Detailed Information on the
Military Construction Programs Assessment

Implement a Facilities Modernization Model to improve the facilities recapitalization metric.

Improve the Quality rating and process for assessing facility conditions.

Review the current construction agent customer surveys to develop a DoD Customer Satisfaction performance measure for the Military Construction Program.

Develop a Performance Measure for Project Cost Estimate to evaluate the cost (and related scope) variation between project DD1391 and awarded construction contract.

Develop a Performance Measure for the Construction Duration.

Implement a Facilities Modernization Model to improve the facilities recapitalization metric.

Improve the Quality rating and process for assessing facility conditions.

Evaluate the cost variation between project DD1391 and awarded construction contract.

Measure: Modernize the DoD real property inventory at the recapitalization rate of 67 years.

Explanation:Note: This measure is now part of the DoD Sustainment, Restoration, Modernization, and Demolition program area.

Measure: Reduce the percent of facilities quality rated Q-3 or Q-4.

Explanation:Facility quality rating (Q-ratings) will be based on the estimated cost to restore and modernize facilities. The quality rating is the necessary restoration and modernization costs as a percentage of the replacement value of the facility. Rating Definition Q-1 The sum of all necessary restoration and modernization costs is not greater than 10 percent of the replacement value of the facility. Q-2 The sum of all necessary restoration and modernization costs is greater than 10 percent but not greater than 20 percent of the replacement value of the facility. Q-3 The sum of all necessary restoration and modernization costs is greater than 20 percent but not greater than 40 percent of the replacement value of the facility. Q-4 The sum of all necessary restoration and modernization costs is greater than 40 percent of the replacement value of the facility.

Measure: Military Construction Project Current Working Estimate (CWE) to Programmed Amount (PA) Ratio.

Explanation:This is a measure of cost control. Project CWE to Programmed Amount Ratio. Award the full scope of all DoD MILCON projects at or below the authorized project programmed amount. The ratio of the Project CWE expressed as a percentage, should be equal to or less than 100%. The Project CWE at award includes the full authorized contingency and any pending unawarded items.

Measure: Percent of the authorized projects awarded in the program year.

Explanation:The execution rate is an indication of the process efficiency to initiate capital work in a timely manner to avoid higher costs and continued facility deterioration due to delays. Program Execution. Award all Current Fiscal Year President's Budget and prior Fiscal Year projects by the end of the 2nd Quarter (31 Mar) and 100% of Current Fiscal Year Congressional Adds and Supplemental Authorizations/Appropriations (Suppl) projects by 30 September.

Is the program purpose clear?

Explanation: This Department of Defense (DoD) program provides, in a cost-effective and environmentally sound manner, installations (capital assets) necessary to support our military forces - in both peace and war.

Evidence: Enabling legislation United States Code Title 10, Subtitle A, Part IV, Chapter 169 allows the Secretary of Defense to carry out military construction projects as authorized by law to satisfy permanent or temporary defense requirements. The annual defense authorization and appropriations acts provide project level approval and funding for requested military construction projects. The Defense Installations Strategic Plan (page 3) provides the Department's vision, mission and goals for this program.

Does the program address a specific and existing problem, interest, or need?

Explanation: The program funds buildings, structures, utilities, and land to meet defense requirements on military installations. 1) The program is flexible and disciplined to respond to emerging operational, weapon, and other special program needs. For example, during weapons procurement, the DoD implements a proactive facilities requirements process. DoD conducts site selection surveys and facility assessments to determine whether existing bases can accommodate the new weapons system or execute new projects. The Service's have developed specific program requirements for emerging needs such as the Army Barracks Modernization program, housing the Air Force F-22 Fighter aircraft, and undertaking the Global Posture Initiative. 2) Currently the implementation for BRAC 2005 is underway. Construction requirements are determined by the BRAC recommendations for closing and realigning installations. The DoD ensures military construction programs support BRAC requirements by phasing and coordinating with missions needs, meeting Congressional deadlines, and minimizing the effect on operations. In addition, to execute the Base Realignment and Closure (BRAC), the program modernizes obsolete facilities, constructs facilities to support new missions, and provides required facilities.

Evidence: 1 The 2005 BRAC Commission report is located at http://www.brac.gov/finalreport.html. 2 Since 1994 the Army has invested in the Army's Barracks Modernization Program, which will provide adequate housing for 122,900 Soldiers in barracks. The Army's Barracks Modernization Program has been documented through historical real property database records, annual written Congressional Testimony, and is updated annually under the Army Barracks Strategic Plan (formerly called the Army Barracks Master Plan). 3 In September, 2004, the Department completed a two-year comprehensive review of its global posture and basing strategy. This review was conducted with a team of leaders across the Department - the Secretary of Defense, Combatant Commanders, Joint Chiefs of Staff, the Deputy Under Secretary for Installations and Environment and the Military Services -and led to the most thorough restructuring of U.S. military forces overseas since the end of the Korean War. Coordinating with the State Department, DoD has already begun the process of realigning or closing a number of large permanent bases in favor of small and scalable installations better suited for deployments to trouble spots. In July 2005, the return of eleven Army bases in Germany was announced as part of plans for redeployment of the 1st Infantry Division headquarters, scheduled to begin in summer of this year. The United States has signed an agreement with the Governments of Romania and Bulgaria that will allow U.S. troops to establish temporary training locations in those nations. The United States has also signed the U.S.-Japan Alliance Transformation and Realignment for the Future document, outlining posture realignment initiatives that will adapt the Alliance to today's regional and global security environment. One of the realignment initiatives resulting from this document and from discussions with Government of Japan representatives concerns Japanese support for measures to enable the realization of the relocation of U.S. Marines from Okinawa to Guam. Specific infrastructure requirements for overseas locations have been reflected in overseas master plans, submitted to Congress in both 2005 and 2006. The plans will be updated annually through FY 2009. In addition to infrastructure requirements at overseas locations, plans include the status of properties being returned to host nations.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The military construction program is an unique federal program. No other federal, state, local, or private effort duplicates DoD's military construction program. Within DoD, the Office of the Secretary of Defense establishes policies, strategy, and prioritizes goals for the DoD, which subsequently are used to guide Military Service and Defense Agency resource decisions.

Evidence: 1 Department of Defense Directive 4270.5 Military Construction establishes policies and responsibilities for the military construction program. 2 The Department implemented Department of Defense Directive 1225.7 Reserve Component Facilities Programs and Unit Stationing to review projects to eliminate redundant or duplicative efforts. The Directive establishes a Joint Service Reserve Component Facility Board to maximize usage of Reserve component land, facilities, and installations by fostering joint use by two or more components. This implements the policy stated in 10 United States Code Section 18231(2). Additionally, the Joint Service Reserve Component Facility Board pursues opportunities for shared use with any Active components in their area. 3 In order to avoid duplication and redundancy with other efforts, the Department of the Navy has institutionalized its planning, programming, budgeting and execution process through a Chief of Naval Operations Instruction, 11010.20G, also known the Facilities Projects Manual. The Army provides similar guidance in Army Regulation 415-15, Army Military Construction Program Development and Execution. Both the Navy and Army guidance provides the specific steps a project must follow in order to be executed through Congressional law. Projects are scrutinized through an iterative process beginning at the activity level and ending with the submission to the Office of Secretary of Defense. 4 Specific infrastructure requirements for overseas locations have been reflected in overseas master plans, submitted to Congress in both 2005 and 2006. The plans will be updated annually through FY 2009. In addition to infrastructure requirements at overseas locations, plans include the status of properties being returned to host nations. 5 The Department's budget submission for Fiscal Year 2007 Military Construction program is located at: http://www.defenselink.mil/comptroller/defbudget/fy2007/index.html. Links to the Services budget justification materials are located at this website. Project documentation (form DD 1391) are located at the Service Military Construction budget materials justification link.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: The requested project is reviewed at the installation, major command, Service Headquarters, and finally by the Office of Secretary of Defense. This highly competitive project evaluation screens out inappropriate projects. Once the project is appropriated by Congress, the assigned design/construction agent solicits and obtains design and construction services from industry using a competitive acquisition process. The selected contractor(s) develops a detailed execution plan and provides routine execution status reports. As an example of the rigorous process, the Navy Military Construction Programming process is documented in Facilities Project Instruction, Chapter 2, Section 7 (Chief of Naval Operations Instruction 11010.20G).

Evidence: 1) Facilities Project Instruction, (Chief of Naval Operations Instruction 11010.20G) is located at http://neds.daps.dla.mil/Directives/11010_20G.pdf.

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: The legislative process authorizes and appropriates every major construction project. The project scope clearly addresses the purpose and targets the beneficiary.

Evidence: Department of Defense Budget requests and provides budget justification for each project. The Department's budget submission for Fiscal Year 2007 Military Construction program is located at: http://www.defenselink.mil/comptroller/defbudget/fy2007/index.html Congress authorizes and appropriates annually each major construction project. The Fiscal Year 2006 Military Quality of Life and Veterans Affairs Appropriation Act (Public Law 109-114). The Military Construction Authorization Act for Fiscal Year 2006 (Public Law 109-114). The Department's budget submission is outlined in the Financial Management Regulation (FMR) (Volume 2, Chapter 6 addresses Military Construction requirements).

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: Since the purpose of the military construction program is to improve quality of life and enhance military capabilities, the program has two long term performance measures: 1) a recapitalization goal of 67 years, which will help lower the average age of facilities and thereby improve the quality of the facilities; 2) a minimum average condition rating of C-2 (also know as Quality-2 rating) for all facilities, which will improve the quality of the facilities across the DoD. These two output pressures result in newer and state-of-the-art facilities, which enables and/or enhances installation mission capabilities - a desirable outcome. In addition, each service conducts surveys to ensure improvement in the quality of the facilities. A survey will be conducted in 2006.

Evidence: The Defense Installations Strategic Plan Goal two, objective 2.1 and objective 2.2 set the performance targets for recapitalization and facility quality rating. The latest survey is posted on (href="http://www.hq.usace.army.mil/cemp/index.htm">http://www.hq.usace.army.mil/cemp/index.htm

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: DoD wants to lower the average cycle to replace facilities to 67 years by 2008 (from 104 years in 2005) and improve the quality of the facilities to a Q-2 standard by 2010 (13% of the facilities are below the standard). The military construction program spans 2,965 domestic sites and 766 overseas sites. The DoD owns over 571,000 facilities and manages over 29 million acres of land. At any given time over 1,500 projects are underway. Given the inventory, DoD has established a baseline and the goals are ambitious. The Office of the Secretary of Defense provides policy oversight for the military construction program which is developed and managed by the four Services and Defense Agencies/Activities. The military construction program is executed by DoD construction agents - United States Army Corps of Engineers, Naval Facilities Engineering Command, and Air Force Center for Environmental Excellence.

Evidence: The Defense Installations Strategic Plan Goal two, objective 2.1 and objective 2.2 set the performance targets for recapitalization and facility quality rating (page 8) (http://www.acq.osd.mil/ie/irm/irm_library/2004DISPfinalsigned.pdf); Future Years Defense Plan that supports the goals established.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: Services have developed focused long-term recapitalization plans. These long-term goals are supported by annual recapitalization rate set by the Services and the Department of Defense overall and furthermore, there are annual targets for quality rating for individual facilities. These two output pressures result in newer and state-of-the-art facilities, which enables and/or enhances installation mission capabilities - a desirable outcome.

Evidence: 1) Mr. Philip Grone, Deputy Under Secretary of Defense (Installations and Environment), statement (page 9) at the 2 March, 2006 Readiness and Management Support subcommittee, Senate Armed Services Committee. Honorable B.J. Penn, Assistant Secretary of the Navy, (Installations and Environment), statement (page 6) at the 2 March, 2006 Readiness and Management Support subcommittee, Senate Armed Services Committee. The statements are located at http://armed-services.senate.gov/e_witnesslist.cfm. 2 The Army's Barracks Modernization Program takes its overall end state goals and applies them to an annual requirement and funding level to achieve its goal of providing adequate, modern housing for Soldiers in barracks. The Army's 2007 budget will provide barracks to house approximately 5,670 Soldiers. 3 In 1997, the Department of the Navy initiated a long term goal to recapitalize the deteriorating infrastructure at the Recruit Training Center at Naval Station, Great Lakes, Illinois. The concentrated effort was focused to improve the quality of life and training for Navy recruits, while creating efficiencies in the training schedule. Over the past 10 years, the Navy has programmed an average of two projects per year ($635 million) to accomplish this objective. The recapitalization initiative will be complete with the programming of the 14th Recruit Training Center barracks in Fiscal Year 2009.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: The Department has Recapitalization rates baseline from 2002 through 2007. The annual targets for recapitalization metric are reviewed and resources adjusted through the budget development process.

Evidence: Strategic and Joint Planning Guidance, Program Decision Memorandum, and Program Budget Decisions

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: The Military Construction program consist of a mature and strong network of customers, planners, programmers, designers, contractors, and other suppliers and stakeholders across the nation and overseas that are all focused on the delivery of quality construction projects on time, and within cost.

Evidence: The Military Services have partnered with industry groups to promote sustainable design, quality design and construction, small business participation, and training of the construction industry workforce. For example, The Navy Facility Engineering Command and Army Corps of Engineers have ongoing strategic alliances and partnering efforts with suppliers, industry groups and Small Business Administration to perform market research on possible future Request(s) for Proposal(s) that may be issued in support of the Military Construction Program. These forums are announced online and help develop new ideas such as design-to-build (i.e. one group that takes the project from design to construction to completion). Website for these forums include: FedBizOpps http://fedbizopps; Small Business Administration http://www.sba.gov; Associated General Contractors (AGC) of America Federal & Heavy Division http://www.agc.org; Council on Federal Procurement of A-E Services http://www.cofpaes.org/. In addition, for each major construction project, DoD develops a purpose document, called DD 1391, which estimates the construction period based on a programmatic model (i.e., construction duration is based on the programmed amount of the project). Army Corps of Engineers refines the construction duration estimates and maintains real time data in its P2 database throughout the design and construction phases of the project.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: Since each Service builds facilities that are specific to its own service capability, the Office of the Secretary of Defense allows each Service to work with their audit agencies, which conduct numerous evaluations of the program and specific projects. In addition, the General Accountability Office and Congressional Research Service conduct reviews of this program periodically. For example, a recent Navy audit (NAVAUDIT N2005-001) reduced the scope of five projects resulting in a $7.8 million savings.

Evidence: For example, during the programming process, the Department of the Navy, like the other Services, uses the Naval Audit Service as an independent reviewer to evaluate the effectiveness and validity of project scopes and requirements. The projects selected for review result from collaboration of project importance, dollar value, geographic location and discussions between the Naval Audit Service, Commander, Navy Installations Command, Commandant of the Marine Corps, and Naval Facilities Engineering Command. The Navy Audit Service, which typically reviews approximately 20-25% of the program each year, performs their reviews at the location of the proposed facility and holding meetings with activity, regional, real property requirements generators and other planning personnel. After each audit is performed, the Navy Audit Service issues a Draft Audit Report to Commander, Navy Installations Command and Commandant of the Marine Corps. The Navy's Facility Quality Evaluation tool is a Web-based questionnaire and evaluation process used to assess the performance and quality of newly constructed facilities based on client feedback. A facility quality evaluation is to be done on all new Military Construction projects valued at greater than $5 million dollars. The evaluation is launched 6 to 9 months after Beneficial Occupancy Date, and entails a survey that is sent to the facility's maintenance and user point of contact for feedback. Commissioning has been incorporated into all phases of the Military Construction acquisition process. The focus is now directed to building delivery and system performance. These types of building and system performance evaluations are primarily the responsibility of the contractor, usually through a commissioning agent who may be a third party entity. The Navy is committed to designing, constructing and operating facilities that are energy and water efficient, which promote healthy, productive environments for the Navy's Sailors, Marines, and civilians. The adoption of sustainable development practices as delineated in the United States Green Building Council's Leadership in Energy and Environmental Design (LEED) will ensure the lowest facility life cycle. The Navy also has a significant percentage of its professional engineers and architects LEED certified to ensure sustainable design features are included in thier facilities. The Army is committed to sustainable design and development. Prior to the development of the United States Green Building Council's LEED, the Army required Military Construction projects to meet the Army's Sustainable Rating Tool (SPiRiT) Gold level. With the latest update to LEED New Construction, the Army has directed all Military Construction projects to meet LEED Silver Standard (comparable to SPiRiT Gold) in 2008 projects and beyond (Army memorandum dated 5 Jan 2006).

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: Annual Military Construction Budget request is reviewed by the Services, Military Departments and Office of Secretary of Defense. Projects are requested and supported as line item requests and linked to the restoration, new facility (footprint) or Base Closure and Realignment requirements. During the budget process, before DoD determines funding for the various programs, DoD evaluates the effect of the tradeoffs on performance goals. The military construction program accounts for the full cost of projects, which include planning and designing a project, project costs, and supervision, inspection, and overhead of the project.

Evidence: The Department's budget submission for Military Construction program is located at: ( http://www.defenselink.mil/comptroller/defbudget/fy2007/index.html). Links to the Services budget justification materials are located at this website. Project documentation (form DD1391) are located at the Service Military Construction budget materials justification link.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: The Department published the Defense Installations Strategic Plan in 2004. An update was published in 2005 to reflect changes and progress. A new plan is under development for publication later this calendar year. The Presidential Management Agenda for Real Property Initiative has an ambitious goal of using accurate and current inventory data and real property performance measures to make daily management decisions by 2007.

Evidence: Published the Defense Installations Strategic Plan 2004 and update in 2005. The President's Management Agenda Real Property Initiative is tracked quarterly by the Administration and shows the current status and progress. This scorecard is published by the Administration every February. (need website)

Has the agency/program conducted a recent, meaningful, credible analysis of alternatives that includes trade-offs between cost, schedule, risk, and performance goals, and used the results to guide the resulting activity?

Explanation: Composition of the Military Construction Program is the result of a rigorous competitive and selective process. Each project undergoes requirement, solutions and costs analysis prior to formal programming into the President's budget submission. Once the facility requirement has been fully validated, the Department has numerous authorities to satisfy the requirement, e.g., Military Construction, Public Private Venture, and enhanced use lease. Examination of the appropriate authority to use also undergoes a rigorous analysis.

Evidence: 1 As an example of the rigorous process, the Navy Military Construction Programming process is documented in Facilities Project Instruction, Chapter 2, Section 9 (Chief of Naval Operations Instruction 11010.20G). 2. Department of Defense policy is that family housing will be privatized in all installations located in the U.S. unless it is not economically feasible. Accordingly, all privatized family housing projects are supported by comprehensive analyses that include: (1) Housing Requirements and Market Analysis based on the "Community First" approach, (2) life cycle economic comparison between MILCON and privatization, and (3) financial feasibility.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The Department's construction agents systematically collect information on project location, schedule, material and labor costs, and facility design standards and use the data to develop unit cost guides. The DoD publishes criteria adopted for planning, design, construction, sustainment, restoration and modernization. These criteria allow the DoD to better build and manage the military construction program.

Evidence: The Army Corps of Engineers has developed a web-based system and has implemented a comprehensive real-time, automated project management system to manage projects and collect project schedule and cost data covering the full life of projects from initial authorization all the way through final accounting of all costs. The historical cost data is used to develop unit cost guides such as the Office of the Secretary of Defense Unit Cost Guide and the Army Military Facilities Cost Guide. The historical cost data is also used as a valuable reference for developing costs (DD 1391s) as well as development of the Government Cost Estimates. In addition, the Army Corps of Engineers has a monthly review process where it examines projects to assure the project milestones are met and highlight any issues that are impeding the ability to maintain schedules. Program Review Boards are held at the District level analyzing specific projects and at the intermediate headquarters reviewing effectiveness across the Business Region. The Directorate Management Review is held at the Headquarter monthly where all of the programs are evaluated for time and cost compliance. Additionally, a face to face meeting is held with the customers on a quarterly basis to review projects. Army Corps of Engineers conducts end of year comprehensive After Action Reviews with all Divisions, Customers and Stakeholders. These reviews are beneficial in identifying timely corrective actions to be taken by both the Army Corps of Engineers and customer. The Navy has developed on-line Facility Quality Evaluation reporting for all projects greater that $5 million. Similar systems exist in the Air Force. Additional evidence includes Unified Facilities Criteria documents and USD(AT&L) Memorandum dated 29 May 2002.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: The Department awards and manages design and construction contracts in accordance with the Federal Acquisition Regulations and subordinate Defense and Military Department regulations. Contracts are managed by a certified Contracting Officer and generally they have a field staff of Administrative Contracting Officer. These individuals are legally obligated to hold the contractor accountable for the contract cost, schedule adherence, and quality. They manage a rigorous quality management program to evaluate if the contractor is meeting acceptable standards, industry codes, and customer requirements. Contractors are required to submit cost and schedule data on a monthly basis. The regulations controlling the procurement process offer a multitude of remediation alternatives for the Contracting Officer in assuring effective execution of the projects.

Evidence: 1 The Army Corps of Engineers conducts routine quality assurance, contract compliance, administration and technical adequacy reviews of construction execution. As a result of these efforts the Corps has disclosed many cases where the materials either unintentionally did not meet contract quality standards or contractors intentionally substituted inferior materials. This includes items such as low grade concrete, inferior structural steel/connecting bolts/mechanical units, failure to install required items, construction not in accordance with design, noncompliance with the Buy America Act, etc. It is through the Corps' contract enforcement processes that they remedy the issues to these findings and either recoup damages, achieve corrective actions or implement litigation procedures. In other cases when contractors have submitted defective cost and pricing data, and the government has relied on this data, the assistance of the Defense Contracting Audit Agency provides the support to determine the level of recovery and cost to be recouped. 2 DoD reviews the contractor's past performance prior to awarding or renewing contracts. The Corps and Naval Facilities Engineering Command require the completion of a performance evaluation on every Architect-Engineering and Construction contract that it administers in accordance with the Federal Acquisition Regulations requirements. The Corps has an established Engineering Regulation (ER-415-1-17) that details the requirements for this process. In addition, the Corps has developed unique IT systems that tracks and stores Architect and Engineering (A-E) contract performance evaluations and construction contract performance evaluations. These systems have recently been tailored and merged with the Naval Facilities Engineering Command system, and has become the single DoD system for storing A-E and construction contracts. These systems are used for every source selection and responsibility determination prior to award of a contract. DoD uses contractor's past performance prior to awarding or renewing contracts. The Corps also plays a major role in correcting latent defects and warranty enforcement. Army Corps of Engineers has an Engineering Regulation (ER-415-345-38) that addresses warranty issues including enforcement.

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: Military Construction funds are obligated consistently with the program plan. Military Construction projects are line-item authorized by Congress. Any reprogramming of funds over $2 million to or from a project requires the prior approval of Congress. Funding documents to the Components allocate funds on a project by project basis, and prohibit the use of funds for other than their intended purpose. Military Construction appropriations are available for obligation for 5 years. Limited amounts of unobligated funds remain at the end of this period. Monthly accounting reports identify available amounts, obligations, disbursements, and unobligated balances on a project by project basis

Evidence: Monthly accounting reports (DoD 1002 reports), the DoD Financial Management Regulation, Chapter 169 of Title 10 of the United States Code, OMB apportionment documents, Fund Allocation Documents, annual authorization and appropriation acts.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: DoD uses software to identify inefficiencies and metrics to measure time and cost growth. In addition, the Services compare their overhead costs to those of the private sector. The program has two efficiency measures: 1) Military Construction Project Current Working Estimate (CWE) to Programmed Amount (PA) Ratio. The purpose of this measure is to control costs with a target ratio of 100%. 2) Percent of the authorized projects based on programmed amount awarded in the program year. The purpose of this measure (target 100%) is to ensure process efficiency by initiating capital work in a timely manner to avoid higher costs and continued facility deterioration due to delays.

Evidence: For example, the Army Corps of Engineers project management process and the project management software (P2) provide capability for comprehensive analysis and management of the program to identify inefficiencies and sources of improvement. Metrics that have been developed with the customers and are used to measure time and cost growth as well as schedule compliance. Army Corps of Engineers routinely evaluates performance of its offices to compare its overhead costs to those of the private sector performing design and construction services. The overhead burden placed on each hour of labor is called total labor multiplier (TLM). According to an independent study by PSMJ Resources, Inc (Professional Services Management Journal), Army Corps of Engineers TLM is very competitive with the private construction industry. In the 2004 PSMJ publication, industry TLM was 2.64 plus profit versus a Army Corps of Engineers TLM of 2.48.

Does the program collaborate and coordinate effectively with related programs?

Explanation: In accordance with the Defense Installation Strategic Plan, the Department's Military Construction program is designed to provide those projects necessary to effectively and efficiently support the defense mission. Consequently, it is closely tailored to or parallel weapons, operational, and quality of life programs.

Evidence: For example. the Army Modular Force initiative requires new equipment and facilities, a different mix of skills among Army personnel, and significant changes to training and doctrine. Military construction is being coordinated with the scheduled transformation of Army units to modular units at the appropriation installation to provide critical facilities to support this initiative. In the case of the Air Force, extensive base facility assessments were conducted at bases that were selected to receive new C-17s.

Does the program use strong financial management practices?

Explanation: As documented in question 3.3, military construction funds are tightly controlled. While DoD continues to receive disclaimers by auditors on the financial statements for the Department as a whole, these deficiencies are not specifically tied to the financial management of military construction funds.

Evidence: There are not audit reports of the military construction program that identify financial management deficiencies in the military construction program. However, since DoD has yet to receive a clean audit of it's financial statements, it is not clear that the financial data is accurate and compliant with federal financial management standards. In addition, there is no evidence whether erroneous payments are recovered quickly and handled in a timely manner.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The DoD has begun its transformation initiatives to increase their management effectiveness and efficiencies. The DoD construction agents are continually soliciting ideas from stakeholders and narrowed for processes that can be leaned and eventually worked into full-blown process improvements. No matter how improvements are made, whether from necessity, technological advances or through some formal improvement process, the DoD will officially document their improvements.

Evidence: 1 Military Construction Transformation was developed to bring about efficiencies into the delivery of new facilities for the Army through the utilization of industry best practices with less prescriptive requirements and standard acquisition approaches to acquire new quality facilities less expensively and in less amount of time. The Army Corps of Engineers has taken pro-active steps towards incorporating lessons learned into the Military Construction execution process and streamlining procedures for more effective and efficient project delivery. A Project Delivery Team has been established to review options and improvements for implementing transformation principles, including an integrated web-based lessons learned business process for our Communities of Practice. 2 Design-Build is the preferred contracting method and will be the vehicle used to implement transformation for the 2006 Army Base Closure and Realignment program and select Military Construction projects. Depending on the complexity of the project, a single-phase or a two-phase selection process will be used to award these projects at each "pilot project" location. Indefinite delivery indefinite quantity contracting procedures may be employed as required to award additional facilities selected under the transformation initiative. A "Best Value" method a trade-off process resulting in Best-value to the Government will be used in the selection process to award contracts. The goal is to complete the selected pilot projects in an expedited manner, with better quality (compared to previously constructed facilities), and at the least possible cost to the Government. 3 United States Army Corps of Engineers is developing a formal lessons learned program to improve existing processes and procedures associated with capturing and sharing knowledge and improving management processes, procedures, and decisions. Although they have processes in place for sharing lessons throughout the organization, a team is working to identify an appropriate web based integrated solution that will facilitate improved data collection, analysis, vetting, and implementation of improvements. The team plans to expand the use of the initiative with the 2007 Military Construction program and eventually expand the process and procedures for use with other Army Corps of Engineers environmental, installation support, real estate, and interagency/international programs.

Is the program managed by maintaining clearly defined deliverables, capability/performance characteristics, and appropriate, credible cost and schedule goals?

Explanation: 1 The Department's corporate program measure is the recapitalization rate (in years) and facility condition measured as a quality rating (Q-rating). The program is executed using a combination of Design-Bid-Build and Design-Build acquisition processes. The majority of the contracts are firm fixed-price for construction and indefinite delivery and indefinite quantity for project design. We are increasing our use of performance-based contracts to streamline the delivery of facilities. The program execution progress is measured as the percent (based on dollars) of the program awarded in the program year. 2 The construction agents manage the cost, schedule, and quality at the individual project level. The Navy manages construction award performance, Current Working Estimate (CWE) to Programmed Amount (PA) Ratio, cost, schedule and quality at the individual project level by assigning MILCON construction contract administration to licensed engineers and architects. These engineers/architects have Service goals to award the construction contract within the fiscal year the project is authorized, to complete the project within the PA, and minimize cost growth and schedule growth based on metric goals. Quality is managed (similar to Army Corps of Engineers) using a contractor quality control program (based on the three phases of control) and a government quality assurance program.

Evidence: 1. The planned NAVFAC program execution of the 2006 Military Construction Program is 27% Design-Bid-Build and 73% Design-Build. This is accomplished using 100% fixed-price, 73% performance-based contracts. NAVFAC executed 92% of the Department of Navy 2005 program during the program year and is currently projected to execute 94% of the 2006 program by September 2006. 2. The planned Air Force Center for Environmental Excellence (AFCEE) program execution of FY2006 MILCON program is 64% Design-Bid-Build and 36% Design-Build. This is accomplished using 100% fixed-price and 0% performance-based contracts. The Air Force executed 70% of their 2005 program during the program year and is currently projected to execute 94% of the 2006 program by September 2006.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: The Department has improved the recapitalization rates from 2001 to 2006 and is working on improving the average quality of the facilities to a rating of C-2.

Evidence: The Defense Installations Strategic Plan, Goal two, figure 4.1b Recapitalization Rates and the Defense Corporate recapitalization rate chart shows an improvement from 192 years in 2001 to 110 years in 2006. The Defense Instatallations Strategic Plan Goal two, Objective 2.2 sets the facility quality rating.

Does the program (including program partners) achieve its annual performance goals?

Explanation: The Services have improved their recapitalization rates from 2002 to 2007. The Service is working on improving the facility quality rating.

Evidence: The Defense Installations Strategic Plan, Goal two, Objectives 2.1 and 2.2 set the recapitalization rates and facility quality ratings. However DoD has had to miss the targets in some years because DoD has had to budget for more pressing needs such as procuring weapon systems.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: The Department of Defense's Military Construction program consistently delivers quality facilities on time and within costs meeting the customers needs. The Department, Services and Defense Agencies annually review the program to identify areas for increased efficiencies and improvement. For example, the Army Corps of Engineers will gain efficiencies in its project delivery for the Army through the use of regional design-build request for proposals and eventually regional design models versus the design of each individual project one-by-one. The Centers of Standardization will become the design centers for their assigned standard facilities by the end of fiscal year 2006 and will become responsible for the regional request for proposals, and over time for the regional design (adapt-build) models. The emphasis on the utilization of design funds will be less and less on the production of individual project designs by Corps executing districts. The expenditure of design funds will be more and more on the development and maintenance of the regional design models by the design centers. In the implementation of the Military Construction Transformation strategy for new facility delivery, there is greater emphasis on the utilization of the pre-manufactured building solutions.

Evidence: Program efficiency measures will evaluate program on project cost (Project Durrent Working Estimate (CWE) to Programmed Amount (PA) Ratio), and design/construction award process (percent of the authorized projects based on programmed amount awarded in the program year). An area of improvementd under consideration is the time for construction completion.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The Department of Defense's Military Construction program consistently provides quality facilities on time and within costs. The program is a key part of the Department's asset management strategy. The Federal Real Property Council accepted the Defense Installations Strategic Plan 2004 as the Department's asset management plan. The Department's construction agents conduct assessments of the facilities delivery systems to benchmark performance with other government agencies and private industry. Results of the assessment identify business practices and processes for continual improvement

Evidence: The Naval Facilities Engineering Command routinely seeks independent assessment of their Capital Improvements Business Line processes. They will often repeat an analysis to determine if they are making any progress to improving their delivery systems. A frequently used benchmark study is done by Independent Project Analysis (IPA) Inc who has a database of capital investment projects from hundreds of companies and several government agencies including Department of Energy as well as Naval Facilities Engineering Command and Army Corps of Engineers. The Navy had IPA assess their processes in 1997, 2003, and 2005. An Executive Summary of the 2005 report is available for review. The Navy is one of the leading agencies in the delivery of capital improvements through the Design-Build (DB) methodology. At least 75% of their military construction program is awarded to DB contractors who partner with the Navy to deliver facilities in a true Government/Industry partnering approach. The Navy has three comprehensive, streamlined DB delivery systems that can be used for virtually all projects regardless of complexity or size. The Navy routinely partners with the design and construction industry to fine tune those processes in order to ensure the highest quality, innovative and sustainable facilities. The Navy established policy for implementing Building Commissioning into all phases of the acquisition process, as directed by Naval Facilities Engineering Command Instruction 12271.1 dated 23 October 2003. An industry benchmarking review has been initiated to assess the Command's Building Commissioning business practices and processes.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: The General Accountability Office and the Military Department (Army, Navy, and Air Force) audit agencies provide conduct evaluations which cover the wide range of functions within their respective military construction program areas and provide program improvement recommendations. For example,the Navy Audit Service is used by the Department of Navy to evaluate the effectiveness and validity of project scopes and requirements. The scope of the Navy audit is a review of the adequacy of support for 24 of 145 projects contained in Department of Navy's proposed Fiscal Year's 2006 and 2007 Military Construction Program. The review revealed that 19 projects have valid requirements and was properly scoped. For example a 2004 GAO audit results indicated some management deficiencies. The Office of the Secretary of Defense has taken a number of steps to enhance the management of the military construction program by providing guidance though a facilities strategic plan and by standardizing practices through selected management tools. However, some of these tools are not completed, and others have weaknesses that hinder DOD's efforts to sustain and recapitalize facilities. (page 4 GAO-04-228)

Evidence: General Accounting Office conducted a audit in February 2004 - Long-term Challenges in Managing the Military Construction Program (audit 04-228); Army Audit Agency audit titled, Military Construction Process, 19 May 2005; Navy Audit Service audit titled, Military Construction, navy Projects Proposed for Fiscal Year 2006 (NAVAUDSVC P-7520.1).

Were program goals achieved within budgeted costs and established schedules?

Explanation: 1 The Department's real property portfolio is being recapitalized within the budget and schedule. The Department is moving towards the recapitalization goal of 67 years by 2008. 2 The Department has a Current Working Estimate/Program Account measure that helps control cost growth, schedule growth, and construction duration. The Department is moving toward a 100% target. 3. The Department has a measure (number of projects awarded in a program year as a percent of authorized projects) which measure timeliness of awarding projects. The Department is attempting to achieve 100%; currently it is 98%.

Evidence: 1 The Naval Facilities Engineering Command (NAVFAC) maintains monthly metrics for execution performance, adherence to programmed amount, construction contract cost growth, schedule growth and adherence to construction duration. Headquarters and all field components review these metrics on a monthly basis. 2 The Air Force uses a series of performance measures called "Dirtkicker". It was developed in FY01 to help the Air Force meet its goal of delivering quality facilities on time and on budget. It consists of ten goals that are measured on a quarterly and annual basis. Each MAJCOM and design and construction agent is graded on their performance during the specified period. Dirtkicker's primary focus is on time and budget. The measures are design completion, project award for President's Budget and Congressional Insert projects, CWE/PA ratio, cost growth, schedule growth, and construction duration. 3 The Corps in conjunction with its customers have developed a number of metrics to measure and evaluate performance of the execution of the MILCON Program. The evaluations are used to identify positive and negative performance and identify where extra attention is needed. The five metrics are key to successful execution of the MILCON program: Program Execution - Forecast of Construction Awards; Headquarter Project Current Working Estimate (CWE) to Programmed Amount (PA); Construction Contract Cost Growth; Construction Contract Time Growth; and Construction Timeline (Duration). 4 The Department requested a extension of authorizations for projects with expiring authorizations: Prior Year (2005) - six projects valued at $45,620,000 Current Year (2006) - three projects valued at $11,500,000 Budget Year (2007) - ten projects valued at $122,323,000