DoD News Briefing: Secretary of Defense William J. Perry
Tuesday, February 28, 1995, 11 a.m.
Note: Participants in this briefing were Dr. Perry; Dr. John Deutch, Deputy Secretary of Defense; and Mr. Kenneth H. Bacon, Assistant to the Secretary of Defense (PA)
Mr. Bacon: Welcome to the press conference on base closure and realignment. Secretary Perry will start with a statement and then take several questions. And then Deputy Secretary Deutch will follow up with a statement, more charts, and he'll stay until the questions are exhausted or he is. He's a man of great stamina. I present Secretary Perry.
Secretary Perry: Thank you, Ken. The ending of the Cold War has allowed us to safely reduce our force structure. As a consequence, we have underway a force structure reduction which will amount to about a third -- a 33 percent reduction within another year or two. This force structure reduction has been underway for five or six years and has about another year to go.
With fewer Forces, obviously, we need fewer bases. In BRAC '88, '91 and '93 -- the last three base closing rounds -- we have reduced our infrastructure about 21 percent. I would point out to you that 21 percent is still less than the roughly 33 percent reduction in Forces.
Therefore, we are motivated and the services are motivated to reduce the infrastructure further in order to free up dollars that we can apply to readiness and to modernization.
The first chart simply summarizes the key numbers that I've just given you here. This is the simple arithmetic which drives the BRAC process.
Let me talk about that process. The BRAC -- the Base Realignment and Closure -- is enshrined in law. This is the fourth, and the last, authorized base closing round that we are proceeding on.
We proceed in a bottom-up approach to this. Each service makes their own best judgment as to the facilities they have, the capabilities they need. And they do this based on the published force structure and the published criteria. They do this under the guidance of the BRAC Review Group which is chaired by the Deputy Secretary, John Deutch. This process has been underway for almost a year now, most intensely in the last few months.
It is the first time we will have done a BRAC -- a base closing -- that is based on the force structure which was specified in the Bottom-Up Review, and it is the first ever attempt at trying to effect real joint cross-servicing.
The cross-servicing has been very difficult, but we made real progress in that area. When Deputy Secretary Deutch briefs you on the details of our recommendations here, you'll see that reflected in the specific recommendations we're making on depots.
When the services finish their review, they send it to my office for final determination. My staff and the Joint Staff have been reviewing this intensely ever since early February. We're reviewing it for factors which we were concerned that the services may not have given sufficient consideration to. For example, we wanted to ensure that the law and the DoD policies were fully followed in all recommendations. We wanted to be sure that there was adequate consideration of the warfighting needs of all of our commanders-in-chief in the field. For example, we have a recommendation here to close a facility at Guam which Deputy Secretary Deutch will be describing to you in more detail. That particular recommendation was questioned by our CINCPAC as to whether it would allow him to adequately perform his warfighting mission. That's the kind of a discussion we had with the CINCs during the last few weeks.
We also had to consider whether these recommendations would meet all of our treaty obligations. One of the bases that's recommended for closing here involves missile sites. The missile sites are affected by our START Treaty. So we wanted to be very sure that every recommendation here was compatible with treaties. That was considered.
We wanted to be sure how it would affect other departments. For example, the Department of Energy. One of the recommendations on this list is Kirtland Air Force Base, and that is an Air Force base, but there are Department of Energy facilities housed within the base. We had to be sure that those DOE needs were being adequately accommodated.
Finally, we wanted to look at the cumulative economic impact from independent actions of different services to be sure that the cumulative effect is not necessarily disruptive in any one region.
During this process of the review, I have to tell you, we have received substantial advice from all over the town and all over the country as to the recommendations that we were considering. We got numerous recommendations that we should take a base off the list which the service had put on the list. Even though we did not publicize what was on the list, the word had somehow gotten out.
We did consider these recommendations on their merit. After consideration, and after careful review, I will report to you that I have accepted all of the recommendations which were made to me by the services. That is to say the recommendation which I will give to the Commission tomorrow will include all of the recommendations of the services. I have not taken any off; I've not added any to those recommendations.
We did not make that decision lightly. As I told you, we had a very intensive review process. Nevertheless, at the end of the review, our conclusion was to accept all of the recommendations of the services. I think that is a tribute to the fact that we have been working this process for a year, and it was done under the guidance of the BRAC Review Group under the Deputy Secretary, so we've had very good communications all through this process.
I told you this review was done and these recommendations were made according to BRAC criteria. Let me describe to you briefly what these criteria are.
The first and highest priority criteria is military value. That was the one which the services had to consider first of all.
I will tell you that the recommendations we are making here are consistent with the force structure which is in the Future Years' Defense Program which we just presented to the Congress. More specifically, in FY99, the Army will have ten active divisions and we will have, on these recommendations, room to station all ten of these divisions. The Navy will have 11 carriers, and we will have adequate facilities to berth 11 carriers. The Air Force will have 936 fighters, and we will have room to bed down all of these fighters. The Marines will have three divisions. We will have room to base those.
In addition to that basic accommodation, the services have retained enough domestic capacity to accommodate the return of some forward-based forces. In other words, we have some degree of redundancy in basing, even after this drawdown has been made, so that we can accommodate some degree of reconstitution.
On the cost and savings. I'll be talking more about that in a few minutes, but let me simply say that on the last base closing round we had some very high up-front costs that were associated with relocating units from one base to another, and we had military construction costs associated with that. As a consequence, it took us a long time to fully recover the investments that were made in order to effect the move.
This time we have made a very heavy emphasis on reducing the up-front costs and getting an early recovery. We've done this by putting an emphasis on what's called the net present value savings. That is, we not only looked at the cost of making the move and the savings that would be affected by it, but we considered the cost of money in this process. By considering the cost of money, it meant that it gave an emphasis on lower up-front costs and earlier payoffs.
We also considered community impacts: economic, environmental. That was done also in the previous base closing rounds. I think this time it was done more consistently, and, in particular, with the very careful consideration of cumulative economic impacts -- cumulative over all four base closing rounds and cumulative from service to service.
Let me give you, in the next chart, a summary of what the consequences of this base closing round will be. I have listed on this chart BRAC '88, '91, '93 and 95. The first column tabulates the number of actions that are recommended. It turns out to be 146 either closing or realignment actions. I would compare that with 175 closings in BRAC '93. So based on actions alone -- closings or realignments -- this BRAC is somewhat less than the previous BRAC -- about 80 percent of the previous BRAC.
Let me go to the next area which is closure costs. In BRAC '93, we had almost $7 billion of closure costs associated with this. Whereas in this round, we have only $3.8 billion -- a considerable reduction -- and that results in the emphasis which I described to you earlier.
I think perhaps the most interesting figure is this third column. This is the six-year net savings. Over the course of our Future Years' Defense Program six years -- if we take the costs and the savings that will occur during that period and BRAC '93, it ended up being about a wash over the six-year period. That is to say, the savings only kicked in at the end of the period and with just barely enough to offset the costs which occurred in the first few years.
In the BRAC '95, we are projecting a $4 billion savings over the course of the six-year Future Years' Defense Program. That is a very substantial difference.
So, in terms then, if we're trying to size, how big is this BRAC? In terms of savings, it's very much bigger than any of the previous BRACs we have effected. In terms of the number of actions, it's somewhat less than BRAC '93 and somewhat larger than the first two BRACs.
After this process reaches stability, there will be a savings effected every year after that. We see this BRAC, with $1.8 billion per year savings, is about equivalent to the one we had in 1993.
Finally, I would comment on this total savings column. This is the net present value that I referred to earlier. It's a 20-year accumulation of costs and savings discounted for the cost of money. By that criterion of total savings, this is the largest BRAC we have ever had in that we will effect savings on net present value of over $18 billion -- larger than any of the previous BRACs.
I might say that these figures we put on here exclude the closure costs exclude environmental costs. We do not have those tabulated yet for this year, because we did not consider environmental costs as a part of our criterion for closure. We consider those as sunk costs -- costs we have to make sooner or later. So, we do not consider that yet. But if you take the environmental costs of these previous rounds of BRAC, it adds up to $3.8 billion in addition to the figures that I have shown here.
This gives you some flavor, then, of the cost and the savings associated. In very brief and summary form, this BRAC is slightly smaller than the previous the 1993 BRAC in terms of number of actions. It's larger in terms of savings, whether you measure those savings over the six-year period or whether you take the total net present value of the savings over a 20-year period.
I would make one other point from this. That is, that the $6 billion annual savings, which will kick in towards the end of this decade, is absolutely crucial to our plans for ramping up our modernization program again as we get to the end of the decade. In our planning, this entire $6 billion transfers over to an improvement in the modernization program.
Let me go to the next chart. These are the costs in savings. Let me talk a little bit about impact.
This is not in any way to be a comprehensive listing of the BRAC, but I have selected a few of the higher, the most significant, impact just for comparison. I have picked for certain states here the number of civilian job losses in all previous BRACs put together, and the ones attributable to BRAC '95. California, for example, was very heavily hit in the previous BRAC, lost a total 26,000 civilian jobs as a result of the '88, '91, and '93 BRACs. In this closing, they will lose 3,900. So it's still a significant impact, but much smaller than in previous years.
By contrast, Texas which had an almost negligible effect of closures from previous years will lose 6,600 civilian jobs this year. Texas was hit much more heavily. New York, by comparison, lost 3,000 in the previous BRACs, net; will lose about 1,400. We are netting together the various actions in these states for purposes of this chart. Pennsylvania, which lost 10,000 in previous base closings, will lose just over 3,000 on this round.
This is the Guam example I gave you. We will be losing over 2,000 -- 2,600 jobs in Guam as a result of the realignment that's going to take place at the Guam facility.
We have, from the beginning in our implementation of the BRAC '93 and at the very firm guidance of President Clinton, we have spent a lot of time and effort trying to help the communities that are affected by base closings develop a reuse plan and implement a reuse plan. This chart is only to illustrate that point. This happens to be the plot plan for Lowry Air Force Base which was closed in the 1991 base closing program. The community got together, worked with the Defense Department, with other agencies of the government, and developed a reuse plan. That reuse plan involves an educational campus, parkland, a business park, housing. We also moved a Defense Finance and Accounting Center into that area. There's recreation. As a consequence, what used to be the Lowry Air Force Base is now evolving into a multi-use facility in Colorado which will be beneficial to all of the citizens of that area.
What the citizens around Lowry Air Force Base are doing, with our assistance, is taking the problem which was presented them by BRAC and converting it into an opportunity by our conveying the land to them and by our assisting them in the process of actually drawing the plans together.
I want to make one other comment about BRAC before I take a few questions. That is, where it may go in the future. This has been a very difficult task, both for us and the communities involved, to absorb everything we have done up to this date, and, with this rather significant, further round, of base closings that's going to take more attempts to absorb those closures. We need some time to absorb those. The communities need some time to absorb those.
Nevertheless, my best view now is that another BRAC will be desirable in another perhaps three or four years. If you go back to the figures which I posed to you at first, even with this round of base closings, we still will have reduced the infrastructure somewhat less than the force structure reduction. Therefore, we're still carrying somewhat more overhead than is desirable. Therefore, another round of BRAC would be useful in the future.
After this action is completed on the '95 BRAC, after the Commission completes its action and we start the implementation of it, I am considering going to Congress with a request for one more round of base closings.
This has been a painful process for the Defense Department; it's been a painful process for the communities involved, but it is necessary to close the unneeded structure, and that is why we are doing it.
I also recognize that this BRAC process is not only the right way to do this closing, it is probably the only way that we could successfully close the number of bases that we have undertaken to close.
With those comments, I'll be happy to entertain a few questions.
Q: Tomorrow, as you know, the Commission is going to start its first meeting. What words of advice would you give the Commission, and what will you be telling them in a nutshell?
A: We will be, first of all, explaining to them why this round is important to us. I gave you a summary description of why it is so important to us: in order to free up money for our readiness and modernization. We will be describing in some detail the process to them, and we'll be telling them that all of the data that we analyzed, everything we looked at in arriving at these recommendations, will be available to them.
I might mention that not only available to them, but all through this process, we have had the Department of Defense Inspector General reviewing the process. So this has been, and will continue to be, a very open process. All of the data that led to these recommendations will be available to the Commission for their review and consideration.
Q: Would you have any words of advice for them?
A: Our advice would be that they approve these recommendations. (Laughter) They're thoughtful, they're careful. We have substantial documentation. I think they will be able to support that.
Q: Mr. Secretary, can you explain the process by which the Oakland Army Base is not on the list, after having been reported to be on the list?
A: Yes, that's very easy to explain. The Oakland Army Base was never on the list that was submitted to me. That report was in error. I repeat again, every base that was on the list submitted to me by the services, as it turns out, is on this list that I am submitting to the BRAC Commission.
Q: ...it was an unnecessary and redundant facility, now that the entire naval group and the East Bay has closed down. How do you justify keeping the Army base?
A: The judgment, first of all, was made by the Army. We reviewed that judgment. But this was a judgment that was made by them and by this whole process that I have described to you. This was not a direction from the Defense Department to the Army. This was a bottom-up judgment made by the Army, based on their best judgment of their needs and their capacity.
Q: Mr. Secretary, you made a point of saying that you haven't added or subtracted to the service recommendations. Some critics, perhaps cynics, would suggest the reason for that is that the Pentagon carefully managed the list all along so that by the time it got to your desk it was exactly what you wanted to see. Could you answer that criticism specifically? And more generally, about whether or not any politics at all is involved in this process?
A: I guess I'm probably pleased that we're accused of being good managers. We have managed this process. We had, as I indicated to you in that second chart, a BRAC Review Group that follows this process all along the way. The purpose of that process -- the purpose of that review group -- was to ensure that the process was adequately carried out, to ensure that the guidance and the criteria that were established was met.
I repeat again, though, that all of the recommendations we have made and all the rationale for these recommendations -- and we have extensive documentation at this time -- will be available to the Commission for their detailed review.
Q: As you look out 20 years, considering future possible closure rounds, are we heading to a military that's concentrated at a few sort of mega-centers with multi-service bases located close together? And are there any sort of military strategic concerns about that?
A: I don't think so. First of all, it's possible that this is the last base closing round we have. It's the last one we are authorized to do under the present legislation. So this may be the end of the line on the base closings.
As I indicated to you, I think we're not quite where we ought to be in terms of reducing infrastructure, so I will recommend -- I will probably recommend that the Congress authorize us for one more round. But I would see this as just one more round. I think we're rather close to where we need to be right now.
I'm going to turn the floor over to Secretary Deutch at this time. John?
Q: Before you go, can you say anything about how the U.S. troops are performing in Somalia in the mission? Your assessment on that?
A: The mission in Somalia is going very well to this point. We will schedule a joint staff briefing -- a J-3 briefing on that at -- I think it's 1:30 this afternoon, to give you more details on that. But all of the reports I have to date say that's going very well, indeed.
Secretary Deutch: Thank you all very much. I'm going to go through a few charts very briefly, and then I'll be delighted to take your questions, and I'll try to stay as long as is necessary to address all the questions you may have.
First, I want to highlight some of the points made by Secretary Perry. This is a smaller BRAC, slightly smaller than '93, about 20 or 25 percent smaller. That's very important. However, it's a BRAC with -- through better planning... by the services -- we expect it's going to lead to much faster payback during the six-year planning period. It's consistent, as Bill Perry has described, with the downsizing imperatives that we faced after the end of the Cold War. Cumulative economic impact is a matter of great concern to the communities around the country. One which has been raised, in the prior BRAC. Our ability to carry out an impact assessment on communities that are being hit by numerous BRAC actions was considered here in detail. As Bill mentioned, it was the first time that we carried out some cross-service assessments and made some progress in consolidating activities between services.
A word on process. The services gave their recommendations to Secretary Perry here between February 3rd and February 4th. Today is when we are announcing the transmission of those recommendations to the Base Closure Commission. The Base Closure Commission has until July 1st to evaluate those recommendations, at which time they are presented to the President, who has the ability to accept or reject the entire list. If he accepts it and sends it to Congress subsequently, Congress has the ability to accept or reject the entire list.
I want to emphasize that between the period of February 3rd and today there has been a scrupulous assessment by the Office of the Secretary of Defense staff in a variety of different dimensions, especially cumulative economic impact of the recommendations that were made by the services.
I want to emphasize that this has been an enormously complex and large process involving hundreds of people -- first in the service, bringing forward data on which the recommendations were made. This is data which is available to the public and auditable, and has been reviewed by our Inspector General.
I'm especially grateful to Josh Gotbaum, our Assistant Secretary for Economic Security, and for Bob Bayer for the incredibly efficient staff work in helping us review what we hope is a thorough and fair process for all the communities affected in this country. An important part of this, is that, we give our best recommendation and there is an independent group which is available to assure that these assessments have been done accurately and thoroughly. I want to stress that Bill Perry and I spent time on several of these recommendations before he reached a judgment, Bill Perry reached the judgment that these lists from the services represented the most thorough and fair assessment that was possible, and we are transmitting those recommendations to the Base Closure Commission tomorrow.
This summarizes precisely the data that was presented to you by Bill Perry in a slightly different form. I want to make two points. One is the total civilian job loss is about 20 percent, down from what it was last year. Once again, reflecting that this BRAC '95 is smaller than BRAC '93. And also the point made by Bill Perry that our closure costs are estimated to be much lower than the closure costs of the previous BRAC. And we will be paying a good deal attention to the managerial problem of implementing this BRAC process. So indeed, we have these closure costs realized, the net savings are realized, and that we have the facilities promptly, as Bill described, transferred to community use for more productive economic use in the country.
What I would like to do is briefly go through some significant actions. I'll do so with maps of this kind. The first is Army. Let me mention five major Army actions: the proposed closure of Fort McClellan in Alabama; the closure and realignment of the Aviation Troop Command here in St. Louis, Missouri; the closure of the Red River Army Depot in Texas; the closure of the Army depot at Letterkenny, Pennsylvania; and the closure of the Fitzsimmons Army Medical Center. Those are the principal BRAC closure recommendations for the Army.
Q: Is Letterkenny a closure or a realignment?
A: Realignment, I'm sorry. I will not be totally accurate with this. There are 150-some actions. I won't have it exactly right each time, and I apologize for that. I'll let you know when I don't do it right.
Significant Navy actions: principally the large closure of the shipyard at Long Beach; the Naval Air Station at Meridian; the Naval Air Warfare Center at Indianapolis. That is a realignment too, I believe, to Crane. Then the Naval Surface Warfare Center at Louisville. As Bill mentioned, a closure of naval activities in Guam which amount to about 2,000 out of the 5,000 civilian and military positions at Guam.
The Defense Logistics Agency, I believe, is the next one I want to mention. The Defense Logistics Agency has a number of closures. Several of them follow from the service recommendations -- Red River, Letterkenny. Others are actions which were taken as part of the cross-servicing. The Defense Logistics Agency is working with the service depots to make use of the capability and the capacity which is available in the service depot system.
The closure of the depot in Memphis is an important closure; Ogden, Utah; and, as I mentioned, the closure of the DLA depot at Red River.
The Air Force I want to spend a moment on here. There is the closure of the Minuteman missile field at Grand Forks; the Rome Laboratory in New York; the Kirtland Air Force Base, but not the Phillips Laboratory, is a realignment in New Mexico; Reese Air Force Training Base in Texas; and Brooks Air Force Base in San Antonio. These are the major significant Air Force actions.
I'd like to spend a moment on the situation with respect to Air Force depots. If I may do that with the next slide, this is an important difference in prior BRAC.
What the Air Force has decided to do, rather than close any depots, is to reduce their work force and the work activity at all five of the major Air Force depots. If I'm quoted, I hope you'll indulge me for a moment. I would like to explain the reasoning that the Air Force used to arrive at this recommendation.
Their proposal is to consolidate work at the depots and to downsize work at all five depots. Some of this consolidation satisfies the requirements of BRAC. That is, it's actually consolidating and getting rid of some activity. Other is work force reduction, which BRAC rules, as specified in legislation. The reduction in the work force, which comes from smaller force structure or phasing out certain weapon systems, would not count as a BRAC closure cost, but is important from looking at the financial impact and cost savings of the entire department.
If you combine both these actions, the reduction in work which will take place at Air Force depots, as well as the consolidation which comes from a specific BRAC action, there is a modest one-time cost; a net savings over the six-year planning period of $600 million; annual recurring savings of $235 million at the end of the period; and a 20-year, net present values savings, as Bill mentioned, that is about $2.9 billion.
The alternative that was considered by the Air Force was to close two of the major depots. That would have led to a much larger up-front cost because of the need to realign, to close the base, and to open certain facilities at other air logistics centers -- a much larger one-time cost. A much smaller cost savings over the six-year planning period. And indeed, the annual savings would have been less at the end of that process and the net present value over the 20-year period would have been only $700 million in contrast to the direction they are taking under their proposed action.
So in this case, the Air Force -- because it saves the taxpayer money decided to consolidate and reduce civilian employment at all depots, rather than to fully close one or two depots, leading to a greater savings to the taxpayer. That is a different situation than was anticipated when we began the process. It's one of the two alternatives that the Air Force was considering right from the beginning. It's a different situation that exists, for example, at Navy depots because the Navy has a smaller depot structure than the Air Force. So this is an important feature which is different in this BRAC compared to prior rounds.
This is just to show you that we have, for those of you who are interested I don't intend to go through it -- a complete list by 50 states of the employment impacts both cumulatively and in this BRAC. The first box telling you how many civilians have been directly lost in prior BRACs and how many lost in this BRAC. I will be able to refer to this in terms of questions if anybody is interested in a particular state.
What are the outstanding issues? Let me just mention three of them. The first is future BRACs. The future BRAC Bill Perry mentioned to you. The considerations which will lead him to make a recommendation about the need for an additional base realignment and closure round in three or four years.
This is an example of the three or four issues which are in our transmission to the commission. We'll have small provisos on them. In the case of Grand Forks, there is an outstanding issue about if we close the missile fields there, whether there is any ABM Treaty consequence for that. We are allowing time to report back to the BRAC Commission before we make a final decision, and we have an alternative specified if there is an ABM Treaty program at Grand Forks.
I want to close with one remark. Environmental cleanup costs. It is very important that we clean up the bases that are being closed properly for community reuse and that we implement this process as rapidly and as efficiently as possible. A great fraction of my time from here on out will be devoted to concern with making sure that we implement and execute the closure process, not only for the '95 proposals, but also for '93, '91, and '88; to assure that we have a managerially sound way of completing these actions and turning these facilities over which, when they are environmentally cleaned up will be, hopefully, as Bill described this morning, available for economic and productive reuse.
Let me stop there and I'll be glad to take any of your questions.
Q: Yesterday the House Majority Leader Dick Armey who wrote the original base closing law, issued a statement in which he said that he was disappointed that this BRAC was going to be so much smaller -- that a lot more money could be saved.
Secondly, he said that the civilian job losses -- or the job losses total appear to follow the electoral map for 1996. When you had that chart up there, if you look at that chart, actually the states with the most electoral votes seemed to take smaller hits, with the exception of Texas, where Senator Phil Gramm has already announced that he's opposing the President's reelection. Would you respond to that?
A: Let me say something to you which determines the size of the BRAC. There really are three variables that determine the size of the BRAC. First is the required-by-law published force structure that we provide as guidance to each of the services telling them what, for the next six years, will be the force structure of the Armed Forces. So they are required to size the infrastructure to support that force structure. That's one determinant of the size of the BRAC.
The second is the services' assessment of military need, as Bill Perry mentioned, both in terms of their continuing capabilities, but also in terms of how rapidly they can efficiently close bases, and how they can do that in an environmentally appropriate way and by saving costs. Those are really the major determinants which lead the services to come up with a bottom-up recommendation to the Secretary. There was no overall guidance given to the services about whether it should be larger or smaller. As Bill mentioned to you, we do expect that it will be appropriate to have an additional -- in three or four years -- an additional base closure session.
I want you to all see these numbers. If anybody can find a pattern here of numbers they will do so, but it is one which will meet the current view that they have wherever they are. Some will add these two numbers and say that they've had a disproportionate impact over these higher BRAC process, over several different administrations. Others will look only at '95 and argue that they've had an adverse impact. But I don't know of anyone who will be able to find, through any statistical technique, that there is a correlation here with politics, either in prior BRACs which were done by different people, or in a cumulative set of all BRACs or in this BRAC. I don't think anybody can see a pattern with respect to that in these numbers.
Q: To follow up on this, you said in the previous chart that the service recommendations only reached OSD on February 3/4?
Q: I wonder if you could say what information prior to that date had gone from the Pentagon to the White House, such that the President could say to the New Hampshire radio listeners on January 31, that in his best judgment Portsmouth, New Hampshire's naval shipyard was not going to be closed? How could he possibly have known at that point?
A: Let me say that as I chair the Base Closure Committee, the overall committee here in the Department... I would say we met tens of times, or five or six hundred times, all of us together. We had hundreds, hundreds of conversations. I had dozens of conversations with everybody who was involved in the process. We went back and forth on different recommendations, which is especially important in our effort to do cross-servicing in different areas, asking whether there were opportunities in things like the medical area and pilot training, where one could make a better closure decision by combining the interests of two services. So there were literally dozens and dozens of conversations, and exploration of different possibilities.
More than a year ago I asked the Secretary of the Air Force and the Navy, for example, to explore the possibility of having a joint depot. So all along here there have been conversations back and forth with many different alternatives considered by the services and discussed.
Q: I wonder if you could address the question I asked, which related to contact between the Pentagon and the White House.
A: We have had the following circumstance with the White House: Bill Perry and I briefed the President about the process last year, late last year. The White House, Leon Panetta, put out two memoranda saying to people in the White House, "do not interfere with this process." As near as I can tell, every inquiry that came to the White House went to Leon Panetta, who in turn would have me talk to the individual -- whether it was a mayor, a congressman, a senator, or a governor involved. So we've had, I would say, myself -- Leon and I have had hundreds of discussions, mainly with him saying such and such a congressman, such and such a governor would like to make this point. Please give him a call and meet with him. I've done that hundreds of times.
Q: Did the Army at any point consider closing the Oakland Army Base? If so, how did it in the end come to the conclusion not to recommend that closure?
A: That's a question that you should direct to the Army. I can only tell you that when the Army first came forward with their list, that the Oakland Army Base was not on that. Actually, I think the Oakland Army Base may have, and I'm speculating -- it's a question you should ask the Army -- has a role to play in the two MRC -- the two major regional conflict strategy of being able to get enough equipment to support Army Forces in Korea.
Q: Secretary Perry talked about service recommendations being accepted. Does that mean that in all respects and in every detail, every recommendation of each of the services was accepted, or was there some adjusting or increasing or decreasing in amounts going on at the OSD level?
A: I would say that it was really an issue of clarification. Let me give you an example of an issue which has been very vexing to Bill and myself over the past week. That is Kirtland Air Force Base in New Mexico. Bill wanted to make absolutely sure, and I wanted to make absolutely sure, that the Air Force action at Kirtland Air Force Base in New Mexico did not adversely affect the very critical national security programs that are underway there by the Department of Energy. You might imagine that I was actually more than slightly interested in that.
So we did go back to the Air Force and made sure that their provision was permitting full security of the area, of Kirtland Air Force Base, which includes Sandia National Laboratory in Albuquerque. So there were moments that we went back through this process for clarification. There were five or six issues that we looked at exceedingly carefully, and had much interaction here at the end, of which I've mentioned two. One is Kirtland. The other one is Grand Forks. There are three or four others that we looked at in great detail.
Q: In the past, the Defense Department has been able to tell us at some point in the future net savings to the Department would exceed net costs. That would include both the closing costs and environmental cleanup costs. You've thrown a lot of new numbers at us today. I'm wondering if you can tell us at what point when you total up all the costs of this BRAC, as well as previous BRACs, when you'll start seeing net savings for all those. And after that, what will be the net annual savings?
A: Let me say that I think there's a chart which will provide that for you, and what I show here before. Let me just say that the annual savings, and I will speak for this BRAC although I can give you... By adding up these numbers, the annual savings in this BRAC will be $1.8 billion. If you add up all these numbers, these will be the steady state savings from all these BRACs when it's done.
Q: Those don't include environmental cleanup costs from this BRAC, does it?
A: That's correct. The reason for that, and I can tell you exactly how to think about that. The law says to us, from the point of view of BRAC actions, do not consider environmental cleanup costs. Why? Because you would have to bear those costs whether or not you kept the base open or not, and you want to make the base -- remediate environmental insult at the base. So the law says do not consider environmental costs in the decision process. But once you've made the decision, you actually have to bear the costs.
So in this particular '88, '91, and '93 rounds, our estimate of the cost for environmental cleanup is $3.8 billion. We will be able to tell you our estimate of the environmental costs here in this new BRAC once the final decisions have been made. I believe the estimates for the environmental costs, which we have not done -- we don't have a good estimate of it -- will be in the range of about $2 billion. But that is a preliminary number. We have not done the auditable assessments of environmental costs because the legislation tells us not to do so.
Q: I think what the Department has said up to this point is, for the first three BRACs you will begin to see a total net savings of about $4 billion, roughly around the turn of the century. So, if you factor in this, what can we now expect?
A: By the year 2001 you will see a savings of $1.8 billion.
Q: In addition to the $4 billion?
A: Yes. Because that number came from the prior BRAC.
Q: So about $5.8 billion a year, starting with the year 2000?
A: That's right.
Q: How does this round address cross-servicing or eliminating duplication in research, development, acquisition, and maintenance?
A: A very good question. As Bill mentioned, it was the first time we've tried to do a systematic look. We had a variety of different groups look at inter-services. Let me just give you some examples.
In the medical area, I think that every time there is a proposal for a change in a hospital structure, whether it's Fitzsimmons or whether it's down in Fort Lee, what you have is a situation where you're looking at the entire medical resources of all the services. That is something which is going on all the time.
Rome Labs. Much of the work at Rome Labs will go to Fort Monmouth, an Army-run installation which will become a center of excellence under the Director of Defense, Research, and Engineering -- Anita Jones' purview, for CCCI, Command, Control, Communications, and Intelligence Research & Development.
The Defense Logistics Agency this time was able to close a facility and make use of excess space and excess facility at the McClellan Air Logistics Center in Sacramento, California.
I might say there are other cases where we looked very carefully. It's another one of the issues which Bill and I worried about, and that was inter-servicing in pilot training. A great deal of that has been done. More is being done in this BRAC, but there were also proposals to do even more inter-service pilot training. That is something which we've taken a first step, but by no means... All the possibilities have not been exhausted in this BRAC.
Q: Can you address the State of Florida? Just glancing at this sheet, it appears to be the only major state that doesn't have any major closings at all and is actually gaining a number of units at several of its bases. Was Florida just particularly valuable?
A: What do you mean by value? I guess in military value, the answer to that is yes. But I think you're right, there are no closures proposed for Florida this year. If I can see the chart again, I don't think there's any closure proposed for Maine or the State of Washington, or Louisiana. That is really the bottom-up process followed by the services for the impact on each of the states. That's the way it came out.
Q: There's been a big emphasis on the point that the up-front costs in this BRAC are going to be lower than the previous years. I know that two years ago there was major controversy concerning MCAS EL TORO because it had such huge up-front costs. Did that prove to be a lesson to you? I also notice that it's a major redirect in this recommendation concerning that scenario. I wonder if you could comment on the redirect and on whether that was the example used to cut the up-front costs...
A: I can't really comment on El Toro specifically. I just don't have any specific point of view on it. But I will say there's no question about it, there's a tremendous management challenge here to be able to realize this quicker pay-back and to actually be able to close these bases for the cost that has been put forward. This is a management challenge which holds generally across the Department. We want to have this faster pay-back, it's important for the financial capacity of the Department to have that. And the services have tried to design their recommendations, as I pointed out in the recommendation of the Air Force, to minimize the up-front costs and get the maximum amount of savings.
Q: As you know, the Commission often adds installations to the list through the process. If the services feel strongly about what they can do without in this round, or where things could be realigned, how do you bridge that gap between what the Commission does during the process in add-ons and what the services feel comfortable with and not going beyond that point?
A: I don't believe that it's been our experience in past BRACs that the Commission has added quite a lot of stuff. There's been some readjustments in size. But I think on balance, it is not correct to say that on-balance, over the whole list, that the Commission has added. But I'm very much an advocate of this Commission.
I think the Commission performs two important functions. They make sure to review that these recommendations have been done with accurate data and that the reasoning is sound. It is important, also, to give the opportunity for communities to know that they have been fairly heard, that there is a way of double checking and appealing the Department's recommendation.
So I very much have the view that the Commission should make changes that they think are justified, but I don't think history shows that they've added much.
Q: I speak specifically to Virginia, where last year on the last BRAC in '93, the add-ons were Fort Monroe and Oceana for consideration. Those were two major installations. So in that respect, though they came off, that sent the whole area into a tailspin because no one understood, or knew whether or not, they could be pulled back off the list. That's the concern, specifically to that area. I was wondering, in that case, if those were the biggest installations that were added on?
A: The Commission made a number of changes in '93. All of these recommendations, all of these changes are absolutely dreadful for the communities that are involved. There is uncertainty until it's over. There is an enormous impact on the people who work and live in these communities. But what is important for the process is that the Commission has an opportunity to review our recommendations and make changes that they think are appropriate.
I cannot speak to what will happen to Virginia this time, but I notice that Fort Monroe is not on the list. And Oceana certainly; it remains an active base.
Q: Sir, Fort McClellan was recommended for closure. It's been recommended twice before and the Commission rejected that recommendation. I'm curious, how many closures on this list have been recommended before and rejected by the Commission?
And two, regarding Fort McClellan, the Commission last time suggested that environmental permits for transferring some of the CBTF to Fort Leonard Wood be in place before the process began. That isn't the case, and I'm wondering how you reach that decision?
A: I can't give you an accurate answer to how many facilities are on here that have been proposed before, but Fort McClellan is certainly one of them. I do know that the proposal that we are sending over to the BRAC Commission says that if the environmental permits are not granted by the State of Missouri at Fort Leonard Wood, then Fort McClellan should not close and should not be moved. So in that sense, the proposal for -- as I mentioned -- there are two or three places like Grand Forks where there are in the submissions of the services' in particular provisos if certain contingencies arise.
Q: Is it possible that you could sometime this year disestablish units to adjust to the reduced force structure that are not mentioned on this list? Not going to the Base Closure Commission, but disestablishing military units?
A: There are rules specified -- I guess now that the law is expired -- there has been up until now rules about what will regulate... Within which limits we cannot just disestablish facilities and work forces without going through the BRAC process. Now that the BRAC process is over, I guess a new set of rules will need to be invented to take care of the period between now and when a new BRAC law is set into place, if it is, in the future.
Q: Mr. Secretary, you used this BRAC process in the case of Williams Air Force Base in Arizona to revise a previous BRAC recommendation. How do you do that, and what for what purpose was that done?
A: I don't know the specifics of Williams Air Force Base. We'll have to deal with that afterwards. I don't know the specifics of that case. I'm afraid I'll be saying that a lot.
Q: There have been rumors that two military reserve units now at Chicago that the Pentagon was considering closing those. It was a subject of the '93 BRAC. They're not on this list. I was wondering, is the Pentagon considering closing those units?
A: We'll have to find a way of answering individual questions like this in detail. I do not have at my fingertips all possible changes here.
Q: Can you explain the apparent flip-flop on White Oak, Maryland, where it expanded in BRAC '93 and is now to be closed?
A: I believe that here is a situation where, both for technical and economic reasons, it became more attractive to move to San Diego for the space warfare... I'm sorry, that's not the right move. The right move from White Oak is the naval surface... Naval Sea Systems, which will move to the naval gun factories here in Washington, D.C. That is a situation where costs caused the Navy to make a different recommendation.
Mr. Bacon: All the services have representatives available all afternoon long, to answer specific questions.
Q: Can you explain the difference between receive, close, disestablish, realign? Can you give us a quick idea...
A: We'll give you good definitions of that. But "receive" basically means that they are receiving either military or civilian people from the results of closures of other bases. "Closed" means the base is closing. "Disestablish" means a unit on a base is being disestablished.
Q: To follow up on Fort McClellan, what would be the timeframe in terms of trying to get those environmental permits out at Fort Leonard Wood? How long would you have?
A: We certainly would be applying for those environmental permits as soon as the BRAC Commission acts. It probably will take a good period of time. I would guess a year-plus to make sure that all the concerns of the State of Missouri are mentioned.
Q: For communities that lose major installations, what are the rules for the property passing to others? Is there a set procedure where that title goes?
A: We have in place a very extensive community reuse program which was announced by the President in July of 1993. The President was extremely interested in seeking rapid economic reuse. We have one-stop shopping for all federal agencies that have an interest, or possibly could help, in the economic redevelopment and cleanup of those bases. It's a place where we've put a great deal of emphasis to help communities reuse those facilities as rapidly as possible.
Thank you all very much.