Support operations play a critical role in enabling Department of Defense personnel to live, train, and execute national security policy. Support functions must further serve the force by becoming better, faster, and cheaper. They must be better because quality infrastructure—particularly installations—contributes to quality of life, morale, retention, and hence force readiness. Services must be cheaper, because the Department must increase its spending on modernization to maintain battlefield dominance. The Secretary of Defense’s November 1997 Defense Reform Initiative lays out a plan by which DoD will continue to actively examine its internal operations and support activities to determine where it can right-size, lower cost, and improve performance through better management.

The Department has the world’s largest dedicated infrastructure. Roughly the size of the state of Virginia (40,000 square miles), the Department’s physical plant is worth $500 billion. It includes not only mission and mission-support facilities, but also housing for more than 300,000 families and about 400,000 unmarried service members. DoD is committed to providing facilities in the quality and condition suitable to support the defense mission. The Department is actively pursuing initiatives for facility strategic planning, disposal, outsourcing, privatization and competition, energy, test and evaluation, and housing. All these efforts are focused on improving the efficiency and performance of the DoD facility support structure. As part of the Department’s responsibility to the environment, DoD is working to reduce toxic chemicals released at these facilities.

DoD initiated an effort to improve the strategic planning process for the acquisition, operation, maintenance, repair, renovation, and replacement of its physical plant. In 1998, this effort, as an outgrowth of shortfalls identified in the Quadrennial Defense Review (QDR), will create a Defense Facilities Plan using a framework modeled after the Government Performance and Results Act of 1993. All active and reserve Service components are participating, along with defense agencies.

The Department is improving facility management by disposing of obsolete and excess buildings and structures. A recently-completed survey of all installations has identified 8,000 buildings totaling 50 million square feet as candidates for disposal by FY 2003. Disposal of these buildings will result in cost avoidance to DoD of $100 million per year in future operations and maintenance costs. In addition, disposal will improve safety, prevent space creep, and remove eyesores. The Department has substantially increased funding for facilities disposal and will accomplish even more through military construction projects that contain facilities disposal as part of the project.

Another key to achieving necessary savings is outsourcing, privatization, and competition. Competition drives organizations to improve quality, reduce costs, and better focus on their customers’ needs. DoD’s experience has been positive; the Department has saved at least 20 percent on services costs as a result of past competitions. However, commercial firms cannot always perform the required work, and many activities are best performed by government entities due to expertise, technological edge, or other factors. Outsourcing is useful only when it results in the best value for the government. In 1995, the Department of Defense began developing its strategy for competition and outsourcing. The Defense Reform Initiative further directed the Department to evaluate DoD’s entire military and civilian work force by 1999 to identify which functions are commercial in nature and could be competed.

The Department’s principal tool for competition has been the Office of Management and Budget’s Circular A-76, which provides policy and cost comparison procedures for commercial activities. More than 2,000 A-76 studies were completed between 1978 and 1994, about half of which were won by the government in-house work force. Regardless of who wins the competitions, DoD anticipates steady state savings from the ongoing A-76 cost comparisons process of over $2.4 billion annually commencing in FY 2003. These savings are based on conservative extrapolations of historical experience for savings from A-76 cost comparisons.

The Department spends nearly $2.5 billion annually to heat, light, cool, and operate buildings and other facilities on military installations (70 percent of all energy used by federal facilities). The primary long-term goal for the Department is to reduce installation energy use by 30 percent over 20 years (1985-2005). The Department is on track at 15.5 percent to meet this goal and satisfy mandates set forth in the 1992 Energy Policy Act and Executive Order 12902. Effective and efficient utilization of energy is essential because conservation not only saves money but also reduces greenhouse gases and counters global warming.

DoD is working to design its facilities to achieve the optimum balance for maximum energy conservation and is working to upgrade equipment to increase energy efficiency. Since 1985, all the Department’s energy conversation work has resulted in a reduction of DoD’s annual utility bill by about $500 million.

The Defense Reform Initiative made a number of important commitments with regard to energy use. By January 1, 2000, the Department will privatize all utility systems (electric, water, waste water, and natural gas) except those needed for unique security reasons or when privatization is uneconomical. Many of these systems are old and in need of significant repair. The private sector has both the resources to invest in these systems and the expertise to maintain them appropriately. The Defense Fuels Supply Center (renamed the Defense Energy Support Center) will outline a blueprint for three regional demonstrations of integrated energy management by the middle of 1998. By allowing DoD to better leverage its buying power, these wider management arrangements will allow the Department to maximize savings.

The increasing complexity of DoD weapon systems and the expanding size of the forecasted battlespace has driven the research, development, test, and evaluation (RDT&E) infrastructure to become increasingly complex and sophisticated. DoD laboratories now develop leading edge technologies with substantial commercial applications. Likewise, the test and evaluation (T&E) infrastructure has grown into the large and complex set of facilities needed to test systems and subsystems for DoD acquisition programs. These T&E ranges, where several thousand test projects are performed each year for DoD, other federal agencies, U.S. allies, and commercial users, are worth about $25 billion and account for over 50 percent of the total DoD land area in the continental United States.

Since the early 1990s, Base Realignment and Closure (BRAC) actions and other ongoing initiatives have resulted in significant reductions in DoD RDT&E personnel and infrastructure. The Department recognizes that it must continually look for opportunities to reduce unnecessary duplication, reduce costs, and increase the efficiency and effectiveness of this infrastructure. DoD also recognizes that to maintain a technological edge over potential adversaries, modernized capabilities must be available. In response to the Defense Reform Initiative, the Department will conduct a study to review laboratory and T&E needs for the next 20 years. This study will develop a long-range plan by examining performance envelopes projected for future acquisition systems, laboratory and T&E capabilities, workload, and capacity, with a focus on meeting the needs of current and future warfighters. The result will be a requirements-based RDT&E infrastructure.

To attract and retain high quality personnel, DoD must provide a good quality of life—in particular, decent houses and barracks for service members and their families. But military housing is old, in need of extensive repair, and below contemporary standards. Two-thirds of DoD’s 300,000 houses and 60 percent of the 400,000 bachelor housing spaces require revitalization or replacement. Using traditional funding and procurement methodologies to address this problem, it would take 30 years and $20 billion for the houses and $9 billion for the barracks. DoD is devoting the maximum amount of resources possible and is increasing reliance on the private sector. DoD expects to tap private sector expertise and capital to speed revitalization of military housing. The Department established the Housing Revitalization Support Office to help use the new authorities.

Attracting private capital to help speed revitalization is imperative. Using new tools provided to DoD by Congress in FY 1996, the Department expects to be able to leverage military construction dollars by a factor of at least 3:1. The Department has made significant progress toward the privatization of military housing and plans to accelerate the privatization program over the coming year. DoD now has solid examples to follow that will help build a portfolio of successes.

Already, service members and their families are moving into 404 new townhouses in Corpus Christi, Texas, and into 185 new townhouses in Everett, Washington. These homes were built as DoD’s first limited partnership with private developers. They provide approximately four times the housing for the dollar compared with traditional military construction projects that had been considered at those locations. DoD is evaluating proposals for two other privatization projects: a whole base housing project at Fort Carson, Colorado, where the private sector will construct or revitalize, maintain, manage, and own 2,600 single and multifamily structures; and another at Lackland Air Force Base, Texas, where the private sector will construct, maintain, manage, and own 420 family housing units. The Department is developing requests for proposal for four other revitalization projects: Robins Air Force Base, Georgia; Marine Corps Base Camp Pendleton, California; Marine Corps Logistics Base Albany, Georgia; and Fort Hood, Texas. Some 50 other sites are being evaluated to determine their feasibility as successful privatization projects. DoD has worked hard this year to solve one-time budgetary and legal issues involved with this new program. As these issues are addressed, the Services will be able to negotiate and award more projects more quickly in the coming years.

Beginning with 1994, DoD installations submitted annual Toxic Release Inventory (TRI) reports to the Environmental Protection Agency (EPA) for each toxic chemical used in quantities that exceed statutorily defined thresholds. For 1994, 131 installations submitted reports to the EPA showing that DoD released or transferred off-site 10.6 million pounds of toxic chemicals. In 1995, releases were reduced by 36 percent to 6.7 million pounds. This reduction was due to reduced operations at DoD installations and to the Department’s pollution prevention program.

Of DoD’s 1995 TRI releases and off-site transfers of toxic chemicals, DoD released 5 million pounds (75 percent of the total) to the air. Some of these toxic chemicals are hazardous air pollutants regulated by the Clean Air Act. EPA is increasing the regulatory control for these air pollutants. A number of the toxic chemicals are also ozone depleting substances. By reducing toxic chemicals, DoD is reducing its regulatory burden as well as improving the environment for the community. Achieving toxic chemical reductions requires finding new materials and processes that do not rely on toxic chemicals. DoD installations are implementing these source reduction techniques through such methods as material substitution and equipment changes.

Corporate experience has shown that the integration of environmental and core concerns within an organization can generate constructive, cost-effective environmental management which reduces resources use. DoD has initiated an integrated approach to environmental security decision making and management. The objective of this program is to protect people, manage training and living areas judiciously, be a good citizen and neighbor, and set a good example for other militaries around the world.

The Department is building partnerships with states, tribal nations, and citizens to identify and address issues before they become problems, and to jointly develop constructive solutions-both environmentally and economically. Examples of partnering are found in the development of innovative environmental technologies, the implementation of the Environmental Investment (ENVEST) program, and the adoption of the ecosystem management approach.

The Department is developing innovative environmental technologies which can substantially reduce costs and increase the effectiveness of environmental programs. Congress granted DoD the ability to enter into cooperative agreements with state and local government agencies in order to demonstrate, validate, and certify environmental technologies. With strong research and development and evidence of technical promise and cost-avoidance potential of new technologies, DoD can support the transition of successful technologies to wider DoD use and private markets.

DoD and the Environmental Protection Agency jointly sponsored pilot program ENVEST—part of the President’s Reinventing Environmental Regulation initiative, which seeks pollution prevention through regulatory flexibility. ENVEST allows selected military installations to identify a combination of actions that would protect human health and achieve greater overall environmental performance, with equal or less costs than under the current regulatory approach.

DoD’s installations contain diverse habitats, from tall-grass prairies to old-growth forests, and many rare species. DoD’s conservation goal is to support the military mission while managing these important resources for multiple uses for future generations. In order to accomplish this goal, DoD will partner with other federal and state agencies, communities, and interest groups to adopt ecosystem management approach. This approach considers groups of plant and animal species and their interrelationships instead of focusing on single-species management. It also integrates human considerations in helping determine the best long-term uses of these resources.

The Department’s BRAC process has been a major tool for reducing the domestic base structure and generating savings. The Department recognizes its responsibility to communities surrounding former bases and has a strong track record in helping them develop these properties into vibrant centers of economic growth for public benefit. Even so, the Department’s base infrastructure remains too large for its mission; it must be right-sized to properly support the national security mission.

Four BRAC Commissions between 1988 and 1995 proposed the closure or realignment of 152 major installations and 235 smaller installations. The Department invested approximately $23 billion total to implement these recommendations—and will net a projected $14 billion savings by FY 2001. Recurring savings after FY 2001 will amount to approximately $5.6 billion each year. Despite the infrastructure reductions gained by the four rounds of base closures, balancing DoD’s force and base structure is critical to preserving readiness.

The Department has embarked on a study of actual costs and savings attributable to BRAC in compliance with Section 2824 of the FY 1998 Defense Authorization Act. Preliminary analysis by the DoD Inspector General indicates that BRAC costs have been overstated and BRAC savings have been understated.

The Department continues to make base reuse a high priority. Since 1993, when President Clinton launched a plan to support faster redevelopment at base closure communities, DoD has made major improvements each year to the way former military bases are converted to civilian use. A few of the more recent initiatives are:

Successful recovery from base closures and conversion of military bases can be found throughout the country. Already the redevelopment of closed bases has created nearly 40,000 new jobs and 800 tenants. For bases closed more than two years, nearly 75 percent of the lost civilian jobs have been replaced.

Public and private reinvestments are recreating these installations as job centers, with new airports, educational institutions, and multifaceted business developments. Former defense facilities are also helping communities meet needs for public recreation, homeless individuals, and affordable housing. Most communities are rebounding remarkably fast, crafting more diverse and resilient economies. Many find that they are probably better communities for having evolved away from the bases.

In California, the state hardest hit by base closures, many communities are well on their way to recovery. For example, in Sacramento, on the site of the former Army Depot, Packard Bell employs 5,000 people. At the former Mather Air Force Base there are 45 tenants and 1,800 new jobs. In Charleston, South Carolina, where the number of DoD job losses, as a percent of the work force, was greater than any other BRAC location, there are 32 entities reusing the former Navy facilities providing 2,420 jobs. Additionally, roughly 62 percent of the six million square feet of leasable space on the base is occupied.

As part of the effort to monitor the BRAC process, DoD uses 97 major closure properties as a baseline for measuring progress on closure, disposal, cleanup, and reuse. DoD property disposal is accomplished through federal and private transfers. Over 330,000 acres of real property were declared excess from the last four rounds of BRAC. The BRAC surplus installation property has or will be transferred through public benefit conveyance or to other federal agencies, negotiated sales, public bid sales, or through economic development conveyances. Seventy-two base transition coordinators are on-site coordinators that facilitate the process of base closure and property disposal to the local community.

DoD has eliminated only 21 percent of its domestic base infrastructure, while force structure will have dropped by 36 percent by FY 2003. The Department therefore will request authorization for two more BRAC rounds. After implementation of these rounds, the Department anticipates eventual additional annual recurring savings of approximately $2.7 billion. Balancing the Department’s force and base structures by eliminating unnecessary infrastructure is critical to preserving readiness.

The Department of Defense must make its support structure as agile and efficient as possible. Unless DoD continues to change its traditional tendency to rely upon inherited structures and processes, the nation risks entering the next millennium unprepared for the global challenges it will face. The Department is committed to maintaining only the infrastructure needed and managing it better: seeking out and adopting the best business practices, streamlining organizations, and introducing competition into the delivery of support services, wherever it is effective to do so.