Military Base Closures: DOD's Updated Net Savings Estimate Remains Substantial

A letter report issued by the General Accounting Office with an abstract that begins "Through four rounds of base closures and realignments between 1988 and 1995, the Department of Defense (DOD) expected to reduce its domestic infrastructure and provide needed dollars for high priority programs, such as weapons modernization. Although DOD projects it will realize significant recurring savings from the closures and realignments, Congress continues to raise questions about how much, if any, money has been saved through the base closure process. Two GAO reports issued in late 1998 concluded that net savings from the four closure rounds were substantial but that the cost and savings estimates used to calculate the net savings were imprecise. This report reviews (1) the basis for DOD's recent increase in net savings projected to be realized from the closure process and (2) GAO's previous observations on the basis for savings from base closure and realignment actions and the precision of the cost and savings estimates. DOD's fiscal year 2001 budget request and documentation show that it now expects net savings of about $15.5 billion through fiscal year 2001 and about $6.1 billion in annual recurring savings thereafter, an increase from the $14.2 billion and about $5.6 billion, respectively, DOD reported in fiscal year 1999. GAO's analysis of the data showed that the net savings increase through fiscal year 2001 was due primarily to an overall reduction of about $723 million in reported costs and an increase of about $610 million in expected savings resulting from the closures. The net savings for the four rounds of base closures and realignments are substantial and are related to decreased funding requirements in specific operational areas. Reviews by the Congressional Budget Office, the DOD Inspector General, and the Army Audit Agency have affirmed that net savings are substantial after initial investment costs are recouped. However, those same reviews also showed that the estimates are imprecise and should be viewed as a rough approximation of the likely savings.