II. ISSUE AND RECOMMENDATION SUMMARIES (CONT'D)

A. LOGISTICS (CONT'D)

OSD-8: CONSOLIDATION OF BASE SUPPORT OPERATIONS

Summary Recommendation

The Department of Defense (DOD) should consolidate more base support operations across service lines. DOD should require that the services participate in the Defense Retail . Interservice Support (DRIS) program so that opportunities for consolidation of base support services can be identified in the short term. All bases operating in areas which contain multiple military installations within a 50-mile radius should become potential candidates for consolidation of support services. Those consolidations with savings potential should be promptly implemented at the direction of the Secretary of Defense.

Financial Impact

$100-$500 million

annually

Potential Savings: The estimated savings range used here is derived from testimony by the General Accounting Office (GAO) on June 22, 1982, before the Legislation and National Security Subcommittee of the House Government Operations Committee. Based on an analysis of the many audits and studies of the DRIS program which have been conducted over the last ten years, the OSD Task Force concluded that this savings range is feasible and conservative.

Base support operations include such services as fire protection, housing management and maintenance, finance and accounting, refuse collection, civilian personnel management, building and road maintenance, and security. There are 50 such functions in the administrative and logistical support areas and 25 in the supply and maintenance areas. Since most of these functions are standard across the services, there is a potential for cost savings to the extent that interservice consolidation of such functions can be initiated in geographical areas with several military facilities. Such consolidation can reduce duplication in staffing and facilities.

The cost of base operations was approximately $20 billion in 1982, and it is expected to increase to $26 billion by 1986.

Methodology

The Office of the Secretary of Defense (OSD) Task Force reviewed numerous studies and audits conducted on the DRIS program since 1975. The Task Force also interviewed DOD officials involved in the management of the DRIS program.

This issue and issues related to it were reviewed by other President's Private Sector Survey task forces. For further information, refer to the reports of the Army Task Force and the Procurement/Contracts/Inventory Management Task Force.

Findings

In 1973, DOD initiated DRIS program to provide base commanders with a mechanism for determining where base support operations could be consolidated in order to reduce costs and increase efficiency. (In the DOD context, "retail" refers to the base or user level.) Through participation in the DRIS program, coordinated by the Defense Logistics Agency (DLA), base commanders indicate the base support services their installations could use from, or provide to, other installations within a 50-mile radius. This information is reported to DLA and maintained in the DRIS data bank. Additional information is submitted by participating bases which provides data on the dollar and staff-year savings from consolidation and the types of support services in a particular geographical area categorized by supplier and by receiver.

In 1978, DOD established Joint Interservice Resource Study Groups (JIRSGS) for 51 geographical zones which contain at least ten military installations within a 50-mile radius. JIRSGS were directed to study each category of support services and determine consolidation opportunities within JIRSG zones.

In March 1981, the Deputy Secretary of Defense directed each service to set a goal of minimum savings of $10 million per year in FY 1983 to 1987 from consolidation of base support activities. In March 1982, noting the limited success of the DRIS program, a DOD audit report indicated that changes in the JIRSG process were necessary to elevate the importance of the DRIS program. The audit report recommended that a General or Flag Officer be appointed to act as an executive agent for each of the four primary JIRSG regions. DOD has not followed this recommendation, though a Directorate for Base Operations was established in OSD, currently headed by a Lieutenant Colonel.

The DRIS program has been the subject of numerous studies and audits. In general, all of the studies concluded that the program has not been as effective as possible in identifying potential areas for consolidation. Some of the reasons cited for the program's ineffectiveness include: (a) participation in the program is not mandatory; (b) savings goals are too low to spark an aggressive program; (c) there is no perceived authority to resolve conflicts and force such consolidations without escalation to the highest levels in DOD; (d) the parochialism of the services militates against the sharing of base support services through consolidations; and (e) there is much confusion due to the overlappping of DRIS, the Commercial and Industrial-Type Activities (CITA) program, and the intraservice consolidation programs.

Conclusions

The issue of consolidation of base support operations has been studied rather consistently over a period of at least ten years by DOD and outside audit groups. All reports conclusively point to the potential for savings through effective consolidation of base support operations.

The OSD Task Force has concluded that no insurmountable obstacles stand in the way of a successful program of interservice consolidation of base support services. It appears that strong and forceful management is needed, along with an

emphasis on the program at the OSD level, to provide the impetus for full activation of the consolidation effort.

Recommendations

The OSD Task Force believes that DOD has an existing vehicle through which further base support consolidation efforts can be made, i.e., the DRIS program. However, to improve the effectiveness of the program, the Task Force suggests several modifications:

OSD 8-1: Participation in the program should be mandatory for all base commanders. Further, all areas with two or more bases operating within a 50-mile radius should become potential candidates for consolidation of base support services.

OSD 8-2: DOD should establish a timetable of not more than two years for completion of all interservice consolidation opportunities already identified by the DRIS program. OSD 8-3: Where DLA determines it is appropriate, prototype studies should be performed on potential base support consolidation candidates. This would eliminate the need for separate studies at individual bases.

OSD 8-4: The DRIS program staff should develop a rigid schedule to implement, within a five-year timeframe, all base support consolidation candidates proven feasible by the prototype studies. The staff should also monitor these consolidations as they are implemented.

Savings and Impact Analysis

Potential savings from an effective DRIS program are difficult to estimate with precision. In testimony before the Legislation and National Security Subcommittee of the House Government Operations Committee in June 1982, the GAO stated that a savings goal of $108-$540 million per year from consolidation of base support activities was reasonable. Within the timeframe of our review, we were unable to better quantify potential savings. The lower end of the GAO savings range represents only 0.5 percent of total base operations costs. In light of the numerous previous studies which have indicated that savings opportunities exist in this area, it seems reasonable to assume that the GAO estimate is feasible and conservative. Assuming a 10 percent