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United States Government Accountability Office: 
Washington, DC 20548: 

November 13, 2009: 

The Honorable Jeff Bingaman: 
Chairman:
The Honorable Lisa Murkowski: 
Ranking Member:
Committee on Energy and Natural Resources 
United States Senate: 

The Honorable Daniel K. Akaka:
United States Senate: 

Subject: Defense Infrastructure: Guam Needs Timely Information from DOD 
to Meet Challenges in Planning and Financing Off-Base Projects and 
Programs to Support a Larger Military Presence: 

The Department of Defense's (DOD) plans to increase the U.S. military 
presence on Guam are expected to increase the island's current military 
population by about two and a half times by 2020. If implemented as 
planned, this realignment would increase the military population on 
Guam from about 15,000 in 2009 to about 29,000 in 2014, and to more 
than 39,000 by 2020, which will increase the current island population 
of 178,430 by about 14 percent over those years. The largest portion of 
the military's population growth is related to the relocation of about 
8,000 Marines and their 9,000 dependents from Okinawa, Japan, to Guam 
as part of an agreement between the United States and Government of 
Japan to reduce forces in Japan while maintaining a continuing presence 
of U.S. forces in the region. The populations of each of the other 
military services also are expected to increase as a result of DOD 
plans to expand their operations and presence on Guam. DOD plans to 
fund DOD-owned and on-base infrastructure to support the military 
realignment and buildup, such as roads, buildings, and other 
facilities, while the government of Guam is expected to be largely 
responsible for funding and constructing government of Guam-owned off- 
base roads and utilities and providing certain public services. 

We have previously reported that the government of Guam faces 
significant challenges in addressing the impacts of the buildup and 
realignment. For example, Guam's infrastructure would likely be 
inadequate to meet increased use resulting from the military buildup. 
In June 2009, we reported that Guam will need to significantly expand 
its existing utilities infrastructure and expand public services for 
electric power generation, potable water production, wastewater 
collection and treatment, and solid waste collection and disposal to 
provide the additional utility capacities and services that will be 
required following the buildup.[Footnote 1] Moreover, we have also 
reported that Guam's major highways may not have enough capacity to 
accommodate the increased military and civilian traffic since the 
island's two major highways may need major improvements.[Footnote 2] 
This report is one in a series of reports examining critical issues 
relating to the planned military buildup. We have included a listing of 
our past Guam reports at the end of this report. 

The government of Guam established the Civilian-Military Task Force in 
April 2006 to identify and develop cost estimates for potential 
nondefense projects and programs needed to support the larger military 
presence. The task force comprises 11 subcommittees that focus on 
specific issues to identify community impacts resulting from the 
buildup and develop appropriate mitigation plans.[Footnote 3] In 
addition, the task force has identified initial estimates of the cost 
to improve critical off-base infrastructure and expand needed public 
services to ensure adequate support to the expanded military and 
civilian community. In May 2008, the Governor of Guam testified before 
the Senate Committee on Energy and Natural Resources and stated that 
the government of Guam would need about $6.1 billion to expand the 
commercial port; roadways; power, water, and other infrastructure; and 
certain public services in support of the buildup.[Footnote 4] These 
infrastructure needs and services are to be part of a multiyear funding 
program to ensure that Guam is able to support the buildup and secure 
post-buildup sustainability. In response to your request, this report 
examines (1) the processes used by the government of Guam to develop 
cost estimates for its off-base projects and programs related to the 
military buildup and (2) the key challenges, if any, affecting the 
government of Guam's ability to finance off-base projects and programs 
that are needed to support the buildup and larger military and civilian 
community. 

To determine the processes used by the government of Guam to develop 
cost estimates for off-base projects and programs to support a larger 
military and civilian population resulting from the military buildup, 
we obtained and analyzed studies and assessments used by the government 
of Guam to develop the cost estimates.[Footnote 5] We also examined the 
government of Guam's fiscal year 2010 budget request. In addition we 
reviewed briefings, annual reports, and other pertinent documentation 
prepared by the government of Guam, DOD, and U.S. federal departments 
and agencies. In addition, we interviewed officials from DOD's Office 
of Economic Adjustment, the Navy's Joint Guam Program Office, U.S. 
Pacific Command, Naval Facilities Engineering Command-Pacific, Naval 
Facilities Engineering Command-Marianas, the Department of the 
Interior's Office of Insular Affairs, the Guam Buildup Office, the Guam 
Office of the Public Auditor, the Guam Department of Public Works, the 
Guam Bureau of Budget and Management, the Guam Public Works Authority, 
and the Guam Waterworks Authority. To identify what key challenges, if 
any, may be affecting the government of Guam's ability to plan and 
finance off-base projects and programs related to the buildup, we 
analyzed the government of Guam's most recent financial statements and 
independent auditor's reports, as well as information on Guam's current 
bond ratings. We also examined information on Guam's statutory debt 
limitation. In addition, we discussed key challenges with the Guam 
Buildup Office, the Office of the Public Auditor, the Bureau of Budget 
and Management, the Department of the Interior's Office of Insular 
Affairs, the Joint Guam Program Office, and the DOD Office of Economic 
Adjustment. 

We conducted this performance audit from March 2009 through November 
2009 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Summary: 

The processes used by the government of Guam to develop the key cost 
estimates for planned off-base projects and programs varied depending 
on project or program value, complexity, and size; whether independent 
consultants provided input; and the extent to which DOD provided data 
to help set project requirements. As a result, the estimates prepared 
to date vary in quality, and the overall costs to develop supporting 
off-base infrastructure are still uncertain. These off-base projects 
range from large, multiyear projects, such as improving Guam's road 
network linking the commercial port to DOD's bases, to small, local 
projects, such as expanding certain fire stations. In instances where 
DOD was involved in clarifying or providing updated information on its 
buildup requirements, and the government of Guam used independent 
consultants to help develop and verify cost estimates, we found that 
the government of Guam developed cost estimates that may better reflect 
likely final requirements and may better justify investment decisions 
since they are informed by expert analysis and the most up-to-date 
planning information. For example, when Guam's Department of Public 
Works initially estimated that it needed $4.4 billion to improve the 
road network on Guam, it did not have the benefit of DOD's involvement. 
However, after the May 1,2008, hearing and after engaging DOD in 
further defining buildup requirements, Guam's Department of Public 
Works was able to narrow the scope of the project from overall highway 
improvements to roadways directly affected by the military buildup. 
Guam hired consultants from two national transportation and engineering 
firms, using funding from the Federal Highway Administration, to 
develop and validate cost estimates based on DOD's input in clarifying 
requirements. As a result, the government of Guam's road projects cost 
estimate fell by nearly $3 billion to about $1.5 billion. This reduced 
the overall estimate for multiyear projects from $6.1 billion to $3.2 
billion. Conversely, on another large project--the expected expansion 
of the water and sewer system--DOD input provided general buildup 
information for cost estimates, but DOD and Guam had not reached 
agreement on the key question of whether to have a single water system 
for military and civilian customers or two separate systems, thus 
making current system upgrade cost estimates potentially unreliable. 
For the smaller fire station expansion project, the government of 
Guam's Civilian-Military Task Force developed a cost estimate without 
direct DOD involvement or use of independent consultants. The Guam Fire 
Department followed National Fire Protection Association standards to 
project expansion of the two fire stations, and the Civilian-Military 
Task Force's Infrastructure Subcommittee then estimated that expanding 
two stations would cost $425,000. However, since the process did not 
have the benefit of updated DOD input, these estimates may not fully 
reflect actual buildup requirements. Key buildup decisions to reflect 
actual buildup requirements, such as the exact location, size, and 
makeup of forces moving to Guam as well as the size and type of 
facilities to be constructed, will not be finalized until the 
environmental impact statement and its associated record of decision 
are complete. These documents are currently targeted to be finalized in 
January 2010. 

The government of Guam faces two key challenges in financing off-base 
infrastructure projects and programs required to support a larger 
military and civilian population resulting from the military buildup. 
First, the impact of Guam's debt ceiling on the ability of the 
government of Guam to incur debt to help fund off-base projects and 
programs is uncertain. While the Organic Act of Guam includes a 
statutory debt limitation on government borrowing, limiting Guam's 
public indebtedness to no more than 10 percent of the aggregate tax 
valuation of the property on Guam, not all government obligations are 
included in this debt ceiling. For example, bonds or other obligations 
of the government of Guam payable solely from revenues derived from any 
public improvement or undertaking are not considered public 
indebtedness of Guam within the meaning of this limitation. Thus, until 
the precise form and terms of the debt that the government of Guam 
might contemplate for the purposes of the military buildup on Guam is 
known, the impact that Guam's debt ceiling may have on the ability of 
the government of Guam to incur such a debt obligation is unclear. 
Second, the government of Guam's operating deficit was approximately 
$415 million at the time of our review, and this deficit can affect 
Guam's ability to borrow because of questions about the extent to which 
additional debt service payments are affordable. Officials from Guam's 
Bureau of the Budget and Management said that they will have difficulty 
finding revenue sources to close the current deficit while also 
attempting to fund projects related to the military buildup. 
Nonetheless, the government of Guam may have some ability to raise 
revenue through issuing bonds despite the deficit. In June 2009, the 
government of Guam sold $473.5 million worth of bonds to help pay for 
cost-of-living adjustments owed to government of Guam retirees and tax 
refund payments owed to residents, and to fund part of the construction 
of a new landfill to help meet projected expansion needs, demonstrating 
that a market may exist among investors for Guam's debt. Also, Guam's 
ability to finance needed infrastructure projects could improve because 
of potentially improved local economic conditions as the military 
buildup continues. We have previously reported that available studies 
indicate that communities surrounding military growth installations can 
expect to realize economic benefits stemming from the growth.[Footnote 
6] DOD's Office of Economic Adjustment has provided the government of 
Guam with approximately $2.5 million to hire an international 
consulting firm to assist Guam with financial advisory services, 
determine its ability to underwrite buildup requirements, and recommend 
various options for Guam to consider in developing future revenue 
streams needed to fund off-base infrastructure development and expanded 
public services. 

In commenting on this report, DOD stated that it accurately 
characterizes the challenges that both DOD and Guam face in developing 
cost estimates for off-base projects and programs designed to deal with 
the impact of the military buildup and realignment on Guam. DOD also 
provided technical comments, which we incorporated as appropriate into 
this report. DOD's comments are reprinted in their entirety in 
enclosure II. 

Background: 

In 2004, the U.S. Secretaries of State and Defense and the Japanese 
Minister of Foreign Affairs and Minister of State for Defense began a 
series of sustained security consultations aimed at strengthening the 
U.S.-Japan security alliance and better addressing the rapidly changing 
global security environment. The resulting U.S.-Japan Defense Policy 
Review Initiative established a framework for the future of the U.S. 
force structure in Japan and is to facilitate a continuing presence for 
U.S. forces in the Pacific theater by relocating military units to 
Guam. As part of this initiative, DOD plans to move 8,000 Marines and 
their estimated 9,000 dependents from Okinawa, Japan, to Guam by 2014. 
In addition to this initiative, the United States plans to expand the 
capabilities and presence of Navy, Air Force, and Army forces on Guam. 
As a result, the military population, including dependents, on Guam is 
expected to grow by over 160 percent, from its current population of 
about 15,000 to over 39,000 by 2020. Most of the extensive population 
growth and development resulting from the buildup will occur on the 
northern half of the island, primarily in the northwestern portion, 
where DOD currently plans to construct a new Marine Corps base. 
According to Joint Guam Program Office officials, the current planned 
schedules and levels of population growth and force structure could 
change as buildup plans are further refined and approved. 

In response to the projected military buildup on Guam, the government 
of Guam established the Civilian-Military Task Force as a means to 
identify and develop cost estimates for potential nondefense projects 
and programs needed to support the larger military presence on Guam. 
[Footnote 7] The task force consists of 11 subcommittees that comprise 
members from the community, the government of Guam, the military, the 
business community, and civic organizations. The task force helps to 
identify community impacts resulting from the buildup and develop 
appropriate mitigation plans. At the time of our review, the task force 
had developed cost estimates for two types of funding requests: (1) a 
multiyear request to include major infrastructure needs and to secure 
post-buildup sustainability and (2) a onetime fiscal year 2010 budget 
request that identifies pre-buildup needs for Guam to adequately 
prepare for the realignment and buildup. Enclosure I provides 
additional information on the government of Guam's estimates for off-
base projects and programs. The government of Guam initially identified 
its large, multiyear off-base projects and programs during the hearing 
before the Senate Committee on Energy and Natural Resources in May 
2008. The cost estimates for these off-base projects and programs 
totaled $6.1 billion at that time and involved the expansion of Guam's 
port, improvement to Guam's roadways, and expansion of Guam's water 
infrastructure. In April 2008, the task force developed a fiscal year 
2010 budget request that totaled approximately $238 million, which was 
in addition to the $6.1 billion in the Governor's May 2008 hearing 
statement. The government of Guam sent the 2010 budget request to the 
Office of Management and Budget for funding consideration in July 2008. 

The Navy holds primary responsibility for overseeing the military 
buildup on Guam. In August 2006, the Office of the Secretary of Defense 
directed the Navy to establish the Joint Guam Program Office, which 
reports to the Assistant Secretary of the Navy (Installations and 
Environment), to facilitate, manage, and execute requirements 
associated with the rebasing of U.S. assets from Okinawa, Japan, to 
Guam. Specifically, the office was tasked with leading the coordinated 
planning efforts of all DOD components and other stakeholders to 
consolidate, optimize, and integrate the existing military 
infrastructure on Guam, and is currently preparing a Guam master plan 
to address all aspects of the buildup. The Naval Facilities Engineering 
Command is primarily responsible for contracting for the construction 
of the military's buildup infrastructure as well as developing the 
environmental impact statement.[Footnote 8] 

In accordance with the National Environmental Policy Act of 1969, DOD 
is currently preparing an environmental impact statement in order to 
evaluate the likely environmental effects of its buildup and 
realignment plans.[Footnote 9] The environmental impact statement is 
also expected to contain an analysis of various socioeconomic impacts 
of the realignment related to specific proposed actions (as 
appropriate), among other matters. The environmental impact statement 
and associated record of decision are currently targeted to be 
finalized by January 2010, and are to be used by the Joint Guam Program 
Office to finalize the buildup master plan. The master plan will form 
the baseline for military construction budget planning and facility and 
utility designs and provide a top-level view of the size and type of 
facility requirements, candidate and preferred land sites, and proposed 
use of the land to meet the requirements for new personnel and forces 
planned for Guam. 

The Office of Economic Adjustment is a DOD field activity that reports 
to the Deputy Under Secretary of Defense (Installations and 
Environment), under the Under Secretary of Defense (Acquisition, 
Technology and Logistics). It is responsible for facilitating DOD 
resources in support of local programs and providing direct planning 
and financial assistance to communities and states seeking assistance 
to address the impacts of DOD's actions. The Office of Economic 
Adjustment's assistance to growth communities is primarily focused on 
assisting these communities with organizing and planning for population 
growth because of DOD activities, commonly referred to as defense- 
affected communities. 

DOD policies and guidance on assistance to defense-affected communities 
indicate that DOD should seek to minimize negative economic impacts on 
communities resulting from changes in defense programs, such as base 
closures, realignments, consolidations, transfer of functions, and 
reductions in force.[Footnote 10] Specifically, the secretaries of the 
military departments are to provide maximum advance information and 
support to local governments to allow planning for necessary 
adjustments in local facilities and public services, workforce training 
programs, and local economic development activities. In addition, DOD 
is to take the leadership role in assisting substantially and seriously 
affected communities with the negative effects of major defense base 
closures, realignments, and contract-related adjustments. We previously 
reported that it has been long-standing DOD policy that DOD take the 
leadership role within the federal government in helping communities 
respond to the effects of defense-related activities.[Footnote 11] This 
is based on a series of executive orders, the current version of which 
establishes the Economic Adjustment Committee made up of 22 federal 
departments and agencies to, among other duties, advise, assist, and 
support the Defense Economic Adjustment Program, which is to assist 
defense-affected communities.[Footnote 12] 

The Processes Used by the Government of Guam to Develop Cost Estimates 
Varied, and Buildup Requirements Are Not Yet Fully Known: 

The government of Guam used differing processes to develop cost 
estimates based on (1) the type and size of off-base projects and 
programs, (2) the extent to which DOD provided data to inform project 
and program requirements, and (3) whether appropriate consulting 
services were available or used to refine cost estimates. Off-base 
projects range from large, multiyear projects, such as improving Guam's 
road network linking the commercial port to DOD's bases and expanding 
and modernizing Guam's port, to small, local projects, such as 
expanding certain fire stations. Although the government of Guam has 
developed some cost estimates, the environmental impact statement, 
which will inform DOD's overall Guam master plan and plan 
implementation decisions, and its associated record of decision are 
targeted to be finalized by January 2010. Government of Guam officials 
believe that their ability to plan for off-base infrastructure 
development has been hampered by a lack of finalized buildup plans. 
According to DOD officials, DOD has provided information on buildup 
plans to the government of Guam as requirements have become more fully 
known to try and assist the government of Guam with planning efforts. 

Some Large, Multiyear Projects Were Developed Using Independent 
Consultants and Increased DOD Involvement in Clarifying Requirements: 

For some of the larger, multiyear off-base infrastructure projects, DOD 
clarified or provided updated data regarding its potential buildup 
requirements. The government of Guam also hired independent consultants 
to help develop and verify cost estimates based on its understanding of 
buildup requirements. In these instances, we found that the government 
of Guam developed cost estimates that may better reflect likely final 
requirements and may better justify investment decisions.[Footnote 13] 
For example, as stated at the May 1, 2008, hearing, Guam's Department 
of Public Works initially estimated that overall roadway improvements 
related to the buildup would cost around $4.4 billion. However, the 
Guam Department of Public Works subsequently engaged DOD to identify 
specific improvements based on factors such as the preferred routing of 
truck traffic, points of congestion, and the expeditious and safe 
movement of military equipment, materials, supplies, and personnel. 
Moreover, the Guam Department of Public Works hired two national 
transportation and engineering firms, using funding from the Federal 
Highway Administration, to develop and verify cost estimates on roadway 
inputs based on the revised project requirements. This resulted in a 
new estimate for roadway improvements that totaled $1.5 billion--a 
decrease of $2.9 billion or almost 66 percent of the original estimate. 
This revision also substantially affected the government of Guam's 
overall estimate for larger, multiyear projects, reducing it from $6.1 
billion to $3.2 billion.[Footnote 14] In addition to its input to the 
government of Guam's estimate for roadway improvements, DOD supplied 
the government of Guam with anticipated port throughput requirements 
during and after the buildup, from 2010 to 2018, permitting a longer- 
term planning horizon. Similarly, the Port Authority of Guam combined 
its funding with that provided by the Office of Economic Adjustment to 
hire a national engineering firm to develop a port master plan update 
that incorporated DOD's cargo throughput requirements. The engineering 
firm estimated that port upgrades addressing the projected increases in 
population and ship traffic due to the buildup would cost approximately 
$195 million (calendar year 2008 dollars). 

In other instances, the government of Guam hired independent 
consultants to help develop cost estimates for larger, multiyear 
infrastructure projects even though updated or detailed buildup 
information was not available from DOD because certain agreements were 
still to be negotiated. For example, the Guam Waterworks Authority 
contracted with an independent consultant from a national environmental 
engineering firm using its own funds and an Environmental Protection 
Agency grant to develop a cost estimate for the expansion of Guam's 
water system (e.g., potable water production and wastewater collection 
and treatment) to meet increased demand from the military buildup. The 
$192 million estimate was issued in 2007 and is based on the assumption 
that a unified water and wastewater system will be used to serve both 
the civilian and military populations. However, as we previously 
reported, DOD is in the process of determining how it will meet its 
potable and wastewater needs, and whether it will use a unified water 
system or develop its own.[Footnote 15] The Guam Waterworks Authority 
has indicated that if DOD provides additional detailed information, it 
will modify the assumptions used to develop its estimate for expanding 
Guam's water system. As the government of Guam and DOD reach agreements 
on water and wastewater systems and more specific requirements are 
identified, the cost estimate will likely have to be revised to reflect 
material changes associated with these agreements. 

Smaller Onetime Pre-Buildup Estimates Developed Solely by the 
Government of Guam's Civilian-Military Task Force: 

For smaller estimates that were part of the government of Guam's fiscal 
year 2010 budget request, the Civilian-Military Task Force helped to 
identify requirements and developed estimates without engaging DOD or 
using independent consultants. As such, these estimates did not have 
the benefit of updated DOD input on its plans to expand on Guam, 
raising questions about how reliable these estimates are in that they 
do not reflect updated or final buildup requirements. For example, the 
Guam Fire Department followed National Fire Protection Association 
standards in conjunction with the anticipated locations of population 
growth due to the buildup to conclude that two fire stations will need 
to be expanded by constructing dormitories to accommodate additional 
firefighters as well as for a space to shelter new emergency vehicles. 
The Fire Department provided that information to the Civilian-Military 
Task Force's Infrastructure Subcommittee, which in turn estimated that 
the expansion project would cost $425,000. 

Similarly, Guam's Department of Public Health and Social Services used 
the number of recent tuberculosis cases on Guam in conjunction with 
information from the Centers for Disease Control and Prevention, the 
anticipated number of construction laborers needed for the buildup, and 
the percentage of tuberculosis cases occurring in countries expected to 
supply these laborers to determine the need for a tuberculosis control 
program. The program includes an increase in staff and additional 
office space for Guam's Bureau of Communicable Disease Control in order 
to provide an increase in surveillance, counseling, and treatment 
services to help minimize the spread of tuberculosis on Guam thought to 
be possible because of an influx of construction laborers from 
countries where the disease is more prevalent. The Department of Public 
Health and Social Services then provided the information to the Health 
and Social Services Subcommittee, which estimated that establishing the 
program would cost $458,988. 

Guam's Economic Development and Commerce Authority, using past studies 
in conjunction with the anticipated location of military facilities, 
determined a need to assess the nature and types of infrastructure 
necessary for economic development opportunities in civilian-owned 
undeveloped areas in proximity to military bases, as these areas are 
expected to be prime locations for development in support of or in 
response to military growth. The Economic Development and Commerce 
Authority provided this information to the Economic Development 
Subcommittee, which estimated the total cost of performing such a 
study, including hiring a project manager, to be $350,000. 

Buildup Requirements Are Not Yet Fully Known: 

The government of Guam will likely not receive finalized plans and 
requirements from DOD until its master plan has been issued, although 
DOD has provided some interim information. Naval Facilities and 
Engineering Command is currently developing the environmental impact 
statement related to the realignment and buildup, and this document and 
its associated record of decision must be completed before the master 
plan and key decisions, such as the exact location, size, and makeup of 
forces moving to Guam as well as the size and type of facility 
requirements, can be finalized. Both the environmental impact statement 
and record of decision are currently targeted to be finalized in 
January 2010. As such the government of Guam's ability to develop cost 
estimates that reflect actual buildup requirements is somewhat limited 
because there is greater potential for margins of error if its 
estimates are based on requirements that can change. Though buildup 
plans are not yet finalized, DOD's Office of Economic Adjustment, which 
provides planning information and support to communities affected by 
DOD programs, has been providing technical and financial assistance to 
the government of Guam based on the government of Guam's incremental 
response strategy and information provided by the Joint Guam Program 
Office. However, government of Guam officials believe that their 
ability to plan and develop cost estimates for the off-base 
infrastructure development to support the larger population has been 
hampered because overall buildup plans are not finalized. According to 
DOD officials, DOD has provided information on buildup plans to the 
government of Guam as requirements have become more fully known to 
assist with Guam's planning. 

Although the government of Guam has received some preliminary 
information regarding the military buildup, we have previously reported 
that uncertainties associated with the exact size, makeup, and timing 
of the forces to be moved to Guam make it difficult for the government 
of Guam to develop comprehensive plans to address the effects of the 
proposed military buildup since the environmental impact statement 
process has not been completed yet.[Footnote 16] Any delays in the 
issuance of the environmental impact statement and its associated 
record of decision until after January 2010 can adversely affect Guam 
as it will compress the time period in which the government of Guam 
plans and develops final cost estimates for the construction and 
improvement of new off-base infrastructure, and ensures that enhanced 
public services are available to serve the larger military force 
currently scheduled to arrive by 2014. 

The Government of Guam Faces Some Potential Challenges in Financing Off-
Base Projects and Programs, but May Also Be Able to Raise Some Revenue 
on Its Own: 

The government of Guam faces two key challenges in identifying and 
financing its off-base projects and programs related to the military 
buildup. These financing challenges are its statutory debt limitation 
and operating deficit. Despite such challenges, Guam's ability to 
finance needed infrastructure projects could improve because of 
enhanced local economic conditions as the military buildup continues. 

The Government of Guam Is Facing Challenges in Identifying and Securing 
Financing to Help Carry Out Its Off-Base Projects and Programs Related 
to the Military Buildup: 

Guam's financing challenges are its statutory debt limitation and its 
operating deficit. First, the government of Guam's ability to borrow 
funds to help pay for off-base infrastructure projects and programs 
related to the military buildup may be constrained because of a 
statutory debt limitation contained in the Organic Act of Guam, 
depending on the form and terms of the prospective debt. Section 11 of 
the act places a limitation on government borrowing, limiting Guam's 
public indebtedness to no more than 10 percent of the aggregate tax 
valuation of property on Guam.[Footnote 17] However, not all government 
obligations are included in the debt ceiling. For instance, section 11 
notes that bonds or other obligations of the government of Guam payable 
solely from revenues derived from any public improvement or undertaking 
shall not be considered public indebtedness as defined in the Organic 
Act of Guam. Further, whether certain government obligations constitute 
debts, and thus are to be included in a particular debt limit 
calculation, is generally a highly litigated issue.[Footnote 18] Thus, 
until the government of Guam has determined and decided on the form and 
terms of debt it plans to incur to help fund off-base projects and 
programs related to the buildup, it is unknown what impact this debt 
limitation provision will have on the ability of the government of Guam 
to incur debt for the purposes of the buildup. 

Second, Guam has faced an operating deficit over the past few years. In 
May 2009 Guam's Office of the Public Auditor reported that the 
government of Guam's general fund operating deficit for fiscal year 
2007 was $510 million.[Footnote 19] An independent audit of the 
government of Guam's fiscal year 2008 financial statements showed that 
Guam's operating deficit had decreased to $415 million.[Footnote 20] 
However, the estimated general fund expenditures for fiscal year 2009 
total around $490 million. Thus the operating deficit is almost 85 
percent of the government's total operating expenses. Officials from 
Guam's Bureau of Budget and Management said that they will have 
difficulty finding and securing enough revenue sources to close the 
current deficit while also attempting to fund new off-base projects and 
programs related to the buildup. The Office of Public Auditor noted 
that while the military buildup may be a catalyst for growth, if all 
revenue increases from the buildup will be used to fund current 
government operations, little, if any, new cash will be available to 
pay past debt, and cash shortfall problems could continue. 

The Government of Guam May Have Some Potential to Raise Revenue in 
Support of the Military Buildup: 

The government of Guam has demonstrated that it can raise revenue by 
issuing bonds. In June 2009, the government of Guam successfully sold 
$473.5 million worth of bonds to help pay for cost-of-living 
adjustments owed to government of Guam retirees and tax refund payments 
owed to residents, and to fund part of the construction of a new 
landfill to help meet projected expansion needs. This demonstrates that 
a market may exist among investors for Guam's debt. Moreover, we have 
reported that communities near military growth locations face growth- 
impact challenges in the short term, including challenges to identify 
and provide additional infrastructure--such as schools, roads, housing, 
and other services--to support the expected population growth, but that 
these communities can also expect to realize economic benefits in the 
long term.[Footnote 21] 

An increase in military and federal civilian employees on Guam stemming 
from the buildup may be a potential source of additional revenue. For 
instance, Guam receives federal income taxes paid by military and 
civilian employees of the U.S. government stationed in Guam.[Footnote 
22] As the buildup progresses and both military and federal civilian 
personnel come to Guam, the amount of this income tax revenue provided 
to Guam may increase. 

The Office of Economic Adjustment has been providing technical and 
financial assistance to the government of Guam in preparation for the 
buildup since July 2006. At the time of our review, the Office of 
Economic Adjustment had provided the government of Guam with 
approximately $7.6 million in grants that have been used to: provide 
logistical support to the Office of the Governor; develop a financial 
modeling tool for the Port Authority of Guam and a port financial 
feasibility study; undertake a variety of studies on the port expansion 
and solid waste management; and support the government of Guam with 
international consulting services. Office of Economic Adjustment 
officials stated that the assistance provided to the government of Guam 
is intended to enable the territory to make informed decisions on how 
to respond to the buildup program. As part of the $2.5 million grant 
provided by the Office of Economic Adjustment in September 2008, the 
government of Guam hired an internationally recognized consulting team 
with expertise in planning, environmental, and fiscal/financial 
advisory services. The consulting team provides the government of Guam 
with the expertise to develop response alternatives, evaluate the 
associated risks, and determine appropriate financing mechanisms. At 
the time of our review, the consulting team was developing a fiscal 
impact analysis using information from the environmental impact 
statement. This analysis will include an estimate of the impact of the 
buildup on the territory's cash flow, taking into account projected 
changes in expenses and tax revenues. This could help indicate the 
extent to which the government of Guam may be able to identify and 
develop revenue streams rather than rely solely on federal grants for 
funding of off-base infrastructure. 

Agency Comments: 

In commenting on this report, DOD stated that it accurately 
characterizes the challenges that both DOD and Guam face in developing 
cost estimates for off-base projects and programs designed to deal with 
the impact of the military buildup and realignment on Guam. DOD also 
provided technical comments, which we incorporated as appropriate into 
this report. DOD's comments are reprinted in their entirety in 
enclosure II. 

We are sending copies of this report to the appropriate congressional 
committees. We are also sending copies to the Secretaries of Defense 
and the Interior; the Secretaries of the Army, the Navy, and the Air 
Force; the Commandant of the Marine Corps; and the Director of the 
Office of Management and Budget. This report also is available at no 
charge on our Web site at [hyperlink, http://www.gao.gov]. 

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

Signed by: 

Brian J. Lepore, Director:
Defense Capabilities and Management: 

Enclosure I: 

Government of Guam Cost Estimates for Off-Base Projects and Programs: 

The government of Guam has developed cost estimates for two types of 
funding requests: (1) a multiyear request to include major 
infrastructure needs and to secure post-buildup sustainability and (2) 
a onetime fiscal year 2010 budget request that identifies pre-buildup 
needs for Guam to adequately prepare for the realignment and 
buildup.[Footnote 23] These estimates were developed by the government 
of Guam's Civilian-Military Task Force. Table 1 provides information on 
the government of Guam's cost estimates for off-base projects and 
programs. The fiscal year 2010 estimates in table 1 are categorized and 
totaled by Civilian-Military Task Force subcommittee as they are in the 
government of Guam's budget request.[Footnote 24] These estimates are 
made up of smaller projects and programs that when summed together 
produce each subcommittee's estimate. The examples provided for each 
subcommittee category illustrate the types of projects and programs the 
government of Guam has identified as needed to adequately prepare for 
the buildup. 

Table 1: Government of Guam Cost Estimates for Off-Base Projects and 
Programs as of September 2009 (Dollars in millions): 

Estimates: Multiyear estimates: Roadway improvements; 
Descriptions: Identify and improve road infrastructure based on 
military use during and after buildup; 
Amount: $1,547. 

Estimates: Multiyear estimates: Guam power infrastructure; 
Descriptions: Expansion of power infrastructure capacity to generate 
additional power and improve its reliability; 
Amount: $666. 

Estimates: Multiyear estimates: Education; 
Descriptions: Expansion of educational services, including purchase of 
school supplies and hiring additional staff; 
Amount: $206. 

Estimates: Multiyear estimates: Port expansion; 
Descriptions: Expansion and modernization of Guam's port to address 
increases in ship traffic; 
Amount: $195. 

Estimates: Multiyear estimates: Water infrastructure; 
Descriptions: Expansion of Guam's water system, including potable water 
production and wastewater collection and treatment; 
Amount: $192. 

Estimates: Multiyear estimates: Public health; 
Descriptions: Expansion of Guam Memorial Hospital and construction of a 
new central public health and social services building; 
Amount: $135. 

Total multiyear estimates; 
Amount: $2,941. 

Estimates: Multiyear estimates: Fiscal year 2010 estimates (example 
projects and programs under each estimate); Infrastructure; 
Descriptions: 
* Purchase of additional X-ray machines and washdown facilities at 
ports of entry to Guam; 
* Architectural and engineering designs for expansion of Guam Memorial 
Hospital; 
* Expansion of fire stations; 
* Increase in staff at Guam's Department of Agriculture; University of 
Guam Health-Science Renovation and Expansion Project; 
* Architecture and engineering services for construction of a new 
building for the University of Guam's Center for Excellence in 
Developmental Disabilities Education, Research, and Services; 
* Renovation of building space for the University of Guam's Marine 
Laboratory; 
* Increase in Port Authority of Guam staff; 
* Retrofit of the civilian airport to accommodate military aircraft; 
* Design phase for new court facility; 
* Architectural and engineering design for the construction of new 
buildings for the Department of Health and Social Services; 
* Installation of new water sources; 
* Expansion of sewer capacity; 
* Upgrade of power-generation infrastructure; 
Amount: $170.0. 

Estimates: Multiyear estimates: Fiscal year 2010 estimates (example 
projects and programs under each estimate); Labor; 
Descriptions: 
* Increase in Guam Department of Labor staff to assist in alien-labor 
certification and workers compensation; 
* Increase in Guam Department of Administration staff to assist in 
training and development of worker training programs and to establish 
employment and training programs; 
* Increase in staff levels within the Guam Department of 
Administration; 
* Review of the classification and compensation of government of Guam 
employees; 
* Improvement in government of Guam human resources information 
systems; 
* Increase in staff at the Guam Board of Registration for Professional 
Engineers, Architects, and Land Surveyors; 
Amount: $29.0. 

Estimates: Multiyear estimates: Fiscal year 2010 estimates (example 
projects and programs under each estimate); Economic Development; 
Descriptions: 
* Establishment of revolving loan program to provide financial support 
to local and small businesses that will vie for military contracts; 
* Obtaining consultant services from University of Guam to prepare an 
economic plan to guide the civilian community as a result of rapid 
military growth; 
* Designing, testing, and implementation of an econometric model to 
identify income, output, and employment multipliers due to the buildup; 
* Access and infrastructure feasibility studies; 
* Financial advisory services; Increase in staff at Guam's Department 
of Revenue and Taxation; 
* Hiring of a consultant for the Chamorro Land Trust Commission; 
* Development of a financial management and general services plan; 
Amount: $12.0. 

Estimates: Multiyear estimates: Fiscal year 2010 estimates (example 
projects and programs under each estimate); Public Safety; 
Descriptions: 
* Recruiting, hiring, and training police officers as well as providing 
additional equipment and vehicles for new officers; 
* Impact study to address the effect of accelerated population growth 
on the Guam Police Department; 
* Purchase of emergency vehicles and hiring of additional customs 
enforcement officers for the Guam Customs and Quarantine Agency; 
* Increase in staff at the Attorney General of Guam's Prosecution and 
Family Divisions; 
* Increase in staff at the Guam Public Defender Service Corporation; 
* Increase staff at the Guam Department of Corrections; 
Amount: $9.0. 

Estimates: Multiyear estimates: Fiscal year 2010 estimates (example 
projects and programs under each estimate); Health and Social Services; 
Descriptions: 
* Increase in Guam Bureau of Communicable Disease Control staff to 
improve surveillance of potential disease rate increases, increase 
awareness of communicable diseases, and increase immunization outreach 
services; 
* Implementation of tuberculosis and sexually transmitted disease/HIV 
control programs; Expansion of community health centers through hiring 
of additional staff and purchase of medical equipment; 
* Increase in staff and supplies at Guam's Bureau of Family Health and 
Nursing Services; 
* Increase in staff and supplies at Guam's Bureau of Professional 
Support Services; Increase in staff and supplies at Guam's Bureau of 
Inspection and Enforcement; 
* Development of a master plan for Guam's Department of Mental Health 
and Substance Abuse; 
Amount: $5.0. 

Estimates: Multiyear estimates: Fiscal year 2010 estimates (example 
projects and programs under each estimate); Natural Resources; 
Descriptions: 
* Increase in staff in Guam's Coastal Management Program to provide an 
adequate review of the environmental impact statement when it is 
released by the U.S. Department of Defense; 
* Implementation of a watershed restoration program to reforest badly 
degraded areas in the southern part of Guam; 
* Increase in the number of agricultural quarantine inspectors to deal 
with the influx of military personnel and foreign workers; 
* Conducting a fiscal year 2010 needs assessment for the Guam Historic 
Preservation Office; 
* Development of an overall master plan in obtaining a complete survey 
of all farmers registered with the Guam Department of Agriculture; 
* Increase in staff for the Plant Nursery Program in the Guam 
Department of Agriculture; Increase in staff in the Guam Department of 
Agriculture's Division of Animal Health, Quarantine, and Control; 
Amount: $3.5. 

Estimates: Multiyear estimates: Fiscal year 2010 estimates (example 
projects and programs under each estimate); Education; 
Descriptions: 
* Increase in University of Guam personnel to expand its capacity to 
increase academic and support staff functions in areas identified as 
high priorities in producing more workforce personnel as well as 
maintaining additional facilities expansion; 
* Increase in institutional capacities in career and technical 
education and apprenticeship programs at Guam Community College; 
* Assessment of the needs of the Guam Public Library System to serve 
the increased population anticipated from the buildup; 
Amount: $3.0. 

Estimates: Multiyear estimates: Fiscal year 2010 estimates (example 
projects and programs under each estimate); Ports and Customs; 
Descriptions: 
* Purchase of additional X-ray machines and washdown facilities at 
ports of entry to Guam; 
* Increase in Port Authority of Guam staff[B]; 
Amount: $3.0. 

Estimates: Multiyear estimates: Fiscal year 2010 estimates (example 
projects and programs under each estimate); Environment; 
Descriptions: 
* Increase in Guam Environmental Protection Agency staff to issue 
permits for buildup projects and monitor such projects for compliance 
with both Guam and U.S. environmental regulations; 
Amount: $2.0. 

Estimates: Multiyear estimates: Fiscal year 2010 estimates (example 
projects and programs under each estimate); Housing; 
Descriptions: 
* Property retracement surveys to ensure that property boundaries are 
properly delineated and mapped; 
Amount: $0.8. 

Estimates: Multiyear estimates: Fiscal year 2010 estimates (example 
projects and programs under each estimate); Social and Cultural; 
Descriptions: 
* Master planning for the Guam Visitors Bureau, the Guam Council on 
Arts and Humanities, and the Department of Chamorro Affairs to plan out 
services and needs in connection with the military buildup; 
Amount: $0.2. 

Total fiscal year 2010 estimates; 
Amount: $237.5. 

Source: GAO analysis of government of Guam data. 

[A] Amounts rounded. 

[B] These items also included in the Infrastructure Subcommittee's 
estimates. 

[End of table] 

[End of section] 

Enclosure II: 

Comments from the Department of Defense: 

Office Of The Under Secretary Of Defense: 
Acquisition, Technology	And Logistics: 
3000 Defense Pentagon: 
Washington, DC 20301-3000: 

November 12, 2009: 

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

Dear Mr. Lepore: 

This is the Department of Defense (DoD) response to the GAO draft 
report, "Defense Infrastructure: Guam Needs Timely Information from DoD 
to Meet Challenges in Planning and Financing Off-Base Projects and 
Programs to Support a Larger Military Presence," dated October 5, 2009 
(GAO Code 351302/GAO-10-90R). Detailed comments on the report are 
enclosed. 

The Department appreciates the opportunity to comment on this draft 
report and concurs with the findings in the report regarding the 
challenges that both the Department and Guam face in developing cost 
estimates for necessary off-base projects and programs designed to deal 
with the impacts military build-up and realignment on Guam. 

The Department appreciates the work performed by the GAO in this regard 
and the opportunity to comment on the draft report. 

Sincerely, 

Signed by: 

Dorothy Robyn: 
Deputy Under Secretary of Defense (Installations and Environment): 

Enclosure: As stated: 

[End of letter] 

GAO Draft Report — Dated 05 October 2009: 
GAO Code 351302/GA0-10-90R: 

"Defense Infrastructure: Guam Needs Timely Information from DOD to Meet
Challenges in Planning and Financing Off-Base Projects and Programs to 
Support a Larger Military Presence" 

Department Of Defense Comments: 

DOD Comments: 

The report accurately characterizes the challenges that both DOD and 
Guam face in developing cost estimates for off-base projects and 
programs designed to deal with the impact of the military build-up and 
realignment on Guam. 

As the report points out, DOD is sharing information with Guam and its 
consultants as it becomes available. This will lead to refined cost 
estimates for necessary off-base projects and programs. Also, DOD is 
supporting several consultant studies that will likely allow for 
further refinement of these estimates. 

Additionally, DOD is working within its statutory authorities and in 
cooperation with Guam to fund road improvements and utilities system 
upgrades, such as $50 million in fiscal year 2010 for upgrades to 
roadways that arc expected to be heavily impacted by construction and 
military traffic. DoD is reviewing additional projects for funding, as 
well. 

We suggest the following substitutions to clarify the report: 

Page 11, last two sentences of the first paragraph: Similarly, the Port 
Authority of Guam (PAG) combined its funding with that provided by the 
Office of Economic Adjustment to hire a nationally recognized 
engineering firm to develop a port master plan update that incorporated 
DoD's cargo throughput requirements. The engineering firm estimated 
that port upgrades addressing the projected increases in population and 
ship traffic due to the buildup would cost approximately $195 million 
(CY 2008 dollars). 

Page 14, first new sentence of the paragraph carried over from the 
previous page: Though buildup plans are not yet finalized, DoD's Office 
of Economic Adjustment, which provides planning information and support 
to communities affected by DoD programs, has been providing technical 
and financial assistance to the Government of Guam based on the 
Government of Guam's incremental response strategy and information 
provided by the Joint Guam Program Office. 

Page 17, second paragraph: The Office of Economic Adjustment has been 
providing technical and financial assistance to the Government of Guam 
in preparation for the buildup since July 2006. At the time of our 
review, the Office of Economic Adjustment had provided the Government 
of Guam with approximately $7.6 million in grants that have been used 
to: provide logistical support to the Office of the Governor; develop a 
financial modeling tool for the Port Authority of Guam and a port 
financial feasibility study; undertake a variety of studies on the port 
expansion and solid waste management; and support the Government of 
Guam with international consulting services. Office of Economic 
Adjustment officials stated that the assistance provided to the 
Government of Guam is intended to enable the Territory to make informed 
decisions on how to respond to the buildup program. As part of the $2.5 
million grant provided by the Office of Economic Adjustment in 
September 2008, the Government of Guam hired an internationally 
recognized consulting team with expertise in planning, environmental, 
and fiscal/financial advisory services. The consulting team provides 
the Government of Guam with the expertise to develop response 
alternatives, evaluate the associated risks, and determine appropriate 
financing mechanisms. At the time of our review; the consulting team 
was developing a fiscal impact analysis using information from the 
Environmental Impact Statement. This analysis will include an estimate 
of the impact of the buildup on the Territory's cash flow, taking into 
account projected changes in expenses and tax revenues. 

[End of section] 

Enclosure III: 

GAO Contact and Staff Acknowledgments: 

GAO Contact: 

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

Acknowledgments: 

In addition to the contact named above, Harold Reich, Assistant 
Director; Grace Coleman; Amy Frazier; Kate Lenane; Josh Margraf; 
Richard Meeks; Richard Powelson; John Van Schaik; and Michael Willems 
made key contributions to this report. 

[End of section] 

Related GAO Products: 

Defense Infrastructure: DOD Needs to Provide Updated Labor Requirements 
to Help Guam Adequately Develop Its Labor Force for the Military 
Buildup. [hyperlink, http://www.gao.gov/products/GAO-10-72]. 
Washington, D.C.: October 14, 2009. 

Defense Infrastructure: Planning Challenges Could Increase Risks for 
DOD in Providing Utility Services When Needed to Support the Military 
Buildup on Guam. [hyperlink, http://www.gao.gov/products/GAO-09-653]. 
Washington, D.C.: June 30, 2009. 

High-Level Leadership Needed to Help Guam Address Challenges Caused by 
DOD-Related Growth. [hyperlink, 
http://www.gao.gov/products/GAO-09-500R]. Washington, D.C.: April 9, 
2009. 

Defense Infrastructure: Opportunity to Improve the Timeliness of Future 
Overseas Planning Reports and Factors Affecting the Master Planning 
Effort for the Military Buildup on Guam. [hyperlink, 
http://www.gao.gov/products/GAO-08-1005]. Washington, D.C.: September 
17, 2008. 

Defense Infrastructure: High-Level Leadership Needed to Help 
Communities Address Challenges Caused by DOD-Related Growth. 
[hyperlink, http://www.gao.gov/products/GAO-08-665]. Washington, D.C.: 
June 17, 2008. 

Defense Logistics: Navy Needs to Develop and Implement a Plan to Ensure 
That Voyage Repairs Are Available to Ships Operating near Guam when 
Needed. [hyperlink, http://www.gao.gov/products/GAO-08-427]. 
Washington, D.C.: May 12, 2008. 

Defense Infrastructure: Planning Efforts for the Proposed Military 
Buildup on Guam Are in Their Initial Stages, with Many Challenges Yet 
to Be Addressed. [hyperlink, http://www.gao.gov/products/GAO-08-722T]. 
Washington, D.C.: May 1, 2008. 

Defense Infrastructure: Challenges Increase Risks for Providing Timely 
Infrastructure Support for Army Installations Expecting Substantial 
Personnel Growth. [hyperlink, http://www.gao.gov/products/GAO-07-1007]. 
Washington, D.C.: September 13, 2007. 

Defense Infrastructure: Overseas Master Plans Are Improving, but DOD 
Needs to Provide Congress Additional Information about the Military 
Buildup on Guam. [hyperlink, http://www.gao.gov/products/GAO-07-1015]. 
Washington, D.C.: September 12, 2007. 

U.S. Insular Areas: Economic, Fiscal, and Financial Accountability 
Challenges. [hyperlink, http://www.gao.gov/products/GAO-07-119]. 
Washington, D.C.: December 12, 2006. 

DOD's Overseas Infrastructure Master Plans Continue to Evolve. 
[hyperlink, http://www.gao.gov/products/GAO-06-913R]. Washington, D.C.: 
August 22, 2006. 

Results-Oriented Government: Practices That Can Help Enhance and 
Sustain Collaboration among Federal Agencies. [hyperlink, 
http://www.gao.gov/products/GAO-06-15]. Washington, D.C.: October 21, 
2005. 

U.S. Insular Areas: Multiple Factors Affect Federal Health Care 
Funding. [hyperlink, http://www.gao.gov/products/GAO-06-75]. 
Washington, D.C.: October 14, 2005. 

Opportunities Exist to Improve Future Comprehensive Master Plans for 
Changing U.S. Defense Infrastructure Overseas. [hyperlink, 
http://www.gao.gov/products/GAO-05-680R]. Washington, D.C.: June 27, 
2005. 

Results-Oriented Government: GPRA Has Established a Solid Foundation 
for Achieving Greater Results. [hyperlink, 
http://www.gao.gov/products/GAO-04-38]. Washington, D.C.: March 10, 
2004. 

Environmental Cleanup: Better Communication Needed for Dealing with 
Formerly Used Defense Sites in Guam. [hyperlink, 
http://www.gao.gov/products/GAO-02-423]. Washington, D.C.: April 11, 
2002. 

Compact of Free Association: Negotiations Should Address Aid 
Effectiveness and Accountability and Migrants' Impact on U.S. Areas. 
[hyperlink, http://www.gao.gov/products/GAO-02-270T]. Washington, D.C.: 
December 6, 2001. 

Foreign Relations: Migration From Micronesian Nations Has Had 
Significant Impact on Guam, Hawaii, and the Commonwealth of the 
Northern Mariana Islands. [hyperlink, 
http://www.gao.gov/products/GAO-02-40]. Washington, D.C.: October 5, 
2001. 

Overseas Presence: Issues Involved in Reducing the Impact of the U.S. 
Military Presence on Okinawa. [hyperlink, 
http://www.gao.gov/products/GAO/NSIAD-98-66]. Washington, D.C.: March 
2, 1998. 

U.S. Insular Areas: Development Strategy and Better Coordination Among 
U.S. Agencies Are Needed. [hyperlink, 
http://www.gao.gov/products/GAO/NSIAD-94-62]. Washington, D.C.: 
February 7, 1994. 

[End of section] 

Footnotes: 

[1] GAO, Defense Infrastructure: Planning Challenges Could Increase 
Risks for DOD in Providing Utility Services When Needed to Support the 
Military Buildup on Guam, [hyperlink, 
http://www.gao.gov/products/GAO-09-653] (Washington, D.C.: June 30, 
2009). 

[2] GAO, Defense Infrastructure: Planning Efforts for the Proposed 
Military Buildup on Guam Are in Their Initial Stages, with Many 
Challenges Yet to Be Addressed, [hyperlink, 
http://www.gao.gov/products/GAO-08-722T] (Washington, D.C.: May 1, 
2008). 

[3] These subcommittees are (1) Health and Social Services, (2) Public 
Safety, (3) Education, (4) Labor, (5) Ports and Customs, (6) Economic 
Development, (7) Infrastructure, (8) Housing, (9) Social and Cultural, 
(10) Government Services, and (11) the Environment. 

[4] Statement of The Honorable Felix P. Camacho, Governor of Guam, 
before the U.S. Senate Committee on Energy and Natural Resources 
Concerning the United States Military Buildup on Guam: Impact on the 
Civilian Community, Planning, and Response (May 1, 2008). 

[5] We did not validate the underlying assumptions of the estimates. 

[6] GAO, Defense Infrastructure: High-Level Leadership Needed to Help 
Communities Address Challenges Caused by DOD-Related Growth, 
[hyperlink, http://www.gao.gov/products/GAO-08-665] (Washington, D.C.: 
June 17, 2008). 

[7] The Civilian-Military Task Force was established in April 2006 by 
Governor of Guam Executive Order 2006-10. 

[8] The primary purpose of an environmental impact statement is to 
serve as an action-forcing device to ensure that the policies and goals 
defined in the National Environmental Policy Act of 1969 are infused 
into the ongoing programs and actions of the federal government. 

[9] The National Environmental Policy Act of 1969, codified as amended 
at 42 U.S.C. § 4321-4347, establishes environmental policies and 
procedures that are to be followed by all federal agencies to the 
fullest extent possible. The act established the Council on 
Environmental Quality, which is responsible for, among other things, 
issuing guidelines and reviewing agencies' policies and procedures to 
ensure compliance with the act. Council on Environmental Quality 
regulations implementing the National Environmental Policy Act of 1969 
appear at 40 C.F.R. Part 1500. In accordance with National 
Environmental Policy Act of 1969 requirements and Council on 
Environmental Quality regulations, federal agencies typically evaluate 
the likely environmental effects of projects they are proposing to 
undertake using an environmental assessment or, if a project 
constitutes a major federal action significantly affecting the quality 
of the human environment, a more detailed environmental impact 
statement. 

[10] DOD Directive 5410.12, Economic Adjustment Assistance to Defense- 
Impacted Communities, July 5, 2006. 

[11] GAO, High-Level Leadership Needed to Help Guam Address Challenges 
Caused by DOD-Related Growth, [hyperlink, 
http://www.gao.gov/products/GAO-09-500R] (Washington, D.C.: Apr. 9, 
2009). 

[12] Exec. Order No. 12049, 43 Fed. Reg. 13363 (Mar. 27, 1978), as 
superseded by Exec. Order No. 12788, 57 Fed. Reg. 2213 (Jan. 21, 1992), 
as amended. 

[13] We have reported in the past that cost estimates will need to be 
continually updated as actual costs begin to replace the original 
estimates. GAO, GAO Cost Estimating and Assessment Guide: Best 
Practices for Developing and Managing Capital Program Costs, 
[hyperlink, http://www.gao.gov/products/GAO-09-3SP] (Washington, D.C. 
March 2009). 

[14] As the government of Guam has continued to revise its estimate for 
larger, multiyear projects, the total is currently about $2.9 billion. 
See enclosure I for more details about the projects. 

[15] [hyperlink, http://www.gao.gov/products/GAO-09-653]. 

[16] [hyperlink, http://www.gao.gov/products/GAO-08-722T]. 

[17] 48 U.S.C. § 1423a. Most U.S. states and local municipalities have 
similar constitutional or statutory limitations on borrowing. Debt 
limitation provisions "serve as a limit to taxation and as a protection 
to taxpayers; to maintain … solvency, both governmental and 
proprietary; and to keep [local] … residents from abusing their credit, 
and to protect them from oppressive taxation." In Re Request of 
Camacho, 2003 Guam 16, 2003 WL 21697180 at 3 (Guam July 23, 2003), 
quoting McQuillin (3RD ed., § 41.02); reversed on other grounds in 
Limtiaco v. Camacho, 549 U.S. 483 (2007). 

[18] Courts have interpreted "debt" to include a wide variety of 
financial arrangements. For example, the Guam Supreme Court held that 
bonds issued by the Guam Telephone Authority should be included in the 
debt ceiling, because the government of Guam was committed to pay to 
the authority any deficiencies in the bond reserve fund from general 
tax revenues. Guam Telephone Authority v. Rivera, 416 F.Supp. 283 
(1976). 

[19] Office of the Public Auditor, Annual Report Calendar Year 2008 
(Hagåtña, Guam, May 22, 2009). The general fund is the government of 
Guam's primary operating fund. 

[20] Deloitte and Touche, Government of Guam General Fund Financial 
Statements and Independent Auditors Report Year Ended September 30, 
2008 (Tamuning, Guam, May 11, 2009). 

[21] [hyperlink, http://www.gao.gov/products/GAO-08-665]. 

[22] See 26 U.S.C. § 7654 and 48 U.S.C. § 1421h. 

[23] The initial overall cost estimate for the government of Guam's 
multiyear projects and programs was $6.1 billion, as indicated in 
Governor Camacho's May 1, 2008, hearing statement. This initial 
estimate was reduced to $3.2 billion because of subsequent revisions in 
the estimate for roadway improvements. As the government of Guam has 
continued to revise its estimate for larger, multiyear projects, the 
total is currently about $2.9 billion. 

[24] Government of Guam, Civilian-Military Task Force FY2010 Budget 
Request (Hagåtña, Guam, July 16, 2008). 

[End of section] 

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