2005 BRAC cost more, saved less than estimated
Newport News, Va. — Sequestration is the newest scary word to enter the military vocabulary of Hampton Roads, a Beltway term for deep cuts in defense and non-defense spending that will take effect in January unless Washington decides otherwise.
Before sequestration there was BRAC, the base closing and realignment commission that last hit Virginia in 2005. It closed Fort Monroe in Hampton and merged some common functions at four bases that resulted in the creation of Joint Base Langley-Eustis on the Peninsula and Joint Expeditionary Base Little Creek-Fort Story in South Hampton Roads.
As Congress debates sequestration, BRAC continues to be in the undercurrent of conversation. The Obama administration has proposed BRAC rounds for 2013 and 2015, and while next year's prospects appear all but dead, a former Navy secretary said recently that 2015 seems more likely as the military continues to downsize, shift focus and try to save money.
But the 2005 BRAC round has fallen fall short of its original billing – at least as far as taxpayer savings are concerned.
Overall, one-time construction costs related to BRAC jumped by 67 percent, from a $21 billion estimate to $35.1 billion in 2011.
Five projects had one-time cost increases that skyrocketed beyond 1,000 percent of what Congress was originally told. Two were tied to Fort Lee in Prince George County.
Due primarily to those one-time cost increases, the expected 20-year net present value of BRAC 2005 – a measure of costs and savings over time – has plummeted by 72 percent.
These figures are from the Government Accountability Office, which has published a series of analyses on the 2005 BRAC, the most recent one released last month.
GAO's Brian Lapore noted that 2005 BRAC differed from previous rounds. It was the biggest and most complex round ever, involving 800 defense locations and relocating more than 125,000 people. While previous BRAC efforts focused on shedding waste, the military saw the 2005 BRAC as a way to realign its forces to meet defense needs 20 years in the future.
Functions were combined and realigned. Missions were transferred from base to base. To make it all fit, the military had to construct or retool at a myriad of locations.
Rep. Randy Forbes, R-Chesapeake, said he gets that part.
"That is a fair analysis," he said. "The BRAC rounds in 2005 were not just force reductions. They were designed with multiple-purpose approach. But having said that, it is vitally important when you sell these programs, you do not do a bait and switch.
"They were giving these cost figures early on, and that's what led Congress to make those decisions. When you make these policy decisions, you need to be making them on a reasonable basis."
Last week, Rep. Rob Wittman, R-Westmoreland, successfully amended the defense appropriations bill to block federal funding for the 2013 BRAC round. He says the timing is all wrong.
With the drawdown in Afghanistan, a proposed shift in naval forces from the Atlantic to the Pacific and other reductions already planned, the situation is too uncertain to decide whether to close bases.
"This is the last period of time you want to be doing BRAC," he said. "We don't get a redo on this. You can't say afterward, whoops we really need that base."
Forbes, who like Wittman sits on the House Armed Services Committee, said he is skeptical of future BRAC rounds because the Defense Department has been "notoriously off" on previous BRAC predictions.
For example, a 175 percent cost overrun occurred at Marine Corps Base Quantico, GAO says. The military closed various locations it had leased for investigative and counter-intelligence functions and moved them to Quantico. The required square footage was underestimated because the Navy did not include space for students or contractors to train there. As a result, construction cost $222 million more than planned.
Bad estimates happened on the local front, too.
In a move to joint basing, 26 installations consolidated management and support into 12 joint bases. Specific figures for Langley-Eustis and Little Creek-Fort Story are not yet available. GAO is actually working on a separate report devoted to joint basing.
But overall, the long-term savings dropped from initial estimates by 80 percent.
BRAC and the GAO both measure long-term savings by 20-year net present value. Lepore said it attempts to account for inflation and the value of money over time, and is considered a meaningful measure of a project's financial performance.
The original estimate said joint basing would result in a 20-year net present value of $2.3 billion.
The current estimate is $249 million.
One reason, Lapore said, is that the military required joint bases to meet various standards for functions like security, custodial services, grounds maintenance and fire protection – things that the bases could combine.
That turned out to be good news and bad news. The good news was that the new standards were very close to the military's existing requirements. The bad news: Because of lack of funding, installations were not meeting the existing standards anyway, so it would still cost more.
So for example, when it came to mowing the lawn, the military needed to maintain grass height at 2-4 inches "and accomplish necessary trimming, edging, pruning, and landscaping to maintain healthy vegetation and a professional appearance," according to one standard that GAO quoted in an earlier report.
The June GAO report is the first time the agency has listed all 182 BRAC projects in a single list. It offers some numbers on the closing of Fort Monroe in Hampton, which triggered greater construction at Fort Eustis in Newport News.
The 20-year savings estimate has dropped here as well. It was estimated to be $686.6 million. It is now less than half that, at $323.9 million.
The June report does not offer detail on Monroe or most other projects. But in a list of 182 projects with the biggest drop in savings listed at the top, Fort Monroe ranks 26th.
Last week, the subject of BRAC came up during a presentation by law firm Williams Mullen before the Virginia Peninsula Chamber of Commerce. The subject was sequestration, but some of the discussion focused on the possibility of another BRAC.
William L. Ball III, a former Navy secretary under President Ronald Reagan, sat on the 1991 BRAC commission. He said it might be possible to avoid a base-closing round next year, but it will be more difficult in 2015.
"It's hard to see how they would realign without it," he said.
The GAO's documentation of the 2005 round "is resonating on Capitol Hill," Ball said, because it shows how unanticipated costs can alter projects. If there is a subsequent BRAC round, he said, it will likely be focused more on simple reduction rather than another complex realignment.