TESTIMONY OF
MR. RAYMOND F. DUBOIS
DEPUTY UNDER SECRETARY OF DEFENSE
(INSTALLATIONS AND ENVIRONMENT)

BEFORE THE
HOUSE ARMED SERVICES COMMITTEE
SUBCOMMITTEE READINESS
UNITED STATES HOUSE OF REPRESENTATIVES

 March 25, 2004
 

INTRODUCTION

Thank you, Mr. Chairman, and members of the subcommittee for the opportunity to testify today about the Base Realignment and Closure (BRAC) process authorized by the Congress.  In accordance with the authorizing legislation, the Secretary has certified that the need exists for the closure or realignment of additional military installations and that the additional round of closures and realignments authorized for 2005 will result in annual net savings for each of the Military Departments, beginning not later than fiscal year 2011.  This certification is contained in the report that was provided to this Committee earlier this week.  Today, in addition to discussing the report, I will discuss the BRAC process generally, including what the Department expects of BRAC for 2005 and what it achieved in previous rounds of BRAC.

The Secretary's certification of the need for BRAC is a direct result of the changed world in which we live.  The conclusion that an additional round of BRAC is needed is shared not just by the Department's civilian leadership but also by the Chairman and Joint Chiefs.  Changes in the threats we face, how we prepare for those threats, and changes in technology require that we reconfigure our force structure to most effectively and efficiently support our forces.  Our force structure and the way we employ it is already transforming and this will continue.  BRAC has proven to be the most effective and comprehensive tool to position our base structure to accommodate and facilitate this transformation.

Therefore, an additional base realignment and closure (BRAC) round is essential to the Department's efforts to transform the Armed Forces to meet the threats to our national security and to execute our national strategy.

The Secretary's certification that there is a need for BRAC also reflects the fact that the Department retains excess infrastructure capacity, even after the previous four BRAC rounds.  Excess capacity diverts scarce resources from recapitalization.  The report we have provided includes a "discussion of the categories of excess infrastructure and infrastructure capacity" as required by the legislation.  Elimination of excess capacity is an important goal of BRAC because it is important to the Department's stewardship of the taxpayer's dollar and to its application of taxpayer resources to achieve their maximum effect.  I must note, however, that the Department is focused on the elimination only of truly excess capacity - that which is not important to preserving military value.  The Secretary has not established any quantitative capacity reduction targets for BRAC and the Department will not eliminate assets, even if only used marginally, wherever these assets are important to the preservation of the capabilities the Department must retain and enhance.  This was a key consideration in the previous rounds and is even more important now.

BRAC 2005 will be a capabilities-based analysis.  The Department recognizes that the threats our Nation now faces are difficult or even impossible to forecast through conventional analysis.  That realization compels us to review our facilities in BRAC within the context of the capabilities they offer instead of viewing our facilities against definitive requirements.  Because it is critically important for the Department to retain the infrastructure necessary to accommodate its ability to "surge", the Department is gauging its installations against the range of threats faced by our Nation so that it can differentiate among and capitalize on those that offer needed capabilities, and reconfigure, realign or close those that do not.  The previous BRAC rounds demonstrated that DoD has, in fact, focused on the elimination of assets that are "reconstitutable," that is, available through construction or purchase in the private sector, while retaining difficult to reconstitute assets like land maneuver areas and airspace for training.

The Secretary has directed that BRAC must:  further transformation by rationalizing infrastructure to force structure; enhance joint capabilities by improving joint utilization; and convert waste to war fighting by eliminating excess capacity.  I know that you share the Department's goal that BRAC 2005 must result in a base structure configured to most effectively and efficiently support the capabilities necessary to meet the threats of today and tomorrow.  I also know that this Subcommittee appreciates the fact that every dollar wasted on unnecessary infrastructure is a dollar diverted from improving Defense capabilities.  That is why Congress authorized BRAC 2005 -it is the only process that uses a rigorous, objective process rooted in military value to rationalize the Department's infrastructure.

The BRAC 2004 Report

As a basis for the Secretary's certification that an additional round of BRAC is necessary and will produce savings, Congress asked the Department for a report that included, among other things, a force structure plan and a discussion of categories of excess infrastructure capacity.  That request is entirely appropriate as the Department should not embark on an effort with the severity of impact associated with BRAC without an appreciation within the legislative branch of the necessity for such action.  The certification of the Secretary regarding the need for BRAC coupled with the documentation contained in the report establishes a solid foundation for the need for and the importance of BRAC 2005.

As required, the report includes a force structure plan based on a 20-year threat assessment, probable end-strength and major force units to meet those threats, and anticipated funding levels; a comprehensive worldwide inventory of military installations; a description of the infrastructure necessary to support the force structure; a discussion of categories of excess infrastructure capacity; and an economic analysis of the effect of closures and realignments.  In determining the level of necessary versus excess infrastructure, the report must consider the continuing need for and availability of installations overseas and the efficiencies that can be gained from joint tenancy.  Based on the force structure plan and infrastructure inventory and the economic analysis, the Secretary certified that the need for BRAC exists.

The force structure plan was developed by the Joint Staff based on the probable threats to national security from 2005 to 2025.  The complete force structure plan is included in a classified appendix to the report.  A higher level discussion for the years FY 2005 through FY 2009 is included in the unclassified portion of the report.

The inventory contained in the report is drawn from the Department's Facilities Assessment Database and also includes a separate list of leased facilities provided by the Military Departments, the Defense Logistics Agency, and Washington Headquarters Services.  The inventory identifies over 522,000 facilities owned by the Military Departments, arrayed by Military Department or defense agency user, location, and category.  The inventory also specifies whether the facilities serve the active or reserve components.  For leased facilities, the report identifies almost 3,000 leases of the Military Departments, Defense Logistics Agency, and Washington Headquarters Services, and includes notation regarding whether those leases serve the active or reserve components.  The report provides an overview of the need for bases overseas and concludes that a network of main operating bases with forward-stationed combat forces will continue to provide the U.S. with an unmatched ability to conduct military operations worldwide.  While some overseas bases will be realigned or consolidated to gain efficiencies and to eliminate excess infrastructure as a result of the overseas posture review, in the foreseeable future, main operating bases will continue to be located on reliable, well-protected territory primarily in Europe and East Asia.

The report discusses the efficiencies that can be gained from joint basing, noting that the Joint Cross-Service Groups will play a role in the Department's examination of cross-cutting solutions for business-oriented support functions.  The report also notes that the Military Departments are examining options for integrating reserve and active duty components into "blended units," combining related functions' support assets; combining/collocating assets and units to facilitate rapid mobilization; redistributing and consolidating training; and creating joint product centers.

Capacity

To estimate excess capacity, the Department focused on a significant sample of the inventory of major U.S. installations representing broad categories.  The analysis builds on the methodology first used in a similar report provided by the Department to the Congress in 1998.  The 1998 analysis indicated 23% of DoD's capacity could be considered excess, projecting to a 2003 end state.  In the current analysis, the Department projects to 2009 and finds that approximately 24% of the infrastructure may be excess.

It is important to be clear about what this analysis is and what it is not.  It is a conservative snapshot of the Department's current infrastructure in its existing configuration.  It is not an analysis that takes into account reconfiguration or cross service opportunities.  It is a discussion of categories of excess capacity in the aggregate.  It is not a detailed and comprehensive analysis of all installations using certified data regarding specific base capacity, considering the unique infrastructure requirements of specific force elements or military functions, all within the framework of selection criteria that provide primary consideration to military value and based on a force structure plan that considers threats looking out 20 years.  Bottom line, this report was not developed using the BRAC process and cannot be used as the basis for specific closure and realignment recommendations.

The analysis in this report provides the evidence necessary to support a certification that BRAC is necessary.  This comports with the position taken by the General Accounting Office (GAO) in its review of the 1998 report.  In their review of that report, the GAO noted that this approach provided a rough approximation of capacity and it also noted that its previous work indicated excess capacity remains.

Savings

To estimate the savings for BRAC 2005, the report uses an aggregate of the last two BRAC rounds as a benchmark.  During BRAC 93 and 95, infrastructure representing about 12 percent of the Department's infrastructure plant replacement value (PRV) was eliminated through realignment or closure.  This report demonstrates that today most functional categories continue to retain excess capacity.

If the same amount of the Department's PRV is reduced during BRAC 2005 (12%), the expected net savings for year 6 (2011) of the BRAC implementation process would be about $3 billion.  Experience suggests that the Department would achieve a recurring savings of about $5 billion for each year thereafter.  If 20 percent of the Department's PRV is reduced, the expected net savings for 2011 would be about $5 billion, with a recurring savings of about $8 billion for each year thereafter.  The experience of previous BRAC rounds suggests that each Military Department will achieve annual net savings beginning not later than Fiscal Year 2011, the sixth year of implementation.  The actual costs and savings from BRAC 2005 actions will, of course, depend on the specific recommendations adopted.

The report also provides an overview of the affects of prior BRAC actions on local communities and highlights reuses success stories.

THE BRAC 2005 PROCESS

In authorizing the BRAC 2005 process, the Congress recognized the efficacy of the methodology used in the last three rounds: all military installations will be reviewed, all closure and realignment recommendations will be based on approved, published selection criteria and a force structure plan, with military value as the primary consideration.  In establishing the Department's approach to implementing the legislative framework provided by the Congress, the Secretary has stressed the importance of enhancing the joint utilization of our infrastructure to improve joint capabilities.

To emphasize joint capabilities and in recognition of the importance of this effort, the Secretary established a senior chain of command for conducting the BRAC analysis that is joint at every level.  Specifically, he established the Infrastructure Executive Council (IEC), chaired by the Deputy Secretary, which is composed of the Secretaries of the Military Departments and their Chiefs of Services, the Chairman of the Joint Chiefs of Staff, and the Under Secretary of Defense (Acquisition, Technology, and Logistics) as the policymaking and oversight body for the entire BRAC 2005 process.  The Secretary also established a subordinate Infrastructure Steering Group (ISG) chaired by the (acting) Under Secretary of Defense for Acquisition, Technology and Logistics and composed of the Vice Chairman of the Joint Chiefs of Staff, the Service Vice Chiefs, the Military Department Assistant Secretaries for installations and environment, and myself.  This structure has, in fact, strengthened the joint process for BRAC 2005 that will advance transformation, jointness, combat effectiveness, and the efficient use of the Department's resources by effectively capitalizing on the military value of our installations.

Based on the Department's own experience, and as the General Accounting Office has addressed, the attention of senior leadership is essential to ensuring the difficult decisions required will be made in a timely fashion.  To this end, the ISG and the IEC provide senior oversight and decision making authority that will keep the process on track.  I am confident that BRAC 2005 will achieve its potential to materially improve the manner in which military infrastructure supports our war fighting capability.

Additionally, the Department realizes through its experience in the past round and as recognized by the General Accounting Office, that a strengthened joint analytical process is necessary to utilize the full potential of BRAC.  The previous rounds were service-centric with little joint decision making or joint analytical authority.  In response, and to further reinforce the importance of enhancing joint capabilities, the Secretary has directed that the analysis of common, business-oriented support functions will be conducted by joint cross service groups which will develop closure and realignment recommendations for review by the ISG and IEC.  Service-specific operational functions will be analyzed within the Military Departments.  The Secretary has designated seven broad areas for joint, cross-service analysis.  These are: Education and Training, Headquarters and Support Activities, Industrial, Intelligence, Medical, Supply and Storage, and Technical.  The members of these groups are drawn from Office of the Secretary of Defense, the Services, and appropriate defense agency personnel with senior level responsibilities within their respective functions.  This structure contrasts with the previous round wherein the Department constrained its joint cross-service analysis by limiting the authority of the groups conducting the analysis and by assigning them a much more limited role.

The legislation authorizing BRAC 2005 provides the Congress with key controls as part of its oversight role in the BRAC process, specifically regarding the Commission, its recommendations, and in the selection criteria the Department will use as the framework for its analysis.  Regarding the selection criteria, the Secretary published the draft selection criteria in the Federal Register on December 23, 2003, for public comment.  We received well over 200 letters from Members of Congress and the public during the comment period and carefully considered all of them.  The Department's final selection criteria were published in the Federal Register on February 12, 2004.

Besides the criteria and the report, other key dates in the statutory BRAC timeline include the requirement for commissioners to be nominated no later than March 15, 2005; the deadline of May 16, 2005, for the Secretary to forward his recommendations to the independent BRAC Commission; and the requirement for the Commission to submit its report to the President no later than September 8, 2005.  The President must transmit his approval of the Commission's report to the Commission and the Congress no later than September 23, 2005.  If approved by the President, the Commission's recommendation becomes binding 45 "legislative days" after Presidential transmission or adjournment sine die, unless the Congress enacts a joint resolution of disapproval.

Overseas Posture Review

The Department is also accomplishing transformation of its overseas infrastructure through the global defense posture review.  Our current posture reflects the Cold War strategy, with US forces forward deployed primarily to fight near where they were based.  Today's environment requires more agile, fast and lean forces able to project power into theaters that may be distant from where they are based.  This agility will require not only a shift in military forces, capabilities and equipment, but also a new basing strategy.

The new posture will enable the Department to respond more quickly to worldwide commitments and will make better use of our capabilities by thinking of our forces globally.  We will tailor our forces to suit local conditions while strategically pre-positioning equipment and support.  We anticipate realigning or closing some large permanent bases in favor of small and scalable installations better suited for deployments.

As the President announced in November, we will "realign the global posture of our forces" to better address the new challenges we face and will be consulting with our friends and allies around the world to incorporate their input in our plan.  Secretaries Rumsfeld and Powell have begun to describe our efforts on recent trips to Asia and Europe, and senior Defense and State officials will continue the consultations.  We plan to finalize the global posture review in time to inform domestic BRAC recommendations, where appropriate.  We will also continue our consultation with Congress on the key items on the transformation agenda.

PAST BRAC ACCOMPLISHMENTS

The previous BRAC rounds have demonstrated that the process can generate substantial changes and substantial savings.  I would like to review these accomplishments:

Costs and Savings

The four BRAC Commissions, 1988, 1991, 1993, and 1995, resulted in the closure or realignment of 152 major installations and 235 smaller installations.  As this committee knows, the Department invested approximately $22 billion to implement these recommendations.  During the implementation period, this investment was offset by savings of about $39 billion, netting approximately $17 billion through FY 2001, the end of the implementation period.  Recurring savings after FY 2001 amount to about $7 billion each year ($6.6 billion in 2002 dollars).

The savings associated with closing bases generally result from the elimination of base operating support, MILCON and related costs.  Examples of costs that can be avoided are:  programmed MILCON and family housing construction, environmental compliance that will no longer be required if the activity ceases or the building is demolished, and other costs normally associated with the day to day operation and maintenance of a military installation.   The following charts provide a recap of the previous BRAC rounds:

Savings from prior BRAC rounds are real and significant.  That is a position shared by both the General Accounting Office (GAO) and Congressional Budget Office (CBO).  For instance, the GAO released a report on April 5, 2002, stating: "In addition to our analyses, studies by other federal agencies, such as CBO, the DoD Inspector General, and the Army Audit Agency, have shown that BRAC savings are real and substantial and are related to cost reductions in key operational areas as a result of BRAC actions."

BRAC Environmental Cleanup

Since the last time we discussed environmental cleanup at BRAC installations, the Department has made steady progress toward achieving its goals, and has worked to improve the entire process.

At the end of FY03, 83 percent of BRAC sites requiring hazardous waste remediation have a cleanup remedy constructed and in place, and 78 percent have had all necessary cleanup actions completed in accordance with Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) standards.  The Department has achieved these results through several key initiatives: partnering with regulators and local communities, who have an inherent interest in clean property that they can safely and effectively reuse; identification and expanded use of the tools and processes that have proved successful in addressing DoD's cleanup requirements; and new cleanup technologies, which are improving cleanup and driving down costs.

Lessons Learned/Best Practices

The past several years have brought new insights to the Department as we have examined what tools have sped property cleanup and transfer.  As I just discussed, expanding partnerships - getting communities and regulators more involved - and finding innovative ways to clean up contaminants and return property to public use continues to be the Department's focus.  The Department is increasing the use of the following initiatives:

• Early transfer authority - The Department continues to build trust with regulators and communities to get property transferred faster.  We have developed a guide for expanding the use of this special authority, and are encouraged that this will assist in implementing early transfer as a useful tool.

• Uniform Land Use Control Statute - DoD worked closely with state and tribal governments, EPA, and other stakeholders in crafting a uniform state law for implementing land use controls where they are more practical than full cleanup.  The Department actively encourages the states to enact this law, which will remove one of the major encumbrances to BRAC transfer.

• Increased use of performance-based contracting - Rewarding contractors for efficient and effective cleanup promotes innovation in cleanup technologies and processes.  By awarding contracts based on performance measures, healthy growth in this area will only contribute to improved cleanup and property transfer.  The Department currently has 15 BRAC installations where performance-based contracting is setting the pace for cleanup.

• Increased implementation of the Conservation Conveyance Authority - In the National Defense Authorization Act for Fiscal Year 2003, Congress granted DoD authority to convey surplus property for natural resource conservation purposes to states and non-profit organizations.  We are encouraging the Services to consider this as a viable option for properties where it presents the best option for transfer and reuse.

In the past year the Department has been working to increase early transfers of property to communities with property redevelopment goals.  Congress granted DoD special authority to transfer its excess property before all environmental cleanup work has been completed, as long as the redeveloper agrees to complete the remaining cleanup work and certain requirements are met.  With the Department providing the funding necessary to complete the cleanup, this process gets the property into reuse much faster than if reuse is delayed until the cleanup objectives are met.  This saves the Department - and taxpayers - more money in the long-term.  The installation, regulators, and redevelopers work together to plan cleanup and property reuse activities concurrently, speeding up economic growth and renewal.  We've seen this process help communities around Mare Island and the Oakland Army Base and we believe it can drastically reduce the amount of excessed BRAC property currently remaining underutilized across the country.  An important example of combining economic redevelopment and environmental remediation took place recently at the former Military Ocean Terminal in Bayonne, New Jersey.  Using the Early Transfer authority, the Army executed an Environmental Services Cooperative Agreement (valued at $11 million) that saves the Army an estimated $5 million and makes the property available for redevelopment earlier.  Moreover, the Bayonne Local Redevelopment Authority (LRA) is able to integrate its redevelopment efforts on this 192-acre parcel with its work to create jobs on the remaining 450 acres that were transferred fee simple.

DoD is continuing its long-standing partnership with EPA to speed review and approval of necessary cleanup documents at its BRAC installations.  As the Department completes cleanup work at some of these installations, EPA shifts its resources to other areas where their help is needed.  In addition, DoD and EPA have collaboratively developed goals and metrics designed to focus efforts in completing the cleanup of BRAC installations by the end of 2005.  The status of these metrics is reviewed semi-annually at In-Progress Reviews conducted jointly by DoD and EPA.  This partnership facilitates the identification and attainment of practical solutions and cleanup goals.

Civilian Reuse

As of March 2004, the Military Departments have effectively transferred 438,500 acres (85%) of the 515,506 acres that were made available for disposal and civilian reuse through the previous four rounds of BRAC.  I would like to recognize the Army, in particular, for disposing of over 100,000 acres itself in 2003, and the Navy for disposing of 71,176 acres at Adak Naval Air Facility.  Through October 2003, almost 93,000 new civilian jobs have been created on former military bases through this civilian activity - a 9% increase from the previous year.

The Defense Economic Adjustment Program, through the Department's Office of Economic Adjustment, assists Defense-impacted communities, workers, and businesses.  Since 1988, this program coordinated the provision of nearly $1.2 billion in assistance from other federal agencies to support community recovery and reuse efforts.  Over this same period, the Office of Economic Adjustment provided over $274 million in economic adjustment planning and redevelopment assistance for the preparation of adjustment strategies, reuse plans, and initial organizational staffing.  We are seeking to reinvigorate this interagency coordination through the President's Economic Adjustment Committee by expanding its purview to address regulatory issues, and update its membership to include all federal agencies with programs that can assist local economic recovery.

Important to the success of these efforts is the flexibility each Military Department has to apply its delegated disposal authorities in a manner to be responsive to specific local circumstances.  These disposal options, ranging from discounted conveyances for public purposes to public bid sales, enable the Department to partner with affected communities as both seek opportunities for quick civilian reuse of former military installations.  A closed installation is often the affected community's greatest asset for mitigating the closure impacts and charting a future that diversifies the local economy, builds on a community's strengths, adds local tax base, and satisfies community public facility needs.

The former Marine Corps Air Station El Toro provides an example of a Military Department using its flexibilities under these delegated authorities to craft a disposal strategy to achieve local reuse objectives.  The City of Irvine, while not directly involved in the redevelopment of this former installation, has identified necessary public improvements for the property and will seek compatible zoning for the Navy to then sponsor a sale of the property.  This disposal is projected to yield 3,000-plus acres for public parks and open space, as well as funding for required public infrastructure through fees and future property assessments.  In return, developers can build on 800 acres per the region's market demand for housing and commercial uses.

CONCLUSION

The FY 2005 budget includes sufficient funding to address all planned BRAC requirements for environmental restoration and caretaker costs for bases closed under the previous rounds of base closure authority.  These requirements will be funded primarily through new budget authority and to a lesser extent with land sales revenue.  The FY 2005 BRAC requirement is less than that requested for FY 2004 which reflects significant progress in closing installations and completing BRAC cleanup.

The Congress recognized the importance of rationalizing the Department's infrastructure when it authorized BRAC 2005.  This recognition was based on the fact that military installations are the deployment platforms for the Nation's fighting forces.  While every one of our installations has a superb history of supporting the defense of this nation, the fact remains that infrastructure cannot remain static in the face of the impact of new threats and technology on our warfighting capability.  As such, the Department must consider closing some installations and realigning others in order to optimize infrastructure and to ensure the needed physical capacity is positioned and configured to make the most effective and efficient contribution to operations.

Military installations must be positioned to support war fighters and BRAC has proven to be the only comprehensive way to effect material changes.  Further, these platforms demand significant levels of funding that simply cannot be wasted on facilities that may no longer be necessary.  Savings from BRAC are critical to supporting the reinvestment and recapitalization necessary to maintain the Nation's enduring installations.  The Department will ensure that BRAC is conducted in a manner that is a fair, objective, disciplined, and comprehensive analysis that makes military value the primary consideration.

In closing, I sincerely thank you for this opportunity.  We appreciate your strong support and look forward to continuing to work with this Subcommittee as we reshape our global infrastructure.