Which of the following structures creates a management team that prioritizes overseas operations?

Military Real Property Maintenance: Management Improvements are Needed to
Ensure Adequate Facilities (Statement/Record, 03/01/2000,
GAO/T-NSIAD-00-111).

Pursuant to a congressional request, GAO discussed the results of its
review of the management of real property assests by the Department of
Defense (DOD) and the military services, focusing on: (1) principle
findings on DOD's strategy for management of real property and how the
services determine and prioritize maintenance needs and allocate
resources to them; (2) promising practices in facilities maintenance by
nonmilitary entities; (3) some barriers that the services face in
implementing such practices; (4) GAO's recommendations on how DOD could
improve its real property management; and (5) the steps DOD has told GAO
it is taking in response to GAO's testimony.

GAO noted that: (1) DOD does not have a comprehensive strategy for
managing its maintenance and repair needs; (2) each service sets its own
standards for maintaining its property. using different methods to
assess property conditions, prioritize repairs, and allocate funds for
maintenance and repairs; (3) moreover, GAO's questionnaire results show
that bases and major commands within the services sometimes apply their
own assessment criteria inconsistently; (4) in addition, the services
have different maintenance funding goals through 2005, and they plan to
fund repairs below the levels required to keep most facilities at
current conditions; (5) therefore, the backlog of repairs, some rated
critical, will increase; (6) the amount of backlog varies by service;
(7) GAO found a number of promising practices in the maintenance area
among nonmilitary entities, such as: (a) using a single system for
counting the number and type of facilities and for assessing facility
conditions; and (b) ranking budget allocations for all facilities using
common criteria, including physical condition, relevance of facilities
to the mission, and life-cycle costing and budgeting; (8) however,
adoption of these practices by the services is hampered by such barriers
as: (a) the use of real property maintenance funds for other operations
and maintenance purposes; and (b) incomplete and noncomparable data on
maintenance and repair, which prevents DOD and the Congress from making
meaningful comparisons of the services' requests for funding repairs,
which prevents DOD and the Congress from making meaningful comparisons
of the services' requests for funding repairs; (9) in February 2000, DOD
briefed GAO on the steps it is taking to improve its real property
management; (10) DOD has formed an Installations Policy Board to provide
DOD-wide policy and guidance for installations and to advocate for
adequate funding them; (11) DOD states that it is developing a
comprehensive Facilities Strategic Plan; (12) in January 2000, DOD
officials visited the Lawrence Livermore National Laboratory and the
Capital Needs Analysis Center of the Church of Latter-day Saints to
determine whether DOD could adopt some of their practices; and (13)
although GAO has not evaluated the extent to which these initiatives
will be effective in redressing the problems that GAO identified, GAO
believes they demonstrate a positive commitment to change.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-NSIAD-00-111
     TITLE:  Military Real Property Maintenance: Management
	     Improvements are Needed to Ensure Adequate Facilities
      DATE:  03/01/2000
   SUBJECT:  Military facilities
	     Facility maintenance
	     Maintenance costs
	     Military budgets
	     Facility repairs
	     Funds management
	     Federal property management
	     Real property
	     Private sector practices

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   * For Release on Delivery
     Expected at 10:00 a.m.

Wednesday,

March 1, 2000

GAO/T-NSIAD-00-111

Military Real Property Maintenance

Management Improvements Are Needed to Ensure Adequate Facilities

Statement of Kwai-Cheung Chan, Director

Special Studies and Evaluations

National Security and International Affairs Division

Testimony

Before the Subcommittee on Military Readiness, Committee on Armed Services,
House of Representatives

United States General Accounting Office

GAO

        Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to share the results of our review of the
management of real property assets by the Department of Defense (DOD) and
the military services and of the recent initiatives taken by DOD to address
issues we raised in that report. We testified on aspects of this review on
October 26, 1999, before the Senate Armed Services Subcommittee on Readiness
and Management Support.

Today I will discuss (1) our principal findings on DOD's strategy for
management of real property and how the services determine and prioritize
maintenance needs and allocate resources to them, (2) promising practices in
facilities maintenance by nonmilitary entities, (3) some barriers that the
services face in implementing such practices, (4) our recommendations on how
DOD could improve its real property management, and (5) the steps DOD has
told us it is taking in response to our report and testimony.

We focused on the properties that the services maintain and repair using
funds from DOD's operation and maintenance account. The services' real
property assets include barracks, administrative space, ports, hangars and
runways, roads and railroad track, and schools and utility systems. Real
property maintenance of these facilities includes daily maintenance, small
repairs, and minor construction. To meet our objectives, we sent
questionnaires to 571 military bases and major commands worldwide; 93
percent of them responded. We visited 35 bases and commands nationwide to
interview experts and DOD maintenance and repair personnel.

Results in Brief

We found a number of promising practices in the maintenance area among
nonmilitary entities, such as (1) using a single system for counting the
number and type of facilities and for assessing facility conditions and (2)
ranking budget allocations for all facilities using common criteria,
including physical condition, relevance of facilities to the mission, and
life-cycle costing and budgeting. However, adoption of these practices by
the services is hampered by such barriers as (1) the use of real property
maintenance funds for other operations and maintenance purposes and (2)
incomplete and noncomparable data on maintenance and repair, which prevents
DOD and the Congress from making meaningful comparisons of the services'
requests for funding repairs.

To improve management of military real property maintenance, we recommended
that the Secretary of Defense provide funding for a comprehensive strategic
real property maintenance plan. We also recommended that DOD develop a
cross-service, integrated strategy to comprehensively address real property
maintenance issues. In February 2000, DOD briefed us on the steps it is
taking to improve its real property management. First, DOD has formed an
Installations Policy Board to provide DOD-wide policy and guidance for
installations and to advocate for adequate funding for them. Second, DOD
states that it is developing a comprehensive Facilities Strategic Plan.
Third, in January 2000, DOD officials visited the Lawrence Livermore
National Laboratory and the Capital Needs Analysis Center of the Church of
Latter-day Saints (organizations we had identified as examples of best
practices for managing real property) to determine whether DOD could adopt
some of their practices. Although we have not evaluated the extent to which
these initiatives will be effective in redressing the problems that we
identified, we believe they demonstrate a positive commitment to change.

Background

Congressional concerns about DOD's and the services' management of real
property maintenance are long-standing, going back to the 1950s. In the past
decade, these concerns have focused in part on the services' reported repair
backlog, which increased 64 percent from 1992 through 1998, despite the
Congress' net addition of more than $800 million to the services'
maintenance accounts during this period to try to eliminate the backlog. In
addition, to address maintenance issues comprehensively, the Congress
provided DOD $50 million in 1992 to pilot test a common system to assess the
condition of facilities. The system was to use common standards in order to
provide DOD with a single set of measures to assess and compare the
maintenance needs of all service facilities and to make resource allocations
on the basis of those needs. However, the services rejected the system,
citing the estimated cost of implementing it. Currently, each service
independently assesses facility conditions annually and estimates the costs
of required maintenance repairs.

DOD Lacks a Comprehensive Maintenance Strategy and a Uniform System for
Determining the Urgency of Repairs

Services Use Different Rating Systems and Apply Them Inconsistently

In addition, bases lack procedures to ensure that assessments of facility
conditions are valid and reliable; that is, that they actually reflect the
facilities' physical conditions. Fifty-five percent of responding bases
indicated that they had no formal standardized procedures to determine the
reliability of inspectors' ratings.

Service Funding Plans May Lead to Increase in Backlogged Repairs

As of October 1999, the services were projecting increases in their repair
backlogs because they planned to fund maintenance and repair below
identified needs over the next several years. For example, the Air Force has
planned no money at all for repair projects until fiscal year 2003 (although
it plans to spend some funds on emergency minor repairs and other forms of
what it terms preventive maintenance). The total reported backlog of needed
repairs increased from $8.9 to $14.6 billion (64 percent in nominal terms)
from 1992 through 1998.

The services rate the urgency of their backlogs differently, and in the
absence of a single rating system, it is difficult to determine how urgent
these needs truly are. Therefore, simply providing additional funding will
not ensure that the most important deficiencies are funded first or that
buildings with repair needs exceeding a large percentage of their
replacement value are not demolished instead (saving money in the long run).
In the absence of a common rating system, neither DOD nor the services can
meaningfully rank the services' maintenance and repair funding requests. Nor
can they be assured that if more funds were provided that they would be
targeted to those facilities that are both needed to carry out critical
missions and in greatest need of repair.

Promising Practices in Facilities Management by Nonmilitary Entities

   * using a single system for counting the number and type of facilities;
   * having a single, engineering-based system for assessing facility
     conditions by adequately trained personnel;
   * prioritizing budget allocations based on physical condition, relevance
     of facilities to the mission, and life-cycle costing and budgeting;
   * using a single property maintenance budget that is controlled by a
     central office with the power to shift resources to facilities in the
     greatest need;
   * creating incentives to demolish or vacate excess space;
   * restricting the use of maintenance funds to maintenance purposes; and
   * allowing maintenance management offices to charge tenant entities an
     annual maintenance fee, based on square feet used, to ensure adequate
     funding for facilities and to create an incentive for space
     conservation.

Two nonmilitary organizations-the Capital Needs Analysis Center of the
Church of Latter-day Saints at Brigham Young University (Provo, Utah) and
Lawrence Livermore National Laboratory (Livermore, California)-have facility
management systems that collectively use all of these practices. Both report
these practices enable them to maintain needed facilities at agreed upon
standard levels, stabilize repair backlogs (with supplemental funding to fix
existing backlogs), accurately predict future maintenance needs, satisfy
customers that maintenance funds are allocated fairly and based on actual
need, and prepare credible budget requests. Similarly, a military
organization-the U.S. Army Health Facility Planning Agency-is implementing a
life-cycle investment strategy that it expects to reduce major repair costs
by 50 percent and to cut programming time from years to months.

Adoption of these promising practices by the services is hampered by several
barriers. First, DOD lacks basic data that would permit it to compare how
much the services spend per square foot on barracks or other common
buildings, such as administrative offices, classrooms, and warehouses. While
the Army annually collects per square foot spending data for more than 100
types of structures, we did not find comparable data collected by the other
services.

Second, repair and maintenance funds are frequently used for other purposes,
such as unfunded emergency military overseas operations, which reduces the
amount of funding available for maintenance and creates budgeting and
contracting instability.

Third, multiple accounts are used to pay for maintenance and repair: The
Army pays for maintenance from 27 different accounts, and the Center for
Naval Analyses found that the Navy had 110 different accounts for
maintenance use in 1995. As a result, funding for real property maintenance
is fragmented, creating problems in determining how much is actually being
spent.

Fourth, the services have different coding schemes to record the number and
type of their facilities; as a result, this information cannot be compared
across the services. Without valid, reliable data, DOD and the services
cannot adequately evaluate the cost-effectiveness of real property
management or even know how much is being spent on maintenance and repair.

Fifth, there are no DOD-wide space standards to determine whether a service
is using much more space per worker than other services for similar
functions. Common standards are useful in managing space utilization and
controlling costs, since less space use reduces maintenance needs. For
example, the Army allocates 162 square feet per administrative worker but
the Navy and the Marines allocate 110 to150 square feet, depending on a
worker's grade level. The Army uses its standards to determine whether more
space than required per worker is being used at bases, to help set
maintenance budgets. Although some facilities will always be service-unique
(e.g., nuclear submarine repair facilities, intercontinental ballistic
missile silos), many (such as barracks, standard classrooms, administrative
space, and family housing) are common across the services.

Recommendations Made to Improve Real Property Management

   * uniform standards that set the minimum condition in which military
     facilities are to be maintained and standardized condition assessment
     criteria;
   * standard criteria by which the services are to allocate space for
     different types of facilities (e.g., barracks, classrooms,
     administrative buildings) and against which maintenance funding
     allocations will be measured;
   * standard criteria for counting the number and type of facilities;
   * computerized, on-line inventory and cost databases that permit
     meaningful comparisons, across and within the services, of repair and
     maintenance spending by type, size, and location of facility and repair
     and maintenance activity, including direct data access by DOD
     headquarters;
   * standard cost accounting methods by which the services will record and
     track their maintenance expenditures so that they and DOD know how much
     is being spent, where it is being spent, and on what type of facility
     or repair activity it is being spent;
   * the identification of priorities for the services to use to explicitly
     link needs assessments with resource allocations and tracking systems
     that show whether or not identified high priority needs are allocated
     the funds intended for them by the Congress;
   * mandated training standards (curriculum and hours) for all those
     involved in condition assessment and ratings of repair urgency; and
   * a comprehensive, valid, engineering-based assessment system that
     incorporates life-cycle planning into facilities maintenance based on
     the well-developed methods already used by nonmilitary entities.

DOD agreed with most of our recommendations. However, DOD disagreed with the
need to establish standard cost accounting methods because it would impose
too great a level of detail, and it disagreed with the need to develop
mandated training standards because DOD is not certain such training is
needed. We continue to believe these measures are needed to provide DOD with
adequate oversight and consistency in prioritizing needs.

DOD's Initiatives in Response to GAO

DOD also noted that prior to our report, the services and DOD had begun
efforts to develop metrics that tie facility condition and its effect on
mission accomplishment into an installation readiness reporting system. DOD
stated it is developing a facilities sustainment model to more accurately
estimate the effects of funding levels on property condition.

In sum, Mr. Chairman, DOD has undertaken a number of initiatives that are in
direct response to the findings and recommendations we made in our report
and previous testimony. Although we have not evaluated whether these will be
successful, we believe that they show a management commitment to addressing
long-standing problems.

Contacts and Acknowledgments

(713062)

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