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GAO-11-459R: 

United States Government Accountability Office: 
Washington, DC 20548: 

June 27, 2011: 

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

Subject: Military Buildup on Guam: Costs and Challenges in Meeting 
Construction Timelines: 

In 2004, the bilateral U.S. and Japanese Security Consultative 
Committee began a series of sustained security consultations to 
strengthen the U.S.-Japan security alliance by establishing a 
framework for the future of the U.S. force structure in Japan. The 
United States and Japan agreed to reduce the U.S. force structure in 
Japan while maintaining the U.S. force presence in the Pacific theater 
by relocating units to other areas, including Guam. As part of this 
effort, called the Defense Policy Review Initiative, about 8,600 
Marines and 9,000 dependents were to move from Okinawa, Japan, to Guam 
by a projected date of 2014, as described in the bilateral agreement. 
[Footnote 1] On June 21, 2011, however, United States and Government 
of Japan officials noted that completion of the Marine relocation will 
not meet the previously targeted date of 2014, but confirmed their 
commitment to complete the relocation at the earliest possible date 
after 2014.[Footnote 2] The Department of Defense (DOD) also plans to 
move other military forces and equipment to Guam on different 
schedules in implementing a new strategic approach in the Pacific as 
part of its worldwide Integrated Global Presence and Basing Strategy. 
These latter initiatives involve each of the military services and the 
Army National Guard working concurrently to complete infrastructure 
projects to support Guam-based U.S. forces and their dependents. If 
the initiatives are implemented as planned, the Guam-based DOD 
population would grow from about 15,000 in 2007 to about 39,000 by 
2020. As you requested, we evaluated issues surrounding DOD's military 
buildup on Guam. Specifically, we (1) examined the estimated military 
construction costs for the buildup and determined whether bid savings 
[Footnote 3] existed for military construction projects in fiscal 
years 2009 and 2010, and (2) assessed certain challenges that DOD 
faces related to the buildup. 

To examine the estimated military construction costs for the buildup, 
we interviewed and collected data from officials in the Office of the 
Under Secretary of Defense (Comptroller), the Office of the Under 
Secretary of Defense (Acquisition, Technology and Logistics), the 
Director of the Office of the Secretary of Defense Cost Assessment and 
Program Evaluation, the Joint Guam Program Office, and the Departments 
of the Army, Navy, and Air Force. To determine whether military 
construction bid savings existed for military buildup projects in 
fiscal years 2009 and 2010, we subtracted the services' planned 
obligations from the amounts appropriated or otherwise designated for 
a project for all 13 projects awarded during that time frame. We 
corroborated the calculations with cognizant military service 
officials. We also reviewed the statutory authorizations to transfer 
or reprogram bid savings[Footnote 4] to other projects. Through 
document reviews and interviews with agency officials knowledgeable 
about the services' cost, obligation, and appropriation data, the 
systems that produced them, and the internal controls used to maintain 
the integrity of the data, we determined that the data were 
sufficiently reliable for our purposes. To assess the challenges 
related to the buildup, we reviewed the United States and Japan 
bilateral agreement on the Marine Corps force relocation from Okinawa 
to Guam; drafts of the Navy's Guam Joint Military Master Plan; the 
2001, 2006, and 2010 Quadrennial Defense Review reports; the 
Interagency Coordination Group of Inspectors General for Guam
Realignment annual reports for 2009 and 2010; and final environmental 
impact statements for Navy and Air Force projects and accompanying 
records of decision. Additionally, we reviewed our prior reports that 
described some challenges of implementing the military buildup on Guam 
(see the Related GAO Reports list at the end of this report). We 
interviewed officials from the offices of the Under Secretary of 
Defense (Policy); the Under Secretary of Defense (Comptroller); the 
Under Secretary of Defense (Acquisition, Technology and Logistics); 
the Deputy Under Secretary of Defense (Installations and Environment); 
the Joint Staff; Army, Navy, Air Force, and Marine Corps headquarters, 
command, and installation staff; the Navy's Joint Guam Program Office; 
and Joint Region Marianas. We met with officials at U.S. Pacific 
Command and its service components and Guam-based DOD officials 
planning the buildup. We discussed funding and planning challenges for 
off-installation road and other projects with officials from the U.S. 
Department of the Interior's Office of Insular Affairs and DOD's 
Office of Economic Adjustment. 

We conducted this performance audit from May 2010 through June 2011 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 military buildup on Guam is likely to cost about $7.5 billion in 
military construction funding from fiscal years 2009 through 2016, 
according to the latest estimates by DOD. However, DOD has yet to 
fully identify some costs associated with the buildup. For example, 
DOD has not developed cost estimates for the air and missile defense 
task force that may be placed on Guam. In addition, construction for 
future facilities for the Air Force Guam Strike initiative is expected 
to occur over a 16-year period, which extends beyond the current costs 
that the Air Force has estimated through fiscal year 2015. Moreover, 
DOD's total costs will be higher once life-cycle costs are included in 
these estimates. In addition, the Government of Japan is expected to 
provide up to an additional $6.09 billion in funding for 
infrastructure and facilities to support the Marine Corps relocation, 
which includes directly funding up to $2.8 billion in military 
construction projects on Guam, including utilities and site 
improvements for future facilities. Japan is also expected to fund up 
to $3.29 billion in special purpose entity loans and equity 
investments for installation support infrastructure for utilities and 
for military family housing, and, according to DOD officials, Japan is 
expected to recoup most of these funds over time in the form of 
repayments from the U.S. government and rents paid by Marine Corps 
servicemembers through their housing allowances. The Government of 
Guam is largely responsible for obtaining funding for needed off-
installation infrastructure projects, such as off-base roads and 
utilities, and it estimated that it needs approximately $3.2 billion 
for buildup-related projects and programs. In addition, we found that 
DOD, the Government of Japan, and the Government of Guam total cost 
estimates for the Guam-based military buildup are almost $23.9 billion 
to date, including the $3.29 billion that Japan is expected to recoup 
over time. We also found that DOD had bid savings of about $93 million 
for 11 of the 13 military construction projects for which it had 
awarded contracts in fiscal years 2009 and 2010 to support the Guam 
buildup. In these cases, the winning contract bids were lower than the 
amounts that Congress had appropriated or the amount that was 
otherwise designated for the project. However, bid savings may often 
be used to offset cost overruns on other projects or future 
requirements for a specific military construction project or for other 
projects around the world without further congressional authorization. 
In the cases we examined, most of the bid savings were applied to 
offset the impact of rescissions of military construction 
appropriations or had been transferred or reprogrammed to other 
projects as of the time of our report. 

DOD continues to update but has not yet finalized its Guam Joint 
Military Master Plan (master plan) for the military buildup on Guam 
and faces certain unresolved challenges which may delay some 
construction projects, although it has taken some steps to address 
many of these challenges. The congressional defense committees have 
been requesting a master plan for Guam since 2006. Delays in 
finalizing the master plan may lead DOD to make budget requests for 
military construction projects for the relocation of the Marines from 
Okinawa, Japan, to Guam without reasonable assurances that the funds 
are needed in the time frame in which they are being requested. 
Moreover, certain challenges could delay some construction projects, 
making it increasingly difficult to meet the planned deadlines for the 
different components of the buildup. These challenges include the 
Navy's deferral of decisions on (1) selection of a site for the live-
fire training range complex on Guam to support needed Marine Corps 
training, (2) selection of a site for the transient aircraft carrier 
berth within Apra Harbor, and (3) the potential deployment of an air 
and missile defense task force on Guam and the construction of 
associated infrastructure to support the task force. Other challenges 
include unresolved decisions with the governments of Japan or Guam, 
such as determining when Japan will begin making "tangible progress" 
toward constructing a new airbase in Okinawa, which is part of the 
bilateral agreement between the United States and Japan to move the 
Marine Corps forces to Guam; finalizing the terms and conditions for 
the use of special purpose entities for housing and utilities; and 
defining the role of a new interagency advisory group, all of which 
could delay some projects supporting the buildup. DOD has taken steps 
to address many of the challenges associated with the military buildup 
on Guam, although many issues remain unresolved. In addition to its 
ongoing coordination with the governments of Japan and Guam and other 
federal agencies, DOD is also making progress in incorporating new 
information into its draft master plan, promoting interagency 
coordination among federal agencies, and identifying off-base 
infrastructure improvements and socioeconomic needs to help the 
Government of Guam prepare for the military buildup. 

We are not making any recommendations in this correspondence. After 
reviewing a draft of this product, DOD officials said the department 
would not provide a formal response. However, DOD provided technical 
comments that have been incorporated as appropriate in this 
correspondence. 

Background: 

The Defense Policy Review Initiative and relevant Integrated Global 
Presence and Basing Strategy elements together account for five major 
components that, if fully implemented, will result in an increase in 
the DOD population on Guam from about 15,000 personnel in 2007 to 
about 39,000 by 2020. Figure 1 displays the five components.  
  
Figure 1: Five Components of the Military Buildup on Guam: 

[Refer to PDF for image: illustration] 

Army National Guard response to the Army's "Grow the Force" initiative; 

Air Force Guam Strike and regional training center; 

Marine Corps relocation from Okinawa; 

Proposed air and missile defense task force; 

Navy transient nuclear carrier berth. 

Source: GAO analysis of DOD data as of April 2011. 

[End of figure] 

Marine Corps' Relocation from Okinawa to Guam Is the Largest Component 
of the Buildup: 

The largest component of the buildup is the planned relocation of 
elements of the Marine Corps' III Marine Expeditionary Force from 
Okinawa to Guam. If implemented as planned, about 8,600 Marines and 
their estimated 9,000 dependents will move from Okinawa to Guam under 
the Defense Policy Review Initiative agreement between the United 
States and Japan.[Footnote 5] The relocation requires significant 
facilities and infrastructure construction to support the forces and 
their families, including needed training and operations facilities on 
Guam or in the Commonwealth of the Northern Mariana Islands. Moreover, 
in a subsequent bilateral agreement signed by the U.S. Secretary of 
State and Japanese Minister of Foreign Affairs in February 2009, the 
United States and Japan agreed that the III Marine Expeditionary Force 
relocation to Guam is dependent on "tangible progress" by Japan toward 
the completion of a replacement for Marine Corps Air Station Futenma 
on Okinawa, which is to close and be replaced by a new base commonly 
referred to as the "Futenma Replacement Facility." The replacement 
facility is planned to be built in a less densely populated area in 
northern Okinawa and will provide a home base for aviation elements of 
the BI Marine Expeditionary Force that will remain on Okinawa. If 
implemented as planned, this initiative will relocate a Marine 
Aviation Group, Logistics Squadron, and several helicopter squadrons 
to the Futenma Replacement Facility by the projected date of 2014. The 
Futenma Replacement Facility is planned to be constructed in a 
location that will require substantial landfill, including portions 
that are currently under water, thus requiring significant land 
reclamation. While it is difficult to determine at this time what, if 
any, impact the March 11, 2011, earthquake, tsunami, and associated 
nuclear reactor incident will have on current agreements and 
initiative construction plans, DOD officials have said that there is 
potential for increases in the cost of materials and labor in Asia. 
Furthermore, on June 21, 2011, United States and Government of Japan 
officials noted that completion of the Futenma Replacement Facility 
and the Marine relocation will not meet the previously targeted date 
of 2014, but confirmed their commitment to complete the above projects 
at the earliest possible date after 2014. 

DOD's Integrated Global Presence and Basing Strategy and Force 
Structure Increase Are to Add New Forces to Guam: 

The other four major components of the Guam buildup result from 
elements of DOD's global basing strategy, prior Quadrennial Defense 
Reviews, and the Army's "Grow the Force" initiative:[Footnote 6] 

* Two Air Force initiatives comprise the second largest component of 
the Guam buildup. These include (1) developing a global hub, known as 
"Guam Strike," for intelligence, surveillance, reconnaissance, strike, 
and aerial refueling capabilities at Andersen Air Force Base; and (2) 
relocating Pacific Air Force's expeditionary training centers from the 
Korean peninsula to Guam. Guam Strike is intended as a multifaceted 
strike force able to respond quickly when needed. Air Force officials 
told us that military construction has begun for Guam Strike and will 
continue through at least fiscal year 2022. The Pacific Air Force 
Regional Training Center was established to support the movement of 
Air Force personnel from the Korean Peninsula to Andersen Air Force 
Base to support the U.S. Global Defense Posture Review and the United 
States Forces Korea-Republic of Korea Security Policy Initiative 
agreement to reduce the number of troops on the Korean Peninsula by 
12,500. Air Force officials told us that military construction has 
begun for the training center and will be completed in fiscal year 
2016. 

* The third component of the Guam-based buildup is the Navy's plan to 
enhance facilities, infrastructure, and logistic capabilities at Naval 
Base Guam to accommodate the berthing of transient nuclear aircraft 
carriers and their support vessels. This component supports DOD's 
redefinition of the U.S. defense posture in the Pacific, which calls 
for increasing the availability of aircraft carrier strike groups in 
the region. 

* The fourth military buildup component is the Army National Guard's 
plan to build additional facilities at an existing installation, Navy 
Barrigada, to accommodate the Guard's increase in personnel. This 
increase is part of the Army National Guard's contribution to the 
Army's "Grow the Force" initiative, with the growth on Guam 
anticipated to total about 1,300 staff and family members by fiscal 
year 2012. 

* The fifth component is the potential stationing of an air and 
missile defense task force on Guam. However, a decision to proceed is 
pending the results of ongoing regional and global ballistic missile 
defense architectural and capability studies to determine whether the 
task force could be placed on Guam to protect its citizens and U.S. 
and allied forces from ballistic missile attacks and, if so, which 
service would perform the mission.[Footnote 7] 

DOD has developed estimated timelines for each component of the 
military buildup. Figure 2 displays the major milestones and planned 
completion dates for each component.   
   
Figure 2: DOD-Estimated Timelines for Each Component of the Military 
Buildup on Guam: 

[Refer to PDF for image: 5 timelines] 

Marine Corps: Relocation from Okinawa: 

2002: Defense Policy Review Initiative begins. 

October 2005: U.S. and Japan review roles and responsibilities. 

May 2006: Roadmap signed. 

February 2009: Guam relocation agreement. 

May 2010: U.S. and Japan reaffirm agreement. 

July 2010: Final Environmental Impact Statement (originally expected 
in January 2010). 

September 2010: 
* Record of Decision; 
* First construction contract awarded. 

FY 2014: Estimated completion.   

Air Force: Guam Strike and Regional Training Center Initiatives:  

September 2001: 2001 Quadrennial Defense Review. 

June 2006: Finding of No Significant Impact, Beddown of Training and 
Support Initiatives at Northwest Field. 

November 2006: Final Environmental Impact Statement (Guam Strike). 

January 2007: Record of Decision (Guam Strike). 

FY 2016: Northwest Field facility construction projects completed. 

FY 2022: Estimated completion (Guam Strike).    

Navy: Transient Carrier Berth:  

September 2001: 2001 Quadrennial Defense Review. 

March 2009: Initial DD Form 1391 submitted[A]. 

July 2010: Final Environmental Impact Statement (originally expected 
in January 2010). 

September 2010: Record of Decision (originally expected in January 
2010). 

November 2011: Additional environmental studies to be completed. 

September 2014: Estimated completion. 
  
Army National Guard: "Grow the Force" Initiative: 

January 2007: Grow the Force initiative announced. 

July 2012: Groundbreaking for first project. 

FY 2012: Growth completion anticipated. 

Air & Missile Defense Task Force: 

December 2002: National Security Presidential Directive-23 issued.  

July 2010: Final Environmental Impact Statement (originally expected 
in January 2010). 

September 2010: Record of Decision (originally expected in January 
2010). 

March 2011: Ballistic missile defense study completed. 

FY 2014: Army air and missile defense task force to establish 
operational capability. 
   
Source: GAO analysis of DOD data. 

[A] DOD Financial Management Regulation 7000.14-R, Volume 2B, Chapter 
6 designates that a DD Form 1391, Military Construction Project Data, 
is used by DOD to submit requirements and justifications in support of 
funding requests to Congress for military construction projects.    

[End of figure] 

Facility and infrastructure projects supporting the five components 
will be located throughout Guam, as shown in figure 3. 

Figure 3: Current and Proposed Locations of DOD Facility and 
Infrastructure Projects for the Five Components of the Military 
Buildup on Guam: 

[Refer to PDF for image: illustrated map of Guam] 

Depicted on the map: 

Naval Base Guam; 
Proposed transient aircraft carrier berth; 
New Naval hospital; 
South Finegayan (Marine Corps housing); 
Former FAA parcel (for Marine Corps main cantonment); 
Marine Corps main cantonment; 
Potential air and missile defense task force; 
Northwest Field, Andersen Air Force Base (regional training center); 
Marine Marine aviation; 
Andersen Air Force Base; 
Guam Strike capability; 
Naval Computer and Telecommunications Station Finegayan; 
Proposed Marine Corps live-fire training range complex; 
Andersen South (nonfire training); 
Navy Barrigada; 
Air Force Barrigada; 
Ordnance Annex. 
    
Source. GAO analysis of DOD data; Map Resources (map). 

Notes: Dotted lines show the proposed location of the live-fire 
training range complex and the preferred alternative for Marine    
Corps main cantonment. The Navy is building a new hospital at the same 
location as the existing one and construction has begun.  

[End of figure] 

Estimated Military Construction Costs and Bid Savings to Date: 

Near-Term Military Construction Costs Have Been Estimated, but Not All 
Buildup Costs Have Been Identified: 

In the near-term, during fiscal years 2009 through 2016, the military 
buildup on Guam is likely to cost about $7.5 billion for military 
construction, according to the latest estimates by DOD. This estimate 
does not include up to $3.29 billion that is expected to be recouped 
by Japan from its contribution to the buildup. Moreover, DOD has yet 
to fully identify some costs for the Guam-based military buildup. For 
example, DOD has not yet developed cost estimates for the air and 
missile defense task force that may be placed on Guam. Table 1 
displays those military construction costs and time frames for 
incurring costs which DOD had estimated through fiscal year 2016, as 
of the time of our report. In addition to the estimated military 
construction costs for the five components, we also include cost 
estimates for an additional training range in the Northern Mariana 
Islands and the Defense Access Roads program, which will fund off-
installation intersection, bridge, and roadway improvements.[Footnote 
8] 

Table 1: Estimated DOD Military Construction Costs for the Facilities 
and Infrastructure, Including the Defense Access Roads Program, Needed 
to Support Each Component of the Buildup (by Estimated Time Frame): 

Components and Defense Access Roads program: Marine Corps Relocation 
from Okinawa (Defense Policy Review Initiative); 
Cost estimates: $4.2[A] billion; 
Estimated time frame to incur costs (fiscal years): 2010-2014. 

Components and Defense Access Roads program: Training Range in the 
Commonwealth of the Northern Mariana Islands; 
Cost estimates: $1.9[B] billion; 
Estimated time frame to incur costs (fiscal years): 2012-2015. 

Components and Defense Access Roads program: Air Force Guam Strike and 
Pacific Air Force Regional Training Center; 
Cost estimates: $847 million; 
Estimated time frame to incur costs (fiscal years): 2009-2015. 

Components and Defense Access Roads program: Navy Transient Nuclear 
Aircraft Carrier Berth; 
Cost estimates: $291 million; 
Estimated time frame to incur costs (fiscal years): 2011-2016. 

Components and Defense Access Roads program: Army National Guard 
Response to the Army's "Grow the Force" initiative; 
Cost estimates: $57 million; 
Estimated time frame to incur costs (fiscal years): 2010-2014. 

Components and Defense Access Roads program: Proposed Air and Missile 
Defense Task Force; 
Cost estimates: To be determined 
Estimated time frame to incur costs (fiscal years): To be determined. 

Components and Defense Access Roads program: Defense Access Roads 
Program; 
Cost estimates: $191 million; 
Estimated time frame to incur costs (fiscal years): 2010-2014. 

Components and Defense Access Roads program: Total; 
Cost estimates: $7.486 billion.  

Source: GAO summary of DOD data. Comprehensive Cost  

[A] This entry represents military construction cost estimates. In our 
report, Defense Management: Comprehensive Cost Information and 
Analysis of Alternatives Needed to Assess Military Posture in Asia, 
GAO-11-316 (Washington, D.C.: May 25, 2011), we stated that U.S. cost 
estimates for the Marine Corps relocation from Okinawa to Guam were 
about $11.3 billion, which includes an additional $7.1 billion that 
the Marine Corps estimated may include the costs to outfit, furnish, 
and maintain buildings constructed by Japan and to move personnel and 
equipment into consolidated locations. 

[B] According to the Navy’s final environmental impact statement, Guam 
cannot accommodate all training for the realigned Marine Corps forces; 
therefore, DOD has identified locations in the Northern Mariana 
Islands that could provide additional land for training. Marine Corps 
officials have estimated that building this additional training range 
could cost approximately $1.9 billion or more, of which $1 billion 
would cover costs such as military construction, planning and 
development, environmental compliance, and combat arms training ranges 
from fiscal years 2012 through 2015. According to the Marine Corps 
officials, the remaining cost for full development of the training 
capabilities and capacity in the Northern Mariana Islands was at least 
$900 million over an unspecified period of time. 

[End of table] 

Service officials acknowledged that, as of March 2011, these for the 
military construction or infrastructure projects during frames. They 
expect to incur additional military construction components beyond the 
time frames shown in the table. for Air Force Guam Strike is expected 
to occur over a 16-year there will be additional military construction 
costs beyond estimates shown above. As we have recently reported, the 
estimated that an additional $7.1 billion may be required move from 
Okinawa to Guam—-$4.7 billion for additional billion for costs 
associated with utilities, labor, and procurement equipment.[Footnote 
9] In addition, congressional committees have requested that DOD 
provide Congress a plan detailing the total cost estimate for each 
facility and infrastructure item required to complete the Marines' 
relocation to Guam. Moreover, since the cost estimates for all of the 
components of the buildup do not include life-cycle costs, total costs 
will be higher over the life of the DOD facilities.[Footnote 10] 

The Government of Japan is expected to provide up to $6.09 billion in 
funding for infrastructure and facilities to support the Marine Corps 
relocation. Of this amount, the bilateral agreement states that Japan 
agreed to directly fund up to $2.8 billion in military construction 
projects on Guam to develop infrastructure and facilities for the 
relocation, including utilities and site improvements for future 
facilities, barracks, and health clinics. Japan is also expected to 
fund up to $3.29 billion in special purpose entity loans and equity 
investments for installation support infrastructure for on-base water 
wells and storage; off-installation power, wastewater, and water 
systems improvements; and military family housing. According to DOD 
officials, most of this $3.29 billion is expected to be recouped by 
Japan over time in the form of service charges paid by the United 
States and in rents paid by Marine Corps servicemembers using their 
DOD provided overseas housing allowance. DOD officials said that 
special purpose entities would most likely be limited liability 
companies or partnerships formed for the specific purpose of providing 
a particular utility service or other services on Guam.[Footnote 11] 

The Government of Guam would be largely responsible to obtain funding 
for needed off-installation infrastructure projects. These projects 
include road, water and sewer, electric power, and potentially other 
infrastructure improvements. DOD and some non-DOD agencies could 
augment the Government of Guam's revenue sources to fund such projects 
by contributing additional funds through existing intergovernmental 
grant processes that could add to federal government costs. DOD's
Office of Economic Adjustment has provided technical and financial 
assistance to the Government of Guam in preparation for the buildup 
since July 2006. We previously reported in November 2009, that the 
Government of Guam estimated that it needs approximately $3.2 billion 
for buildup-related projects and programs.[Footnote 12] 

In table 2, we summarize the DOD, the Government of Japan, and the 
Government of Guam cost estimates for the Guam-based military buildup 
that so far total almost $23.9 billion, including the $3.29 billion 
that Japan is expected to recoup over time. In May 2011, we reported 
total cost estimates of $19.3 billion for the initiatives in Guam and 
the Northern Mariana Islands that are associated with one of the five 
components of the military buildup on Guam—-the Marine Corps 
relocation from Okinawa.[Footnote 13] In the table below, we also 
include the military construction costs of about $7.5 billion that 
have been identified to date for three of the components of the 
buildup (for the Air Force, Navy, and Army National Guard), the 
training range in the Northern Mariana Islands, and the Defense Access 
Roads program. (As noted earlier, DOD has not yet developed cost 
estimates for the fifth component of the Guam-based military  to
buildup—the air and missile defense task force that may be placed on 
Guam.) The table below also identifies the additional Marine Corps 
requirements of $7.1 billion complete the move to Guam, Government of 
Japan funding of up to $6.1 billion for infrastructure and facilities 
projects to support the Marine Corps relocation, and cost estimates of 
$3.2 billion for the Government of Guam. 

Table 2: DOD, Government of Japan, and Government of Guam: 

DOD, Government of Japan, and Government of Guam: DOD-—Military 
Construction Projects (total from table 1) 
Cost estimates: $7.486 billion. 

DOD, Government of Japan, and Government of Guam: DOD—-Additional 
Marine Corps Requirements[A];  
Cost estimates: $7.100 billion. 

DOD, Government of Japan, and Government of Guam: Government of Japan-—
Direct funding 
Cost estimates: $2.800 billion. 

DOD, Government of Japan, and Government of Guam: Government of Japan—-
loans and equity investments 
Cost estimates: $3.290 billion. 

DOD, Government of Japan, and Government of Guam: Government of Guam 
or non-DOD federal agency grants-in-aid[B]; 
Cost estimates: $3.179 billion. 

DOD, Government of Japan, and Government of Guam: Total; 
Cost estimates: $23.855 billion. 

Source: GAO summary of DOD data. 

[A] The Marine Corps has estimated these additional costs to complete 
the relocation of Marines from Okinawa to Guam; however, they have not 
been validated by DOD. 

[B] The Government of Guam figures represent estimated funding 
required as of September 2009, the latest available. We reported these 
figures in GAO-10-90R, November 13, 2009. 

[End of table] 

Bid Savings Identified for 11 of 13 Military Construction Contracts: 

In our analysis of the 13 military construction projects for which DOD 
had awarded contracts in fiscal years 2009 and 2010 to support the 
Guam buildup, we identified about $93 million in bid savings—-
differences between the appropriated or otherwise designated amounts 
and the obligated amounts-—for 11 of the projects. Specifically, the 
winning contract bid was lower than the amount that Congress had 
appropriated or had otherwise been designated for the project in all 
but two cases. However, Congress has provided DOD authority, subject 
to limitations, to transfer and reprogram funds among military 
construction projects.[Footnote 14] Thus, bid savings may be used to 
offset cost overruns or future requirements for a specific military 
construction project or for other projects around the world. As a 
result, as of the time of our report, DOD and military service 
officials had already applied most of these bid savings to certain 
congressional rescissions of military construction appropriations    
or had reprogrammed leftover funds to other uses, as shown in table 3. 

Table 3: GAO's Assessment of Bid Savings for 13 Military Construction 
Projects (Fiscal Years 2009 and 2010): 
    
Project: Air Force Combat Community Maintenance Facility; 
Appropriated or designated amount: $5,200,000; 
Obligated amount: $4,346,364; 
Difference: $853,636; 
Use identified for savings: Use identified for savings: $698,000 for 
Eielson Air Force Base repair project, leaving $155,636 not 
reprogrammed. 

Project: Realign Arc Light Boulevard; 
Appropriated or designated amount: $5,400,000; 
Obligated amount: $6,287,404; 
Difference: ($887,404); 
No savings; winning bid was higher than appropriated or designated    
amount. 

Project: Naval Base Guam Wastewater Upgrade; 
Appropriated or designated amount: $26,070,000; 
Obligated amount: $15,492,000; 
Difference: $10,578,000; 
Use identified for savings: Navy applied to $51,468,000 rescission in 
Pub. L. No. 111-117 (2009). 

Project: Central Utility Plant, Naval Hospital; 
Appropriated or designated amount: $30,000,000; 
Obligated amount: $15,574,134; 
Difference: $14,425,866; 
Use identified for savings: Applied to $93,268,000 rescission in Pub. 
L. No. 111-117 (2009). 

Project: F-22 Electrical Support; 
Appropriated or designated amount: $1,800,000; 
Obligated amount: $1,737,055; 
Difference: $62,945; 
Use identified for savings: Unspecified minor construction project; 
savings not applicable. 

Project: Commando Warrior Operations Facility; 
Appropriated or designated amount: $4,200,000; 
Obligated amount: $3,931,699; 
Difference: $268,301; 
Use identified for savings: Air Force applied to $64,091,000 
rescission in Pub. L. No. 111-117 (2009). 

Project: Northwest Field; 
Appropriated or designated amount: $4,752,000; 
Obligated amount: $4,337,661; 
Difference: $414,339; 
Air Force applied to $64,091,000 Perimeter Fence and Road    
rescission in Pub. L. No. 111-117 (2009). 

Project: Army National Guard Readiness Center; 
Appropriated or designated amount: $30,000,000; 
Obligated amount: $20,500,000; 
Difference: $9,500,000; 
Use identified for savings: Army identified this amount will be 
applied to offset one or more rescissions, but could not immediately 
identify which rescissions it would be applied to. 

Project: Strike Forward Operating Location Electrical Infrastructure; 
Appropriated or designated amount: $33,750,000; 
Obligated amount: $29,807,430; 
Difference: $3,942,570;
Use identified for savings: Air Force applied to $64,091,000 
rescission in Pub. L. No. 111-117 (2009). 

Project: Combat Support Vehicle Maintenance Facility; 
Appropriated or designated amount: $15,500,000; 
Obligated amount: $14,496,360; 
Difference: $1,003,640; 
Use identified for savings: Air Force applied $578,000 to cost overrun 
on postal facility, and $426,000 to $64,091,000 rescission in Pub. L. 
No. 111-117 (2009). 

Project: Military Working Dog Relocation; 
Appropriated or designated amount: $14,000,000; 
Obligated amount: $12,504,656; 
Difference: $1,495,344; 
Use identified for savings: Naval Facilities Engineering Command 
Project Manager explained that obligated amount increased to about 
$12.5 million with $1,495,344 use not identified. 

Project: New Naval Hospital; 
Appropriated or designated amount: $259,156,000; 
Obligated amount: $208,000,000; 
Difference: $51,156,000; 
Use identified for savings: Applied to $125,500,000 rescission in Pub. 
L. No. 112-10 (2011). 

Project: Apra Harbor Wharf Improvements; 
Appropriated or designated amount: $127,033,000; 
Obligated amount: $127,033,000; 
Difference: $0; 
Use identified for savings: No savings realized. 

Project: Total; 
Appropriated or designated amount: $556,861,000; 
Obligated amount: $464,047,763; 
Difference: $92,813,237.  

Source: GAO analysis of DOD or military service data. 

[End of table] 

DOD attributes the savings to favorable construction market 
conditions, which may not persist over the course of the buildup 
period. 

DOD Has Not Finalized Its Master Plan and Faces Certain Unresolved
Challenges That May Delay Some Construction Projects: 

DOD is updating its Guam Joint Military Master Plan but has not 
finalized it. The congressional defense committees have been 
requesting a master plan for Guam since 2006. Delays in finalizing the 
plan may lead DOD to seek budget requests for military construction 
projects for the relocation of the Marines from Okinawa, Japan, to 
Guam without reasonable assurances that the funds are needed in the 
time frame in which they are being requested. Moreover, certain 
challenges could delay some construction projects, making it 
increasingly difficult to meet the components' planned deadlines. 

DOD Continues to Update but Has Not Finalized Its Master Plan: 

As of May 2011, DOD had not finalized its draft Guam Joint Military 
Master Plan and provided it to Congress. In 2008, the Navy's Joint 
Guam Program Office estimated that it could complete a comprehensive 
master plan within 90 days of finalizing the record of decision. 
[Footnote 15] The record of decision, which was completed in September 
2010, represents the decisions of the Navy and the Army regarding 
proposed actions on three components of the military buildup on Guam. 
However, during our review, DOD officials told us that they had 
updated the draft master plan again in November 2010, after finalizing 
the record of decision, but the revised plan was still under review 
within DOD in May 2011. Since 2006, the congressional defense 
committees have been requesting a master plan for Guam. In that year, 
the Senate Armed Services Committee first directed the Secretary of 
Defense to submit such a plan for Guam, noting that the buildup would 
require a well-developed master plan to efficiently use the available 
land and infrastructure. More recently, in the conference report 
accompanying the Ike Skelton National Defense Authorization Act for 
Fiscal Year 2011, the conferees recommended that authorizations for 
future construction projects to support the movement of Marine Corps 
forces to Guam be deferred until DOD provides Congress with an updated 
master plan for Guam and other information.[Footnote 16] We have 
previously reported on the need for DOD to provide congressional 
defense committees with annual updates of the Guam working-level plan 
until a comprehensive master plan is finalized and submitted to 
Congress. [Footnote 17] However, Congress' ability to oversee the 
entire Guam military buildup and make appropriately timed funding 
decisions is likely to be hampered until DOD completes the plan and 
provides it to Congress. 

Deferred Decisions Related to Three Components May Delay Construction 
Project Completion: 

As noted in the record of decision, DOD deferred decisions related to 
three components of the buildup, which may delay the timelines for the 
military construction projects on Guam. First, in its July 2010 final 
environmental impact statement, the Navy identified two alternative 
locations for a live-fire training range complex off Route 15 on Guam, 
explaining that every Marine on Guam would require annual training 
with individual weapons to maintain combat readiness, and that high-
volume training of this kind could only be met with ranges located in 
close proximity to the Marine installation. Additionally, the 
environmental impact statement indicated that the Navy estimated that 
the facility would typically be used 5 days a week, 45 weeks a year. 
Subsequently, in the September 2010 record of decision, the Navy 
disclosed that it had deferred selection of the range's specific site, 
pending completion of the consultation process under the National 
Historic Preservation Act. Additionally, the recently signed 
programmatic agreement that documents consultations under the National 
Historic Preservation Act states that DOD will consult with the 
various parties to the agreement and the public to address range 
location, orientation, and design within any area that may be selected 
in the Navy's record of decision for the live-fire training range 
complex, in order to avoid, minimize, and mitigate potential direct 
and indirect effects on historic properties. Therefore, once a site 
for the Marine Corps training range complex is selected, there are 
likely to be additional consultations that may have an impact on 
associated construction projects and the overall timeline for the 
Marine Corps relocation. Moreover, ongoing litigation related to this 
project could further delay site selection and construction. DOD 
considers completion of the live-fire training range as a necessary 
prerequisite for the Marine Corps relocation to proceed, so further 
delays make it increasingly difficult to meet the original projected 
Marine Corps relocation timeline. 

Second, in its record of decision, the Navy deferred final site 
selection for the aircraft carrier wharf at Apra Harbor, although the 
final environmental impact statement identified a preferred site. The 
Navy plans to make the final site selection after completing its 
collection of additional environmental data on marine resources that 
could be affected by port dredging, wharf operations, and the turning 
basin to be located in front of the wharf. DOD officials told us that 
these studies were expected to be completed in November 2011 and would 
be incorporated into a supplemental environmental impact analysis 
before final site selection. This project is not part of the bilateral 
agreement for the Marine Corps relocation from Okinawa, although the
Navy had separately planned to complete the project in September 2014. 
DOD officials subsequently told us that the carrier wharf construction 
budget request was now projected to be in the Navy's fiscal year 2014 
military construction program budget. As a result, since the project 
is expected to take 3 years to complete, it would be unlikely to be 
completed before 2017 (assuming it is requested and funded in fiscal 
year 2014)--3 years after the Navy's original 2014 estimated 
completion date. 

Third, DOD has not decided whether to place an air and missile defense 
task force on Guam and which service would have the mission. DOD is 
awaiting the results of ongoing regional and global ballistic missile 
defense architectural and capability studies to determine whether to 
assign this mission to the Army.[Footnote 18] However, the Army 
included its deliberations on the environmental impact of the proposed 
task force in the Navy's environmental impact statement since the Army 
could be assigned the mission. Inclusion in the environmental impact 
statement process helps avoid the additional time and cost of 
completing a separate environmental assessment later. Army officials 
said that the Terminal High-Altitude Area Defense system was expected 
to be integral to the task force but was in production and not 
expected to be available before fiscal year 2015.[Footnote 19] The 
ballistic missile defense initiative is a separate component which is 
not part of the Marine Corps relocation described in the bilateral 
agreement, although the draft Guam Joint Military Master Plan 
specified that the task force was to be operational around 2014. 
However, if DOD assigned the mission to the Army, the task force is 
unlikely to be operational by 2014. Army officials stated that the 
Army is not committing funding for any buildup activities on
Guam related to the task force until a ballistic missile defense task 
force is approved for Guam and DOD assigns the mission to the Army. If 
the Army is assigned the mission, officials estimated that it would 
then take another 2 years of planning and design before the Army could 
even begin to program any military construction funds for the task 
force into its budget, which may delay the estimated 2014 operational 
date. 

Unresolved Decisions with the Governments of Japan or Guam May Also Slow
Construction Progress: 

The bilateral agreement between the United States and Japan specifies 
that the relocation of elements of the III Marine Expeditionary Force 
is dependent on "tangible progress" toward completion of the Futenma 
Replacement Facility on Okinawa. The location for the replacement 
facility will require substantial landfill, which will include 
reclaiming land from the sea for the needed new airfield. However, the 
Governor of Okinawa had not signed the landfill permit at the time of 
our report, and DOD officials did not know when the permit would be 
signed and thus when the Marine Corps forces would actually move to 
Guam. Furthermore, as noted earlier, the United States and the 
Government of Japan officials recently acknowledged that completion of 
the Futenma Replacement Facility and the Marine relocation will not 
meet the previously targeted date of 2014, but confirmed their 
commitment to complete these actions at the earliest possible date 
after 2014. 

Decisions surrounding the use of special purpose entities for housing 
and utilities were still being negotiated between DOD and the 
governments of Japan and Guam at the time of our report. First, Joint 
Guam Program Office officials told us that DOD and Government of Japan 
representatives continue to meet to refine the structure for the 
housing special purpose entities, stating that the deadline for 
issuing the housing requests for proposal is directly related to when 
the Marine Corps will require housing for the families on Guam. 
However, if military family housing is not available when needed, then 
the relocation of Marine Corps forces from Okinawa will likely be 
delayed. Second, Joint Guam Program Office officials stated that 
utility agreements for power and wastewater are to be executed between 
the governments of Japan and Guam, and DOD's only role would be as a 
rate-paying customer. However, these officials told us that 
negotiations for the utility special purpose entities were ongoing. As 
we have previously reported, there are a number of actions that need 
to be taken to create the special purpose entities for utilities, 
including development and approval of a business model for the special 
purpose entities, the evaluation of qualifications and service 
proposals, the selection and creation of the entities, and 
construction,[Footnote 20] which would need to be completed in time to 
handle the added requirements for an estimated peak in fiscal year 
2013 of about 20,000 construction laborers. 

Unresolved Decisions on the Role of a New Interagency Advisory Group 
May Limit Opportunity to Resolve Challenges That Could Otherwise Delay 
Some Projects: 

The record of decision stated that DOD established a Civil-Military 
Coordination Council to implement a new approach for the military 
buildup on Guam. Unresolved decisions on the role of the new Civil-
Military Coordination Council advisory group in implementing a new 
approach to flexibly sequencing military construction and public 
utilities infrastructure projects could lead to some project delays. 
However, if effectively implemented, the council could help to avoid, 
for example, public utilities' capacity problems. Specifically, the 
Navy has developed an approach to sequencing and timing military 
construction projects known as "adaptive program management" in order 
to avoid significant environmental impacts or exceeding Guam's 
infrastructure capabilities, particularly with the increased number of 
workforce personnel needed to support the proposed construction. 
According to DOD officials, adaptive program management is to be 
implemented through the Civil-Military Coordination Council comprised 
of officials from the Government of Guam, DOD, and other federal 
agencies. According to DOD officials, the council's working groups are 
to monitor construction tempo, construction sequencing, or other 
actions and make recommendations on project sequencing and timing to 
the council in light of utilities' capacity at the location of the 
military construction, environmental concerns, and impacts on social 
services. In the case of utilities, the council would in turn make 
recommendations to DOD or other agencies to try to ensure that the 
capacity of public utilities is adequate to meet the needs of the 
construction crews and newly constructed military facilities at the 
time that the added capacity is needed. Using adaptive program 
management and based on recommendations from the council, DOD could 
change the timing and execution of construction contract awards if the 
capacity of the public utilities infrastructure is known to be 
inadequate in the location of a given military construction project 
and redirect construction to occur in locations with adequate 
capacity. For its part, the Government of Guam is responsible for 
public utilities and other infrastructure off the installations. 
[Footnote 21] The Government of Guam would be positioned to try to 
expand its utility capacity in sequence with DOD to ensure that 
adequate capacity existed at military construction sites and newly 
constructed military facilities when needed. 

However, the council's current operating charter had not been 
finalized as of May 2011, and only one additional meeting has been 
held since the initial meeting in October 2010. DOD officials told us 
that the second meeting of the Civil-Military Coordination Council, 
originally planned for February 2011, was postponed to allow time for 
the new governor of Guam to fill his positions on the council and for 
participants to agree upon the structure of the council. The second 
meeting was subsequently held in May 2011, and officials told us they 
plan to finalize the current operating charter by August 2011. DOD 
officials said that the absence of a final charter would not prevent 
buildup-related construction activities from beginning and the current 
operating charter may be followed until it is finalized. However, if 
the council's role is not well defined, it is not clear how 
effectively DOD will be able to implement adaptive program management 
in order to help monitor the buildup and its impact on the environment 
and infrastructure on Guam. 

DOD Has Begun to Address Buildup Challenges: 

DOD has taken some steps to address many of the challenges to the 
military buildup on Guam. In addition to its ongoing coordination with 
the governments of Japan and Guam and other federal agencies, DOD is 
also making progress in incorporating new information into its draft 
master plan, promoting interagency coordination among federal 
agencies, and identifying off-base infrastructure improvements and 
socioeconomic needs to help the Government of Guam prepare for the 
military buildup. 

* Although DOD has not finalized its Guam Joint Military Master Plan, 
the
Navy's Joint Guam Program Office and the Naval Facilities Engineering
Command have continued to update the draft plan. In 2009, for example, 
we recommended that DOD develop a comprehensive utility plan for 
inclusion in the final Guam Joint Military Master Plan.[Footnote 22] 
In July 2010, DOD updated the draft master plan to include basic 
information about utilities requirements. For example, DOD has 
included a proposed schedule for wastewater, water, and power 
infrastructure improvements, which should also assist in implementing 
adaptive program management. DOD officials told us that the draft 
master plan will continue to be updated as more information, such as 
special purpose entities operating procedures, becomes available. 

* Additionally, DOD exhibited high-level leadership in coordinating 
with other federal agencies and with the Government of Guam to address 
off-installation challenges related to the military buildup. 
Specifically, we had recommended that the Economic Adjustment 
Committee consider Guam's requests for assistance to address the 
challenges.[Footnote 23] DOD officials told us that the Economic 
Adjustment Committee met four times in fiscal year 2010 to address the 
military buildup and ordered certain actions. For example, as a result 
of the February 2010 committee meeting, DOD's Office of Economic
Adjustment led an interagency effort to validate necessary off-
installation facilities and services critical for Guam to absorb the 
population growth resulting from the buildup. This planning is being 
incorporated into budget requests to support the military buildup. For 
example, in addition to the $33 million requested by DOD for 
Government of Guam requirements, the President's fiscal year 2012 
budget also requests approximately $33.7 million in non-DOD 
commitments to Guam, including $18 million for the U.S. Department of 
Transportation for road and highway requirements not addressed by the 
Defense Access Roads program, $3.1 million for the U.S. Department of 
Interior for technical assistance to improve tax collection and grant 
writing, a Sub-Office of Insular Affairs on Guam, and ambulances and 
fire equipment; $3 million for the U.S. Department of Housing and Urban
Development for mental health and substance abuse; and $9.6 million 
for the U.S. Environmental Protection Agency for clean water and 
drinking water grants. 

We are not malting any recommendations in this correspondence. After 
reviewing a draft of this product, DOD officials said the department 
would not provide a formal response. However, DOD provided technical 
comments that have been incorporated as appropriate in this 
correspondence. 

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

If you or your staff have any questions concerning 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. Key contributors to this report are 
listed in enclosure III. 

Signed by: 

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

[End of section] 

Enclosure I: Agreement Between The Government Of The United States Of
America And The Government Of Japan Concerning The Implementation Of
The Relocation Of III Marine Expeditionary Force Personnel And Their
Dependents From Okinawa To Guam: 

The Government of the United States of America and the Government of 
Japan, 

Affirming that the United States-Japan security arrangements, based on 
the Treaty of Mutual Cooperation and Security between the United 
States of America and Japan signed at Washington on January 19, 1960, 
are the cornerstone for achieving common security objectives, 

Recalling that, at the meeting of the United States-Japan Security 
Consultative Committee on May 1, 2006, the Ministers recognized that 
the implementation of the realignment initiatives described in the 
Security Consultative Committee Document, "United States-Japan Roadmap 
for Realignment Implementation" (hereinafter referred to as "the 
Roadmap") will lead to a new phase in alliance cooperation, and
reduce the burden on local communities, including those on Okinawa, 
thereby providing the basis for enhanced public support for the 
security alliance, 

Emphasizing their recognition of the importance of Guam for forward 
presence of United States Marine Corps forces, which provides 
assurance of the United States' commitment to security and strengthens 
deterrent capabilities in the Asia-Pacific region, 

Reaffirming that the Roadmap emphasizes the importance of force 
reductions and relocation to Guam in relation to the realignment on 
Okinawa and stipulates that approximately 8,000 III Marine 
Expeditionary Force (hereinafter referred to as "III MEF") personnel 
and their approximately 9,000 dependents will relocate from Okinawa to 
Guam by 2014, in a manner that maintains unit integrity, and recognizing
that such relocation will realize consolidation and land returns south 
of Kadena, 

Recalling that the Roadmap stipulates that United States Marine Corps 
CH-53D helicopters will be relocated from Marine Corps Air Station 
Iwakuni to Guam when the III MEF personnel relocate from Okinawa to 
Guam, the KC-130 squadron will be based at Marine Corps Air Station 
Iwakuni with its headquarters, maintenance support facilities, and 
family support facilities, and the aircraft will regularly deploy on a 
rotational basis for training and operations to Maritime Self-Defense 
Forces Kanoya Base and Guam, 

Reaffirming that the Roadmap stipulates that, of the estimated ten 
billion, two hundred seventy million United States dollar 
($10,270,000,000) cost of the facilities and infrastructure 
development costs for the III MEF relocation to Guam, Japan will 
provide six billion, ninety million United States dollars 
($6,090,000,000) (in U.S. Fiscal Year 2008 dollars), including two 
billion, eight hundred million United States dollars ($2,800,000,000) 
in direct cash contributions, to develop facilities and infrastructure 
on Guam to enable the III MEF relocation, recognizing the strong 
desire of Okinawa residents that such force relocation be realized 
rapidly, 

Reaffirming further that the Roadmap stipulates that the United States 
will fund the remainder of the facilities and infrastructure 
development costs for the relocation to Guam-estimated in U.S. Fiscal 
Year 2008 dollars at three billion, one hundred eighty million United 
States dollars ($3,180,000,000) in fiscal spending plus approximately
one billion United States dollars ($1,000,000,000) for a road, 

Recalling that the Roadmap stipulates that, within the overall 
package, the Okinawa-related realignment initiatives are 
interconnected, specifically, consolidation and land returns south of 
Kadena depend on completing the relocation of III MEF personnel and 
dependents from Okinawa to Guam, and the BI MEF relocation from 
Okinawa to Guam is dependent on: (1) tangible progress toward 
completion of the Futenma Replacement Facility, and (2) Japan's 
financial contributions to fund development of required facilities and 
infrastructure on Guam, 

Have agreed as follows: 

Article 1: 

1. The Government of Japan shall make cash contributions up to the 
amount of two billion, eight hundred million United States dollars 
($2,800,000,000) (in U.S. Fiscal Year 2008 dollars) to the Government 
of the United States of America as a part of expenditures for the 
relocation of approximately 8,000 III MEF personnel and their 
approximately 9,000 dependents from Okinawa to Guam (hereinafter 
referred to as "the Relocation") subject to paragraph 1. of Article 9 
of this Agreement. 

2. The amount of Japanese cash contributions to be budgeted in each 
Japanese fiscal year shall be determined by the Government of Japan 
through consultation between the two Governments and reflected in 
further arrangements that the two Governments shall conclude in each 
Japanese fiscal year (hereinafter referred to as "the further 
arrangements"). 

Article 2: 

The Government of the United States of America shall take necessary 
measures for the Relocation, including funding for projects of the 
Government of the United States of America to develop facilities and 
infrastructure on Guam subject to paragraph 2. of Article 9 of this 
Agreement. 

Article 3: 

The Relocation shall be dependent on tangible progress made by the 
Government of Japan toward the completion of the Futenma Replacement 
Facility as stipulated in the Roadmap. The Government of Japan intends 
to complete the Futenma Replacement Facility as stipulated in the 
Roadmap in close cooperation with the Government of the United States 
of America. 

Article 4: 

The Government of the United States of America shall use Japanese cash 
contributions and their accrued interest only for projects to develop 
facilities and infrastructure on Guam for the Relocation. 

Article 5: 

The Government of the United States of America shall ensure that all 
participants in the process of acquisition for projects to be funded 
by Japanese cash contributions for the Relocation shall be treated 
fairly, impartially and equitably. 

Article 6: 

The Government of the United States of America shall designate the 
Department of Defense of the United States of America as its 
implementing authority, and the Government of Japan shall designate 
the Ministry of Defense of Japan as its implementing authority. The 
two Governments shall hold consultations at the technical level on 
implementation guidance to be followed by the implementing 
authorities, and on the specific projects referred to in paragraph 
1.(a) of Article 7 of this Agreement. Through such consultations, the 
Government of the United States of America shall ensure that the 
Government of Japan shall be involved, in an appropriate manner, in 
the implementation of the said specific projects. 

Article 7: 

1. (a) Specific projects to be funded in each Japanese fiscal year 
shall be agreed upon between the two Governments and reflected in the 
further arrangements. 

(b) The Government of the United States of America shall maintain a 
United States Treasury account to which the Government of Japan shall 
provide cash contributions. The Government of the United States of 
America shall open and maintain, under the said account, a sub-account 
for Japanese cash contributions in each Japanese fiscal year. 

2. Japanese cash contributions and their accrued interest that is 
contractually committed to pay for specific projects shall be 
credited, based on the method of calculation using an index to be 
agreed upon between the implementing authorities referred to in 
Article 6 of this Agreement, to the total amount of Japanese cash 
contributions, which is up to the amount of two billion, eight hundred 
million United States dollars ($2,800,000,000) (in U.S. Fiscal Year 
2008 dollars). 

3. (a) In case there remains an unused balance of Japanese cash 
contributions after the completion of all contracts, as evidenced by 
receipt of documents releasing the Government of the United States of 
America from any further financial and contractual liability, for all 
specific projects funded in the same Japanese fiscal year, the 
Government of the United States of America shall return the said 
unused balance to the Government of Japan, except as provided in 
paragraph 3.(b) of this Article. 

(b) The Government of the United States of America may use, with the 
consent of the implementing authority of the Government of Japan, the 
unused balance for other specific projects funded in the same Japanese 
fiscal year. 

4. (a) The Government of the United States of America shall return 
interest accrued from Japanese cash contributions to the Government of 
Japan, except as provided in paragraph 4.(b) of this Article, after 
the completion of all contracts, as evidenced by receipt of documents 
releasing the Government of the United States of America from any 
further financial and contractual liability, for the last specific 
projects funded by Japanese cash contributions. 

(b) The Government of the United States of America may use, with the 
consent of the implementing authority of the Government of Japan, 
interest accrued from Japanese cash contributions for projects funded 
by Japanese cash contributions. 

5. The Government of the United States of America shall provide the 
Government of Japan with a report, every month, on transactions in the 
United States Treasury account, including all the sub-accounts related 
to Japanese cash contributions. 

Article 8: 

The Government of the United States of America shall consult with the 
Government of Japan in the event that the Government of the United 
States of America considers changes that may significantly affect 
facilities and infrastructure funded by Japanese cash contributions, 
and shall take appropriate actions, taking Japanese concerns into full 
consideration. 

Article 9: 

1. Japanese cash contributions referred to in paragraph 1. of Article 
1 of this Agreement shall be subject to funding by the Government of 
the United States of America of measures referred to in Article 2 of 
this Agreement. 

2. United States' measures referred to in Article 2 of this Agreement 
shall be subject to: (1) the availability of funds for the Relocation, 
(2) tangible progress made by the Government of Japan toward the 
completion of the Futenma Replacement Facility as stipulated in the 
Roadmap, and (3) Japan's financial contributions as stipulated in the
Roadmap. 

Article 10: 

The two Governments shall consult with each other regarding the 
implementation of this Agreement. 

Article 11: 

This Agreement shall be approved by the United States of America and 
Japan in accordance with their respective internal legal procedures. 
This Agreement shall enter into force on the date when diplomatic 
notes indicating such approval are exchanged. 

In Witness Whereof the undersigned, duly authorized for the purpose, 
have signed the present Agreement. 

Done in duplicate, at Tokyo, in the English and Japanese languages, 
both equally authentic, this seventeenth day of February, 2009. 

For The Government The United States of America: 
Hillary Rodham Clinton: 

For The Government of Japan: 
[Name written in Japanese characters] 

[End of section] 

Enclosure II: 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; Karyn Angulo; Pat Bohan; R. Bruce  Brown; Wil Holloway; Mae 
Jones; Josh Margraf; John  Van Schaik; Amie Steele; and Michael 
Willems made key contributions to this report. 

[End of section] 

Related GAO Reports: 

Defense Management: Comprehensive Cost Information and Analysis of
Alternatives Needed to Assess Military Posture in Asia. [hyperlink, 
http://www.gao.gov/products/GAO-11-316]. Washington, D.C.: May 25, 
2011. 

Defense Infrastructure: The Navy Needs Better Documentation to Support 
Its Proposed Military Treatment Facilities on Guam. [hyperlink, 
http://www.gao.gov/products/GAO-11-206]. Washington, D.C.: April 5, 
2011. 

Defense Infrastructure: Impact of Purchasing from Local Distributors 
All Alcoholic Beverages for Resale on Military Installations on Guam. 
[hyperlink, http://www.gao.gov/products/GAO-10-563R]. Washington, 
D.C.: May 28, 2010. 

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. [hyperlink, 
http://www.gao.gov/products/GAO-10-90R]. Washington, D.C.: November 
13, 2009. 

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. 

Page 28 GAO-11-459R Military Buildup on Guam 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. 

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

[End of section] 

Footnotes: 

[1] Agreement Between The Government Of The United States Of America 
And The Government Of Japan Concerning The Implementation Of The 
Relocation Of III Marine Expeditionary Force Personnel And Their 
Dependents From Okinawa To Guam (Feb. 17, 2009). We refer to this 
agreement as "the bilateral agreement," and enclosure I contains the 
signed agreement in its entirety. 

[2] Security Consultative Committee Document Progress on the 
Realignment of U.S. Forces in Japan (June 21, 2011). The Security 
Consultative Committee Document is a joint document issued at the 
conclusion of the most recent United States-Japan Security 
Consultative Committee meeting, attended by Secretary of State Hillary 
Rodham Clinton, Secretary of Defense Robert M. Gates, Minister for 
Foreign Affairs Matsumoto, and Minister of Defense Kitazawa. 

[3] DOD and Congress consider bid savings to be the difference between 
the appropriated or otherwise designated amount for a military 
construction project and the obligated amount for that project. 

[4] For example, Section 128 of Division E of the Consolidated 
Appropriations Act, 2010 Pub. L. No. 111-117 (2009). 

[5] The Defense Policy Review Initiative was preceded by the Special 
Action Committee on Okinawa. United States and Japan released the 
Final Report of the Special Action Committee on Okinawa on December 2, 
1996. The report made 27 recommendations to reduce the impact of the 
U.S. military presence on the Okinawan people, including building a 
replacement facility for Marine Corps Air Station Futenma elsewhere on 
Okinawa. We reported on the plans at the time. See GAO, 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.: Mar. 
2, 1998). 

[6] In January 2007, the Secretary of Defense announced an initiative 
to expand the Army to a total of 1,112,000 active and reserve soldiers 
by fiscal year 2013-—an increase of 74,200 military personnel—-in 
order to meet increasing strategic demands and to help reduce stress 
on the force. 

[7] National Security Presidential Directive-23, dated December 16, 
2002, directed DOD to establish a capability, beginning in 2004, to 
protect the United States, deployed forces, and allies from ballistic 
missile attacks. 

[8] The Defense Access Roads program is co-administered by DOD and the 
Department of Transportation and is a means for DOD to pay its "fair 
share" of public road improvements needed in response to sudden and 
unusual defense-generated traffic impacts to help ensure adequate 
transportation capacity is in place when needed. 

[9] GAO, Defense Management: Comprehensive Cost Information and to 
Assess Military Posture in Asia, [hyperlink, 
http://www.gao.gov/products/GA0-11-316] (Washington, D.C.: May 25, 
2011).  

[10] Life-cycle cost estimates include all direct and indirect costs 
for planning, procurement, operations and maintenance, and disposal. 

[11] Pub. L. No. 111-84 § 2832(a) defines special purpose entities as 
any private person, corporation, firm, partnership, company, State or 
local government, or authority or instrumentality of a State or local 
government that the Secretary of Defense determines is capable of 
producing military family housing or providing utilities to support 
the realignment of military installations and the relocation of 
military personnel on Guam. 

[12] GA0, 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, [hyperlink, 
http://www.gao.gov/products/GAO-10-90R] (Washington, D.C.: Nov. 13, 
2009). 

[13] In GAO-11-316, we reported that this amount comprises U.S. 
funding of $4.2 billion for military construction projects and $7.1 
billion for additional Marine Corps requirements for the relocation, 
U.S. funding of $1.9 billion for the Northern Mariana Islands training 
range, and Government of Japan funding of up to $6.1 billion. 
 
[14] For example, Section 128 of Division E of the Consolidated 
Appropriations Act, 2010 provided DOD with authority to transfer funds 
among fiscal year 2010 military construction projects and activities, 
subject to certain rules and exceptions. DOD's transfer and 
reprogramming authorities for Military Construction are primarily 
implemented in the DOD Financial Management Regulation 7000.14-R, 
Volume 3, Chapter 7: Reprogramming Of Military Construction And Family 
Housing Appropriated Funds (March 2011).  

[15] Department of the Navy and Department of the Army, Record of 
Decision for Guam and Commonwealth of the Northern Mariana Islands 
Military Relocation including Relocating Marines from Okinawa, 
Transient Nuclear Aircraft Carrier Berth, Air and Missile Defense Task 
Force (Sept. 2010). 

[16] Committee Print of the House of Representatives Committee on 
Armed Services No.5, Legislative Text and Joint Explanatory Statement 
to Accompany H.R. 6523, Public Law 111-383 (Dec. 22, 2010). 

[17] GA0, 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.: Sept. 17, 2008). 

[18] DOD officials told us that, although one study was completed in 
March 2011, they are still analyzing the baseline results. They expect 
the analysis of this study to be completed around the end of July 2011. 

[19] The Terminal High-Altitude Area Defense system is being developed 
as a rapidly deployable, ground-based missile defense system with the 
capability to defend against short- and medium-range ballistic 
missiles during their late midcourse and terminal phases. A Terminal 
High-Altitude Area Defense battery includes interceptor missiles, 
three to six launchers, an X-band radar, and a fire control and 
communications system. 

[20] 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). 

[21] As noted previously, the Government of Japan is expected to fund 
up to $3.29 billion in special purpose entity loans and equity 
investments for off-installation power, wastewater, and water systems 
improvements. 

[22] [hyperlink, http://www.gao.gov/products/GA0-09-653]. 

[23] The Secretary of Defense, or his designee, is the chair of the 
Economic Adjustment Committee. The committee is made up of 
representatives from 22 federal agencies but the Executive Order gives 
DOD a leadership role in coordinating interagency efforts in support 
of defense-affected communities. The committee is to ensure, among 
other things, that communities that are substantially and seriously
affected by DOD actions are aware of available federal economic 
adjustment programs; assure coordinated interagency and 
intergovernmental adjustment assistance; and serve as a clearinghouse 
to exchange information among federal, state, regional, and community 
officials involved in the resolution of community economic problems. 
See GAO, Defense Infrastructure: 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). 

[End of section] 

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