessment scopes and frequencies; 

Service: Army: Facilities are assessed annually; ; Some sampling is 

used to estimate conditions; Service: Air Force: Installation officials 

identify deficiencies and program repair projects throughout the fiscal 

year; Service: Navy: Most major commands assess facilities every 3 

years; one major command assesses facilities on 2, 3, and 6-year 

cycles; Service: Marine Corps: Facilities are assessed at different 

frequencies, depending on type.



Rating system characteristic: Appraisal scales; Service: Army: Three-

level scale for facility conditions: green, amber, and red; Service: 

Air Force: Three-level scale for impact of facility deficiencies on 

mission: minimal, degraded, and critical; Service: Navy: Three-level 

scale for facility conditions: good, fair, and poor; Service: Marine 

Corps: Three-level scale for facility conditions: adequate, inadequate, 

and substandard.



Rating system characteristic: Validation procedures; Service: Army: No 

Army-wide system; some review of the data is done by Army headquarters 

and the major commands; Service: Air Force: No Air Force-wide system; 

some major commands send infrastructure sustain teams to validate 

projects; Service: Navy: No Navy-wide system; some major commands and 

regions have own review processes; Service: Marine Corps: No Marine 

Corps-wide system.



[End of table]



Source: DOD and the services.



Note: GAO’s analysis of DOD and service data.



Services Use Different Types of Facility Raters and Procedures:



The services use different types of personnel and procedures to rate 

the condition of their facilities. The Army relies on building 

occupants and users to rate each facility using facility condition 

assessment worksheets. The worksheets contain a list of Army required 

components for each type of facility, such as condition of restrooms, 

adequacy of storage space, or size and adequacy of administrative or 

training space. Booklets containing illustrations showing conditions 

for facility components at each rating level accompany the worksheets. 

The Air Force has no formal facility assessment process. Instead, 

building occupants and users report any deficiencies to building 

managers, who then review the deficiencies and submit work orders to 

initiate repair projects. In addition, engineers and engineering 

technicians also assess some facilities. The Navy uses mostly 

engineers, engineering technicians, and certified journeymen to assess 

facilities. They conduct the assessments by identifying and classifying 

deficiencies as either critical or deferrable.[Footnote 30] The 

Atlantic Fleet, the Navy’s second largest major command, however, 

developed its own assessment system that uses criteria different from 

Navy-wide standards to classify deficiencies.[Footnote 31] Atlantic 

Fleet facilities staff told us that they developed this system because 

they were concerned about the lack of consistency under the Navy wide 

system. The Marine Corps depends on technicians and personnel with 

skilled trade backgrounds to rate the condition of facilities’ major 

components and structural integrity. Based on the raters’ data, a 

computer program then calculates both the cost of improvements and the 

installations’ C-ratings.



Assessment Scopes and Frequencies Vary among the Services:



The scopes and frequencies of facility assessments also differ among 

the services. The Army assesses all of its facilities annually and uses 

some sampling as part of the process. The Air Force does not formally 

assess facilities; rather, installation officials identify 

deficiencies and program repair projects throughout the year. In most 

Navy major commands, facilities are inspected on a 3-year cycle, but in 

the Atlantic Fleet, facilities are assessed on 2-, 3-, and 6-year 

cycles, depending on the type of facility. The Marine Corps inspects 

some types of facilities annually but inspects other types of 

facilities less frequently.



In addition, the services do not assess all facilities in their 

inventory. For example, the Army does not report on the condition of 

its temporary facilities, which includes World War II-era wood 

buildings. At Fort Bragg, World War II-era facilities comprise nearly 2 

million square feet of space, or 7 percent of the installation’s total 

facility space. The Army does not consider temporary facilities as 

meeting quantity requirements. In the Air Force, some temporary 

structures are not considered part of an installation’s facility 

inventory. At Pope Air Force Base, for instance, temporary structures 

that have been used for electronic equipment maintenance since the 

1970s are not counted as part of the installation’s facility inventory 

but, rather, are counted as equipment. According to one Navy official, 

the service also does not assess temporary structures, such as 

trailers.



Services Use Different Appraisal Scales:



The four services also use different appraisal scales in assessing 

facility conditions. In the Army, facilities receive a green, amber, or 

red rating based on an assessment of physical conditions. A green 

rating signifies that a facility meets standards and is in overall good 

condition. An amber rating indicates that a facility does not fully 

meet facility standards, while a red rating signifies a facility is 

substandard and in overall poor condition. In the Air Force, projects 

are prioritized using the Facility Investment Metric, which weights 

repair project costs by mission area, such as primary mission and base 

support, and mission impact. Projects, not facilities, are rated as 

minimal, degraded, or critical. A minimal rating indicates marginal or 

little adverse impact to installation mission capability. A degraded 

rating indicates a limited loss of installation mission capability. A 

critical rating indicates a significant loss of installation mission 

capability and frequent mission interruptions. In the Navy, facilities 

are rated good, fair, or poor based on deficiencies identified during 

assessments. A good rating indicates that a facility complies with 

facility standards. A fair rating denotes a facility that does not meet 

standards and is in overall poor condition. A poor rating indicates 

that a facility requires replacement. In the Marine Corps, facilities 

are rated as adequate, substandard, or inadequate based on renovation 

costs or the condition of major facility components, as well as health 

or safety issues. An adequate rating indicates that facility components 

(such as electrical systems or fire protection) have only minor 

deficiencies, a substandard rating signifies that facility components 

have significant deficiencies, and an inadequate rating indicates that 

facility components have major deficiencies that impair functionality.



In translating facility condition or project ratings into C-ratings 

reported to DOD, the Army, the Navy, and the Marine Corps use similar 

computation methods while the Air Force employs a different method. In 

general, the Army, Navy, and Marine Corps systems assign C-ratings to 

facility classes based on mathematical formulas that consider both the 

results of facility condition assessments and the plant replacement 

value. These formulas vary slightly from service to service. In 

contrast, the Air Force uses its Facility Investment Metric to weight 

repair project costs by mission area and impact. The total weighted 

repair project costs are summed and divided by the total plant 

replacement value to obtain a percentage for each facility class. Each 

percentage is converted to a C-rating using the following break points: 

C-1: 0 to 10 percent; C-2: greater than 10 to 20 percent; C-3: greater 

than 20 to 40 percent; and C-4: greater than 

40 percent.



Validation Procedures Are Not Comprehensive:



Neither DOD nor the services have comprehensive validation procedures 

for facility condition information, although some major commands and 

installations review and verify their own data. However, such practices 

are inconsistent within the services. In the Army, for instance, we 

found that facilities personnel at Fort Leavenworth reviewed every 

Installation Status Report worksheet. By comparison, at Fort Bragg 

there is no review process. During our visit to that base, we reviewed 

Installation Status Report worksheets where facility assessors rated 

all assessment categories as amber. Facilities personnel told us that 

since an amber rating requires no written explanation of deficiencies, 

as does a red rating, building users often assign amber ratings so they 

can quickly complete their assessment worksheets. Moreover, at Fort 

Leavenworth we found that all building users responsible for assessing 

facilities were required to attend a training session on completing 

Installation Status Report worksheets. At Fort Bragg, on the other 

hand, we were told that no facility assessors attended this year’s 1-

hour training session while last year only two individuals attended the 

training. In the Air Force, some major commands send infrastructure 

sustain teams to visit installations on an 

18-month cycle to identify and validate specific projects for major 

infrastructure systems (e.g., airfield pavements, airfield lighting, 

etc.). In the Navy, some regions and major commands have procedures for 

reviewing facility condition information. For example, Atlantic Fleet 

facilities personnel told us that facility assessors and installation 

staff review and collaborate on all assessment data before they are 

submitted for calculating facility condition ratings. They also told us 

that all critical deficiencies are reviewed by a Navy public works 

center. The Pacific Fleet relies primarily on its component regional 

commands to verify assessment data but has developed a program called 

condition assessment validation visits in which fleet, regional, and 

installation staff members visit bases to review and evaluate 

assessment data. However, according to Pacific Fleet officials, since 

the program began in fiscal year 2001 they have completed only three 

visits and there are no funds currently programmed to support future 

visits. The Marine Corps has no servicewide validation procedures.



Inconsistent Definitions and Data May Be Misleading:



Without a DOD-wide standard system for defining, assessing, and 

validating facility conditions, the services’ data on facility 

conditions are not consistent. These inconsistent data, along with 

DOD’s attempt to link the data to military readiness in its 

Installations’ Readiness Report, make it difficult for Congress to 

fulfill its oversight responsibilities and for DOD and the services to 

direct funds to facilities in greatest need and to measure progress in 

improving facilities. Because the services’ C-rating definitions do not 

directly link facility conditions with military readiness, the ratings 

reported to Congress by DOD in the Installations’ Readiness Report may 

not accurately indicate the ability of installations to support 

military readiness. In addition, a facility at one service’s 

installation may be rated C-4 for its deficiencies, but a comparable 

facility at another base in the same service with similar deficiencies 

may not be rated C-4. For example, the Atlantic Fleet found that a 

facility at one base was rated C-3 while a comparable facility at 

another base--with the same deficiency--was rated C-4, contributing to 

the fleet’s decision to develop its own process for assessing facility 

conditions. Moreover, comparable types of facilities with similar 

deficiencies may not be rated consistently across the services.



In our previous review on the condition of barracks used to house 

military recruits attending basic training, we found some apparent 

inconsistencies in the application of C-ratings to describe the 

condition of barracks.[Footnote 32] For example, as a group, the 

barracks at the Marine Corps Recruit Depot, Parris Island, were the 

highest rated--C-2--among all the services’ training barracks. The 

various conditions we observed, however, suggested that they were among 

the worst barracks in terms of physical condition that we had seen. 

Marine Corps officials acknowledged that, although they had recently 

inspected the barracks and had identified significant deficiencies, the 

updated data had not yet been entered into the ratings database. On the 

other hand, the barracks at the Marine Corps Recruit Depot, San Diego, 

were rated C-3, primarily because of noise from the adjacent San Diego 

airport. Otherwise, our observations indicated that these barracks 

appeared to be in much better physical condition than those at Parris 

Island. After we completed our work, the Marine Corps revised its 

ratings for the Parris Island and San Diego barracks to C-4 and C-2, 

respectively, in its fiscal year 2002 report. The Air Force barracks 

were rated C-3, but we noted that they appeared to be among those 

barracks in better physical condition and in significantly better 

condition than the Army barracks that were rated C-3.



On the assumption that DOD and the services wish to target funding to 

those facilities most in need of repair and with the greatest impact on 

mission, the lack of standardization reduces the likelihood that 

funding will be consistently directed to those facilities in greatest 

need. This means that the limited funding available may not be 

accurately targeted, reducing its cost-effectiveness. For instance, in 

fiscal year 2002, DOD added an additional $2 billion to the services’ 

budget requests for military construction. According to one DOD 

official, the additional amounts were allocated to each service based 

on the services’ C-ratings. Furthermore, some facilities are not rated 

by the services, such as the Army’s World War II-era wood buildings. 

Although they receive sustainment funding, they receive little 

restoration and modernization funds because they are not rated.



Weaknesses in Strategic Plan and Key Objectives Limit the Services’ 

Ability to Sustain and Improve Facility Conditions:



DOD’s Defense Facilities Strategic Plan, along with several key 

objectives it adopted to sustain and improve the services’ facility 

conditions, have weaknesses that limit their usefulness in providing 

direction to the services and an understanding of DOD’s vision for 

facilities to Congress. The strategic plan lacks comprehensive 

information on the specific actions, time frames, assigned 

responsibilities, and resources--the elements of a well-developed 

strategic plan--that are required to meet the plan’s vision. In 

addition, three key objectives--fully funding sustainment, 67-year 

average recapitalization rates, and improvements in facility ratings to 

ensure military mission achievement--which are not part of the 

published strategic plan, are unlikely to be achieved because the 

services do not propose to fully fund all of them, and others are based 

on future funding plans that have unrealistically high rates of 

increase when compared with previous funding trends and when considered 

against other defense priorities. Moreover, achieving these objectives 

at the service level still allows for a range of sustainment funding 

and facility deficiencies at the installation level. For example, even 

though the services intended to fund sustainment at more than 78 

percent of requirements in fiscal year 2002, we found that 7 of 10 

installations we visited received less. In addition, the services have 

not developed comprehensive performance plans that include quantifiable 

and measurable performance goals that fully address DOD’s objectives; 

indicators to determine if programs are meeting the objectives; and the 

necessary resources, particularly realistic and credible funding plans, 

for achieving those objectives--elements of a comprehensive performance 

plan. On a positive note, DOD and the services have undertaken several 

initiatives that are designed to improve the monitoring and 

accountability of the facility management program.



DOD’s Strategic Plan Is Not Comprehensive:



DOD’s Defense Facilities Strategic Plan does not contain the 

comprehensive information that is needed to guide DOD and the services 

in their efforts to maintain thousands of facilities at defense 

installations. Instead, the strategic plan identifies four overall 

goals in areas that DOD believes can be significantly improved, such as 

planning, programming, budgeting, and operations at all military 

installations and facilities. The plan’s four goals are:



* Right size and place--Locate, size, and configure defense 

installations and facilities to meet the requirements of today’s and 

tomorrow’s force structures.



* Right quality--Acquire and maintain defense installations and 

facilities to provide quality living and work environments.



* Right resources--Leverage resources--money, people, and equipment--

to achieve the proper balance between requirements and available 

funding.



* Right tools and metrics--Improve facility management and planning by 

embracing best business practices and taking advantage of modern asset-

management techniques and performance-assessment metrics.



Our analysis of the plan, however, shows that it lacks the 

comprehensive information that makes a strategic plan useful and that 

most strategic plans encompass. It does not contain detailed 

information on (1) the specific actions that are needed to achieve each 

of the four goals; (2) the methods or processes that will be used to 

achieve each goal; (3) the amount of funding or other resources needed 

to reach the goals; (4) the time frames and milestones; (5) the 

assignment of responsibilities, in other words what entity is 

accountable for completing each goal; and (6) the performance 

measurement tools to use to determine the progress being made toward 

each goal. DOD officials told us that the lack of specific information 

in the plan resulted, in part, from the fact that the services were 

unable to agree on many of the actions and time frames before the plan 

was issued. In addition, some of the detailed information about various 

actions, time frames, and resources needed to sustain and improve 

facility conditions that is missing from the plan could be found in 

other DOD guidance and directives. Examples include DOD’s annual 

Defense Planning Guidance,[Footnote 33] which is not publicly 

available; DOD’s April 2001 report to Congress on the funding required 

to eliminate deficiencies in the services’ facilities,[Footnote 34] 

DOD’s annual Installations’ Readiness Reports to Congress; and various 

other briefings. The information in these documents, however, is 

scattered and not always easily accessible.



DOD’s Three Objectives for Sustaining and Improving Facility Conditions 

May Not Be Achievable:



Although not fully developed in the 2001 Defense Facilities Strategic 

Plan, DOD has identified three key objectives--and assigned deadlines-

-that are intended to ensure that the military services can stop the 

deterioration of facilities at their installations. Officials of the 

Office of the Secretary of Defense told us that DOD established these 

objectives in its annual Defense Planning Guidance for fiscal year 2004 

and other planning documents. They are to ensure that the services (1) 

fund all of their sustainment requirements, starting in fiscal year 

2004; (2) reach a 67-year average recapitalization rate for their 

facilities, by fiscal year 2007; and (3) improve the condition of their 

facilities so that deficiencies have only a limited effect on mission 

performance, by fiscal year 2010. However, these objectives are not 

likely to be achieved because the services do not propose to fully fund 

all of them or have developed funding plans that have unrealistically 

high rates of increase in the out-years when compared with previous 

funding levels and against other defense priorities. In addition, 

achieving these objectives at the service level still allows for a wide 

range of sustainment funding and facility deficiencies at the 

installation level.



Services Do Not Plan to Fully Fund Their Sustainment Requirements in 

Fiscal Year 2004:



To arrest the further deterioration of facilities, DOD instructed the 

services to fully fund sustainment requirements of their facilities 

starting in fiscal year 2004. However, in developing their fiscal year 

2004 programs, none of the services proposed to fully fund sustainment 

in fiscal year 2004, even though the Marine Corps plans to fully fund 

sustainment in fiscal year 2003. DOD and service officials said that 

funding for sustainment must compete with other defense programs and 

priorities. While the services had originally planned to fund 

sustainment at no less than 78 percent of requirements in fiscal year 

2002, these levels of funding did not reach the installations because 

service headquarters and major commands withheld funds for other 

purposes, such as civilian pay, emergency needs, and must-pay bills. 

This practice raises questions about whether DOD’s requirement of 

fully funding sustainment, as currently implemented by the services, 

will address all sustainment problems at the installation level.



At the time of our review, as figure 12 shows, none of the services 

proposed to fully fund sustainment during fiscal year 2004. While the 

Army planned to come close, with 98 percent, in fiscal year 2002, its 

plan shows a decline in funding to 94 percent of its requirement in 

fiscal year 2003, 79 percent of its requirement in fiscal year 2004, 

and 77 percent in fiscal year 2005--short of DOD’s objective of 100 

percent sustainment funding starting in fiscal year 2004. Afterward, 

the Army proposes to gradually increase its funding for sustainment 

activities to 94 percent from 82 percent of its requirements during 

fiscal years 2006 through 2009. The Air Force, starting at 90 and 

98 percent in fiscal years 2002 and 2003, respectively, intends to 

fund 96 percent of its sustainment requirement in fiscal year 2004--

short of DOD’s objective. In fiscal year 2005, the Air Force proposes 

to fund 97 percent of its sustainment requirement and fully fund 

sustainment during subsequent fiscal years through 2009. The Navy, 

on the other hand, projects that it will fund its sustainment 

activities at about 78 and 84 percent of its requirements in fiscal 

years 2002 and 2003, respectively, and at 90 percent annually 

thereafter through fiscal year 2009--short of DOD’s objective. 

The Marine Corps, which started at 80 percent in fiscal year 2002, 

proposes to fully fund sustainment in fiscal year 2003 and at between 

98 and 99 percent thereafter during fiscal years 2004 through 2009.



DOD’s objective to fully fund sustainment:



Figure 12: Military Services’ Proposed Sustainment Funding, Fiscal 

Years 2002 through 2009:



[See PDF for image]



[End of figure]



Notes: GAO’s analysis of service data as of December 2002.



DOD initiated funding for sustainment in fiscal year 2002.





During our visits to major commands and installations, we found that 

sustainment funds can be reduced or held back at the service 

headquarters, major command, and installation levels. The reason that 

service officials most often cited for moving funds was that these 

funds were needed to cover more pressing needs or emerging 

requirements. As figure 13 illustrates, in fiscal year 2002, service 

headquarters withheld sustainment money to cover must-pay bills, such 

as civilian pay, emergent needs, and other nonsustainment programs. 

Similarly, major commands withheld sustainment funds to pay for 

emergent needs, nonsustainment must-pay bills, commandwide sustainment 

contracts, restoration and modernization projects, and other 

unspecified reductions. Finally, individual installations that we 

visited moved sustainment funds in fiscal year 2002 to pay for 

restoration and modernization emergent needs and for other 

nonsustainment programs, such as utilities. As a result of fund 

movements at all three levels, the amounts that installations obligated 

for sustainment purposes were far less than the amounts necessary to 

meet requirements as identified by DOD’s facilities sustainment model. 

In addition, installation officials told us that because of these 

holdbacks and movements, it was difficult for them to make or implement 

rational plans for maintaining and repairing their facilities.



Figure 13: Flow Chart of the Movement of Sustainment Funds to Other 

Purposes in Fiscal Year 2002:



[See PDF for image]



[End of figure]



Note: GAO’s analysis of DOD and service data.





Some specific examples of where major commands moved sustainment funds 

to cover emergencies or other priorities follow:



* In fiscal year 2002, the Army’s Forces Command told us that it 

received about 92 percent of its sustainment requirement, but it then 

had to reduce the amounts passed on to component installations to 79 

percent in order to pay for expanded utilities modernization, 

engineering services, municipal services upgrades, and fire emergency 

services.



* In fiscal year 2002, the Navy Pacific Fleet moved about $130 million, 

or 29 percent of its total sustainment funding of $452 million, to 

support nonsustainment programs such as base operating support 

functions, unspecified requirements by the fleet’s commander in chief, 

and reserve force mobilization after the September 11th attacks. Of the 

$130 million, $25 million for reserve force mobilization was returned 

at the end of the fiscal year, and the fleet applied this amount to 

sustainment projects.



* Early in fiscal year 2002, the Navy’s Atlantic Fleet used $146 

million, or 34 percent, of its total sustainment funding of $425 

million to help pay for reserve force mobilization, the facilities 

condition assessment program, the design of recapitalization and 

demolition projects for the following fiscal year, the management of 

the facility maintenance program, and a reserve fund for major storm 

damage. A fleet official told us that the funds obligated for the 

assessment program, the design of recapitalization and demolition 

projects, and the facility management program benefited all of the 

fleet’s installations. At the end of the fiscal year, the fleet 

received $98 million for reserve force mobilization back, which it 

applied to sustainment projects, and provided the remaining balance of 

the reserve fund to the installations.



Officials told us that the fiscal year 2002 actual obligations for 7 of 

the 10 installations we visited were well below the services’ planned 

funding levels (see fig. 14). The Marine Corps base at Quantico, 

Virginia, Pope Air Force Base, North Carolina, and Los Angeles Air 

Force Base, California, which funded 97, 95, and 113 percent, 

respectively, of their sustainment requirements in fiscal year 2002, 

were the exceptions. However, after using a portion of their 

sustainment funding to pay for nonsustainment related costs, the other 

7 installations had only enough sustainment funds to meet from 35 to 77 

percent of their requirements as identified by DOD’s facilities 

sustainment model (see fig. 14). Installation officials told us that 

they had to obligate a portion of their fiscal year 2002 sustainment 

funds for a variety of nonsustainment-related purposes, such as paying 

for utilities and for restoration and modernization projects, including 

emergency repairs. They said that their installations received very 

little operation and maintenance funds for restoration and 

modernization projects in fiscal year 2002. At Fort Bragg, North 

Carolina, sustainment funding was reduced to just 57 percent of its 

requirement because of the movement of funds to nonsustainment 

activities. This leads us to question whether DOD’s guidance on fully 

funding sustainment is directed toward the service or installation 

level. Thus, it is uncertain that the stated objective of fully funding 

sustainment, as currently implemented by the services, will address all 

sustainment problems at the installation level.



Figure 14: Sustainment Obligations as a Percentage of Requirements at 

Installations We Visited, Fiscal Year 2002:



[See PDF for image]



[End of figure]



Notes: GAO’s analysis of DOD and service data.



Air Force totals do not include some military pay that supports 

sustainment.



The Marine Corps base at Quantico, Virginia; Pope Air Force Base, North 

Carolina; and Los Angeles Air Force Base, California, clearly stand out 

as exceptions to the sustainment funding levels at the other 

installations (see fig. 14). According to Marine Corps officials, their 

service does not permit sustainment funds to be taken away from 

installations by intermediate commands without the explicit permission 

of headquarters’ facilities staff. There is no intermediate command 

between Quantico Marine Corps Base and headquarters. Furthermore, the 

officials said the base received $1 million in sustainment funding in 

September 2002 to replace heating, ventilation, and air-conditioning 

systems in two buildings; this amount alone accounted for 5 percent of 

its $18.6 million obligation for sustainment in fiscal year 2002. 

Officials at Pope Air Force Base told us that the base received 95 

percent of its sustainment requirement in fiscal year 2002 because its 

major command, Air Mobility Command, made a concerted effort to repair 

some key facility problems at the installation with funds the command 

had received at the end of the fiscal year. Air Force officials also 

told us that Pope Air Force Base’s and Los Angeles Air Force Base’s 

fiscal year 2002 sustainment obligations were higher than amounts 

initially received by the bases for sustainment because major commands 

provided additional funds during the fiscal year and moved funds from 

other sources.



In addition to the 10 installations we recently visited, we found 

similar underfunding for sustainment at bases with barracks used to 

house military recruits.[Footnote 35] Our analysis of cost data 

generated by DOD’s facilities sustainment model showed, for example, 

that Fort Knox required about $38 million in fiscal year 2002 to 

sustain its facilities. However, base officials told us they had 

received about $10 million, or 26 percent, of the required funding. 

Officials at other Army basic training sites also told us that they had 

received less funding, typically 30 to 40 percent, than what they 

considered was required to sustain their facilities. Army officials 

told us that, over time, the sustainment funding shortfalls at their 

training bases have been caused primarily by the movement of funding 

from facility sustainment to other priorities, such as the training 

mission.



Achieving a 67-Year Average Recapitalization Rate by Fiscal Year 2007 

Is Unlikely:



To restore and modernize facilities, DOD instructed the services to 

achieve a 67-year average recapitalization rate by fiscal year 2007. 

The recapitalization rate is based on an assessment of the expected 

service life of different types of facilities and is defined as the 

number of years it would take to restore or replace those facilities at 

a given level of investment. The recapitalization rate is derived by 

dividing recapitalizable plant replacement value by the total 

restoration and modernization funding.[Footnote 36] In general, the 

recapitalization rate declines as more restoration and modernization 

funds are spent for facilities. While all the services plan to improve 

their fiscal year 2002 average recapitalization rates by fiscal year 

2009, the rates are expected to worsen before they recover. Also, all 

of the plans, except for the Army’s, call for rapid funding increases 

between fiscal year 2003 and 2009 that are uncertain when compared to 

prior funding levels and the need for funds for other defense 

priorities. Furthermore, DOD’s guidance does not specify that each 

installation should achieve a 67-year average recapitalization rate and 

therefore allows for a range of recapitalization rates at the 

installation level.



While all the services plan to improve their fiscal year 2002 average 

recapitalization rates, as shown in figure 15, nearly all of the 

improvement is expected to occur in the later years, when only the Air 

Force and the Navy expect to exceed DOD’s objective of 67 years by 

fiscal year 2007. Under its funding proposal, the Army projects its 

average recapitalization rate will increase from 70 years in fiscal 

year 2002 to 122 years in fiscal years 2003 and 2004 and then improve 

again to 83 years in fiscal year 2007--falling short of DOD’s objective 

of 67 years. Afterward, the Army tends to achieve 84-and 87-year 

recapitalization rates in fiscal years 2008 and 2009, respectively. The 

Air Force expects that its average recapitalization rate will increase 

from 163 years in fiscal year 2002 to 257 years in fiscal year 2003 and 

then improve to 61 years in fiscal years 2006 and 2007--meeting DOD’s 

objective of 67 years. It also plans to achieve 55-and 57-year 

recapitalization rates in fiscal years 2008 and 2009, respectively. 

The Navy estimates that its rate will increase from 113 years in fiscal 

year 2002 to 116 and 134 years in fiscal years 2003 and 2004, 

respectively, and then decrease from 129 years in fiscal year 2005 to 

69 years in fiscal year 2006. Between fiscal year 2007 and 2009, the 

Navy’s average recapitalization rate is projected to decrease from 64 

to 47 years--exceeding DOD’s 67-year objective. Under its funding plan, 

the Marine Corps projects its average recapitalization rate will 

increase from 63 years in fiscal year 2002 to 155 years in fiscal year 

2003 and then decrease to 81 years in fiscal year 2004. Afterward, it 

plans to maintain recapitalization rates between 79 and 73 years during 

fiscal years 2005 through 2007--falling short of DOD’s objective of 67 

years. However, the Marine Corps plans to meet this objective in fiscal 

years 2008 and 2009 by achieving 66-and 42-year recapitalization rates, 

respectively, in these years.



Figure 15: Projected Average Recapitalization Rate by Military Service, 

Fiscal Years 2002 through 2009:



[See PDF for image]



[End of figure]



Notes: GAO’s analysis of DOD data as of December 2002.



Recapitalization rates were not consistently calculated prior to fiscal 

year 2002.





To achieve these recapitalization rates, all the services, except for 

the Army, call for rapid increases in restoration and modernization 

funding between fiscal year 2003 and 2009, but this growth appears 

unrealistic when compared with prior funding levels. As shown in figure 

16, using constant fiscal year 2002 dollars, the four services propose 

to decrease their restoration and modernization funding between fiscal 

year 2002 and 2003. From a low of $1.3 billion in fiscal year 2003, the 

Army proposes to increase its restoration and modernization funding 31 

percent, to 

$1.7 billion in fiscal year 2009. It is important to note again that 

figure 15 shows the Army does not plan to achieve DOD’s 

recapitalization target of 67 years anytime during this period. From a 

low of $553 million in fiscal year 2003, the Air Force proposes to 

increase its restoration and modernization funding 316 percent to $2.3 

billion in fiscal year 2009. A significant part of this increase is 

planned in one budget year, between fiscal year 2005 and 2006, when the 

Air Force expects to increase its restoration and modernization funding 

by 123 percent, to $2 billion from $895 million. While the Navy 

proposes a decrease from fiscal year 2003 to fiscal year 2004, it 

intends to increase its restoration and modernization funding 145 

percent--from $857 million in fiscal year 2003 to $2.1 billion in 

fiscal year 2009. More than half of this increase is planned in one 

budget year, between fiscal year 2005 and 2006, when the Navy proposes 

to increase its restoration and modernization funding by 80 percent, to 

$1.4 billion from $777 million. The Marine Corps plans a 188 percent 

increase in restoration and modernization funding, from a low $145 

million in fiscal year 2003 to $418 million in fiscal year 2009.



Figure 16: Total Restoration and Modernization Funding Proposed by 

Military Service, Fiscal Years 2002 through 2009:



[See PDF for image]



[End of figure]



Notes: GAO’s analysis of DOD data as of December 2002.



DOD initiated funding for restoration and modernization in fiscal year 

2002.



Totals include operation and maintenance and military construction 

funding for restoration and modernization.



Defense installation officials referred to the services’ out-year 

funding plans as “hockey sticks” because of their abrupt increases in 

funding in the out-years, indicating skepticism about the likelihood 

that the services would be able to achieve such rapid increases. They 

told us that they recommended the services revise their plans so that 

the funding increases would not be so steep, by proposing more funding 

for the early years of the period. At the time of our review, DOD had 

not finished its review of the services’ funding plans. Marine Corps 

officials described their proposed increase as much larger than any 

amount they had ever seen and expressed doubt about whether the service 

would actually come up with the funds.



The services’ rapid increases in restoration and modernization funding 

between fiscal year 2003 and 2009 also appear uncertain when compared 

with the need for funds for other defense priorities, such as the war 

on terrorism, weapon system modernization, and force transformation. As 

a result of the war on terrorism, DOD is seeking higher than previously 

planned funding for a number of pressing priorities against which 

facilities maintenance must compete, such as military readiness, 

training, antiterrorism, force protection, weapons procurement, and 

research and development. For example, in the Army’s fiscal year 2004 

program objective memorandum, the Army plans to increase funding for 

force protection by $2.7 billion, or 60 percent; for future combat 

systems by $19.1 billion, or 197 percent; and for force transformation 

by $16.6 billion, or 37 percent.[Footnote 37] In addition, facilities 

maintenance must compete with the Air Force’s plans to modernize space 

forces and procure new weapons systems and with the Navy’s plans to 

procure new ships and weapons systems.



Bringing Facility Ratings Up to a Minimal C-2 Level by Fiscal Year 2010 

Is Unlikely:



To improve the overall condition of facilities, DOD set an objective 

for the military services to concentrate funding in order to eliminate 

C-3 and C-4 facility ratings, bringing them up to a minimal C-2 level 

by fiscal year 2010. However, at the time of our review, the Army and 

the Navy were not planning to meet this objective. The Air Force and 

the Marine Corps only plan to meet this objective through proposed 

funding increases, shown in figure 16, which are uncertain when 

compared to prior funding levels and the need for funds for other 

defense priorities. DOD estimates that it would cost $62 billion (or $7 

billion annually during fiscal years 2002 through 2010) to achieve this 

objective departmentwide. This amount would only be enough to bring all 

facilities up to the minimal C-2 level, or “minimal acceptable 

performance,” in DOD’s rating system. DOD estimates that it would cost 

more than $160 billion over the same time period to reach a C-1 level 

for all facilities.



DOD’s guidance for this objective allows a wide range of facility 

deficiencies at installations. A service could have some facility 

classes rated C-3 and C-4 and still have an overall C-2 rating because 

of a preponderance of C-1 and C-2 rated classes. For example, in its 

facility strategy, the Army plans to concentrate restoration and 

modernization funding on certain types of facilities to raise their 

rating to a C-1, and thus raise the Army’s overall rating to a C-2 

level. Furthermore, because there is no common, standardized system by 

which to rate the condition of facilities, there is no assurance that 

achieving a minimal C-2 level would result in similar facility 

conditions across the services.



Services Have Not Developed Comprehensive Performance Plans to 

Implement DOD’s Strategic Plan and Objectives:



The services have not developed plans that include quantifiable and 

measurable performance goals that fully address DOD’s objectives; 

indicators to determine if programs are meeting the objectives; and the 

necessary resources, particularly realistic and credible funding plans, 

for achieving those objectives--elements of a comprehensive performance 

plan. Of those services--the Army, the Air Force, and the Marine Corps-

-that have developed plans for facilities, their plans do not contain 

comprehensive information for implementing DOD’s facilities strategic 

plan or achieving DOD’s objectives for sustaining and improving 

facility conditions. For example:



* While the Army has developed a installation plan, our analysis shows 

that it is unlikely to meet any of DOD’s objectives of fully funding 

sustainment in the near term, achieving a 67-year average 

recapitalization rate for facilities by 2007, and eliminating C-3 and 

C-4 facility ratings, bringing them up to a minimal C-2 level by fiscal 

year 2010.[Footnote 38] The Army’s plan does not provide realistic and 

credible funding plans to achieve DOD’s objectives.



* The Air Force’s facilities investment plan outlines the requirements 

that must be addressed in order to meet DOD’s objectives of fully 

funding sustainment across the future years defense plan, reducing the 

average recapitalization rate to 67 years by fiscal year 2007, and 

eliminating C-3 and C-4 facility ratings by fiscal year 2010.[Footnote 

39] The plan also lists metrics to be used to measure successful 

implementation of the plan. However, the plan is vague in how it will 

be implemented, and the funding strategy outlined in the plan to 

achieve DOD’s objectives is unrealistic. As the plan notes, “projected 

fiscal year 2004 restoration and modernization funding is almost double 

that of fiscal year 2003, while fiscal year 2007 funding is nearly 

quadruple the fiscal year 2004 level.” In addition, in a 2002 report 

the Secretary of the Air Force states that the Air Force must still 

defer restoration and modernization with only the most urgent 

requirements addressed and leaving important projects 

postponed.[Footnote 40]



* Although the Navy does not have a plan for meeting DOD’s objectives, 

Navy officials told us the service is developing a plan to address both 

the Navy’s and Marine Corps’s sustainment and restoration and 

modernization programs. The Navy does not plan to meet DOD’s objectives 

of fully funding sustainment in the near term or eliminating C-3 and C-

4 ratings for facility classes by fiscal year 2010.



* While the Marine Corps issued a vision statement for its 

installations in April 2001, the statement does not provide 

comprehensive information on goals, actions, or time frames for 

sustaining and improving facilities.[Footnote 41] The statement fails 

to discuss any of DOD’s objectives. In addition, the statement does not 

provide specific metrics to measure performance or credible and 

realistic funding plans to achieve these objectives.



DOD Has Taken Other Steps to Improve Facilities Management:



In addition to its strategic plan and objectives, DOD has taken other 

steps to improve the management of its facilities, including the 

demolition of obsolete facilities, and is attempting to build upon 

these steps to further improve military facilities. At the same time, 

the Army has implemented a new organizational structure to manage its 

facilities in an attempt to better control the use of sustainment, 

restoration, and modernization funds, and the Navy is moving toward a 

more centralized structure of its regional management of facilities. 

However, it is too soon to assess their likely impact.



DOD has put in place a number of changes intended to revamp its 

facility management, enhance accountability, and better measure and 

track performance. These changes have included:



* Facilities assessment database. In 1997, DOD created an integrated 

facilities assessment database from stand-alone service inventories. 

This database tracks key facility inventory and cost data, including 

quantity, type, location, and status of buildings, structures, and all 

other military facility assets.



* Cost factors handbook. In 1999, DOD issued its first defense 

facilities cost factors handbook, which categorizes defense facilities 

into approximately 400 categories and uses commercial benchmark costs 

to determine the annual cost per square foot (or similar unit of 

measure) to sustain each facility type. The purpose of the handbook was 

to standardize the method by which the services would determine the 

sustainment costs of their facilities and to establish a minimum 

sustainment funding level for facilities.



* Facilities sustainment model. In 1999, DOD developed the facilities 

sustainment model, which estimates the annual sustainment cost 

requirement, adjusted for area costs, for each service and defense 

agency, based on the number, type, location, and size of its total 

inventory of facilities.



* Recapitalization metric. In 2001, DOD began using the facilities 

recapitalization metric, which determines the rate of restoration and 

modernization relative to the average expected service life of the 

inventory. It is also developing a recapitalization funding model.



* Improved budgeting methods. In 2002, DOD changed the way that 

facilities funding is reported and tracked, replacing real property 

maintenance with sustainment, and restoration and modernization, having 

already created a separate structure for demolition and disposal in 

fiscal year 1999. By tracking each element separately, it is now 

possible to link programs and budgets directly to program objectives 

and to better track performance relative to the objectives. DOD gave 

the Navy and the Marine Corps permission to delay this change until 

fiscal year 2003.



DOD also developed and implemented the facilities demolition and 

disposal program, in which more than 62 million square feet of excess 

and obsolete facilities were demolished during fiscal years 1998 to 

2001. According to DOD officials, one reason for the success of this 

program is that the services’ budgets were not reduced in advance by 

the estimated maintenance costs of the facilities to be demolished. 

Instead, as an incentive to dispose of what the services did not need, 

their budgets were left intact and the forecasted savings were 

reprogrammed by the services to other needs within their programs. By 

closing some installations and consolidating overlapping activities 

within and across the services, DOD also intends to further reduce its 

inventory of facilities through an upcoming round of base realignments 

and closures starting in 2005, as authorized by Congress in 2001. DOD 

officials have testified that 20 to 

25 percent of DOD’s infrastructure is not needed to meet current 

mission requirements. The process of realigning and closing bases, 

however, will take some years to accomplish and, while it is expected 

to produce significant long-term savings, typically it has required 

considerable up-front expenses.



To prevent major commands from moving funds to other priorities, the 

Army centralized and streamlined its facility management in October 

2002. The new Installation Management Agency, which reports directly to 

the Army Assistant Chief of Staff for Installation Management, oversees 

all facilities maintenance funds for Army installations and supervises 

seven regional management centers worldwide that are responsible for 10 

to 

30 installations each. The key objectives of the new organizational 

structure include ending the movement of sustainment funds and 

restoration and modernization funds to other priorities by major 

commands and implementing consistent standards across the Army for 

allocating these funds. The organizational structure has a centralized 

base operations funding process that funnels sustainment funds and 

restoration and modernization funds directly to installations without 

major commands moving funds away from facilities. Army officials said 

that if the total funding allocated by the service for these purposes 

continues to fall short of requirements, the new agency would be 

greatly challenged in meeting its facilities goals. Officials believe 

that the Army would likely continue to use sustainment, restoration, 

and modernization funds to pay for legacy weapons programs and other 

nonsustainment priorities.



The Navy has had a less centralized, regional-based installation 

management program for several years but continues to underfund its 

sustainment requirements and restoration and modernization 

requirements. For example, the Naval Audit Service reported in August 

2002 that funds intended for facility maintenance were being used for 

nonsustainment purposes.[Footnote 42] Specifically, it noted that both 

the Atlantic and Pacific Fleets were using sustainment funds and 

restoration and modernization funds to resolve other base operating 

support shortfalls. It concluded that this generally occurred because 

sustainment, restoration, and modernization were not considered high 

enough priorities within the Navy leadership to preclude movement of 

funds away from these activities. While the Navy is now moving toward a 

more centralized management structure similar to the Army’s facility 

management program, it is too early to assess the potential success of 

either facility program.



Conclusions:



The military services have not made sustaining and improving facilities 

a funding priority because of other defense programs and emerging 

requirements. Funding for facility maintenance and recapitalization has 

been inadequate for many years, resulting in deteriorated facilities 

that negatively affect the quality of life and service for military and 

civilian personnel and, in some cases, hindered the satisfactory 

performance of their mission. Yet, the services do not meet all of 

DOD’s objectives for sustaining and improving facilities, nor have they 

developed credible and realistic funding plans to do this in the 

future. In addition, Congress, DOD, and the services do not have 

consistent information on the condition of facilities to ensure that 

their funding decisions are targeting facilities in greatest need, to 

measure the progress in facility improvement, and to provide to 

Congress for its oversight responsibilities. Along with these 

inadequate data, weaknesses in DOD’s Defense Facilities Strategic Plan 

further impede DOD’s efforts to sustain and improve facilities. In 

developing a comprehensive strategic plan, it is important that DOD 

clearly establish goals and milestones, assign responsibilities for 

managing and coordinating its efforts, and identify needed funding to 

sustain and recapitalize facilities. However, the Defense Facilities 

Strategic Plan lacks comprehensive information on the specific actions, 

time frames, assigned responsibilities, and resources that are needed 

to meet DOD’s vision for facilities. Moreover, it is unclear whether 

DOD’s stated objectives for sustaining and improving facility 

conditions are to be achieved at the service or installation level. In 

addition, the services have not developed plans that include 

quantifiable and measurable performance goals that fully address DOD’s 

objectives; indicators to determine if programs are meeting the 

objectives; and the necessary resources, particularly realistic and 

credible funding plans, for achieving those objectives--elements of a 

comprehensive performance plan.



Recommendations for Executive Action:



We recommend that the Secretary of Defense direct the secretaries of 

the military services to reassess the funding priorities the services 

have attached to sustaining and improving the condition of their 

facilities relative to other needs and funding limitations. In 

addition, we recommend that the Secretary of Defense (1) instruct the 

military services to implement a departmentwide process to consistently 

assess and validate facility conditions; (2) revise the Defense 

Facilities Strategic Plan to identify specific actions needed, time 

frames, responsibilities, and funding levels--elements of a 

comprehensive strategic plan; (3) clarify DOD’s guidance by specifying 

the organizational level (service, major command, or installation) at 

which its three objectives to fully fund sustainment, achieve a 67-year 

average recapitalization rate, and eliminate C-3 and C-4 facility 

ratings, bringing them up to a minimal C-2 level, should be achieved; 

and (4) direct the services to develop comprehensive performance plans 

implementing the Defense Facilities Strategic Plan, which would provide 

specific metrics to measure performance and credible and realistic 

funding plans to sustain and recapitalize facilities.



Agency Comments:



In commenting on a draft of this report, the Deputy Under Secretary of 

Defense for Installations and Environment concurred with our 

recommendations and indicated that actions were underway or planned to 

deal with our recommendations. The comments are included in this report 

in appendix IV. DOD also provided technical clarifications, which we 

incorporated as appropriate.



We are sending copies of this report to the Secretaries of Defense, the 

Army, the Navy, and the Air Force; the Commandant of the Marine Corps; 

and the Director, Office and Management and Budget. We will also make 

copies available to others upon request. In addition, the report will 

available at no charge on GAO’s Web site at www.gao.gov.



Please contact me on (202) 512-8412 if you or your staff have any 

questions regarding this report. Other key contributors to this report 

are listed in appendix V.



Signed by Barry W. Holman:



Barry W. Holman, Director

Defense Capabilities and Management:



List of Congressional Committees:



The Honorable John Warner

Chairman

The Honorable Carl Levin

Ranking Member

Committee on Armed Services

United States Senate:



The Honorable Ted Stevens

Chairman

The Honorable Daniel K. Inouye

Ranking Member

Subcommittee on Defense

Committee on Appropriations

United States Senate:



The Honorable Kay Bailey Hutchison 

Chairman

The Honorable Dianne Feinstein

Ranking Member

Subcommittee on Military Construction

Committee on Appropriations

United States Senate:



The Honorable Duncan L. Hunter

Chairman

The Honorable Ike Skelton

Ranking Member

Committee on Armed Services

House of Representatives:



The Honorable Jerry Lewis

Chairman

The Honorable John P. Murtha

Ranking Member

Subcommittee on Defense

Committee on Appropriations

House of Representatives:



The Honorable Joe Knollenberg

Chairman

The Honorable Chet Edwards

Ranking Member

Subcommittee on Military Construction

Committee on Appropriations

House of Representatives:



[End of section]



Appendix I: Scope and Methodology:



To examine the historical funding trends for facility maintenance and 

military construction and their impact on the condition of the active 

forces’ facilities, we examined the Department of Defense’s (DOD) 

budget requests, congressional designations, and obligation data for 

facility operation and maintenance and military construction for fiscal 

years 1998 through 2002. Because they are responsible for developing 

and implementing policies regarding the condition of defense 

facilities, we interviewed and were briefed by facility management 

officials from DOD’s Office of Installations and Environment and from 

each service’s headquarters. We also examined key documents related to 

the funding and condition of defense facilities from DOD and the 

services. These documents included funding requests, initial 

congressional designations, and obligations for sustainment, 

restoration and modernization, and military construction; 

Installations’ Readiness Reports compiled by DOD; assessments of the 

condition of facilities produced by each service; congressional 

testimony by DOD and service officials; documentation of unfunded 

requirements within each service; and other relevant reports and 

documents. We compared the operation and maintenance amounts that DOD 

requested in its budget submissions with the amounts that Congress 

designated in its conference reports for DOD’s appropriation acts and 

with DOD’s reported obligations. We discussed any differences we found 

with officials from DOD and the services to obtain a better 

understanding about overall fund movements.



To determine the impact of historical funding on the condition of DOD’s 

facilities and to view the condition of facilities firsthand, we 

visited and met with officials from 10 military installations across 

the country: Fort Bragg, North Carolina; Fort Leavenworth, Kansas; Pope 

Air Force Base, North Carolina; Whiteman Air Force Base, Missouri; Los 

Angeles Air Force Base, California; Naval Station Norfolk, Virginia; 

Naval Air Station Oceana, Virginia; Naval Station San Diego, 

California; Naval Base Coronado, California; and Marine Corps Quantico 

Base, Virginia. We recognize that the conditions we observed at these 

10 installations may not represent conditions at other DOD 

installations, and we did not attempt to project the results of our 

visits to all military installations.



To determine the perspective of the major commands on the impact of 

historical and current funding on the condition of DOD’s facilities, 

the factors that have led to the deterioration of facility conditions, 

and the effect of deteriorated facilities on personnel and overall 

mission, we met with officials from Army Forces Command, Air Force Air 

Mobility Command, Air Force Space Command, Air Force Air Combat 

Command, Navy Atlantic Fleet, and Navy Pacific Fleet.



To evaluate the consistency of the services’ information on facility 

conditions, we reviewed each service’s system for assessing facility 

conditions and compared this information within and across each service 

to identify differences in facility raters and procedures, assessment 

scopes and frequencies, appraisal scales, computation methods, and 

validation procedures. We also interviewed officials at DOD, the 

services’ headquarters, and major commands to identify the processes 

they used to assess facilities and collect information to support the 

condition rating and the underlying reasons for the current condition 

of the facilities. During our visits to installations, we discussed the 

evaluation methods and condition assessment process with the facility 

raters and reviewers and toured facilities to observe and compare their 

physical condition and deficiencies with the facilities’ C-ratings. 

During these visits, we also interviewed engineering staffs to discuss 

the cause of the deficiencies we observed, the actions needed to 

correct the deficiencies, and the impact of the deficiencies on the 

quality of life of military personnel and their families and on 

military operations and military mission achievement.



To assess DOD’s long-term strategic plan and objectives to sustain and 

improve the condition of facilities, we reviewed DOD’s Defense 

Facilities Strategic Plan and other strategic planning documents for 

evidence of the critical elements of a strategic plan and performance 

plan--as embodied in the Government Performance and Results Act of 1993 

and in our prior reports.[Footnote 43] These elements include 

information on (1) the specific actions that are needed to achieve each 

of the four goals identified in DOD’s strategic plan; (2) the methods 

or processes that will be used to achieve each goal; (3) the amount of 

funding or other resources needed to reach the goals; (4) the time 

frames and milestones; (5) the assignment of responsibilities, in other 

words what entity is accountable for completing each goal; and (6) the 

performance measurement tools to determine the progress being made 

toward each goal. In examining DOD’s three objectives for sustaining 

and improving facility conditions, we identified funding metrics 

designed by DOD to address the condition of facilities, including the 

implementation of a facilities sustainment model and the development of 

a recapitalization metric. We did not attempt to validate the 

facilities sustainment model.



To assess the services’ plans to implement DOD’s strategic plan and 

achieve its objectives, we compared the plans with key elements of a 

comprehensive performance plan and reviewed projected funding levels 

for sustaining and recapitalizing facilities for fiscal years 2002 

through 2009. In computing sustainment obligations as a percentage of 

requirements at the 10 installations visited, we divided each 

installation’s reported sustainment obligation for fiscal year 2002 by 

its sustainment requirement generated by DOD’s facilities sustainment 

model for the same year. In addition, we interviewed service 

headquarters officials responsible for managing installations and 

programming operation and maintenance and military construction funds. 

We also examined the services’ initiatives, such as the Army’s new 

regional facilities management plan. We discussed DOD’s objectives for 

sustainment and recapitalization with service and installation 

officials to determine whether they are viable and attainable within 

the time frames DOD has set forth, impediments to achieving the goals, 

and other approaches to sustaining and improving facility conditions. 

Also, we evaluated the services’ ability to meet DOD’s objectives and 

initiatives regarding the sustainment and improvement of facility 

conditions by determining the magnitude of each service’s facility 

problems through our site visits and reviews of rating reports. 

Finally, we compared the services’ prior obligations for facility 

maintenance with their future funding projections designed to reach 

DOD’s objectives to determine whether the services’ plans to address 

these issues are credible and realistic.



We performed our work at the Office of the Secretary of Defense and the 

headquarters of each military service. Additionally, we met with 

officials from Army Forces Command, Air Force Air Mobility Command, Air 

Force Space Command, Air Force Air Combat Command, Navy Atlantic Fleet, 

and Navy Pacific Fleet. We also met with officials from the 10 

installations visited: Fort Bragg, North Carolina; Fort Leavenworth, 

Kansas; Pope Air Force Base, North Carolina; Whiteman Air Force Base, 

Missouri; Los Angeles Air Force Base, California; Naval Station 

Norfolk, Virginia; Naval Air Station Oceana, Virginia; Naval Station 

San Diego, California; Naval Base Coronado, California; and Marine 

Corps Quantico Base, Virginia. We selected these installations because 

they represent a range of facility conditions, missions, major 

commands, and geographic locations. During the review, we focused on 

the services’ active force facilities in the United States. These 

facilities ranged from administrative offices, airfields and terminals, 

and piers to classrooms and other training buildings, water treatment 

plants, warehouses, barracks, and child development centers. Our review 

covered only those facilities funded by operation and maintenance and 

military construction monies and not by other sources, such as 

revolving and management funds, military family housing and overseas 

facilities funds, and the defense health program (hospitals and medical 

clinics).



In performing this review, we used the same accounting records and 

financial reports DOD and the military services use to manage and 

justify budgets for their facilities. We did not independently 

determine the reliability of the reported financial information. 

However, our recent audit of the federal government’s financial 

statements, including DOD’s and the services’ statements, questioned 

the reliability of reported financial information because not all 

obligations and expenditures are recorded to specific financial 

accounts.[Footnote 44] In addition, we did not validate DOD’s reported 

requirements for the sustainment of its facilities, nor did we validate 

its facility inventory database. Also, our prior reports have 

highlighted DOD’s inability to sufficiently track funding status.



[End of section]



Appendix II: DOD’s Facilities Life-Cycle Management Model:



DOD’s facilities life-cycle model calls for fully funding sustainment 

activities and regularly investing in restoration and modernization 

projects to maintain high performance and extend the useful service 

life of facilities (see fig. 17).



Figure 17: Projected Facilities Service Life and Performance with Full 

Sustainment and Modernization:



[See PDF for image]



[End of figure]





Sustainment funding provides resources for maintenance and repair 

activities to keep facilities effectively functioning throughout an 

expected life cycle. Restoration and modernization funding is designed 

to recapitalize facilities after normal aging occurs or to update 

facilities to meet new mission standards. Restoration includes repair 

and replacement work to restore facilities damaged by inadequate 

sustainment activities, excessive age, natural disasters, fire, 

accidents, and other causes. Modernization includes the alteration of 

facilities solely to implement new or higher standards, to accommodate 

new functions, or to replace standard building components. At the end 

of the life cycle in figure 17, a facility may be worn out or 

functionally obsolete or will require recapitalization by either 

replacement or large-scale renovation.



According to DOD’s facilities life-cycle model, full sustainment and 

restoration and modernization investments are necessary to maintain the 

condition and performance of facilities. Without full funding of 

sustainment activities, facilities can deteriorate more quickly than 

would be expected under their average life cycle, requiring premature 

recapitalization of facilities (see fig. 18). As facilities deteriorate 

without full sustainment, their level of performance also diminishes. 

For example, Naval Station San Diego, California, has deferred a 

project to repair quay walls and pier fenders for the past 4 years, 

resulting in continued deterioration and increased costs to maintain 

service. In 2 of these years, the installation spent more than $100,000 

annually for temporary repairs to fenders. DOD estimates that, with 

full sustainment funding, facilities should have an expected average 

life of 67 years. Expected service life is defined as the number of 

years a fully sustained inventory provides service before requiring a 

major restoration or replacement project.



Figure 18: Lost Facilities Service Life and Performance without Full 

Sustainment:



[See PDF for image]



[End of figure]



[End of section]



Appendix III: How Operation and Maintenance Funds Are Moved during the 

Fiscal Year:



DOD has considerable flexibility in using and moving operation and 

maintenance funds. After Congress passes the operation and maintenance 

appropriation, the conferees make an initial congressional designation 

of the appropriation by program activity, such as real property 

maintenance. However, after the initial appropriation is made, DOD can 

adjust funding through adjustments directed by Congress in conference 

reports on appropriations acts and fact-of-life adjustments DOD 

believes are necessary due to changes, such as unplanned force 

structure changes, that have occurred since the budget was 

formulated.[Footnote 45]



After making these initial fund movements, DOD establishes an adjusted 

congressional designation that it refers to as “appropriated amount.” 

Using the initial congressional designation as the baseline, the 

following actions can occur:



* congressional adjustments,



* fact-of-life adjustments that DOD believes are necessary due to 

changes, such as unplanned force structure changes, which have occurred 

since the budget was formulated,



* reprogramming actions to move funds from one budget activity to 

another within the same account,



* statutorily authorized transfers to move funds from other DOD 

appropriations (such as procurement),



* transfers from congressionally established, centrally managed 

accounts (such as for drug interdiction),



* supplemental appropriations by Congress that provide additional funds 

during the year, and:



* rescissions by which Congress cancels appropriated funds.



These movements in operation and maintenance funds and the time frames 

within which they can occur are illustrated in figure 19.



Figure 19: DOD’s Budget and Obligation Process for Operation and 

Maintenance Funds:



[See PDF for image]



[End of figure]



Note: GAO’s analysis based on Department of Defense Financial 

Management Regulation 

7000.14-R, conference reports on the appropriations acts, and 

interviews with officials from the Office of the Under Secretary of 

Defense (Comptroller).



[End of section]



Appendix IV: Comments from the Department of Defense:



OFFICE OF THE UNDER SECRETARY OF DEFENSE:



3000 DEFENSE PENTAGON WASHINGTON, DC 20301-3000:



ACQUISITION, TECHNOLOGY AND LOGISTICS:



Mr. Barry W. Holman:



Director, Defense Capabilities and Management U.S. General Accounting 

Office:



441 G Street, N.W. Washington, D.C. 20548:



Mr. Holman,



This is the Department of Defense (DoD) response to the GAO draft 

report, ‘Defense Infrastructure: Changes in Funding Priorities and 

Strategic Planning Needed to Improve the Condition of Military 

Facilities,’ dated December 12, 2002 (GAO Code 350142/GAO-03-274). The 

report is well-researched, generally accurate, and pertinent in its 

recommendations. We concur with all the major recommendations.



Although the report emphasizes the need to assess and validate the 

condition of facilities, there is a history of problems - including 

high implementation costs, unmanageable subjectivity, and lack of 

timeliness - with using condition assessments as a basis for future 

funding requirements. Fortunately, the bulk of funding requirements for 

facilities can be predicted with good accuracy using other tools and 

benchmarks.



Facilities are made of components (roofs or interior finishes, for 

example) for which normal maintenance tasks, maintenance schedules, and 

typical service life expectancies are known in advance. So most life-

cycle costs to sustain and recapitalize facilities can be forecasted in 

the absence of detailed information about current conditions. In an 

ideal facilities management scenario, there is no need for expensive 

annual condition assessments since conditions are known to be good due 

to regular adherence to appropriate sustainment and recapitalization 

rates. DoD is moving in this direction.



Sincerely,



Signed by Raymond F. DuBois:



Raymond F. DuBois Deputy Under Secretary of Defense (Installations and 

Environment):



GAO DRAFT REPORT - DATED DECEMBER 12, 2002 GAO CODE 350142/GAO-03-274:



“DEFENSE INFRASTRUCTURE: Changes in Funding Priorities and Strategic 

Planning Needed to Improve the Condition of Military Facilities”:



DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:



RECOMMENDATION 1: The GAO recommended that the Secretary of Defense 

direct the Secretaries of the Military Services to reassess their 

funding priorities the Services have attached to sustaining and 

improving the condition of their facilities relative to other needs and 

funding limitations. (p. 59/GAO Draft Report):



DOD RESPONSE: Concur.



DoD is already implementing this recommendation. In January 2003, we 

completed the FY04 program-budget review. OSD directed the Services and 

Defense Agencies to provide adequate funding to achieve a sustainment 

rate of 93 % in FY04, and we plan to achieve full sustainment in FY06. 

In addition, we plan funding to achieve a 67-year recapitalization rate 

DoD-wide by FY08.



RECOMMENDATION 2: The GAO recommended that the Secretary of Defense 

instruct the Military Services to implement a department-wide process 

to consistently assess and validate facility conditions. (p. 59/GAO 

Draft Report):



DOD RESPONSE: Concur.



DoD is moving now to require common condition reporting in the regular 

facilities inventories for the update due October 1, 2004. However, 

condition assessments are more valuable for prioritizing work rather 

than for forecasting funding needs. The DoD strategy and funding for 

facilities will continue to emphasize preventive maintenance through 

full annual sustainment and life-cycle based recapitalization rates. 

This is superior to a strategy that includes continuous and expensive 

monitoring of small changes in condition coupled with periodic 

emergency interventions. DoD prefers the preventive approach for three 

reasons:



(1) It is less costly and delivers better performance over a life 

cycle:



(2) It is more objective and easier to benchmark than condition - 

determination of a condition always involves a subjective judgment:



(3) It is more forward looking and timely, and therefore more useful - 

condition assessments by definition represent past investments and are 

often outdated before the next round of program and budget decisions 

can be made.



RECOMMENDATION 3: The GAO recommended that the Secretary of Defense 

revise the Defense Facilities Strategic Plan to identify specific 

actions needed, time frames, responsibilities, and funding levels - 

elements of a comprehensive strategic plan. (p. 59/GAO Draft Report):



DOD RESPONSE: Concur. Target date for update: Dee 31, 2003.



RECOMMENDATION 4: The GAO recommended that the Secretary of Defense 

clarify DoD’s guidance by specifying the organizational level (service, 

major command, or installation) at which its three objectives to fully 

fund sustainment, achieve a 67-year average recapitalization rate, and 

eliminate C-3 and C-4 facility ratings, bringing them up to a minimal 

C-2 level should be achieved. (p. 59/GAO Draft Report):



DOD RESPONSE: Concur.



The Facilities Sustainment Model (FSM) and Facilities Recapitalization 

Metric (FRM) are each macro level resource programming tools. They have 

been specifically developed for application at the level of the DoD 

Components. These tools are based on averages and long term life 

cycles, and are accurate for annual budgeting when applied to a large 

population of facilities. Although they can be applied at lower levels 

of the organization, accuracy and confidence is lost as the population 

of facilities decreases, unless the timeframe under consideration is 

extended. These tools have no use whatsoever for understanding annual 

requirements for an individual facility or for a handful of facilities, 

since year-to-year sustainment and recapitalization benchmarks vary by 

orders-of-magnitude at that level. We have not yet determined a precise 

level of confidence for smaller populations and extended timeframes, 

but it is our judgment that for a one-year analysis the general FSM/FRM 

tools should never be applied below the level of a large major command/

claimant. In the future, these tools could possibly be applied at 

larger installations over a multi-year period, but DoD does not support 

that use at this time. The table below summarizes our judgment of 

confidence (low, medium, and high) when applying FSM and FRM tools to 

smaller inventories over alternative planning periods:



[Empty]; [Empty]; Alternative Planning Periods.



Inventor Size; 1 Year; 10 Years; Alternative Planning Periods: 50 

Years.



1 facility; Low; Medium; Alternative Planning Periods: High.



1,000 facilities; Medium; High; Alternative Planning Periods: High.



100,000 facilities; Hi; High; Alternative Planning Periods: High.



[End of table]



RECOMMENDATION 5: The GAO recommended that the Secretary of Defense 

direct the Services to develop comprehensive performance plans 

implementing the Defense Facilities Strategic Plan, which would provide 

specific metrics to measure performance and credible and realistic 

funding plans to sustain and recapitalize facilities. (p. 59/GAO Draft 

Report):



DOD RESPONSE: Concur.



[End of section]



Appendix V: GAO Contact and Staff Acknowledgments:



GAO Contact:



Mark A. Little (202) 512-4673:



Acknowledgments:



In addition to the individuals named above, Nancy Benco, Rebecca 

Gambler, David Keefer, Adam Roye, and Jonathan R. Tumin made key 

contributions to this report.



[End of section]



Glossary:



Advance appropriation: An advance appropriation is one made to become 

available one fiscal year or more beyond the fiscal year for which the 

appropriation act is passed. For instance, advance appropriations in 

fiscal year 2000 appropriations acts became available for programs in 

fiscal year 2001 and beyond. Since these appropriations were not 

available until after fiscal year 2000, the amounts were not included 

in fiscal year 2000 budget totals.



Commanding Officer’s Readiness Reporting System: The Commanding 

Officer’s Readiness Reporting System is a decision support system 

designed to help commanders and other decision makers evaluate the 

quality and quantity of facilities on Marine Corps installations. The 

system compares the quantity of on-hand facilities to requirements and 

evaluates the quality of facilities with respect to Marine Corps 

standards.



Congressionally designated: Congressionally designated refers to 

amounts set forth at the budget activity, activity group, and 

subactivity group level in an appropriation act’s conference report. 

These recommended amounts are not binding unless they are also 

incorporated directly or by reference into an appropriation act or 

other statute.



Expected service life (recapitalization target): The expected service 

life is the number of years that facilities are expected to provide 

adequate performance, given full sustainment, before wearing out or 

becoming obsolete. The number is usually applied as an average to the 

total inventory of facilities. In the absence of incremental 

recapitalization investments, facilities typically must be replaced or 

extensively renovated at the end of their expected service life.



Facility Investment Metric: The Facility Investment Metric was 

developed by the Air Force to identify and prioritize operation and 

maintenance restoration and modernization funding requirements based on 

the impact of requirements in four mission areas: mission, mission 

support, base support, and community support.



Facilities sustainment model: DOD’s facilities sustainment model 

generates an annual sustainment funding requirement for facilities 

based on the expected life cycle of those facilities. The model uses 

standard facility-specific cost factors, based on commercial benchmarks 

and variable area costs, to compute a sustainment cost for each type of 

military facility.



Installations’ Readiness Report: DOD issued its first Installations’ 

Readiness Report in fiscal year 1999 to give an overall assessment of 

the condition of all military installations and facilities and their 

ability to support military mission. DOD developed the Installations’ 

Readiness Report to fulfill its reporting requirement to Congress under 

section 117 of title 10 of the United States Code, which specifies that 

DOD measure the capability of defense installations and facilities to 

provide appropriate support to forces in the conduct of their wartime 

missions. Major commands rate each of the nine facility classes, using 

standard readiness definitions, and use these ratings to help decide 

how to allocate repair and construction funds.



Installation Readiness Reporting System: The Installation Readiness 

Reporting System is a decision support system developed by the Navy to 

help commanders and other decision makers evaluate the quality and 

quantity of facilities on Navy installations. The system allows an 

installation to compare the quantity of its on-hand facilities to its 

requirements and evaluate the quality of these facilities with respect 

to Navy standards.



Installation Status Report: The Installation Status Report was 

developed by the Army as a way to assess installation-level conditions 

against Army-wide standards.



Military construction: The military construction appropriation is DOD’s 

source of funding for the repair or replacement of facilities, as well 

as for construction of facilities for new missions.



Modernization: Modernization funding provides funds for improving 

facilities. Modernization includes altering facilities solely to 

implement new or higher standards, to accommodate new functions, or to 

replace standard building components. Modernization activities are 

funded by operation and maintenance and military construction funds.



New footprint military construction: New footprint military 

construction funds are used for the construction of new facilities. 

These are not recapitalization resourcesæthey are not used to replace 

or modernize existing facilities.



Obligations: Obligations are binding agreements that will result in 

outlays, immediately or in the future. Budgetary resources must be 

available before obligations can be incurred legally.



Operation and maintenance: Operation and maintenance is DOD’s single 

largest appropriation group. It funds training, maintenance, and other 

key readiness-related activities, as well as other expenses, such as 

maintaining and operating bases.



Plant replacement value: Plant replacement value is the cost to replace 

an existing facility with a facility of the same size at the same 

location, using today’s building standards.



Quality of life enhancements: The quality of life enhancements defense 

appropriation was established by Congress to fund DOD’s backlog of 

facility maintenance, including minor construction and major 

maintenance and repair of barracks, dormitories, and related 

facilities.



Recapitalizable plant replacement value: This is a subset of the whole 

plant replacement value. Some types of facilities excluded are:



* facilities for which there is no recapitalization requirement, such 

as one-time use facilities and facilities scheduled for demolition or 

disposal, and:



* facilities that currently are recapitalized using specialized methods 

or metrics, or for which future recapitalization funding cannot 

currently be estimated, such as family housing; privatized facilities; 

and missile, aircraft, and ammunition production facilities.



Recapitalization: Recapitalization includes major renovation or 

reconstruction activities (including facility replacements) needed to 

keep facilities modern and efficient in an environment of changing 

standards and missions. Recapitalization extends the expected service 

life of facilities or restores lost service life and includes the 

restoration and modernization of existing facilities but not the 

acquisition of new facilities or the demolition of old ones.



Recapitalization rate: This is the number of years required to replace 

or renovate facilities at a given level of investment. The 

recapitalization rate is computed by dividing recapitalizable plant 

replacement value by total restoration and modernization investments.



Restoration: Restoration funding provides funds for improving 

facilities. Restoration includes repair and replacement work to restore 

facilities damaged by inadequate sustainment, excessive age, natural 

disaster, fire, accident, or other causes. Restoration activities are 

funded by operation and maintenance and military construction funds.



Supplemental appropriation: A supplemental appropriation is an act 

appropriating funds in addition to those in an annual appropriations 

act. Supplemental appropriations are enacted when the need for funds is 

too urgent to be postponed until the next regular annual appropriations 

act.



Sustainment: Sustainment funding provides resources primarily from 

operation and maintenance funds for recurring maintenance and repair 

activities necessary to keep an inventory of facilities in good working 

order. Sustainment includes regularly scheduled maintenance as well as 

anticipated major repairs or replacement of components that occur 

periodically during a facility’s life cycle. Due to obsolescence, 

sustainment alone does not keep facilities like new indefinitely, nor 

does it extend their service life.



FOOTNOTES



[1] Since fiscal year 1999, DOD has reported annually to Congress the 

condition of its facilities and ability to support military mission. In 

these reports, each military facility falls under one of nine facility 

classes, which are groupings of like facilities, such as operations and 

training, mobility, and supply. Major commands assign condition 

ratings, or C-ratings, to each facility class.



[2] As authorized by Congress in 2001, DOD intends to reduce its 

inventory of facilities as the result of closing some installations and 

by consolidating overlapping activities within and across the services 

through a round of base realignments and closures in fiscal year 2005. 

DOD officials have testified that 20 to 25 percent of the department’s 

infrastructure is not needed to meet current mission requirements. 

Consequently, as a result of the round of base realignments and 

closures in fiscal year 2005, the department and the military services 

will have to adjust their facility maintenance and recapitalization 

plans.



[3] We use the terms “congressionally designated” and “congressional 

designation” or variations of these terms throughout to refer to 

amounts set forth at the budget activity, activity group, and 

subactivity group level in an appropriation act’s conference report. 

These recommended amounts are not binding unless they are also 

incorporated directly or by reference into an appropriation act or 

other statute.



[4] The installations we visited include Quantico Marine Corps Base, 

Naval Station Norfolk, and Naval Air Station Oceana, Virginia; Pope Air 

Force Base and Fort Bragg, North Carolina; Whiteman Air Force Base, 

Missouri; Fort Leavenworth, Kansas; and Los Angeles Air Force Base, 

Naval Station San Diego, and Naval Base Coronado, California. The six 

major commands include Army Forces Command, Air Force Air Combat 

Command, Air Force Air Mobility Command, Air Force Space Command, Navy 

Atlantic Fleet, and Navy Pacific Fleet.



[5] In fiscal year 2002, DOD replaced its real property maintenance 

program with a program comprised of two distinct activities: (1) 

sustainment and (2) restoration and modernization. A separate structure 

for demolition and disposal was created in fiscal year 1999. Fiscal 

year 2002 data are not included in this report because obligations data 

were not available during our review.



[6] During fiscal years 1998 through 2000, DOD reported that its 

deferred maintenance increased by $14.1 billion. In 2001, DOD stopped 

reporting deferred maintenance because it found the metric to be 

inaccurate, subjective, and unverifiable. In the meantime, the 

department has developed or is developing other tools for generating 

maintenance and military construction requirements, such as its 

facilities sustainment model to calculate annual sustainment costs for 

military facilities and its recapitalization metric to measure the 

amount of restoration and modernization funding for facilities.



[7] DOD defines recapitalization rate as the number of years required 

to replace or renovate facilities at a given level of investment. The 

rate is computed by dividing recapitalizable plant replacement value by 

total restoration and modernization investments.



[8] As a point of reference, the military services intended to fund 

sustainment between 78 and 98 percent of requirements and reach an 

average recapitalization rate between 63 and 163 years in fiscal year 

2002, and DOD-wide facility ratings show that 68 percent of facility 

classes are in such poor condition that they affect military mission 

achievement.



[9] The Marine Corps base at Quantico, Virginia; Pope Air Force Base, 

North Carolina; and Los Angeles Air Force Base, California; which 

funded 97, 95, and 113 percent, respectively, of sustainment 

requirements in fiscal year 2002, were the exceptions to the funding 

levels at the other installations, which funded from 35 to 77 percent 

of their sustainment requirements during the same period.



[10] DOD defines plant replacement value as the cost to replace an 

existing facility with a facility of the same size at the same 

location, using today’s building standards.



[11] This review does not cover military family housing, which is 

funded by a separate congressional appropriation. We recently issued a 

report on DOD’s privatization of military family housing--Military 

Housing: Management Improvements Needed As the Pace of Privatization 

Quickens, GAO-02-624 (Washington, D.C.: June 21, 2002).



[12] New footprint military construction funds are used for the 

construction of new facilities. These are not recapitalization 

resourcesæthey are not used to replace or modernize existing 

facilities.



[13] U.S. Department of Defense, Financial Management Regulation 

7000.14-R, Budget Formulation and Presentation, vol. 2B, ch. 8, § 

080201 (June 2002). 



[14] DOD’s recapitalization rate is based on an assessment of the 

expected service life of different types of facilities. Expected 

service life is defined as the number of years a properly sustained 

facility should provide service before requiring a major restoration or 

replacement project.



[15] The Navy and the Marine Corps report C-ratings for eight of the 

nine facility classes. They do not report C-ratings for the mobility 

class.



[16] U.S. Department of Defense, Defense Installations 2001: The 

Framework for Readiness in the 21st Century (Washington, D.C.: August 

2001).



[17] DOD’s facilities sustainment model generates an annual sustainment 

funding requirement for facilities based on the expected life cycle of 

those facilities. The model uses standard facility-specific cost 

factors, based on commercial benchmarks and variable area costs, to 

compute a sustainment cost for each type of military facility.



[18] U.S. General Accounting Office, High-Risk Series: An Update, 

GAO-01-263 (Washington, D.C.: January 2001). 



[19] U.S. General Accounting Office, High-Risk Series: An Update, 

GAO-03-119 (Washington, D.C.: January 2003) and High-Risk Series: 

Federal Real Property, GAO-03-122 (Washington, D.C.: January 2003).



[20] U.S. General Accounting Office, Military Infrastructure: Real 

Property Management Needs Improvement, GAO/NSIAD-99-100 (Washington, 

D.C.: Sept. 7, 1999).



[21] U.S. General Accounting Office, Defense Budget: DOD Should Further 

Improve Visibility and Accountability of O&M Fund Movements, GAO/

NSIAD-00-18 (Washington, D.C.: Feb. 9, 2000).



[22] U.S. General Accounting Office, Defense Infrastructure: Most 

Recruit Training Barracks Have Significant Deficiencies, GAO-02-786 

(Washington, D.C.: June 13, 2002).



[23] In fiscal year 2002, DOD replaced its real property maintenance 

program with a program comprised of two distinct activities: (1) 

sustainment and (2) restoration and modernization, having already 

created a separate structure for demolition and disposal in fiscal year 

1999. Sustainment and restoration and modernization are discussed later 

in this report.



[24] Operating tempo includes active and reserve component ground and 

air training requirements for fuel, repair parts, and other 

consumables; training range modernization; combat training center 

modernization; training ammunition; and training support and 

operations.



[25] Congress established the quality of life enhancements defense 

appropriation to fund DOD’s backlog of real property maintenance of 

barracks, dormitories, and related facilities, including minor 

construction and major maintenance and repair.



[26] Total appropriations for military construction in fiscal year 2003 

were $4.07 billion.



[27] An advance appropriation is one made to become available one 

fiscal year or more beyond the fiscal year for which the appropriation 

act is passed. For instance, advance appropriations in the fiscal year 

2000 appropriation act became available for programs in fiscal year 

2001 and beyond. Since these appropriations were not available until 

after fiscal year 2000, the amounts were not included in fiscal year 

2000 budget totals.



[28] U.S. Department of the Air Force, Office of the Civil Engineer, 

United States Air Force Facilities Investment Plan (Washington, D.C.: 

Aug. 14, 2002).



[29] U.S. Department of the Navy, Naval Audit Service, Management of 

the Navy’s Sustainment, Restoration, and Modernization Program, N2002-

0067 (Washington, D.C.: 

Aug. 6, 2002).



[30] According to Navy criteria, a deficiency is classified as critical 

if the maintenance and repair need requires corrective action within 

the current year or poses a serious risk for environmental damage, 

interference or loss of mission, life safety, or quality of life.



[31] According to Atlantic Fleet criteria, a deficiency is classified 

as either critical or deferrable depending on two factors: the severity 

of the deficiency or the probability of the deficiency causing a 

mishap. These two factors are considered in four impact areas: 

environment, mission, life safety, and quality of life.



[32] See GAO-02-786.



[33] The Secretary of Defense and his staff prepare the Defense 

Planning Guidance, issue policy, and articulate strategic objectives 

that reflect the national military strategy. The Defense Planning 

Guidance includes the Secretary’s force and resource guidance to the 

military departments, other combat support agencies, and the unified 

combatant commands.



[34] U.S. Department of Defense, Report to Congress: Identification of 

the Requirements to Reduce the Backlog of Maintenance and Repair of 

Defense Facilities (Washington, D.C.: April 2001).



[35] See GAO-02-786.



[36] DOD defines recapitalizable plant replacement value as the cost of 

replacing an existing facility with a facility of the same size at the 

same location using today’s building standards, but it does not include 

facilities planned for demolition, disposal by transfer to other 

entities, and one-time use, as well as facilities recapitalized by 

appropriations other than regular military construction or operation 

and maintenance funds (such as family housing), and facilities 

recapitalized by sources outside DOD (such as facilities in Japan).



[37] U.S. Department of the Army, Army Program Objective Memorandum for 

Fiscal Years 

04-09 (Washington, D.C.: Aug. 22, 2002).



[38] U.S. Department of the Army, U.S. Army Installation Long-Range 

Plan (Washington, D.C.: February 2003).



[39] U.S. Department of the Air Force, United States Air Force 

Facilities Investment Plan (Washington, D.C.: Aug. 14, 2002).



[40] U.S. Department of Defense, Annual Report to the President and the 

Congress (Washington, D.C.: 2002).



[41] U.S. Marine Corps, Marine Corps Installations 2020 (Washington, 

D.C.: Apr. 28, 2001).



[42] See N2002-0067.



[43] U.S. General Accounting Office, Agencies’ Strategic Plans under 

GPRA: Key Questions to Facilitate Congressional Review, GAO/GGD-10.1.16 

(Washington, D.C.: May 1997); Agencies’ Annual Performance Plans under 

the Results Act: An Assessment Guide to Facilitate Congressional 

Decisionmaking, GAO/GGD/AIMD-10.1.18 (Washington, D.C.: February 

1998); The Results Act: An Evaluator’s Guide to Assessing Agency Annual 

Performance Plans, GAO/GGD-10.1.20 (Washington, D.C.: April 1998); and 

Financial Management: DOD Improvement Plan Needs Strategic Focus, 

GAO-01-764 (Washington, D.C.: Aug. 17, 2001).



[44] U.S. General Accounting Office, Major Management Challenges and 

Program Risks: Department of Defense, GAO-03-98 (Washington, D.C.: 

January 2003).



[45] DOD’s financial management regulations, which reflect agreements 

between DOD and the authorization and appropriation committees, provide 

general guidelines for various reprogramming actions. For example, 

congressional notification was required for operation and maintenance 

reprogramming actions of $15 million or more in fiscal year 2002. 



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