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Infrastructure Cuts Shift Funds to Operations, Maintenance

By Claudette Roulo
American Forces Press Service

WASHINGTON, April 2, 2014 – To reduce operational and training risk, the Defense Department is assuming more risk in military infrastructure, the acting deputy undersecretary of defense for installations and environment said here today.

Infrastructure generally has a long, useful life and its associated degradation is not as immediate, John C. Conger said in a hearing of the Senate Armed Services Committee’s readiness and management support subcommittee.

However, he noted, reducing military construction during periods of fiscal uncertainty reduces the possibility of the department investing in infrastructure that would become obsolete or excess due to the uncertain allocation of force structure cuts and the possibility of a new round of base realignments and closures.

In its fiscal year 2015 budget proposal, the department requested $6.6 billion for military construction and family housing, $8 billion for sustaining and restoring facilities, and $3.5 billion for environmental compliance and cleanup, Conger said. The military construction request is a 40-percent reduction from fiscal 2014, he noted, and the facilities sustainment request is just 60 percent of the modeled requirement.

“The budget challenges facing the department are deep, and they extend for many years,” Conger said. “We continue to believe that an important way to ease this pressure is with base closure, allowing us to avoid paying upkeep for unneeded infrastructure and making those funds available for readiness and modernization of our forces.”

In February, Defense Secretary Chuck Hagel said in his announcement of the proposed budget that the department cannot fully achieve its goals for overhead reductions without cutting unnecessary and costly infrastructure, so it’s asking Congress for another round of base realignments closures in 2017. “I am mindful that Congress has not agreed to [our] BRAC requests of the last two years,” the secretary added. “But if Congress continues to block these requests even as they slash the overall budget, we will have to consider every tool at our disposal to reduce infrastructure.”

Conger acknowledged that Congress was dissatisfied with the high cost of the 2005 round of base closures. But, he said, the closures and realignments during that round were weighted toward transformation, rather than efficiency.

That answer didn't satisfy Congress's concern about the $35 billion cost, he added, and also didn’t guarantee that the department wouldn’t go the same route again if

Congress authorizes a new round of closures.

“I wasn't satisfied, either,” Conger said. So, he said, he tasked his staff to review each of the recommendations from the 2005 round of base closures. The review found that the department actually conducted two parallel base realignment and closure rounds.

The transformation recommendations were expensive, Conger said, “and they didn't pay back.”

Nearly half of that last round's recommendations were focused on transformation, and they either didn't pay back at all or paid back in seven years or more, the deputy undersecretary said. This “transformation BRAC” cost $29 billion and resulted in just $1 billion in annual savings. “In other words,” he said, “the reason we were doing those moves wasn't to save money.”

The remaining recommendations were focused on saving money, Conger said. These recommendations paid back in less than seven years and cost just $6 billion out of the overall BRAC cost of $35 billion, he said. They also yielded recurring savings of $3 billion a year, Conger added.

“[The so-called ‘efficiency BRAC’] proves that when we're trying to save money, we do,” he said. “That's the kind of round we're seeking to conduct now. It is fair to say that the department needs to save money, now.”

Many members of Congress have suggested that the department should close bases overseas before closing bases in the United States, Conger said. The department has embarked on a BRAC-like European infrastructure consolidation effort, he noted. However, European forces aren’t expected to return to the United States as a result, Conger said, “so it will not take pressure away from the need for a BRAC round.”

A report based on the analysis is expected to be finished this spring, he said, and several recommendations already have been affirmed.

Conger said he applauds the committee’s focus on energy efficiency programs, noting that he agrees completely with New Hampshire Sen. Jeanne Shaheen’s statement that “the cheapest energy is the energy we don’t use.” The department is actively working to keep its energy costs low, the deputy undersecretary told the committee.

“Many of our energy efficiency projects, and most of our renewable ones, are funded by third parties, minimizing our upfront costs and resulting in long-term cost reduction,” he said. For department-funded energy efficiency projects, “we’re focused on the business case and ensuring good payback -- these are smart investments,” the deputy undersecretary said.

But, he added, “one of the risks that is associated with reduced levels of facility sustainment funding is reduced energy performance. Put simply, a hole in the roof or a malfunctioning HVAC system has a significant effect on a building's energy efficiency.”

To paraphrase the original quote, Conger said, “the most expensive energy is the energy we waste. That's what you get if you underfund maintenance.”

(Follow Claudette Roulo on Twitter: @rouloafps)

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John C. Conger

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