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entitled 'Defense Infrastructure: Issues Need to Be Addressed in 
Managing and Funding Base Operations and Facilities Support' which was 
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Report to the Subcommittee on Readiness, Committee on Armed Services, 
House of Representatives: 

June 2005: 

Defense Infrastructure: 

Issues Need to Be Addressed in Managing and Funding Base Operations and 
Facilities Support: 

GAO-05-556: 

GAO Highlights: 

Highlights of GAO-05-556, a report to the Subcommittee on Readiness, 
Committee on Armed Services, House of Representatives: 

Why GAO Did This Study: 

Concerns have surfaced in Congress and various media regarding the 
adequacy of funding for base operations support (BOS) functions of 
military installations as well as the quality and level of support 
being provided. As requested, this report addresses (1) the historical 
funding trends for BOS as contrasted with funding for facilities 
sustainment, restoration and modernization (S/RM); (2) how effectively 
the Department of Defense (DOD) and the military services have been 
able to forecast BOS requirements and funding needs; and (3) how the 
Army’s and Navy’s reorganizations for managing installations have 
affected support services, and whether the Air Force and Marine Corps 
could benefit from similar reorganizations. 

What GAO Found: 

Congress has designated increased funding for BOS programs in recent 
years, sometimes more than requested, but because those amounts were 
often less than the cost of BOS services provided at installations, 
hundreds of millions of dollars designated for S/RM and other purposes 
were redesignated by the military services to pay for BOS. As GAO has 
previously reported, such funding movements while permissible are 
disruptive to the orderly provision of services, contribute to the 
degradation of many installation facilities, and can adversely affect 
the quality of life and morale of military personnel. The problem 
appears to be greatest in the Army. Further, in fiscal year 2004, U.S. 
military installations faced additional pressures in managing available 
BOS and S/RM funding as the services redesignated varying amounts of 
these funds to help pay for the Global War on Terrorism. Similar 
problems are reportedly occurring in fiscal year 2005. While difficult 
to quantify, installation officials at the locations GAO visited voiced 
concerns about the potential for these conditions to adversely affect 
operations and readiness in the future. Moreover, such movements of 
funds add considerable uncertainty regarding actual BOS requirements 
and the extent of underfunding. 

The ability of DOD and its components to forecast BOS funding 
requirements has been hindered by the lack of a common terminology 
across the military services in defining BOS functions as well as the 
lack of a mature analytic process for developing credible and 
consistent requirements comparable to the model developed for 
facilities sustainment. The lack of common definitions among the 
services, particularly where one service resides as a tenant on an 
installation operated by another service, can lead to differing 
expectations for installation services, and it obscures a full 
understanding of the funding required for BOS services. Because the 
military services have often based future requirements estimates 
largely on prior expenditures, they do not necessarily know if BOS 
services were provided at appropriate levels. DOD and the military 
services have a strategic plan for installations and have multiple 
actions under way to address these problems, but they have not 
synchronized varying time frames for accomplishing related tasks. Until 
these problems are resolved, DOD will not have the management and 
oversight framework in place for identifying total BOS requirements, 
providing Congress with a clear basis for making funding decisions, and 
ensuring adequate delivery of services. 

While the Army’s and Navy’s creation of centralized installation 
management agencies can potentially create efficiencies and improve the 
management of the facilities through streamlining and consolidation, 
implementation of these plans has so far met with mixed results in 
quality and level of support provided to activities and installations. 
Until more experience yields perspective on their efforts to address 
the issues identified in this report, GAO is not in a position to 
determine whether the approach should be adopted by the other services. 

What GAO Recommends: 

GAO is recommending that the Secretary of Defense revise the 
department’s previously issued installations strategic plan to resolve 
long-standing inconsistencies among the military services’ definitions 
of BOS functions and help expedite development and consistent 
application of an analytically sound model for determining BOS 
requirements. 

DOD agreed with the recommendations and indicated that actions were 
under way or planned to implement them. 

www.gao.gov/cgi-bin/getrpt?GAO-05-556. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Barry W. Holman at (202) 
512-5581 or holmanb@gao.gov. 

[End of section]

Contents: 

Letter: 

Results in Brief: 

Background: 

While Historical Trends Show an Increase in BOS Funding, the Services 
Have Redesignated Other Funds to Meet BOS Services: 

Accurate Forecasts of BOS Requirements and Funding Needs Have Been 
Hampered by Several Factors: 

Centralized Installation Management Has Many Benefits, but More 
Perspective Is Needed Before It Can Be Fully Evaluated: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Scope and Methodology: 

Appendix II: BOS Functions and Activities Used by the Military 
Services: 

Appendix III: Army and Navy Base Operations Support Management 
Structure: 

Appendix IV: Impact of Funding Constraints on BOS and S/RM Activities: 

Appendix V: Navy, Marine Corps, and Air Force Funding Trends: 

Appendix VI: Comments from the Department of Defense: 

Appendix VII: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Figures: 

Figure 1: Army BOS Funding, Fiscal Years 2001-04: 

Figure 2: Army S/RM Funding, Fiscal Years 2001-04: 

Figure 3: Army BOS Functions and Activities: 

Figure 4: Navy BOS Functions and Activities: 

Figure 5: Marine Corps BOS Functions and Activities: 

Figure 6: Air Force BOS Functions and Activities: 

Figure 7: Army Installation Management Agency Organization: 

Figure 8: Army Installation Management Agency Locations: 

Figure 9: CNI Organization: 

Figure 10: CNI Locations: 

Figure 11: Navy BOS Funding, Fiscal Years 2001-04: 

Figure 12: Navy S/RM Funding, Fiscal Years 2001-04: 

Figure 13: Marine Corps BOS Funding, Fiscal Years 2001-04: 

Figure 14: Marine Corps S/RM Funding, Fiscal Years 2001-04: 

Figure 15: Air Force BOS Funding, Fiscal Years 2001-04: 

Figure 16: Air Force S/RM Funding, Fiscal Years 2001-04: 

Abbreviations: 

BOS: base operations support: 

CNI: Commander, Navy Installations: 

DOD: Department of Defense: 

IMA: Installation Management Agency: 

O&M: operation and maintenance: 

OSD: Office of the Secretary of Defense: 

S/RM: sustainment, restoration and modernization: 

Letter June 15, 2005: 

The Honorable Joel Hefley: 
Chairman: 
The Honorable Solomon P. Ortiz: 
Ranking Minority Member: 
Subcommittee on Readiness: 
Committee on Armed Services: 
House of Representatives: 

The Department of Defense (DOD) manages nearly 517,000 buildings and 
structures (replacement value of $650 billion) and over 46,000 square 
miles of real estate at its bases and installations worldwide. At the 
same time, DOD recognizes that it maintains infrastructure in excess of 
its needs,[Footnote 1] and that it faces challenges in allocating 
sufficient funds to maintain this infrastructure and supporting other 
base operating needs. We have previously reported on the impact 
resulting from such underfunding, including the deterioration of 
facilities, and its negative effects on the quality of life for those 
living and working at the installations and on their ability to 
accomplish their mission activities.[Footnote 2] More recently, you and 
others have expressed concerns about the adequacy of funding for 
overall base operations and whether funds were being moved to meet 
other pressing needs, leaving shortfalls in base operating accounts. 

Operation and maintenance (O&M) funding is the primary category of 
funds used to keep military installations running and the facilities in 
good working order. Within O&M funding, there are distinct functional 
areas, including (1) base operations support (BOS)--a term used to 
describe a collection of day-to-day programs, activities, and services 
needed to keep the bases and installations running;[Footnote 3] (2) 
facilities sustainment, restoration and modernization (S/RM)--the 
recurring maintenance and repairs needed to keep facilities in good 
working order and in up-to-date condition; and (3) mission support--the 
goods and services needed to prepare for and conduct combat and 
peacetime missions, including training and weapons systems maintenance. 

For fiscal year 2004 O&M activities, Congress appropriated about $83.5 
billion for active duty forces and about $14.3 billion for reserve and 
national guard forces, excluding DOD-wide and miscellaneous O&M 
activities.[Footnote 4] Within the O&M appropriations, conference 
report data show that Congress designated[Footnote 5] $14 billion for 
BOS, $5.5 billion for facilities sustainment, and $78.3 billion for 
mission and other support. These designations were based on the sum of 
a set of defined program elements or activity groups and subactivity 
groups supporting the appropriation bill's conference report, and are 
not binding unless they are incorporated directly or by reference into 
an appropriation act or other statute. Thus, DOD and its components 
have considerable flexibility in using O&M funds and can redesignate 
funds among activity and subactivity groups in various ways. 
Accordingly, it is important to note that amounts designated in the 
services' accounting records for O&M functional areas, such as BOS, do 
not perfectly coincide with these congressional designations. For 
example, according to historical data provided by the military 
services, fiscal year 2004 O&M funds designated for BOS services 
totaled $15.6 billion, about $1.6 billion more than data supporting the 
conference report showed as being designated for BOS at the beginning 
of the fiscal year. Service officials attributed the variance to their 
accounting for the BOS services provided at their respective 
installations--the number and names of which are different and expanded 
from the BOS subactivity groups used for the conference report--and to 
funding redesignations that occur during the year. Accordingly, this 
report uses the congressional designations as adjusted by the services' 
accounting and redesignations of O&M funds for BOS and S/RM to depict 
funding trends. 

Until recently, the Office of the Secretary of Defense (OSD) and the 
military services have, for the most part, carried out installation 
management functions at the local level, where installation commanders 
have set priorities and regularly moved funds among BOS, S/RM, and 
mission support accounts to pay for services and programs at their 
respective installations. Increasingly, however, some of military 
services are moving to centralize the management of these activities, 
with the expectation that such efforts would help mitigate previous 
problems of funds intended for installation management being 
redesignated to other purposes. 

This report addresses (1) the historical funding trends for BOS 
functions, as contrasted with funding for S/RM; (2) how effectively DOD 
and the military services have been able to forecast BOS requirements 
and funding needs; and (3) how the Army's and the Navy's 
reorganizations for managing installations have affected the quality 
and level of support provided to individual activities and 
installations, and whether the Air Force and Marine Corps would benefit 
from similar reorganizations. 

To address these questions, we met with officials in DOD's Office of 
Installations and Environment and with Army, Air Force, Navy, and 
Marine Corps headquarters officials and collected and analyzed 
historical funding data. We obtained data on historic funding levels 
from fiscal years 2001 through 2004 from the military services based on 
their categorization of BOS functions, but we concentrated our analysis 
principally on fiscal year 2004, the most recent year for which 
obligation data were available. To ensure consistency in analyzing 
funding trends from one year to the next, the historical data provided 
by the services and used in this report do not include congressional 
adjustments of a one-time nature or supplemental appropriations for O&M 
that Congress provided during a particular fiscal year for such things 
as hurricane damage cleanup and repairs or for the Global War on 
Terrorism.[Footnote 6] We determined that the data were sufficiently 
reliable for the purposes of this review in indicating broad trends and 
comparisons between identified requirements, budget requests, 
designated funding amounts, and subsequent obligations of funds for BOS 
and S/RM functions. However, various data limitations are noted 
throughout the report, such as differences between conference committee 
designations for BOS funding and amounts categorized by the services. 
We obtained information on the roles that OSD and the military services 
play in the overall base operations process, requirements 
determination, budgeting, and installations management. We visited two 
Air Force bases; two Marine Corps bases; three Army bases; six Navy 
bases; the Army's Installation Management Agency's (IMA) Headquarters 
and Southwest and Northeast regions; and the Commander, Navy 
Installations (CNI) Command's Headquarters and South and Southwest 
regions. We performed our work in accordance with generally accepted 
government auditing standards from April 2004 through April 2005. More 
details on our scope and methodology are presented in appendix I. 

Results in Brief: 

Congress has designated increased funding for BOS in recent years, 
sometimes more than requested, but because the approved increases are 
often less than the cost of BOS services provided at military 
installations (particularly the Army's), hundreds of millions of 
dollars designated for S/RM and other purposes have been redesignated 
to meet BOS needs. In some respects this is a reversal of a trend we 
saw a few years ago, where BOS funds were more likely to be 
redesignated to fund facilities maintenance and mission training needs. 
We found similar though less pronounced funding redesignations in the 
Air Force, Navy, and Marine Corps data. Each service faced problems 
because funds were moved among BOS and S/RM accounts during the year. 
Further, in fiscal year 2004, U.S. military installations faced 
additional pressures in managing available BOS and S/RM funding as the 
services redesignated varying amounts of O&M funds that would have been 
designated for BOS and S/RM to help instead pay for the Global War on 
Terrorism. At the end of fiscal year 2004, installations received 
additional funds to help offset shortfalls endured during the year. The 
timing made it difficult for the installations to execute many of their 
BOS and S/RM activities efficiently and effectively, however, and it 
resulted in the Army underexecuting its S/RM funding designations by 
$882 million in fiscal year 2004. Various indicators suggest that 
similar funding redesignations are occurring in fiscal year 2005. Such 
problems adversely affect efforts to maintain facilities and provide 
base support services. Although these actions are disruptive to planned 
maintenance and support programs and have the potential to adversely 
affect quality of life and morale, it typically is difficult to 
determine any immediate impact they may have on readiness. At the 
installations we visited, however, officials often voiced concerns 
about the potential impact on operations and readiness in the future 
should these conditions continue. At the same time, such movements of 
funds add considerable uncertainty regarding amounts required and the 
degree to which BOS services may be underfunded. 

DOD and the military services' ability to forecast BOS requirements and 
funding needs has been hindered by the lack of a common terminology 
across the military services in defining BOS functions, as well as by 
the lack of a mature analytic process for developing BOS requirements 
comparable to that developed for facilities sustainment requirements. 
Lack of common definitions among the services, particularly where one 
service resides as a tenant on an installation operated by another 
service, can lead to differing expectations for services, and it 
obscures a full understanding of the funding that is required for BOS 
services. Each service has historically developed its own BOS 
requirements and funding needs subject to its own definition of BOS and 
the types and levels of services it deems necessary. Until recently, 
each has relied heavily on previous expenditures as the basis for 
stating future requirements. But while the military services can tell 
Congress how much was spent in an area in the past, they do not 
necessarily know whether BOS services were provided at appropriate 
levels or how much it should cost to provide them in the future. Until 
such problems are resolved, DOD will not have the management and 
oversight framework in place that it needs for identifying total BOS 
requirements and ensuring adequate delivery of services, particularly 
in a joint environment. Various efforts are under way, either within 
the military services or led by OSD, to strengthen their respective 
abilities to forecast future requirements. OSD and the services 
recognize, however, that additional efforts are needed. Within the past 
year they have started working to develop common definitions, 
standards, and performance metrics. However, as they are still in the 
early stages of developing these initiatives, time frames for 
accomplishing many of the specific actions under way or planned have 
either not been established or vary among working groups. This creates 
uncertainty about the accuracy of time frames being reported for 
completing the respective tasks and raises questions about how well 
coordinated and integrated these efforts will be. Improvements in these 
areas will be important to ensuring consistency in identifying the base 
operations services expected to be provided, particularly where 
multiple military services with varying support needs are located on 
individual military installations, and in providing Congress with a 
clear basis for making funding decisions. 

While many officials view the Army's and Navy's creation of centralized 
installation management agencies as having the potential to create 
efficiencies and improve the management of the facilities through 
streamlining and consolidation, implementation of these plans has to 
date met with mixed results in the quality and level of support 
provided to activities and installations. A common concern voiced by 
individuals at the installations we visited was that the centralized 
management efforts had not sufficiently recognized the diverse needs of 
the installations' many tenants who require quick reaction in the face 
of changing circumstances. Navy and Army officials acknowledge such 
problems as growing pains associated with implementing the new approach 
and indicated that they are working to address them. Nevertheless, 
until more experience is gained from efforts to address the issues 
identified in this report, we are not in a position to recommend one 
approach over the other. Using a more decentralized facilities 
management approach at the time of our review, the Air Force and Marine 
Corps were emphasizing selective consolidation and efficiency measures 
to improve operations and achieve savings. 

We are making recommendations in this report for DOD to update its 
strategic plan and to include specific actions and establish time 
frames to, first, resolve long-standing inconsistencies among the 
definitions of BOS services and, second, help expedite the development 
and implementation of an analytically sound and consistently applied 
model for determining BOS requirements. In commenting on a draft of 
this report, DOD agreed with our recommendations and indicated that 
actions were under way or planned to implement them. 

Background: 

DOD manages nearly 517,000 buildings and structures (replacement value 
of $650 billion) and over 46,000 square miles of real estate at its 
bases and installations worldwide. These facilities must be properly 
maintained or they are subject to premature deterioration. At these 
bases and installations, DOD prepares for and conducts combat and 
peacetime missions, including training and weapons systems maintenance. 
Doing so requires significant amounts of BOS services, such as 
information management; systems operations and maintenance; facilities 
engineering; transportation; utilities; environmental, safety, and 
health services; housing; food services; morale, welfare, and 
recreation services; security and fire services; and disaster 
preparedness. 

Funding for O&M: 

O&M funds finance the costs of operating and maintaining military 
operations for active and reserve components, including related support 
activities of DOD, but excluding military personnel costs. Included are 
pay for civilians, services for maintenance of equipment and 
facilities, fuel, supplies, and spare parts for weapons and equipment. 
Funding requirements are influenced by many factors, including force 
structure levels, such as the number of aircraft squadrons and Army and 
Marine Corps divisions; installations; military personnel strength and 
deployments; rates of operational activity; and the quantity and 
complexity of equipment such as aircraft, ships, missiles, and tanks in 
operation. For fiscal year 2004, Congress appropriated $114 billion for 
O&M activities.[Footnote 7] DOD uses distinct activities and accounting 
structures to manage O&M budgeting and funding for functional areas 
such as the following: 

* BOS--a term that derives from the "base operations" program area 
(which includes installation transportation, supply, information 
management, food services, legal and accounting services, and so forth) 
to which the military services have added other program areas including 
family and quality of life programs, force protection, environmental 
compliance and conservation programs, communications services, and 
grounds maintenance, as well as other facilities services such as 
utilities, leases, and custodial services, which OSD has referred to as 
real property services.[Footnote 8] Thus, in practice BOS is not a 
single, well-defined program area but a collection of many diverse 
programs, activities, and services. The different BOS functions and 
activities used by the military services are shown in appendix II. 

* S/RM--the maintenance and repairs needed to keep facilities in good 
working order and in up-to-date condition. Sustainment funds cover 
expenses for all recurring maintenance costs and contracts, as well as 
for major repairs of nonstructural facility components (for example, 
replacing the roof or repairing the air conditioning system) that are 
expected to occur during a facility's life cycle. In addition to 
facilities sustainment, O&M funds are sometimes used for facilities 
restoration and modernization. Restoration includes repair and 
replacement work needed to restore facilities damaged by inadequate 
sustainment, excessive age, natural disaster, fire, accident, or other 
causes. Modernization includes altering or modernizing facilities to 
meet new or higher standards, accommodate new functions, or replace 
structural components. 

* Mission support--the goods and services needed to prepare for and 
conduct combat and peacetime missions, including training and weapons 
systems maintenance. O&M funds are used by the armed forces and defense 
agencies to prepare for and conduct combat and peacetime missions. For 
example, DOD uses O&M funds to increase combat proficiency through 
flying and ground training operations; to acquire fuel, support 
equipment, and spare parts for training operations; to pay supporting 
civilian personnel; and to purchase supplies, equipment, and service 
contracts for the repair of weapons and weapons systems. 

According to historical data provided by the military services, fiscal 
year 2004 O&M funds designated for BOS services totaled $15.6 billion, 
about $1.6 billion more than data supporting the conference report 
showed as being designated for BOS at the beginning of the fiscal year. 
Service officials attributed the variance to their accounting for the 
BOS services provided at their respective installations--the number and 
names of which are different and expanded from the BOS subactivity 
groups used for the conference report--and to funding redesignations 
that occur during the year. Accordingly, this report uses the 
congressional designations as adjusted by the services' accounting and 
redesignations of O&M funds for BOS and S/RM to depict funding trends. 
Further, to better project trend data consistently, the historical data 
provided by the services included in this report do not include 
congressional adjustments of a one-time nature or supplemental 
appropriations for O&M that Congress provided during a particular 
fiscal year for such things as hurricane damage cleanup and repairs or 
for the Global War on Terrorism. 

Services' Organizational Structures for Managing Installations: 

Until recent years, the military services had, for the most part, 
carried out installation management functions at the local level, where 
the installation commanders received O&M funding for various 
subactivities and set priorities among competing demands. They also had 
the flexibility to make trade-offs in the face of funding limitations, 
shifting funds among subactivities' competing priorities, and to meet 
unanticipated demands. We have previously reported on the movement of 
funds from BOS to alleviate shortfalls in S/RM, and we have also 
reported instances where funds intended for maintaining facilities had 
to be used to support base operations or to cover other mission costs. 
However, such movements of funds often raised or aggravated concerns 
about the adequacy of funding for each of these areas or about how 
efficiently and effectively programs were executed during the year. 

The Army and the Navy have recently taken steps to reorganize and 
centralize their installation management activities. One of the 
expectations established in setting up these centralized activities was 
that they would curtail or prevent the movement of funds from 
facilities and base operations to other priorities and create greater 
stability in the execution of those activities. IMA was activated on 
October 1, 2002, providing consolidated management of Army 
installations worldwide. The services managed by IMA include 
engineering, information technology, resource management, and other 
installation support activities. The agency's objective is to 
standardize installation management services, providing consistent and 
equitable facilities and services via common standards. IMA is made up 
of seven regional offices, four in the continental United States and 
three overseas. To establish IMA, the Department of the Army worked 
with its major commands to identify the activities, personnel, and 
resources that provided facilities and base operations support. These 
service activities and the associated workforce were then 
organizationally realigned from the major commands and their 
installation commanders to establish IMA. Under the reorganization, IMA 
headquarters assumed control of the BOS and S/RM budgets in fiscal year 
2004 and determined the funding for these programs and activities. 

CNI was activated October 1, 2003, and is responsible for Navy-wide 
installation management. Its mission is to provide uniform program, 
policy, and funding management, along with oversight of shore 
installation support. Prior to the activation of CNI, management of its 
base operations support activities was conducted at regional levels. 
With the activation of CNI, shore installation management and the 
personnel associated with those functions were organizationally 
realigned under CNI's control. CNI is made up of 16 regions, 10 in the 
continental United States and 6 overseas. Consolidation of the 
management of services provided at the regional and installation levels 
was intended to reduce base operating support costs through the 
elimination of unnecessary management layers, duplicative overhead and 
redundant functions. The Army and Navy reorganizational management 
structures are discussed further in appendix III. 

The Marine Corps, because it is small, has always been somewhat 
centrally managed, but it generally leaves to the individual base 
commanders the decisions about the level of BOS services required and 
issues regarding quality of life at an installation. The Air Force has 
integrated BOS and installations management into its mission programs 
and continues to manage in a decentralized manner, using Air Force- 
level guidance. In the Air Force, major commands are actively engaged 
with subordinate commanders in the funding and management of Air Force 
installations. 

Strategic Plan for Installations: 

We have cited the need for and DOD has in recent years developed a 
facilities strategic plan to guide future facilities efforts. Our 
February 2003 report[Footnote 9] noted that DOD's strategic plan for 
facilities had weaknesses that included a lack of comprehensive 
information on specific actions, time frames, assigned 
responsibilities, and resources--the elements of a well-developed 
strategic plan--that are required to meet the plan's vision. 

In September 2004, the Deputy Under Secretary of Defense for 
Installations and Environment released the department's updated Defense 
Installations Strategic Plan, which outlines a set of initiatives with 
some milestones to sustain, restore, and modernize installation 
assets.[Footnote 10] The vision set forth in the plan is to have 
installation assets and services, including BOS, available when and 
where needed, with the joint capabilities and capacities necessary to 
support DOD missions effectively and efficiently. 

Prior GAO Reports: 

Since 1997, we have identified DOD support infrastructure as a high- 
risk area. We have completed a number of reviews in which we identified 
numerous examples of the services' moving O&M funds out of accounts 
congressionally designated to support one functional area and into 
another to meet competing needs. We examined the impacts on areas such 
as facilities maintenance and BOS--areas that were already considered 
to be underfunded against projected needs. For example, our February 
2000 report compared the funding amounts that Congress had designated 
for DOD's O&M subactivities, including BOS and S/RM, with DOD's 
obligations for those same subactivities, and we showed that DOD 
consistently obligated a different amount from what Congress had 
designated.[Footnote 11] In February 2003, we reported that O&M funds 
designated for facilities sustainment were reduced or held back at the 
service headquarters, major command, and installation levels to cover 
more pressing needs or emerging requirements.[Footnote 12] As a result 
of these holdbacks and movements, we concluded that the amounts of 
funds spent on facilities maintenance and repairs were not sufficient 
to reverse the trend of facility deterioration. Our February 2003 
report also noted the shifting of funds from one O&M functional account 
to resolve funding shortfalls in another. For example, it noted the 
difficulty that redesignating facilities sustainment funds to other 
purposes makes for installations in implementing rational facilities 
sustainment plans. 

While Historical Trends Show an Increase in BOS Funding, the Services 
Have Redesignated Other Funds to Meet BOS Services: 

Congress has designated increased funding for BOS in recent years, 
sometimes more than requested, but often to amounts that were lower 
than the cost of BOS services provided at installations, particularly 
in the Army. This has resulted in hundreds of millions of dollars 
originally designated for facilities maintenance being redesignated by 
the services to meet BOS needs. As a result, the Army has faced 
problems in executing planned programs effectively. Supplemental 
funding may be made available to installations late in the fiscal year, 
as occurred in fiscal year 2004, making it difficult for an 
installation to execute many of its BOS and S/RM activities promptly 
and efficiently.[Footnote 13] For example, base services may be reduced 
and routine maintenance and repair of facilities may be deferred. (App. 
IV highlights some key impacts of funding shortfalls and redesignations 
on BOS and S/RM activities and locations we visited.) Such problems 
adversely affect efforts to maintain facilities, provide base support 
services, and conduct mission training, but the overall impact is often 
difficult to gauge in the short term. We found similar, though less 
pronounced, funding redesignations in the Navy, Marine Corps, and Air 
Force. 

Army Funding Trends: 

Available data show differences between the amounts the Army projected 
as required for BOS and the amounts included in budget requests, the 
congressionally designated amounts as adjusted by the Army, and the 
amounts that were actually obligated for each fiscal year from 2001 
through 2004. Congress gave the Army increasing funds for BOS in some 
fiscal years, but these funds were less than the amounts projected by 
the Army as being required and less than the amounts that were actually 
obligated. As shown in figure 1, fiscal year 2004 data showed a spike 
in projected requirements due at least in part to the Army's use of a 
model that projected requirements at a higher level of service than was 
previously used in projecting budget requirements. Obligations were 
higher than funds initially provided, with funds being moved to BOS 
from other accounts, such as S/RM, to permit this increase.[Footnote 
14] At the same time, funding turbulence across BOS and facility 
sustainment accounts was exacerbated in fiscal year 2004 as the Army 
withheld funds that otherwise would have been designated to fund BOS 
and S/RM, to help pay for the Global War on Terrorism, although some 
funding was restored toward the end of the fiscal year. Such turbulence 
occurring during the year makes it difficult to execute planned 
programs effectively and, as noted later, resulted in the Army's 
underexecuting its S/RM program in fiscal year 2004. 

Figure 1: Army BOS Funding, Fiscal Years 2001-04: 

[See PDF for image] 

Notes: 

(1) Dollars are in constant fiscal year 2004 dollars. 

(2) As discussed in a later section of this report, Army officials 
indicated they are taking steps to improve their requirements 
determination process for BOS funding. 

(3) Obligations exceeded adjusted congressionally designated amounts as 
a result of authorized internal adjustments among accounts. For 
example, as discussed below, the Army moved S/RM funds into the BOS 
account. 

[End of figure] 

The data show that BOS funding provided by Congress increased in fiscal 
year 2002, remained stable in fiscal year 2003, and declined in fiscal 
year 2004. They also show that BOS obligations increased, particularly 
in 2003 and 2004, and that the Army routinely obligates more for BOS 
services than adjusted congressionally designated amounts, through 
redesignations of funds from other accounts. For example, in fiscal 
year 2004, the Army's request for BOS funding--$5.756 billion--was 
about 65 percent of the amount it projected as being needed to provide 
traditional levels of BOS services. According to Army officials, while 
congressionally designated amounts as adjusted by the Army-- $6.009 
billion--were somewhat more than they requested, during the year they 
nevertheless had to reduce BOS programs because they did not have 
sufficient funds to pay for traditional levels of BOS services since 
they had to temporarily move some BOS funds to pay for the Global War 
on Terrorism. To what extent the Army's actual needs increased over 
prior years is difficult to fully gauge because, according to Army 
officials, the requirements model used for fiscal year 2004 budget 
requests reflected improved information on the resources needed to 
provide BOS programs and services compared to what they had used in 
prior years. At the same time, because many BOS programs involved bills 
that must be paid in a timely manner (such as utilities and contracts), 
during the year the Army moved $882 million from S/RM accounts and $816 
million from other O&M accounts and used supplemental funding for the 
Global War on Terrorism to cover its essential bills and BOS services 
(total amount obligated was $7.707 billion). 

In contrast with BOS requirements, S/RM trend data show that S/RM 
requirements and President's budget requests have remained relatively 
constant since fiscal year 2002. Army officials attributed this 
consistency to improved facilities sustainment requirements forecasts 
achieved by using DOD's facilities sustainment model and a cost factors 
handbook, both of which were developed for this purpose in recent 
years.[Footnote 15] However, as shown by figure 2, the Army has 
consistently requested fewer funding dollars for S/RM services than it 
had internally projected as being needed to provide levels of S/RM 
services projected by the model. Furthermore, the Army obligated fewer 
funding dollars for S/RM activities than adjusted congressionally 
designated amounts in the last 3 years. 

Figure 2: Army S/RM Funding, Fiscal Years 2001-04: 

[See PDF for image] 

Notes: 

(1) Dollars are in constant fiscal year 2004 dollars. 

(2) Army officials indicated they had improved S/RM requirements 
forecasts by using the DOD facilities sustainment model developed in 
1999. 

(3) Obligations were less than congressionally designated amounts, 
adjusted by the Army, as a result of authorized internal adjustments 
among accounts. For example, as discussed below, the Army moved S/RM 
funds into the BOS account. 

[End of figure] 

According to Army officials, the difference between the amounts 
designated for S/RM services and the amounts obligated is made up of 
funds moved from S/RM activities and redesignated to BOS activities to 
pay for "must pay bills" (such as utilities and, increasingly, 
obtaining services from contractors). This indicates a continuation of 
the historic trend of funds being moved among various O&M subaccounts 
during the year, but a reversal of a trend we saw a few years ago where 
BOS funds were more likely to be redesignated to fund facilities 
maintenance and other needs. S/RM services were also affected by the 
Army's withholding O&M funds that otherwise would have been designated 
to fund BOS and S/RM, to help pay for the Global War on Terrorism. 
Similar problems reportedly are occurring in fiscal year 2005. The Army 
ultimately was able to provide additional funds to installations late 
in the fiscal year ($100 million in August 2004 and another $100 
million on September 30, 2004), as supplemental funding was made 
available to cover warfighting costs, but Army officials told us that 
the timing made it difficult for the installations to execute many of 
their BOS and S/RM activities promptly and efficiently. We noted that 
this resulted in the Army's underexecuting its S/RM program by $882 
million in fiscal year 2004. As we have previously reported, such 
problems adversely affect efforts to maintain facilities and provide 
base support services. End-of-year figures shown in figures 1 and 2 
mask somewhat the level of turbulence that occurred during the year as 
funds moved between accounts. Similar masking occurred in BOS and S/RM 
accounts in the other military services. 

Other Military Services Have Faced Similar Though Less Pronounced 
Problems: 

BOS and S/RM funding trends and problems identified in the Army also 
occurred in the Navy, Marine Corps, and Air Force but were less 
pronounced. Nevertheless, each of these services faced similar 
challenges in its ability to execute planned programs effectively as a 
result of its moving of funds among accounts. For example, we found the 
following: 

* Congress gave the Navy increased funding for BOS during some years, 
though we found a smaller difference here than for the Army between 
identified requirements and funding. The difference between the Navy's 
obligations and its funding also appears to be smaller than that for 
the Army, but the Navy's obligations for BOS still were greater than 
were its congressionally designated amounts for BOS as adjusted by the 
Navy. Navy officials said the difference between these adjusted 
congressionally designated amounts and the amounts obligated is made up 
of funds redesignated from S/RM activities to BOS activities to pay 
essential BOS bills such as utilities and, increasingly, obtaining 
contractor services. 

* Navy S/RM funding trend data show a spike in congressionally 
designated amounts adjusted by the Navy and in obligations for fiscal 
year 2003. According to Navy officials, 2003 was simply a well-funded 
year for Navy shore facilities. However, in fiscal year 2004, S/RM 
services were negatively affected by the Navy's withholding of O&M 
funds otherwise intended to fund BOS and S/RM to help pay for the 
Global War on Terrorism. (Similar problems reportedly are occurring in 
fiscal year 2005.) The Navy obligated fewer funding dollars for S/RM 
activities in fiscal year 2004 than were initially designated. Although 
the Navy also received supplemental funding for the Global War on 
Terrorism for BOS and S/RM activities, such turbulence occurring during 
the year makes it difficult to execute planned programs effectively and 
resulted in the Navy's underexecuting its S/RM program by $393 million 
in fiscal year 2004. 

* The trend data for BOS obligations present a more mixed picture for 
the Marine Corps. For half of the period (2 of 4 years), its 
obligations were greater than both congressionally designated amounts, 
as adjusted by the Marine Corps, and projected requirements. For 
example, in fiscal year 2004, the Marine Corps' BOS obligations of 
$1.164 billion were $54 million more than its designated funding 
($1.110 billion), representing a movement of funds from other accounts 
to support BOS activities. 

* S/RM trend data show that the Marine Corps obligated more funding 
than adjusted congressionally designated amounts in fiscal years 2001 
and 2003, and it obligated less funding than adjusted congressionally 
designated amounts in fiscal year 2004. Marine Corps officials said the 
differences were due to funds being moved and redesignated among BOS 
and S/RM accounts. 

* Data were not readily available to provide a trend for the Air 
Force's projected BOS requirements.[Footnote 16] Funding trend data for 
BOS services and programs within the Air Force show that budgetary 
requests, funding, and BOS obligations remained more closely aligned 
than was the case for the other services in most years. Nevertheless, 
some differences do exist among budget requests, funding, and 
obligations. 

* Air Force trend data for S/RM activities during fiscal years 2001 
through 2004 show that obligations were greater than funding or budget 
requests in each of the 4 years. According to Air Force officials, BOS 
and other O&M activities' funds were redesignated by installation 
commanders in fiscal year 2004 to supplement S/RM funds. 

Additional details on funding trends for the Navy, Marine Corps, and 
Air Force are included in appendix V. 

Accurate Forecasts of BOS Requirements and Funding Needs Have Been 
Hampered by Several Factors: 

DOD and the military services' ability to forecast BOS requirements and 
funding shortfalls have been hindered by the lack of a common 
terminology across the services for defining BOS functions, as well as 
by their lack of a mature analytic process for developing BOS 
requirements comparable to the one developed for facilities sustainment 
requirements. The lack of common definitions for BOS services among the 
military services impairs the development of a complete picture of 
total BOS requirements across the military services, and it can lead to 
differing expectations where multiple military services are colocated 
on a single installation. Historically, each service has developed its 
own BOS requirements and funding needs, based on previous expenditure 
levels and subject to its own definition of BOS and the types and 
levels of services it has deemed necessary to provide. Various efforts 
are under way to improve BOS management and strengthen the ability of 
DOD and its components to forecast future requirements, provide 
Congress with a clearer basis for making funding decisions, and ensure 
adequate delivery of services, but OSD and the services recognize that 
more are needed. 

Lack of Common Definitions of BOS Functions and Services Leads to 
Different Expectations: 

In completing this review we found that what constitutes BOS functions 
and services varies among the military services, thus contributing to 
the existence of different expectations for the levels of BOS services 
being provided.[Footnote 17] Also, this variation has carried over into 
the support agreements and reimbursement practices used by the 
different commands and military services located at the installations. 
In visiting various military installations we found a variety of 
instances where the lack of a common definition of BOS functions and 
services was problematic, most often where multiple commands and 
military services were colocated at a single installation. 

For example, the Naval Air Station Corpus Christi, Texas, is host to 
non-Navy tenants, including the Coast Guard, the U.S. Customs Service, 
and an Army Depot. Coast Guard officials said that they enjoy numerous 
benefits by being at the base, including no rent payments and better 
security, housing, child care, and fitness centers--better conditions 
than they had experienced before moving onto the base. Despite the 
benefits afforded by their service agreement with the Navy base, Coast 
Guard officials expressed concern over decreasing levels of BOS 
services, including reductions that negatively impact their mission. 
For example, Coast Guard officials said they cannot always meet their 
30-minute launch requirement for nighttime air missions because the 
base has cut back on operating hours, keeping the airfield open only 
during the day. Therefore, Coast Guard officials said, when performing 
after-hours missions, the flight crew must get out of their aircraft, 
stop traffic, and manually unlock and open a gate to access the runway. 
This process sometimes makes it impossible for the Coast Guard to meet 
its 30-minute launch requirement. In addition, Coast Guard officials 
said they could never be certain that runway lights would be on when 
they needed to land late at night or whether the tower would answer, 
and they are unable to conduct training at the base at night, when the 
airfield is closed. Corpus Christi Army Depot, another of the Naval Air 
Station's tenants, also has a service agreement with the base that 
identifies which services are to be provided by the Navy at no cost and 
which services the Army Depot must pay for (through reimbursements to 
the Navy). Army Depot officials told us that they were incurring 
increasing costs but receiving reduced BOS services from the Navy. 
Corpus Christi officials said they had no choice but to reduce services 
because they did not have the BOS and S/RM funds needed to maintain the 
levels of services they had provided in the past. 

Tinker Air Force Base, Oklahoma, houses multiple Air Force missions 
across multiple commands and also hosts the Navy as a tenant activity 
on the base. An Air Force official from a command other than the one 
responsible for managing the base told us that its support agreement, 
signed in 1996, did not clearly specify the quantity or quality of 
services the base would provide and that the base did not have enough 
money to provide all of the needed services. As a result, the tenant 
said it spends from $55,000 to $75,000 a year on BOS services from its 
O&M mission accounts and works personnel extended hours to meet some 
needs. We found that the Navy tenant has an interagency support 
agreement with the Air Force, regarding which services the Air Force is 
to provide at no cost (such as food services), which services the Navy 
will reimburse the Air Force for (such as utilities), and which 
services the Air Force will not provide due to the uniqueness of 
different approaches and governing regulations between the military 
services (such as legal support personnel). The Air Force at Tinker has 
contracted with the private sector for much of its BOS, and the Navy 
shares in the cost of that contract, in accordance with its interagency 
support agreement. While Navy officials stated that overall the BOS 
services provided by the Air Force were adequate, they nonetheless 
expressed concern about limitations in some base support services, 
which forced them to pay separately for some BOS services, such as 
security and education, out of other O&M funds. Navy officials also 
expressed concern that some expected BOS services were being scaled 
back; for example, mail service pickup and delivery were reduced from 
twice to once per day, and fire department inspections and repair and 
replacements of fire extinguishers were postponed. Navy officials 
expressed further concern about service reductions in the facilities 
sustainment area, compromising preventive maintenance and contributing 
to further deterioration of the facilities. 

According to Tinker Air Force Base officials, they do not have 
sufficient funds to provide all BOS and S/RM services at the levels or 
timing desired by their tenants, and they have worked to gain 
efficiencies in their programs and have scaled back some programs that 
are not mission critical. For example, they said that they can only 
replace carpet once every 10 years; thus, if a tenant's carpet is worn 
out in 8 or 9 years, the tenant must either wait 1 or 2 years or use 
other funds to pay for new carpet. Tinker officials conceded that there 
is not as much money available for preventive maintenance as they would 
like, but they believe that the base has done a good job of fixing 
things when they break. They acknowledged that the tenants might think 
things do not get fixed fast enough, but stated that the base and its 
contractor are in full compliance with Air Force standards for 
performing such services. In addition, they are negotiating revisions 
to their support agreements to help clarify which BOS and S/RM services 
the tenants should pay for and which services should be the 
responsibilities of the base. 

We found similar concerns at the other installations we visited, 
particularly those with multiple commands represented on a single base 
or with one service residing as a tenant at an installation operated by 
another service. The potential magnitude of the problem of differing 
expectations is significant, as the Army alone has about 1,200 
agreements with the other military services to provide BOS services and 
about 250 agreements with other agencies for this purpose. As DOD 
increasingly emphasizes jointness and potentially joint basing, 
problems such as those noted above are likely to increase in the 
absence of clearer delineation of BOS service requirements and common 
definitions of BOS functions. 

Requirements and Funding Needs Have Historically Been Service Driven 
and Based on Previous Expenditure Levels: 

The Office of the Deputy Under Secretary of Defense for Installations 
and Environment oversees the procedures that the military services use 
to develop BOS requirements and funding needs, but each service has 
historically developed its own BOS requirements and funding needs 
subject to its own definition of BOS and the types and levels of 
services it deems necessary to provide. Unlike the facilities 
sustainment area, in which DOD has developed a model useful for 
forecasting funding requirements, for BOS the services have had few 
institutional-level requirements-forecasting tools. Until recently, 
they have relied heavily on previous expenditures as the basis for 
stating their future requirements. But while the services can tell 
Congress how much was spent in an area in the past, they do not 
necessarily know whether these services were provided at appropriate 
levels or how much it would or should cost to provide them in the 
future. DOD and the services have recognized this as a problem and have 
various initiatives under way to better develop and calculate BOS 
requirements and funding needs, similar to what they have done in the 
facilities sustainment area. 

As noted earlier, DOD has taken steps to improve its identification of 
the funding required to maintain its facilities. For example, as we 
previously reported, in 1999 DOD issued its first defense facilities 
cost factors handbook. Based on the guidelines in the handbook, DOD 
divides defense facilities into approximately 400 categories and uses 
commercial benchmark costs to determine the annual cost per square foot 
(or similar unit of measure) to sustain each facility type. The purpose 
of the handbook was to standardize the methods by which the services 
would determine the sustainment costs of their facilities and to 
establish a minimum sustainment funding level for facilities. Likewise, 
in 1999, DOD developed the facilities sustainment model, which 
estimates the annual sustainment cost requirement, adjusted for area 
costs, for each service and defense agency, based on the number, type, 
location, and size of its total inventory of facilities. Because of 
competing priorities, the services have not always funded sustainment 
at 100 percent of requirements identified using these tools, and we 
have reported instances where percentages of funding reaching 
individual installations varied. Nonetheless, these tools offer a 
superior basis for identifying requirements than existed previously. 
Similar tools have not been developed for forecasting requirements in 
the BOS area, although OSD and individual services are taking some 
steps to improve forecasting BOS requirements. 

Until recently, the Army relied heavily on historical expenditures as 
the basis for stating its future BOS requirements. In the mid-1990s, 
the Army developed a model that forecasts its BOS requirements based on 
regression cost-estimating relationships derived using historical data, 
demographics, pacing measures, and quality factors. According to Army 
officials, they continually work to improve the model and to update the 
information used in it. They indicated that since the model currently 
reflects all the resources needed to provide BOS programs and services 
at the highest standards without any shortcomings, the Army does not 
expect to fully fund its requirements and is working instead to ensure 
that the necessary and affordable services are provided. Army officials 
told us that they are now working to develop common level of support 
models that they will use to provide definitive guidance, performance 
standards, and performance measures for the uniform delivery of various 
BOS services at an affordable support level across Army installations 
worldwide. The Army is evaluating 95 categories of services and plans 
to implement its common level of support models incrementally, 
beginning in fiscal year 2005, as it completes its evaluations of 
selected service categories. For example, the Army analyzed the various 
activities that constitute recreation services-- exercise programs, 
libraries, movie theaters, and sporting events--and solicited the 
users' priorities. It then determined which activities need no longer 
be provided[Footnote 18] and developed common standards that it plans 
to apply to remaining recreation services at each installation. 

The Navy is also moving away from historical expenditures as the basis 
for stating its future BOS requirements. In fiscal year 2004, the Navy 
centralized its installations management and began costing out its BOS 
services based on a selection of service capability options ranging 
from 1 (most) to 4 (least). According to Navy officials, by providing a 
range of service levels and funding requirements associated with those 
levels for various BOS services, decision makers can see what risks 
they face with selecting given levels of funding. In an effort to 
reasonably balance the levels of services provided against risk and 
affordability, Navy officials said that no capability level 1 or 4 
options were selected in implementing fiscal year 2004 BOS programs and 
services. Instead, BOS programs and services specifically tied to air 
and port operations, utilities, and some recreational services at 
remote overseas locations were to be funded at level 2. All other BOS 
programs and services--including such things as environmental 
compliance, public safety, and human resources--were to be funded at 
level 3. However, officials at Navy bases we visited told us that there 
were not enough funds available to the installations in fiscal year 
2004 to provide services even at the reduced levels and that they were 
experiencing degradation in the quality of some services, which in some 
cases had gone to level 4. For example, Navy officials at Corpus 
Christi said that although fire protection was to be funded at level 3 
in fiscal year 2004, they received only 82 percent of the funding 
needed to provide that level of service, resulting in the actual 
service level provided being level 4. Navy officials stated that the 
level of fire protection at Naval Air Station Corpus Christi is in full 
compliance with DOD and Navy requirements. 

The Marine Corps also has had few institutional-level tools for 
forecasting requirements and, for the most part, has relied on 
historical expenditures as the basis for stating its future BOS 
requirements. Marine Corps officials told us that some BOS programs 
have performance requirements, such as response times and minimum 
staffing necessary for their fire protection and emergency response 
teams to effectively and safely operate during emergencies. By 
utilizing the performance requirements and their metrics, they can 
evaluate their response times to forecast staffing requirements to 
operate a fire department, which in turn drives the program's funding 
requirement. Although based primarily on the previous year's execution 
amounts, Marine Corps officials told us that most Marine Corps BOS 
programs and services are executed as required by the base commanders, 
who have many competing needs, many of which vary annually. For 
example, if the installation has a heavy snow year, the commander may 
reduce the requirement to cut the grass to stay within budget. 

The Air Force has historically based its BOS requirements on the 
average of the previous 4-year obligations, with programmatic 
adjustments as necessary. However, beginning with the fiscal year 2006 
budget submission, Air Force officials told us that BOS requirements 
for the active Air Force major command installations were derived from 
a BOS cost projection formula that used multiple linear regression 
analysis involving BOS personnel, plant replacement value, and 
contractor manpower equivalents.[Footnote 19] The Air Force Reserve and 
Air National Guard BOS requirements are still based on the 4-year 
average method. Air Force officials said that their major commands are 
actively engaged with subordinate commanders in the funding and 
management of BOS services and programs at their installations. 

OSD Has Launched Some Initiatives to Improve BOS Management and Enhance 
Requirements Determinations: 

In addition to the military services' efforts to address BOS, OSD has 
recognized BOS management as a problem and, in March 2004, the Office 
of the Deputy Under Secretary of Defense for Installations and 
Environment designated the improvement of BOS management as a priority. 
According to office officials, DOD's and the military services' ability 
to forecast BOS requirements and funding needs has been hindered by the 
lack of a common terminology across the military services for defining 
BOS functions and the lack of common definitions impairs the 
development of a complete picture of total BOS requirements and can 
lead to differing expectations for services where multiple military 
services are collocated on a single installation. Office officials 
explained that BOS is not a single program but instead comprises many 
diverse functions and activities--the Army has identified 95 different 
categories of BOS functions, the Navy has identified 124 categories, 
and so forth. The different BOS functions and activities used by the 
military services are shown in appendix II. Recognizing that 
definitions of BOS functions varied among the military services, 
officials in the Office of the Under Secretary told us that they are 
working with the services to (1) develop a common definition of BOS 
services and programs between the military services, (2) improve the 
tracking of BOS funding, (3) model BOS requirements, and (4) measure 
performance. Accomplishments through March 2005 include updating the 
Defense Installations Strategic Plan to articulate the need to define 
common standards and metrics, using commercial benchmarks as a starting 
point to define and model each subfunction of facilities operations 
(utilities, leases, custodial services, snow plowing, and the like) and 
establishing cross-service working groups to examine definitions and 
budget structures. Officials with the Office of the Under Secretary 
said that common definitions and standards would be developed 
incrementally, a process that could take several years for full 
development and implementation. 

In a related effort, in late 2004 a separate Senior Joint Basing 
Group[Footnote 20] that was created to address installation management 
issues at joint bases began efforts to resolve long-standing challenges 
involving support agreements where one service is a tenant on an 
installation operated by another service. Key enablers to this effort 
are common definitions and DOD-wide standards, metrics, and 
reimbursement and costing rules for BOS services and programs between 
the military services. This group has its own set of time frames for 
resolving the long-standing inconsistencies among the definitions of 
BOS services. Specifically, a Senior Joint Basing Group official told 
us that by the end of 2005, the four military services expect to have a 
common set of BOS services and programs to use in support agreements at 
joint bases. It appears that a difference between OSD and the group is 
that OSD focuses on developing common definitions of BOS services for 
use in benchmarking funding requirements for future-year programming 
and budgeting purposes at the DOD component level, while the Senior 
Joint Basing Group focuses on developing common definitions of BOS 
services for use in executing the programs and services at the 
installation level in a joint environment. Also, DOD has attempted to 
gain managerial control and better oversight of facilities and 
installations by establishing an Installations Capabilities Council 
(formerly called the Installations Policy Board). The council, chaired 
by the Deputy Under Secretary of Defense for Installations and 
Environment, serves as the coordinator and integrator of all 
installation tasks and activities. Collectively, these initiatives 
offer an overall vision for resolving the long-standing inconsistencies 
in the definitions of BOS services and the development of analytically 
based requirements. Even so, we found that time frames for completing 
BOS tasks were being reported differently by different groups which 
raise questions about how well these efforts will be coordinated, 
synchronized, and integrated. 

Regarding DOD's efforts in modeling BOS requirements, the same official 
with the Office of the Deputy Under Secretary of Defense for 
Installations and Environment expressed doubt regarding whether there 
could be a single BOS model because BOS, as it currently exists, has 
too many diverse activities to model (see app. II). Also, because 
various BOS functions are managed by various offices in DOD[Footnote 
21] this official told us there is no single focal point, and 
therefore, it is likely that a suite of BOS tools will evolve. It will 
take some time to fully develop them and each office in DOD may 
ultimately run its own model or metric. As a starting point, the Office 
of the Deputy Under Secretary of Defense for Installations and 
Environment is developing a facilities operation model that will 
capture all the functions related to facilities (utilities, fire 
protection, grounds maintenance, and so forth). The requirements in 
this model will be driven by the facilities inventory, commercial 
benchmarks, and local factors, including weather and labor rates. The 
office has been building the cost factors for a few months and 
simultaneously preparing the model. A prototype facilities operations 
model, tested on March 31, 2005, is being validated and targeted for 
implementation in fiscal year 2008. Next, the office expects to address 
those installation services that are not related to facilities. These 
functions include transportation, supply, and information management. 
There will likely be a model or metric for each of these functions, 
such as a "transportation activities model" or a "human resources 
management metric." An official in the Office of the Deputy Under 
Secretary of Defense for Installations and Environment told us that a 
transportation activities model may be very much like the facilities 
sustainment model, except that instead of being based on an inventory 
of facilities, it could be based on an inventory of vehicles. The human 
resources management metric may be like the facilities recapitalization 
metric, except that instead of being based on a facilities inventory, 
it may be based on an inventory of people. The Office of the Deputy 
Under Secretary of Defense for Installations and Environment and the 
Office of the Secretary of Defense for Program Analysis and Evaluation 
will likely act as overseers of the whole process. Specific time frames 
for developing the installations services models have not been 
established. 

Centralized Installation Management Has Many Benefits, but More 
Perspective Is Needed Before It Can Be Fully Evaluated: 

The Army's and Navy's creation of centralized installation management 
agencies has resulted some operating efficiencies, according to many 
officials at installations we visited, but their efforts to date have 
met with mixed results in terms of the quality, level of support, and 
flexibility needed to quickly respond to changing needs. A common 
concern was that the centralized management efforts had not 
sufficiently recognized the diverse needs of the installations' many 
tenants who require quick reaction in the face of changing 
circumstances. The centralized management approach seeks efficiencies, 
and Army and Navy officials acknowledged the growing pains associated 
with implementing the new approach. The Air Force and Marine Corps, 
using a more decentralized facilities management approach at the time 
of our review, also reported having achieved selective consolidations 
and efficiency measures to improve operations and achieve savings. 
Until more experience is gained under existing centralized approaches, 
with opportunities to address issues identified herein, it is difficult 
to recommend expanding the concept to the other military services. 

Army's and Navy's Centralized Management Approaches Seek Efficiencies: 

The Army's IMA implements a centralized and streamlined installations 
management concept that oversees all base operations and S/RM funds for 
Army installations and supervises seven regional management centers 
worldwide that are responsible for 10 to 30 installations each. IMA is 
designed to bring together all BOS services to ensure optimal care, 
support, and training of the Army's fighting force at a standard level 
across installations. Key objectives of the organizational structure 
include ending the movement of funds among BOS, S/RM, and mission 
accounts by major commands and implementing consistent standards across 
the Army for designating these funds. IMA is also pursuing 
opportunities for increased efficiencies and decreased expenditures at 
its installations. IMA established a productivity improvement review 
process to identify and implement hard savings and performance 
enhancements. 

During our visits to IMA-managed installations, we observed firsthand 
the emphasis being placed on cost efficiencies and decreased 
expenditures at the installations. Typical efficiency actions completed 
or under way included consolidations of contracts and services. 
Officials at IMA's Southwest Region told us that one benefit was the 
ability to look across multiple major commands and then realize 
benefits through consolidations or other efficiencies. For example, 
common phone services at three of the region's installations, each 
previously managed by a different major command, ranged from about $54 
per month to more than $100 per month per employee. Officials said they 
were in the process of combining the three contracts into a single 
contract with reduced rates. 

The Navy's installation management agency is an organizational concept 
that through centralized management of its installations, is intended 
to permit mission commanders to focus their energies on their 
respective mission accomplishment. According to CNI officials, 
consolidating eight offices into a single office responsible for 
installation planning, programming, budgeting, and resource execution 
enabled CNI to realize an immediate benefit. Through this consolidating 
and streamlining event, the Navy increased its visibility over 
installation management and resources and gained an ability to allocate 
resources between functional programs, regions, and installations to 
better support the overall Navy. As the single responsible office, 
advocate, and point of contact for Navy installations, CNI is pursuing, 
among other things, opportunities for increased efficiencies and 
decreased expenditures at its installations. 

During our visits to CNI-managed installations, we observed firsthand 
the emphasis being placed on cost efficiencies and decreased 
expenditures at the installations. Typical efficiency actions completed 
or under way included eliminating the installation-level management 
structure and in its place installing a regionalized management 
structure for such activities as housing management, contracting, 
supply, business and administrative management, maintenance, and 
warehousing. Officials at CNI's Southwest Region told us that 
consolidated and centralized management would eliminate 2,175 civilian 
personnel positions in the region. The officials had also consolidated 
more than 50 contracts into 12. Similarly, officials at CNI's South 
Region told us that regionalized management would generate $43 million 
of savings and cost avoidances throughout the region over 5 years by 
eliminating installation-level management and by consolidating 
contracts and services. 

Growing Pains in Implementing Army's and Navy's Centralized Management 
Approaches: 

Officials at the Army and Navy installations we visited expressed 
concerns regarding the reduced levels of BOS and S/RM services they 
were receiving, but they did not always distinguish between changes 
brought about by a new management structure and changes necessitated by 
funding shortfalls and the need to move funding to warfighting 
priorities. The most critical issue involved the different major 
commands' mission and support needs. Officials at the Army and Navy 
installations we visited contended that a "one-size-fits-all" approach 
was not working well; they expressed concern that although air and 
ground operations and various training missions each required a 
different level of BOS, they did not perceive that difference always 
being recognized by the centralized management agencies. Officials from 
commands on Navy bases stated that CNI needed to step back and identify 
service levels appropriate for their customers' needs and recognize 
changes in operations (such as increases in the sailor population), and 
then fund to those levels. Officials from major commands claimed that a 
disconnect existed between their mission needs for BOS and CNI's 
perspective and that in their judgment CNI should not be responsible 
for determining the relative priorities of various mission activities' 
BOS needs. For example, Navy Mine Warfare Command officials told us 
that in fiscal year 2004 they had to spend $327,000 of O&M mission 
funds for BOS services because the command no longer received BOS funds 
and CNI either delayed funding or did not pay for the services out of 
its BOS funds. 

Citing growing pains associated with the centralization of installation 
management above the installation level, installation officials raised 
concerns about staffing levels, cited delays in obtaining funding 
guidance, and articulated concerns with IMA's ability to quickly 
respond to shifting needs. For example, during fiscal year 2004, IMA 
opted not to redesignate available S/RM funds to meet an emerging 
funding need in BOS activities. At Fort Eustis, an installation 
affected by IMA's decision, officials told us that the installation 
commander had the flexibility to move funds where needed before the 
creation of IMA, and the installation commander would have done so this 
year but doing so would have caused significant facilities maintenance 
work to be deferred. These officials explained that because IMA 
directed installations to use existing S/RM funds for maintaining 
facilities while BOS funds were depleted, Fort Eustis and other 
installations had to request an additional $200 million of BOS funds 
from IMA headquarters. They did not receive these funds until the end 
of the fiscal year. 

In visiting various military installations we found instances where a 
lack of clarity existed concerning who or what source was responsible 
for funding select base support functions--installation tenants and 
their O&M funding or the installation's O&M funding. Furthermore, we 
found many cases where delays in funding from the installation 
management agency prompted an installation's tenants to fund BOS 
services from mission funds. For example, installations in IMA's 
Southwest Region and their tenants could not agree on who should pay 
for such services as the following: information management services and 
specialized information technology equipment (such as cell phones and 
pagers), dedicated administrative use vehicles, long-distance phone 
service, postage, dedicated copiers, hazardous waste disposal, and 
tactical equipment maintenance. 

Officials with major command organizations at Naval Base San Diego and 
Naval Air Station Corpus Christi said that under CNI they are seeing 
the closing of automobile hobby shops, libraries, swimming pools, and 
other recreational activities. The officials said they were concerned 
that the reduction or elimination of base services would encourage 
military personnel to spend more time away from the bases and in less- 
controlled or less-desirable places. In addition, officials said 
mission operations have been affected by funding shortages. For 
example, at Naval Base San Diego, tugboat operating hours were cut back 
and the number of tugboats being used was reduced from six boats to 
four boats, at CNI's direction. Although this action saved money on 
fuel operations and overtime pay, once San Diego's port operations 
demonstrated that they could not meet mission requirements with fewer 
tugs, CNI authorized that an additional tugboat be returned to service. 
Navy officials stated that some facility closures (e.g., auto hobby 
shops) are due to lack of interest and are offset by facility openings 
(e.g., cyber cafes). 

Finally, officials at various installations expressed concern that they 
were not receiving sufficient facilities sustainment funding to 
maintain their facilities at levels they had expected relative to DOD's 
facilities sustainment model, which was congressionally funded at 94 
percent of the facilities sustainment requirement in fiscal year 2004. 
For example, Naval Station Ingleside, Texas, provided documentation 
showing that facilities sustainment funds available to it were only 62 
percent of its facilities sustainment requirement under the model. An 
official at another installation claimed facilities sustainment funding 
to be as low as 45 percent of their facilities sustainment requirements 
under the model. As we have previously reported, such funding 
shortfalls adversely affect efforts to maintain facilities and provide 
base support services. DOD officials stated that the facilities 
sustainment model is a macro programming tool that establishes an 
average annual investment across entire defense components for 
categories of facilities over the life of those facilities and, 
therefore, the actual requirement for a single facility or small set of 
facilities can be expected to vary across sets of facilities or 
installations and from year to year. They stated that when the 
sustainment program is funded at 94 percent of requirements, they would 
not expect every installation and every facility to be funded at 94 
percent of its individual requirement. We recognize that facilities 
sustainment funding levels at individual installations may vary from 
overall funding levels in a given year, depending upon where the 
facilities are in the sustainment cycle. However, this view was not 
widely recognized at the installations we visited, particularly when an 
installation's sustainment funding was significantly less than overall 
sustainment funding levels. Military barracks and housing repairs were 
frequently delayed due to lack of S/RM funding, according to 
installation officials, and the following problems have been typical: 
leaking roofs; peeling painting; worn carpet; lack of hot water in the 
showers; energy inefficient windows; cracked sinks in bathrooms; broken 
heating, ventilation, and air conditioning systems; and molded ceilings 
and walls. Although funding shortfalls have been disruptive to planned 
maintenance and support programs and have potentially caused adverse 
effects on quality of life and morale, it is difficult to measure any 
direct impact they may have on readiness. Officials with major command 
operations at the installations we visited often voiced concerns about 
the potential impact on operations and readiness in the future, should 
these conditions continue. They were particularly concerned with the 
cumulative impact of continually working military personnel extra hours 
and weekends to make up for the lack of funding in S/RM and BOS 
programs. 

Army IMA and Navy CNI installation management officials we contacted 
viewed these concerns and problems as being temporary in nature and 
attributable to organizational growing pains and, to some extent, to 
personnel's resistance to the changing the role of the installation 
commander. They told us that while having consistent levels of services 
from one installation to the next was their goal, they have made 
exceptions when warranted. The officials also pointed to factors 
outside their control--including unforeseen contract increases, cost of 
war assessments, replacing military personnel with civilians, and 
funding shortfalls--that either delayed or masked the real impact of 
their efforts. 

Marine Corps and Air Force Report Having Achieved Efficiencies without 
Centralization: 

Marine Corps officials said that the Marine Corps' BOS and S/RM 
activities have always been somewhat centrally managed, but they 
generally defer to the individual installation commanders the decisions 
about the level of BOS services required and issues regarding quality 
of life at installations. Marine Corps officials also emphasized 
eliminating inefficiencies in the areas of installation management and 
achieving success without changing the organizational structure used to 
manage installations. The Marine Corps uses five broad activities to 
manage its O&M appropriations--Pacific forces, Atlantic forces, reserve 
forces, logistics, and other activities--and BOS is a crosscutting 
program blended into several subactivity groups across these 
activities. 

Without the centralized installations management structure being used 
by the Army and Navy, the Marine Corps has been able to achieve cost 
savings and efficiencies. For example, during our visits to Marine 
Corps bases Camp Pendleton and Miramar Air Station in California, we 
found that in recent years increased management emphasis had been 
placed on regionalizing and consolidating resources to reduce costs. 
For example, Camp Pendleton is the site of several of the logistical 
functions for Marine Corps bases in the region (such as 29 Palms and 
Miramar), including a regional contracting office, a regional motor 
pool, and a central supply center. According to officials at Camp 
Pendleton, the regional approach has already produced savings of more 
than $1.5 million dollars, and additional regionalization efforts are 
being pursued. 

The Air Force has integrated BOS and installations management into its 
mission activities and continues to manage in a decentralized manner, 
using Air Force-level guidance. The Air Force views centralized 
installation management as less flexible in providing BOS services than 
base-level organizations and less responsive to the urgency and 
priorities of the bases' requirements. Air Force major commands are 
actively engaged with subordinate commanders in the funding and 
management of Air Force installations. The Air Force uses four broad 
activities to manage its O&M appropriations--operating forces (air, 
combat, and space); mobilization; training and recruiting; and 
administration and servicewide operations (logistics, security, 
international support, and other servicewide operations). BOS is a 
crosscutting program blended into several subactivity groups across 
these activities. 

Without using a centralized installations management structure 
comparable to those being used by the Army and Navy, the Air Force has 
succeeded in achieving some cost savings and efficiencies. For example, 
officials at Randolph Air Force Base, Texas, said they saved $190,000 a 
year by consolidating a packaging process at the base's hazardous waste 
accumulation facility and were pursuing additional savings by 
consolidating and standardizing such services as cell phone contracts, 
printers and copy machines, and garbage pickup. In addition, the base 
had an active employee self-help program that performed a lot of 
activities after hours, including painting walls and buildings, 
standardizing workstations, and internal training. 

Insufficient Basis for Expanding Centralized Management Concept at This 
Time: 

At each of the military installations we visited, we observed 
reductions in BOS and S/RM services related to funding constraints. 
(App. IV highlights some key impacts of funding shortfalls and 
redesignations on BOS and S/RM activities and locations we visited.) 
BOS services that were being scaled back or eliminated at the various 
installations we visited included the numbers of rescue and firefighter 
operations; port and airfield operating hours and accessibility; and 
recreational and leisure facilities. We also observed the impacts of 
delayed maintenance on facilities, including deterioration of buildings 
(leaking roofs and ceilings, energy inefficient windows, and broken 
stairwells and fire escapes); breakdown of equipment (heating, 
ventilation, and air conditioning and boilers); cracked pavement at 
airfields; damaged storm drains and sewer lines; and reduced structural 
upgrades and replacements (painting, carpet, and furniture). We also 
observed reductions in other O&M funded activities (medical and 
emergency services). However, there are many unresolved questions 
regarding the centralized management agencies' culpability for the 
reductions in the levels of BOS and S/RM services that were being 
provided at these installations. 

As noted above, various Army and Navy installation officials cited 
growing pains associated with the centralization of installation 
management, including adequacy of funding, services provided, and 
ability to quickly respond to shifting needs. At the same time, we 
recognize that a centralized approach does offer opportunities to 
obtain economies and efficiencies in providing services that may be 
difficult to attain otherwise. Nevertheless, until more experience is 
gained under the existing centralized approaches, with opportunities to 
address concerns identified to date, we are not in a position to 
endorse expanding the concept to the other services at this time. 

Conclusions: 

DOD's Office of the Deputy Under Secretary of Defense for Installations 
and Environment and the services have acknowledged a lack of common 
definitions for BOS and standards for BOS services, along with related 
difficulties in identifying analytically based BOS funding 
requirements. Until these problems are resolved, DOD will not have the 
management and oversight framework in place that it needs for 
identifying total BOS requirements, providing Congress with a clear 
basis for making funding decisions, and ensuring adequate delivery of 
services, particularly in a joint environment. Action is needed to 
expedite development and consistent implementation of an analytically 
sound and consistently applied model for determining BOS requirements 
comparable to the approach used in defining facilities sustainment 
requirements. Until this is done, uncertainties will remain concerning 
actual requirements, and S/RM and other O&M funding will likely 
continue to be redesignated to fund BOS costs rather than used for its 
intended purpose. Furthermore, as we have previously reported and 
continue to note in this report, DOD's installations and facilities 
have been insufficiently maintained and recapitalized for several 
years, a problem that is exacerbated when S/RM funds are redesignated 
to cover BOS programs and services. Thus, the adverse effects on BOS 
programs and facility maintenance efforts attributable to moving funds 
among these activities can also negatively affect quality of life, 
morale, and readiness should these conditions continue. Because DOD is 
still in the early stages of developing its BOS initiatives, time 
frames for accomplishing many of the specific actions under way or 
planned have either not been established or have not been synchronized 
among the working groups addressing them. 

Recommendations for Executive Action: 

To better synchronize the efforts and milestones of the various groups 
working to improve the management and funding of BOS activities, we 
recommend that the Secretary of Defense update DOD's Defense 
Installations Strategic Plan to include specific actions and establish 
time frames first, to resolve long-standing inconsistencies among the 
definitions of BOS services and, second, to help expedite the 
development and implementation of an analytically sound and 
consistently applied model for determining BOS requirements. 

Agency Comments and Our Evaluation: 

In commenting on a draft of this report, the Deputy Under Secretary of 
Defense for Installations and Environment concurred with our 
recommendations and indicated that actions were under way or planned to 
implement them. He noted that our draft report did not properly 
differentiate sustainment programs from restoration and modernization 
programs. As suggested, we revised our report to make clearer this 
distinction. In addition, he commented that our draft report implied 
that each installation should receive funding to match the overall 
sustainment rate every year. We did not intend to imply that each 
installation's sustainment funding should match exactly the overall 
rate each year and we clarified our report accordingly. While we 
recognize that sustainment funding at individual installations may vary 
somewhat from year to year, we also note that it is often significantly 
less than one might expect given the difference between projected 
overall levels of funding and what is actually experienced at the 
installation level. For example, one installation we visited received 
funding for only 45 percent of its sustainment requirement. 

The Deputy Under Secretary of Defense's comments are reprinted in 
appendix VI. DOD also provided technical clarifications, which we 
incorporated as appropriate. 

We are sending copies of this report to interested congressional 
committees and members; the Secretary of Defense; the Secretaries of 
the Army, Air Force, and Navy; and the Commandant of the Marine Corps. 
The report is also available at no charge on GAO's Web Site at 
[Hyperlink, http://www.gao.gov]. 

If you or your staff have any questions on the matters discussed in 
this report, please contact me at (202) 512-5581 or [Hyperlink, 
holmanb@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 appendix VII. 

Signed by: 

Barry W. Holman, Director: 
Defense Capabilities and Management: 

[End of section]

Appendixes: 

Appendix I: Scope and Methodology: 

To determine the historical funding trends for base operations support 
(BOS) as contrasted with funding for facilities sustainment, 
restoration and modernization (S/RM), we reviewed financial data, such 
as budget requests, congressionally designated amounts as adjusted, and 
obligations for fiscal years 2001 through 2004 that we obtained from 
the Army, Air Force, Navy, and Marine Corps. We compared funding 
requirements, budget requests, adjusted congressionally designated 
amounts, and obligations across the services to identify historical 
trends for BOS and how it compared with funding for S/RM from the 
operation and maintenance (O&M) appropriation. We determined how actual 
funding for BOS and S/RM compared with the projected funding 
requirements identified by individual military services. We discussed 
the differences we found with officials from the Office of the 
Secretary of Defense (OSD) and the services to obtain a more thorough 
understanding of BOS and S/RM funding. 

For our historical analyses and for purposes of achieving consistency 
in the analyses, we used data provided by each of the military 
services. In doing so, we recognize that the funding amounts designated 
in the services' accounting records for O&M functional areas such as 
BOS do not coincide perfectly with the congressional conference report 
designations[Footnote 22] that were based on a set of defined but 
nonetheless diverse program elements and subactivity groups among the 
services. Service officials attributed the variance to their accounting 
for the BOS services provided at their respective installations--the 
number and names of which are different and expanded from the BOS 
subactivity groups used for the conference report--and to funding 
redesignations that occur during the year. Accordingly, this report 
uses the congressional designations as adjusted by the services' 
accounting and redesignations of O&M funds for BOS and S/RM to depict 
funding trends. (The Department of Defense (DOD) is currently seeking 
to restructure these accounts with improved tracking mechanisms.)

Also, to project trend data more consistently, the historical data 
provided by the services and included in this report do not include 
congressional adjustments of a one-time nature or supplemental 
appropriations for O&M that Congress provided during a particular 
fiscal year for such things as hurricane damage cleanup and repairs or 
for the Global War on Terrorism. We did not otherwise independently 
determine the reliability of the reported financial information. To 
determine the impact the funding trends had on the levels of BOS and 
S/RM services being provided to individual activities and 
installations, we visited and met with officials and viewed the 
condition of facilities firsthand at 13 installations across the 
country: Randolph Air Force Base, Texas; Tinker Air Force Base, 
Oklahoma; Naval Air Station Corpus Christi, Texas; Naval Air Station 
Kingsville, Texas; Naval Station Ingleside, Texas; Fort Sam Houston, 
Texas; Fort Monroe, Virginia; Fort Eustis, Virginia; Marine Corps Base 
Camp Pendleton, California; Miramar Air Station, California; Naval Base 
San Diego, California; Naval Base Coronado, California; and Naval Base 
Point Loma, California. In addition, we obtained a briefing from 
officials with the Naval Air Station Joint Reserve Base at Carswell 
Field, Fort Worth, Texas. We also interviewed these officials by 
telephone. We selected these installations because they represent a 
range of BOS programs, missions, major commands, and geographic 
locations. We recognize that the conditions we observed at these 13 
installations may not represent conditions at other DOD installations, 
and we did not attempt to project the results of our visits to all 
military installations. 

To evaluate how DOD and the military services forecast BOS requirements 
and funding needs, we reviewed OSD, Army, Air Force, Navy, and Marine 
Corp information pertaining to base operations requirements and funding 
and their roles in the overall base operations process. We reviewed the 
processes, planning documents, and proposals that DOD and the services 
use to forecast their needs. We interviewed officials from DOD's Office 
of the Under Secretary of Defense for Installations and Environment and 
Senior Joint Basing Group. To determine the services' definition of 
BOS, we interviewed OSD officials and representatives from each of the 
services and asked them to provide their working definition of BOS as 
used to determine BOS funding requests. 

To determine extent to which the Army and Navy reorganizations for 
managing installations have affected the quality and level of support 
provided to individual activities and installations and whether the 
Marine Corps and Air Force would benefit from similar reorganizations, 
we reviewed the guidance, procedures, and practices from the Army and 
Navy that specifically address reorganization, including comparisons to 
pre-reorganization data. We interviewed officials from the U.S. Army 
Installation Management Agency (IMA); IMA Southwest Region; IMA 
Northeast Region; Commander, Navy Installations (CNI) Command; CNI 
Region South; and CNI Region Southwest. We discussed the processes used 
in the incipient formation of centralized installation management 
organizations. We discussed the effects these changes have had on the 
planning and implementation of base operations support services as well 
as on the personnel and quality of life at the local level. We 
contrasted these data with information obtained from Marine Corps and 
Air Force officials. 

We conducted our review from April 2004 through April 2005 in 
accordance with generally accepted government auditing standards. 

[End of section]

Appendix II: BOS Functions and Activities Used by the Military 
Services: 

Each of the military services has a different approach to BOS and uses 
somewhat differing categories and definitions of services included in 
BOS. For example, the Army has identified 95 different categories of 
BOS functions, and the Navy has identified 124 different categories of 
BOS functions. For each service, BOS is a complex group of programs 
that support base operations and quality of life. The Office of the 
Deputy Under Secretary of Defense for Installations and Environment 
designated the improvement of BOS management as a priority and has 
announced plans to develop a common definition of BOS services and 
programs. 

BOS Functions and Activities Used by the Army: 

The Army categorizes BOS under nine major service areas. Within these 
broad service areas are 38 specific functions, and within these 
functions, the Army provides 95 different BOS services. The BOS 
functions and activities used by the Army are shown in figure 3. 

Figure 3: Army BOS Functions and Activities: 

[See PDF for image] 

[End of figure] 

BOS Functions and Activities Used by the Navy: 

The Navy categorizes BOS under operating forces support, community 
support, and base support programs. Within these general categories, 
nine major service areas are broken down into 29 functions. These 
functions are broken down further to include 124 BOS services such as 
food service contracts, recreation, and so forth. The BOS functions and 
activities used by the Navy are shown in figure 4. 

Figure 4: Navy BOS Functions and Activities: 

[See PDF for image] 

Note: Sustainment, restoration, and modernization are included under 
the base support functional area to recognize the close 
interrelationship that exists between them. For example, sustainment 
funds may be used to fix a leaking roof in a building that houses a BOS 
activity. 

[End of figure] 

BOS Functions and Activities Used by the Marine Corps: 

The Marine Corps categorizes its BOS functions and activities under 
seven major service areas. Within these broad service areas are 37 BOS 
services. The BOS functions and activities used by the Marine Corps are 
shown in figure 5. 

Figure 5: Marine Corps BOS Functions and Activities: 

[See PDF for image] 

[End of figure] 

BOS Functions and Activities Used by the Air Force: 

The Air Force provides BOS functions and services within its four broad 
mission areas--operating forces, mobilization, training and recruiting, 
and administration and servicewide activities. Within these mission 
areas are 11 functional areas. These functional areas are the framework 
for 63 BOS services. The BOS functions and activities used by the Air 
Force are shown in figure 6. 

Figure 6: Air Force BOS Functions and Activities: 

[See PDF for image] 

[End of figure] 

[End of section]

Appendix III: Army and Navy Base Operations Support Management 
Structure: 

Army Installation Management Agency: 

Prior to the establishment of IMA, 15 major commands managed base 
operations for the Army. IMA was created on October 1, 2002, to attain 
efficiencies from consolidating BOS services for the Army worldwide. As 
shown in figure 7, the activities, personnel, and services for base 
operations previously associated with the major commands were realigned 
under one organization with the establishment of IMA. 

Figure 7: Army Installation Management Agency Organization: 

[See PDF for image] 

[End of figure] 

Management decisions and funding designations now flow through IMA 
headquarters and its seven regional offices, four in the continental 
United States and three overseas, directly to installations for 
execution. IMA's intent with this structure is to support and enable 
mission commanders, achieve regional efficiencies, and provide 
consistent and equitable facilities and services with common standards. 
According to IMA officials, seven regions is the right size for 
efficient management; however, they said they would revisit their 
organizational structure following the outcome of the 2005 round of 
base realignment and closure. Figure 8 shows IMA's current locations. 

Figure 8: Army Installation Management Agency Locations: 

[See PDF for image] 

[End of figure] 

Commander, Navy Installations: 

A key event leading to the creation of CNI occurred in 1998 when the 
Navy consolidated or "regionalized" installation management functions. 
Regionalization was done to reduce BOS costs through the elimination of 
unnecessary management layers, duplicative overhead, and redundant 
functions. In conjunction with regionalization, the Navy reduced the 
number of its major claimants involved in the installation management 
business from 18 to 8. To further reduce costs the Navy stood up CNI in 
October 2003, further consolidating the Navy's installation management 
business under a single claimant. The CNI organization is shown in 
figure 9. 

Figure 9: CNI Organization: 

[See PDF for image] 

Note: Special assistants include Force Judge Advocate, Inspector 
General, Safety, Command Master Chief, Chief Information Officer, 
Public Affairs Officer, General Counsel, Chaplain, and Comptroller. 

[End of figure] 

As shown in figure 10, CNI is organized into 16 regions, 10 in the 
continental United States and 6 overseas. At the time of this report 
there was discussion regarding the possibility of further consolidating 
CNI's regional structure. According to CNI officials, maintaining 16 
regions may be more than is ultimately needed for the most efficient 
management structure; however, they said any decision to consolidate 
further would depend on the outcome of the 2005 round of base 
realignment and closure. 

Figure 10: CNI Locations: 

[See PDF for image] 

[End of figure] 

[End of section]

Appendix IV: Impact of Funding Constraints on BOS and S/RM Activities: 

At each of the military installations we visited, we observed 
reductions in BOS and S/RM services related to funding constraints. BOS 
services that were being scaled back or eliminated at the various 
installations that we visited included the numbers of rescue and 
firefighter operations, airfield and port operating hours and 
accessibility, and recreational and leisure facilities. We also 
observed the impacts of delayed maintenance on facilities, including 
deterioration of buildings (leaking roofs and ceilings, energy 
inefficient windows, and broken stairwells and fire escapes); breakdown 
of equipment (heating, ventilation, and air conditioning and boilers); 
cracked pavement at airfields; damaged storm drains and sewer lines; 
and reduced structural upgrades and replacements (painting, carpet, and 
furniture). We also observed reductions in other O&M funded activities 
(medical and emergency services). 

Observations at Army Installations: 

Fort Eustis, Virginia: 

Created in 1918, Fort Eustis is the home of the U.S. Army 
Transportation Corps and the Transportation Corps Regiment. At Fort 
Eustis and its satellite installation, Fort Story, officers and 
enlisted soldiers receive education and on-the-job training in all 
modes of transportation, aviation maintenance, logistics, and 
deployment doctrine and research. Officials told us that BOS funding 
shortfalls at Eustis have had some indirect impacts on training. For 
example, reductions in dining hall support may be a contributing factor 
to long lines in dining facilities, potentially causing soldiers to be 
tardy for training classes. 

We found indications of Fort Eustis's barracks needing repairs. Mold 
and deteriorating stairwells were an issue in the older barracks. 
Delayed barracks renovations include adding nonskid tracking to the 
stairwells and replacing cracked sinks in the bathrooms. Officials also 
said that Fort Eustis has deteriorated fencing, road paving, and 
heating and air conditioning for training facilities. Officials also 
showed us mission facilities with repair needs that have not been 
completed due to funding issues. At Fort Eustis's third port, concrete 
is crumbling and the repair of airfield hangar doors, roofs, and 
heating and air conditioning systems and routine maintenance of 
training facilities have yet to be completed. 

Public works officials at Fort Eustis also told us about storm drains 
that have been damaged and clogged by tree roots. They have similar 
problems with their sewer lines. 

Fort Monroe, Virginia: 

Fort Monroe is located in the city of Hampton, Virginia, and is 
headquarters of the Army's Training and Doctrine Command, which 
supports the Army's fighting forces through the development of doctrine 
and equipment requirements and training for combat. We observed a 
training facility that had extensive termite damage; to keep the 
facility in use, support beams had been added to the flooring to 
prevent it from caving in. Fort Monroe also closed several fire escapes 
due to eroding of the structures; had rusted and peeling metal 
staircases; and had heating, ventilation, and air conditioning systems 
that need to be overhauled. 

At the installation's marina, we also saw evidence of delayed repairs 
due to funding constraints. The foundation of the facility had rust and 
cracks caused by high tides, and pieces of the building were falling 
off. According to installation officials, the marina repairs, estimated 
to cost at least $300,000, have been backlogged for 3 to 4 years. 

Fort Sam Houston, Texas: 

In 1876, the Army began to move its facilities to the present site of 
Fort Sam Houston. Today, Fort Sam Houston is headquarters for various 
activities including the Army Medical Command, Fifth U.S. Army, U.S. 
Army South, and Brooke Army Medical Center. We observed some buildings 
and roads in need of repairs. We obtained information showing that, due 
to funding shortages in the BOS area, S/RM funds for painting projects, 
electrical repairs, and other preventive maintenance were being 
redesignated to pay for BOS services. 

Observations at Navy Installations: 

Naval Air Station Corpus Christi, Texas: 

Naval Air Station Corpus Christi started its first flight training on 
May 5, 1941. Its general command assignment is still pilot training, as 
headquarters for the Chief of Naval Air Training. However, recent 
cutbacks in BOS services reportedly constrained airfield operations, 
leading to overdue repairs and reduced hours of operation. A Coast 
Guard tenant representative told us about several airfield conditions 
that need repair. For example, we were told that deteriorating power 
systems were prone to failure, and when the power goes off, security 
gates have to be opened manually to access runways. Aged and unreliable 
hangar doors also delayed some launches. We were told that the naval 
base has been closing its field operations at night to reduce 
operational costs. As a result, Coast Guard tenants are uncertain 
whether runway lights will come on when their aircraft are landing late 
at night or whether the tower will answer their calls. Lastly, Corpus 
Christi Air officials said that they could not afford to pay for the 
required number of on duty firefighters at the airfield. To prevent the 
cancellation of training efforts and other air operations, the airfield 
operated under a safety waiver whereby no manned fire truck had to be 
present on the landing strip. 

Funding shortages also reportedly caused cutbacks in services at the 
Naval Hospital at Corpus Christi. Officials told us that due to 
decreased O&M funding, the hospital now operates as a clinic in terms 
of the level of services it is able to provide and that it refers some 
patients to other hospitals. Other reductions in services attributed to 
cost-saving measures at Corpus Christi included reducing pool hours 
from 42 to 20 hours per week (saving $50,000 for the year) and closing 
the enlisted members club at the installation. Base officials said it 
is less desirable for military personnel to go off base for 
entertainment and leisure services. 

Due to the lack of S/RM funding, base officials identified some 
barracks that were in poor condition. Officials showed us buildings 
with leaking roofs and water damage and mold. For example, a mold 
problem at one newly constructed housing facility was attributed to a 
design defect involving the placement of air conditioning vents, and 
officials estimated it would cost $1.6 million, which they did not 
have, to correct the problem. 

Naval Base Coronado, California: 

Established in 1917, Naval Base Coronado comprises two main units: the 
Naval Air Station North Island and Naval Amphibious Base Coronado. 
North Island itself plays host to 23 squadrons and 80 additional tenant 
commands. Officials from tenant organizations told us that the number 
of fire fighters had been reduced due to BOS funding constraints. 
Specifically, they said that there are supposed to be a total of 10 
firefighters on duty--6 for fire response to facilities and housing 
areas and 4 for the airfield--but the number of firefighters on duty is 
being reduced to 4. Officials said that when the firefighters have to 
respond to a structural fire on base, the airfield would be without 
fire protection and would have to shut down. Navy officials stated that 
the level of fire protection at Naval Base Coronado is in full 
compliance with DOD and Navy requirements. 

Officials said that because they have not had the amounts of S/RM funds 
needed to perform sufficient levels of maintenance and repairs, they 
have the following conditions at their facilities: frayed carpeting and 
rotted wood in barracks, broken water pipes, balcony railings with 
corrosion, cracked shower doors, poor shower drainage, and mold. 

Naval Air Station Kingsville, Texas: 

Naval Air Station Kingsville was commissioned in July 1942, and its 
primary mission is to train tactical jet pilots. Officials told us that 
several safety and security projects supporting this mission were 
eliminated due to lack of funding. For example, there is no longer an 
emergency response team on base. Therefore, if an accident occurs 
during a training operation, the base has to rely on emergency response 
from the local community. Also, as a result of limited O&M funding, 
there were no dentists at the dental clinic and no emergency services 
available at the medical clinic. 

Naval Base San Diego, California: 

Naval Base San Diego was established on February 23, 1922, as a 
destroyer base and later was named a naval repair base. Today, the base 
provides a wide range of both direct and indirect fleet support, 
including waterfront operations, security, supply, civil engineering, 
and many other administrative and leisure functions. Officials cited 
tugboat support as an example of a support program that has been scaled 
back due to the lack of BOS-designated funding. They said that the base 
had scaled back its number of operating tugs from six to four, but port 
officials could not meet mission requirements with fewer tugs. The 
number of tugs was subsequently increased to five. In other cost-saving 
initiatives, San Diego has recently scaled back its transportation 
service and uses vans instead of buses, has reduced the number of 
firefighters on duty, and is considering closing its driving range and 
officer's club. The library has also been closed, and due to mold 
problems, the child development center has been closed. 

Naval Base Point Loma, California: 

On October 1, 1998, six installations were consolidated as Naval Base 
Point Loma. Point Loma provides support services for submarines in the 
U.S. Pacific Fleet. In carrying out its mission to provide quality of 
life services for the operating forces, Point Loma is also the site of 
the Navy Alcohol Rehabilitation Center. We found examples of reductions 
in several leisure and recreational services due to BOS funding 
shortages in fiscal year 2004. For example, Point Loma has closed two 
libraries and an auto body shop, and is considering the possibility of 
closing a chapel. Also closed are the outdoor equipment rental facility 
and the leisure travel office. 

We also found several unattended maintenance issues at Point Loma. For 
instance, due to reduced maintenance, some barracks needed painting and 
new carpet. Installation officials complained about brown water in the 
drains of older barracks as well as leaking roofs. They also told us 
that windows are not energy efficient, which drives up energy costs, 
and that several parking lots needed to be repaved. 

Naval Station Ingleside, Texas: 

Naval Station Ingleside is one of three south Texas installations in 
Naval Region South. Ingleside's mission is to provide logistics and 
base support services to 41 commands--including 21 ships and 3,900 
personnel--that make up the Mine Warfare forces. As a result of budget 
constraints experienced in fiscal year 2004, Ingleside officials told 
us they had to reduce port operations working hours from 24 hours a 
day, 7 days per week, to 12 hours per day, 5 days per week; reduce 
overtime for personnel involved ship movements in port by 30 percent; 
and reduce personnel involved in various BOS programs. 

Observations at Marine Corps Installations: 

Marine Corps Air Station Miramar, California: 

On October 1, 1997, Naval Air Station Miramar was renamed Miramar 
Marine Corps Air Station as a part of a DOD realignment. Marine Corps 
Air Stations El Toro and Tustin were closed and their assets moved to 
Miramar by the end of 1999. Miramar is home for eight Hornet jet 
squadrons, four Super Stallion helicopter squadrons, one KC-130 
transport and refueling squadron, and nine station support aircraft. 

Several unexpected expenses affected the BOS funding needs at Miramar 
during fiscal year 2004. Although electricity rates increased by more 
than 70 percent, there was no corresponding increase in BOS funding to 
cover these unanticipated increases. To offset some of the costs, 
Miramar and other Marine Corps installations increased tenant rates for 
utility services and obtained $2.3 million in supplemental funding. In 
an effort to stop programs from moving mission operations funds to pay 
for BOS programs, the installation reduced services of less essential, 
non-mission-related projects, such as furniture and carpet replacement. 

Camp Pendleton, California: 

Camp Pendleton was established in September 1942. Camp Pendleton is an 
amphibious training facility and offers a wide array of training 
facilities, including firing ranges, landing beaches, parachute drop 
zones, and mock urban warfare towns. But in providing this training 
support, Pendleton anticipates a shortfall in BOS funding for fiscal 
year 2005. For example, utilities' costs are projected to be higher 
than the budgeted amount. Disaster preparedness may also be constrained 
because quantities of gas masks and advanced emergency communications 
systems have also not been funded. 

Other programs at Camp Pendleton have also been delayed due to funding 
constraints. Base officials told us that some construction projects 
have been funded, but the new infrastructure creates an additional 
demand for BOS services that the installations are fiscally unable to 
provide. For example, Marine Corps Headquarters has $750,000 of 
military construction money to build permanent latrine facilities. 
However, the installation cannot afford to install plumbing on that 
side of the base nor does it have the money to furnish, service, or 
maintain the new facility. Officials told us that several new vehicles 
have been purchased, but no additional funding has been provided to 
cover the associated costs of new maintenance tools, garages, or fuel. 
In addition, there is a backlog in providing new furniture because 
funding was being used to cover other BOS expenses. 

Observations at Air Force Installations: 

Randolph Air Force Base, Texas: 

Randolph Air Force Base was dedicated on June 20, 1930 as a flying 
training base and continues that mission today. More specifically, the 
installation is one of the few bases that does instructor pilot 
training, and it is also home to Joint Undergraduate Navigator and 
Electronic Warfare Officer Training. To cut costs at the installation, 
Randolph has implemented some changes to BOS services such as custodial 
and dining hall support. For instance, Randolph increased waste 
container sizes and reduced the number of waste collections to once per 
week, performed custodial services after hours when they could be done 
in less time by avoiding the presence of workers, and cut the dining 
hall budget. 

Shortfalls in S/RM funding have also led to the deferring of routine 
facilities maintenance at Randolph. Officials told us about reports of 
rusted drinking water pipes, oil in one of the water wells, and mold 
and water damage from leaking water pipes. 

Tinker Air Force Base, Oklahoma: 

Tinker Air Force Base was established on April 8, 1941, as a 
maintenance and repair depot. Today, Tinker's largest organization is 
the Oklahoma City Air Logistics Center, one of three depot repair 
centers in the Air Force Materiel Command. Tinker is also home to seven 
major Department of Defense, Air Force, and Navy activities with 
critical national defense missions. These activities include the 552nd 
Air Control Wing (which flies the E-3 Sentry aircraft and is part of 
the Air Force's Air Combat Command mobile strike force); the Navy's 
Strategic Communications Wing ONE (a one of a kind unit in the Navy 
that provides a vital, secure communications link to the submerged 
fleet of ballistic missile submarines); and the 507th Air Refueling 
Wing (an Air Force Reserve flying unit). 

Tinker has contracted with the private sector for much of its BOS and 
has reported selective consolidations and efficiency measures to 
improve BOS operations and achieve savings. For instance, mail service 
pickup and delivery were reduced from twice to once per day, fire 
department inspections and repair and replacements of fire 
extinguishers were postponed, and worn carpet was not being replaced. 

[End of section]

Appendix V: Navy, Marine Corps, and Air Force Funding Trends: 

Navy Funding Trends: 

Available Navy data show differences between amounts the Navy projected 
as required for BOS and amounts included in budget requests, 
designated, and actually obligated each fiscal year from 2001 through 
2004 (see fig. 11). As it did for the Army, Congress gave the Navy 
increasing funding for BOS in some years, but we found a smaller 
difference between identified requirements and funding here than in the 
Army. 

Figure 11: Navy BOS Funding, Fiscal Years 2001-04: 

[See PDF for image] 

Notes: 

(1) Dollars are in constant fiscal year 2004 dollars. 

(2) Navy officials indicated they had not had models for projecting 
requirements during these budget years but, as discussed in an earlier 
section of this report, are taking steps to improve their requirements 
determination process for BOS funding. 

(3) Obligations exceeded adjusted congressionally designated amounts as 
a result of authorized internal adjustments among accounts. For 
example, as discussed below, the Navy moved S/RM funds into the BOS 
account. 

[End of figure] 

The difference between the Navy's congressionally designated funding 
and obligations also appears to be smaller than that for the Army, but 
the Navy's obligations for BOS still were greater than its 
congressionally designated amounts for BOS as adjusted by the Navy. For 
example, in fiscal year 2004, the Navy's BOS obligations-- $3.427 
billion--were more than its BOS funding--$3.217 billion. As in the 
Army, Navy officials said the difference between the congressionally 
designated amounts for BOS services, as adjusted by the Navy, and the 
amounts obligated is made up of funds moved from S/RM activities to BOS 
activities to pay "must pay bills" such as utilities and, increasingly, 
to obtain contractor services. This also indicates a continuation of the 
historic trend of funds being moved among various O&M subaccounts 
during the year. Navy installation officials also reported instances of 
funds being withheld during the year and being redesignated to support 
warfighting needs. More specifically, we were told that the Navy 
withheld $300 million in O&M funds, including $199 million that 
otherwise would have been designated to fund BOS and $101 million to 
fund S/RM, to help pay for the Global War on Terrorism. Navy officials 
told us that during the year they had to scale back and cut BOS 
programs and move $504 million from S/RM to pay for essential BOS 
services until supplemental funding became available and they could 
move funds back to S/RM. 

Navy S/RM funding trend data displayed in figure 12 show a spike in 
congressionally designated amounts adjusted by the Navy and obligations 
in fiscal year 2003. According to Navy officials, 2003 was simply a 
better-funded year for Navy shore facilities infrastructure than other 
years. However, in fiscal year 2004, S/RM services were affected by the 
Navy's withholding of O&M funds during the year, that otherwise would 
have been designated to fund BOS and facilities sustainment, to instead 
help pay for the Global War on Terrorism. Similar problems are 
reportedly occurring in fiscal year 2005. The Navy obligated fewer 
funding dollars for facilities sustainment activities in fiscal year 
2004 than were initially designated. Although the Navy also received 
supplemental funding for the Global War on Terrorism for BOS and 
facilities sustainment activities, such turbulence occurring during the 
year makes it difficult to execute planned programs effectively and 
resulted in the Navy's underexecuting its facilities sustainment 
program by $393 million in fiscal year 2004. As we have previously 
reported, such problems adversely affect efforts to maintain facilities 
and provide base support services. 

Figure 12: Navy S/RM Funding, Fiscal Years 2001-04: 

[See PDF for image] 

Notes: 

(1) Dollars are in constant fiscal year 2004 dollars. 

(2) Navy officials indicated they had improved S/RM requirements 
forecasts by using the DOD facilities sustainment model developed in 
1999. 

(3) Obligations were different from congressionally designated amounts, 
adjusted by the Navy, as a result of authorized internal adjustments 
among accounts. For example, as discussed above, during fiscal year 
2004 the Navy moved S/RM funds into the BOS account. 

[End of figure] 

Marine Corp Funding Trends: 

Available data show some differences between amounts the Marine Corps 
projected as required for BOS and amounts included in budget requests, 
amounts designated, and amounts actually obligated each fiscal year 
from 2001 through 2004, with some increase in projected requirements, 
requests and funding occurring in recent years (see fig. 13). 

Figure 13: Marine Corps BOS Funding, Fiscal Years 2001-04: 

[See PDF for image] 

Notes: 

(1) Dollars are in constant fiscal year 2004 dollars. 

(2) Marine Corps officials indicated they had not had models for 
projecting requirements during these budget years but, as discussed in 
an earlier section of this report, are taking steps to improve their 
requirements determination process for BOS funding. 

(3) Obligations fell short of congressionally designated amounts, as 
adjusted by the Marine Corps, for fiscal years 2002 and 2003 and 
exceeded adjusted congressionally designated amounts in fiscal years 
2001 and 2004 as a result of authorized internal adjustments among 
accounts. For example, as discussed below, the Marine Corps moved S/RM 
funds into the BOS account. 

[End of figure] 

The trend data present more of a mixed picture for the Marine Corps in 
terms of obligations when contrasted with data for the other military 
services. In 2 of 4 years the Marine Corps' obligations were greater 
than congressionally designated amounts, as adjusted by the Marine 
Corps, as well as projected requirements. For example, in fiscal year 
2004, the Marine Corps' BOS obligations of $1.164 billion were $54 
million more than its designated funding ($1.110 billion), representing 
a movement of funds from other accounts to support BOS activities. 

S/RM trend data show that the Marine Corps obligated more funding than 
adjusted congressionally designated amounts in fiscal years 2001 and 
2003, and it obligated less funding than adjusted congressionally 
designated amounts in fiscal year 2004. Marine Corps officials said the 
differences were due to funds being moved and redesignated among BOS 
and S/RM accounts (see fig. 14). 

Figure 14: Marine Corps S/RM Funding, Fiscal Years 2001-04: 

[See PDF for image] 

Notes: 

(1) Dollars are in constant fiscal year 2004 dollars. 

(2) Marine Corps officials indicated they had improved S/RM 
requirements forecasts in fiscal year 2004 by using DOD's facilities 
sustainment model. 

(3) Obligations were different from congressionally designated amounts 
as adjusted by the Marine Corps, as a result of authorized internal 
adjustments among accounts. For example, during fiscal year 2004 the 
Marine Corps moved S/RM funds into the BOS account. 

[End of figure] 

As shown by figure 14, in fiscal year 2004, adjusted congressionally 
designated amounts were about 98 percent of the projected S/RM 
requirement. However, the Marine Corps underexecuted its S/RM program 
by $59.2 million in fiscal year 2004. This underexecution occurred 
because, as noted above, the Marine Corps redesignated millions of 
dollars of S/RM funds to cover the difference between designated BOS 
funding and BOS obligations. 

Air Force Funding Trends: 

Data were not readily available to provide a trend in the Air Force's 
projected BOS requirements.[Footnote 23] Funding trend data for BOS 
services and programs within the Air Force show that budgetary 
requests, designated funding, and BOS obligations remained more closely 
aligned than was the case for the other services in most years. 
Nevertheless, some differences do exist between budget requests, 
designated funding, and obligations. As shown by figure 15, only in 
fiscal year 2004 were BOS obligations--$4.896 billion--less than the 
congressionally designated amounts, as adjusted by the Air Force-- 
$5.260 billion. This indicates that BOS funds were being redesignated 
to meet other needs in that year, but funds from other O&M accounts 
were redesignated to BOS in earlier years. Air Force headquarters 
officials told us that rather than being headquarters directed, the Air 
Force relied on its major commands to redesignate BOS and S/RM funds as 
needed for the Global War on Terrorism and to decide which BOS programs 
and services would be scaled back. 

Figure 15: Air Force BOS Funding, Fiscal Years 2001-04: 

[See PDF for image] 

Notes: 

(1) Dollars are in constant fiscal year 2004 dollars. 

(2) Air Force officials indicated they had not had models for 
projecting requirements during these budget years but, as discussed in 
an earlier section of this report, are taking steps to improve their 
requirements determination process for BOS funding. 

(3) Obligations were different from congressionally designated amounts, 
as adjusted by the Air Force, as a result of authorized internal 
adjustments among accounts. For example, as discussed below, the Air 
Force moved BOS funds into the S/RM account. 

[End of figure] 

Air Force trend data for S/RM activities during fiscal years 2001 
through 2004 show that obligations were greater than designated funding 
or budget requests in each of the 4 years. According to Air Force 
officials, BOS funds were redesignated by installation commanders in 
fiscal year 2004 to supplement S/RM funds. Since both BOS and S/RM 
obligations exceeded their funding designations in fiscal years 2001, 
2002, and 2003, this would suggest that funds were redesignated to 
these areas from other O&M activities in those years (see fig. 16). 

Figure 16: Air Force S/RM Funding, Fiscal Years 2001-04: 

[See PDF for image] 

Notes: 

(1) Dollars are in constant fiscal year 2004 dollars. 

(2) Obligations exceeded adjusted congressionally designated amounts as 
a result of authorized internal adjustments among accounts. For 
example, as discussed above, in fiscal year 2004, the Air Force moved 
BOS funds into the S/RM account. 

[End of figure] 

[End of section]

Appendix VI: Comments from the Department of Defense: 

OFFICE OF THE UNDER SECRETARY OF DEFENSE:
ACQUISITION, TECHNOLOGY AND LOGISTICS:

3000 DEFENSE PENTAGON: 
WASHINGTON, DC 20301-3000:

JUN 06 2005:

Mr. Barry W. Holman:
Director, Defense Capabilities and Management: 
U.S. Government Accountability Office:
441 G Street, N.W.: 
Washington, D.C. 20548:

Dear Mr. Holman,

This is the Department of Defense (DoD) response to the GAO draft 
report, "DEFENSE INFRASTRUCTURE: Issues Need to Be Addressed in 
Managing and Funding Base Operations and Facilities Support" dated May 
5, 2005. (GAO CODE 350535/GAO-05-556). The report is well-researched, 
generally accurate, and pertinent in its recommendation. We concur with 
its recommendation.

I have included some technical comments for your consideration prior to 
publishing the final report. I would like to underscore our technical 
comments concerning facilities sustainment. First, the draft report 
does not properly differentiate sustainment programs from restoration 
and modernization (recapitalization) programs, and I recommend that you 
make the proper distinction before publishing the report. Second, the 
draft report implies that each facility or installation should receive 
funding to match the corporate funded sustainment rate every year. The 
sustainment rate is a corporate headquarters-level budgeting metric, 
while sustainment execution requirements at the level of individual 
facilities vary from year to year - so when visiting bases, you should 
expect to see differences compared to the funded corporate rate. The 
facility problems identified by the report are due to under-sustainment 
over a prolonged period, not normal fluctuations in local sustainment 
requirements.

Sincerely, 

Signed by: 

Philip W. Grone: 
Deputy Under Secretary of Defense (Installations and Environment):

Enclosure:

GAO DRAFT REPORT - DATED MAY 5, 2005 GAO CODE 350535/GAO-05-556:

"DEFENSE INFRASTRUCTURE: Issues Need to Be Addressed in Managing and 
Funding Base Operations and Facilities Support"

DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATIONS:

RECOMMENDATION 1: The GAO recommended that the Secretary of Defense 
update DoD's Defense Installations Strategic Plan to include specific 
actions and establish time frames first, to resolve long-standing 
inconsistencies among the definitions of BOS services and, second, to 
help expedite the development and implementation of an analytically 
sound and consistently applied model for determining BOS requirements. 
(p. 33/GAO Draft Report):

DOD RESPONSE: Concur. The 2004 Defense Installations Strategic Plan 
already contains actions and timeframes for several related tasks (for 
one example, see objective 5.4 in the published plan). In addition, our 
2005 update to the 2004 plan lists recent accomplishments, including 
the completion of initial cost factors to support a new facilities 
operation model. Since the 2005 update, we have tested a beta model and 
are on track to release a finished facilities operation model by 
December 1, 2005, for use in developing the FY 2008 program and budget. 
For other installation services, the Department completed a base 
operations assessment study in March 2005, and funded an extensive 
cross-Department initiative to develop definitions for the common 
delivery of installation services. That effort is ongoing and is 
expected to be completed in December 2005. We anticipate the results of 
these efforts to lead to a suite of analytical tools for determining 
funding needs for other installation services. The next update to the 
Defense Installations Strategic Plan, currently planned for release 
during 2006, will contain additional details. 

[End of section]

Appendix VII: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Barry W. Holman (202) 512-5581: 

Acknowledgments: 

In addition to the individual named above, Latasha Brown, Erica Haley, 
Mark Little, Erica Miles, Tanisha Stewart, Roger Tomlinson, Cheryl 
Weissman, and Michael Zola made key contributions to this report. 

[End of section]

Related GAO Products: 

Defense Infrastructure: Long-term Challenges in Managing the Military 
Construction Program. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-288] 
Washington, D.C.: February 24, 2004. 

Defense Infrastructure: Changes in Funding Priorities and Management 
Processes Needed to Improve Condition and Reduce Costs of Guard and 
Reserve Facilities. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-516] 
Washington, D.C.: May 15, 2003. 

Defense Infrastructure: Changes in Funding Priorities and Strategic 
Planning Needed to Improve the Condition of Military Facilities. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-274] 
Washington, D.C.: February 19, 2003. 

Defense Management: Army Needs to Address Resource and Mission 
Requirements Affecting Its Training and Doctrine Command. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-214] 
Washington, D.C.: February 10, 2003). 

Defense Budget: Real Property Maintenance and Base Operations Fund 
Movements. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-NSIAD-00-101] 
Washington, D.C.: March 1, 2000. 

Defense Budget: Analysis of Real Property Maintenance and Base 
Operations Fund Movements. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/NSIAD-00-87] 
Washington, D.C.: February 29, 2000. 

Defense Budget: DOD Should Further Improve Visibility and 
Accountability of O&M Fund Movements. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/NSIAD-00-18] 
Washington, D.C.: February 9, 2000. 

DOD Budget: Budgeting for Operation and Maintenance Activities. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-NSIAD-97-222] 
Washington, D.C.: July 22, 1997. 

Depot Maintenance: Some Funds Intended for Maintenance Are Used for 
Other Purposes. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/NSIAD-95-124] 
Washington, D.C.: July 6, 1995. 

Army Training: One-Third of 1993 and 1994 Budgeted Funds Were Used for 
Other Purposes. 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/NSIAD-95-71] 
Washington, D.C.: April 7, 1995. 

(350535): 

FOOTNOTES

[1] Retaining and underutilizing installations and facilities result in 
inefficiencies and additional costs for base services and programs. 
Congress authorized a base realignment and closure round in 2005 to 
deal with this issue. 

[2] See the following reports: GAO, Defense Infrastructure: Changes in 
Funding Priorities and Strategic Planning Needed to Improve the 
Condition of Military Facilities, GAO-03-274 (Washington, D.C.: Feb. 
19, 2003); Defense Infrastructure: Changes in Funding Priorities and 
Management Processes Needed to Improve Condition and Reduce Costs of 
Guard and Reserve Facilities, GAO-03-516 (Washington, D.C.: May 15, 
2003); Defense Budget: Real Property Maintenance and Base Operations 
Fund Movements, GAO/NSIAD-00-101 (Washington, D.C.: Mar. 1, 2000); and 
Defense Management: Army Needs to Address Resource and Mission 
Requirements Affecting Its Training and Doctrine Command, GAO-03-214 
(Washington, D.C.: Feb. 10, 2003). 

[3] BOS is a term that derives from the "base operations" program area 
(which includes installation transportation, supply, information 
management, food services, legal and accounting services, and so forth) 
to which the military services have added other program areas including 
family and quality of life programs, force protection, environmental 
compliance and conservation programs, communications services, and 
grounds maintenance, as well as other facilities services such as 
utilities, leases, and custodial services, which OSD has referred to as 
real property services. Thus, in practice BOS is a collection of many 
diverse programs, activities, and services. Beginning with fiscal year 
2006 O&M budget submissions, OSD has started referring to real property 
services as "facilities operations" and to other base support programs 
as "installations services." Collectively, installation services and 
facilities operations will be known as DOD's "installations support" 
functional area. 

[4] See Department of Defense Appropriations Act, 2004, Pub. L. No. 108-
87 (2003). Congress appropriated an additional $16.2 billion for DOD-
wide and miscellaneous O&M activities. 

[5] We use the terms "congressionally designated," "congressional 
designation," or variations of these terms throughout to refer to 
amounts set forth at the budget activity, activity group, and 
subactivity group level in an appropriation bill's conference report. 
These recommended amounts are not binding unless they are also 
incorporated directly or by reference into an appropriation act or 
other statute. 

[6] For example, the S/RM-adjusted congressional designations and the 
obligations we used in our analyses for the Navy did not include $168 
million in fiscal year 2003 congressional adjustments to upgrade the 
Navy's facilities to meet antiterrorism and force protection standards 
(such as vehicle inspection shelters, pop-up barriers, fencing and gate 
improvements, and so forth) or $223 million in supplemental 
appropriations for hurricane damage and repairs, and the fiscal year 
2004 amounts did not include supplemental amounts for the Global War on 
Terrorism. 

[7] See Department of Defense Appropriations Act, 2004, Pub. L. No. 108-
87 (2003). This amount, and the amounts we used in our historical 
funding trend analyses for this report, does not include supplemental 
appropriations for O&M that Congress provided for such things as the 
Global War on Terrorism. 

[8] Beginning with fiscal year 2006 O&M activities, DOD refers to base 
operations, family and quality of life programs, force protection, 
environmental compliance and conservation programs, communications 
services, food services, grounds maintenance, and so forth as 
"installations services" and to real property services (utilities, 
leases, custodial services, snow plowing, and the like) as "facilities 
operations." Collectively, installations services and facilities 
operations will be known as DOD's "installations support" functional 
area. 

[9] GAO-03-274. 

[10] U.S. Department of Defense, 2004 Defense Installations Strategic 
Plan (Washington, D.C.: September 2004). 

[11] GAO, Defense Budget: DOD Should Further Improve Visibility and 
Accountability of O&M Fund Movements, GAO/NSIAD-00-18 (Washington, 
D.C.: Feb. 9, 2000). 

[12] GAO-03-274. 

[13] End-of-year obligations provided by the services include funding 
that was restored near the end of the fiscal year. This masks the 
degree of turbulence affecting programs and delivery of services during 
the fiscal year. 

[14] Army efforts to improve its projection of budget requirements are 
discussed more fully in a subsequent section of this report. 

[15] This model, developed by DOD in 1999, estimates the annual 
sustainment cost requirement, adjusted for area costs, for each service 
and defense agency, based on the number, type, location, and size of 
total inventory of facilities. The cost factors handbook uses 
commercial benchmark costs to determine the annual cost per square foot 
(or similar unit of measure) to sustain each facility type. 

[16] Although the Army, Navy, and Marine Corps were able to provide 
information on requirements, Air Force officials indicated that to do 
so would require extraordinary efforts to accumulate data from 
individual installations and commands, and they did not view such 
unrefined requirements data as necessarily representative of true 
requirements. 

[17] This makes it difficult to determine the totality of BOS 
requirements across DOD. 

[18] According to an Army official, the Army's intention is to fully 
fund fewer services as opposed to partially funding a larger number of 
services as it has done in the past. 

[19] Air Force officials told us that requirements data for fiscal 
years 2001 through 2004 (the years that we used in our funding 
analyses) would have to be accumulated from data from individual 
installations and commands, and they did not view such unrefined 
requirements data as necessarily representative of true requirements. 

[20] The Senior Joint Basing Group, an initiative of the Deputy Under 
Secretary of Defense for Installations and Environment, is made up of 
senior officials from the Army, Navy, Air Force, and Marine Corps. Its 
purpose is to enhance joint basing and to more efficiently use joint 
assets. In late 2004, the group began addressing installation support 
agreements and the development of common definitions and standards for 
services such as child care, galleys, and grounds maintenance at joint 
bases, using the facilities sustainment model as an archetype. In 
addition, the group seeks ideas to achieve economies of scale for 
services that are in proximity to one another. 

[21] For example, the Under Secretary of Defense (Personnel and 
Readiness) manages human resources; the Assistant Secretary of Defense 
(Special Operations and Low Intensity Conflict) manages physical 
security and force protection; the Under Secretary of Defense 
(Comptroller) manages community services; and the Assistant Secretary 
of Defense (Networks and Information Integration) manages base 
communications. 

[22] For example, according to historical data provided by the military 
services, fiscal year 2004 O&M funding designated for BOS services 
totaled $15.6 billion, about $1.6 billion more than Office of the 
Secretary of Defense data showed as being designated for BOS at the 
beginning of the fiscal year. 

[23] Although the Army, Navy, and Marine Corps were able to provide 
information on requirements, Air Force officials indicated that to do 
so would require extraordinary efforts to accumulate data from 
individual installations and commands, and they did not view such 
unrefined requirements data as necessarily representative of true 
requirements. 

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