A Tale of Two BRACs

(ROLL CALL 21 NOV 13) … Frank Kendall

Base Realignment and Closure –—also known as BRAC — is the process through which the Department of Defense either closes bases or moves major functions to new locations. The closure of a local installation can cause upheaval in the surrounding community, and many in Congress have expressed firm opposition to the administration’s request to authorize a BRAC round in 2015.

DOD, however, cannot afford to keep excess infrastructure as it reduces force structure. For example, the Army has announced plans to reduce its force from 562,000 to 490,000 soldiers and more reductions could be forced by looming budget cuts, but without BRAC the Army will not be allowed to close any bases to reduce overhead. This “empty space” tax on our warfighters will simply result in cuts to capabilities elsewhere in the budget.

BRAC has been an extraordinarily successful approach — an analytical, apolitical, transparent, independently validated process that has yielded billions of dollars in savings while making closed bases available to communities for redevelopment. DOD is saving more than $12 billion annually from the five past BRAC rounds (1988, 1991, 1993, 1995, 2005) — $12 billion it doesn’t have to find in the current budget environment.

A considerable proportion of the opposition to a new BRAC round is based on the bad taste that BRAC 2005 left in people’s mouths — specifically with regard to the price tag ($35 billion) and the cost growth above the original projection (which was $21 billion). The Government Accountability Office has validated the $4 billion in recurring savings associated with the round, and that really isn’t in question. When congressional members say the last round didn’t save money, what they really mean is that it cost too much, the cost growth was unacceptable and the payback was too slow.

The department has no intention of conducting another 2005-like BRAC. Simply put, we cannot afford another $35 billion BRAC round. However, it turns out the key factor that drove the cost of the last BRAC round was the willingness to accept recommendations that were not designed to save money but to reorganize the department.

To the casual observer, this makes no sense. BRAC has been sold as a method of efficiency — a tool to save money. That’s true to an extent, but the law also prevents the DOD from shifting its functions around from base to base without BRAC, and in the last round, that’s exactly what was done.

The reality is that there were really two parallel BRAC rounds conducted in 2005, and they accomplished very different things. For reference, let’s call them the Transformation BRAC and the Efficiency BRAC.

The Transformation BRAC

Nearly half of the recommendations from the last round were focused on taking advantage of opportunities that were only available under BRAC to move forces and functions to where they made sense, even if doing so would not save much money. Examples are the co-location of counterintelligence and investigative organizations at Quantico or the creation of a Maneuver Center of Excellence at Fort Benning. In BRAC 2005, 33 of the 222 recommendations had no recurring savings and 70 recommendations took more than seven years to pay back. They were pursued because the realignment itself was important, not the savings.

This “Transformation BRAC” cost almost $30 billion and resulted in a small proportion of the savings from the last round, but it allowed DOD to redistribute its forces within its infrastructure in a way that is extraordinarily difficult when one is not in the middle of a BRAC round. It was an opportunity that the department seized while budgets were high.

The Efficiency BRAC

The remaining recommendations made under BRAC 2005 paid back in less than seven years — even after experiencing cost growth. This second BRAC 2005 — the “Efficiency BRAC” — cost only $6 billion (out of $35 billion) with an annual payback of $3 billion (out of $4 billion). This part of BRAC 2005 paid for itself speedily and will rack up savings for the department in perpetuity. This part of BRAC 2005 was very similar to previous BRAC rounds and very similar to what we envision for BRAC 2015.

Returning to Congress’ concerns about the cost growth from the 2005 round, the department acknowledges it was real and significant. However, the key is where it showed up — largely part of the 2005 Transformation BRAC. Looking just at the 2005 Efficiency BRAC, however, while there was cost growth it was manageable and, in the end, the short payback and huge recurring savings have to be considered a success even after cost growth was calculated for this subset of recommendations.

In today’s environment, as we work to cobble together contingency plans on how to deal with the sequester over the long haul, a $6 billion investment that yields a $3 billion annual payback would be extraordinarily welcome. In today’s environment, we need an Efficiency BRAC.

Frank Kendall serves as the undersecretary for Defense for acquisition, technology and logistics.

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