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Limitations of This Analysis
This analysis is intended to produce estimates of the impact of posture changes. It
is sufficiently accurate for cost-benefit analysis for decisionmakers to determine what
courses of action should be considered in more depth. If changes were to then be
considered as possibilities to pursue, more detailed, budget-quality cost estimates that
account for all location-, unit-, and option-specific factors would need to be done.
Preview of Cost Analysis Findings
In the course of our analysis, several costs arose as the primary drivers of incremental
differences between U.S. and overseas forces and bases. We found the largest single
driver of the incremental cost difference in variable per-person costs between the U.S.
and overseas locations to be personnel-related costs, specifically overseas allowances
and PCS moving costs. These costs comprise 60–80 percent of the incremental cost
difference in per-person costs (which ranged from around $10,000 to $40,000 per
person, depending on the service and region). Dependents’ education was next in influence,
followed by additional overseas logistics costs. These categories comprised most
of the per-person cost difference.
Unit training costs (which are captured as per-unit, not per-person costs) sometimes
drive incremental cost differences, but they do not feature as largely as per-person
costs in the impact of posture changes on costs.
Often, but not always, we found differences in the fixed-cost component of recurring
costs between U.S. and overseas locations. USAF bases appear to have systematically
higher fixed costs overseas when compared with similar U.S. bases. Two drivers
of these higher costs appear to be that these overseas bases have systematically more
facilities than bases in the United States relative to their populations and that they have
higher numbers of military personnel providing installation support. We discuss these
differences in detail in Appendix A. For all other services, the message is mixed. Many
overseas bases have fixed costs that appear to be in line or just a little higher than their
U.S. counterparts.
The more important point with regard to fixed costs is that our modeling does
suggest fixed and variable cost components to installation-support costs. Thus, if a base
is closed and the personnel are moved to an existing base, either using new facilities
built to accommodate them (with an attendant investment cost) or using any existing
underutilized facilities, then one set of fixed costs is eliminated, producing savings.
This is a benefit of consolidation, whether it was to occur overseas or in the United
States, although there is more flexibility to expand facilities and forces on U.S. bases
than overseas, since agreements may need to be worked out with the host nation. Additionally,
consolidation from overseas back to the United States produces more DoD
savings because of the higher overseas variable costs, and, in some cases, higher overseas
fixed costs. On the other hand, when overseas bases are closed, ownership reverts
to the host nation. In the United States, closed bases can be repurposed for other uses, providing economic benefit within the United States that accrues outside of DoD.
These additional potential benefits are not accounted for in this study.
In addition to recurring costs for permanently stationed forces, we also assessed
the costs associated with rotational deployments. A key finding is that rotational costs
are very dependent on the frequency and duration of deployments. For deployments to
the same region for the same unit type, higher deployment frequency combined with
lower deployment duration greatly increases costs relative to lower-frequency, longer
deployments to achieve the same degree of presence. For longer, less frequent deployments
(e.g., one unit replacing another every 12 months), personnel-related costs, such
as food, housing, and special allowances, tend to dominate the costs, driving roughly
two-thirds to three-fourths of the costs and potentially enabling some cost savings
over permanent presence. For shorter, more frequent deployments, the deployment
costs themselves—transporting personnel, equipment in some cases, and aircraft for
the USAF—tend to dominate. In these cases, equipment prepositioning, when sufficient
equipment is already available in the force, can mitigate some of those costs.
For ground forces, when the equipment is available, prepositioning offers some savings
over sealift, which also has a transit time disadvantage, with airlift extremely expensive
for ground-unit rotations with equipment due to the size and weight of units.7 For the
USAF, prepositioning can save over airlift, but because air forces have relatively little
equipment to transport, the difference is not too significant.
As a result, rotational presence is not necessarily less expensive than permanent
presence. Generally, if forces are realigned to U.S. bases but their original overseas base
stays open, the costs of even small, infrequent rotational deployments can exceed the
savings. If the sending base is closed (greatly increasing the savings), substituting full
rotational presence (12 months out of the year) for permanent presence sometimes
saves money, sometimes costs money, and sometimes roughly breaks even, depending
on the service, unit type, region, frequency and length of rotations, and equipment
policy options (transporting versus prepositioning unit equipment). In particular,
achieving extensive presence through high-frequency, short rotations would greatly
increase costs, leaving longer rotations as the only option that enables some savings
or avoidance of increased costs while maintaining high presence. If only partial, rotational
presence is substituted for permanent presence, then, depending upon the rotational
design, savings can be more substantial. In other words, we found no single,
definitive comparison for permanent versus rotational presence. Each case must be
examined individually.
Furthermore, if a base were to be closed and its forces realigned, another permanent
base in that country or region must be maintained to support the rotating forces (including considerations of facilities, space, and other accommodations) or a host
nation must agree to provide access to one of its bases. This is a potential constraint on
some posture options.
Finally, we estimate the potential investment costs necessary to shift from the
current posture to an alternative posture. The largest single driver of these costs is by
far the new construction necessary to accommodate forces relocating to the United
States. Some available capacity may exist at U.S. bases (whether today or after planned
force reductions), thus obviating the need for some portion of that new construction.
In particular, this is most likely to apply to the Army, due to significant planned force
reductions.8 So, for any illustrative options that realign Army forces from overseas to
the United States, we estimate an upper and lower bound for these costs. In our upper
bound estimate, we assume all relocating forces will require such construction. This
is the standard assumption for bases of other services. In this standard/upper-bound
estimate, new construction comprises about 85 percent of the total cost estimate for
posture changes. Thus, the lower-bound cases that would reflect the existence of available
capacity in the United States would be less, given that the need for new construction
would drop. There is more uncertainty around our estimate of investment costs
than for other elements of our cost analysis. So our investment estimates should be
considered as rough guides for the costs DoD might incur to shift its overseas posture.
Recurring Permanent Presence Cost Analysis
This section describes our methodology for determining the annual operating and
support cost difference between bases and permanently stationed forces in the United
States and those overseas, as well as for decomposing the fixed and variable cost portions
of operating and support costs to estimate the potential costs or savings that
might accrue from changes in the overseas permanent posture.9
Training Costs
The services sometimes operate their forces differently overseas than when they are
stationed in the United States. This may be as a result of partner-nation training and
exercises, constraints on U.S. activities, or a desire to generate more presence or combat capability. To capture these differences, we directly use service-provided data and
models to compute training costs for this portion of the cost analysis.
For the USAF, we used data from the Air Force Total Ownership Cost (AFTOC)
database to determine unit training costs by aircraft type and command.10 We estimated
the total training cost per aircraft per year using data from FY 2009 to FY 2011.
The results are shown in Table 8.1, which shows the average training cost per aircraft
per year for the primary aircraft currently stationed at overseas installations.11 For each
aircraft type, the left two columns show the unit operating costs at Air Combat Command
and Air Mobility Command (AMC), both located in the United States. The
right two columns show the costs for the same aircraft located in either the Pacific Air
Forces (PACAF) or USAFE. We use these costs as inputs when calculating the costs
and savings of changes to the overseas posture based on the number of aircraft moving
from one command or region to another.
Table 8.1 Air Force Aircraft Annual Training Costs, by Type and Command
Some costs are comparable across regions (within 5 or 10 percent), and some are
significantly higher or lower. Recent RAND research has analyzed these costs in detail
for USAFE and sheds some light on these differences. In particular, costs for depotlevel
reparables and munitions for USAFE units were generally found to be lower for fighter/attack aircraft than for their U.S. counterparts. These are believed to be lower
due to flying restrictions in Europe that reduce consumption rates for those assets.12
For the Army, we used the Force and Organization Cost Estimating System
(FORCES) Cost Model (FCM) to determine the training costs for Army units in different
regions.13 FCM uses past obligations data to produce its estimates. Table 8.2
shows select unit types and their average annual unit training costs as derived from
FCM. While FCM contains estimates for a broad range of cost elements, we included
only three in our computation of training costs: Direct Equipment Parts and Fuel Cost,
Post Production Software Support, and Indirect Support Cost. Appendix A contains
a complete list of the cost elements in FCM and how we utilize them in this report.
Table 8.2 Army Unit Training Costs, by Unit Type and Region
Most Army units have noticeably higher training costs in EUCOM and slightly
lower costs in PACOM. About half of the higher costs in EUCOM stem from contractual
services, and the other half of the difference is from other Indirect Support costs.
For the Navy, rotational operations are built into its structure and day-to-day
operations. The Navy has a sea/shore policy that governs the frequency and length of
deployments, and the ships rotate on regular schedules. Its force structure is designed
to provide a certain level of forces deployed on rotations at all times. While few Navy
units are actually home-ported overseas, most spend significant time overseas on deployments from U.S.-based homeports. Thus, this cost category is not as relevant
to most Navy operations for the purpose of determining the relative costs of U.S. and
overseas basing. Shore-based Navy aviation could be subject to similar regional cost
differences as their USAF counterparts, but our illustrative postures did not consider
the realignment of naval air assets, so we did not include such cost factors.
Similar unit training cost factors were not available to the RAND study team
for the Marine Corps. We therefore assume no difference in training costs of Marine
Corps units between the U.S. and overseas locations.
Allowances and PCS Costs
Several categories of allowances for military personnel are higher for overseas stations,
including the following. We used the Work Experience and monthly Active
Duty Pay files to estimate the net cost differences in allowances between CONUS
and OCONUS locations.14 This database includes the pay and allowances for all individual
service members by month. It includes their unit identifier, which we could use
to map their locations. Our use of unit identifier data is described in more depth in
the installation-related costs section. For this analysis, we used FY 2011 data to reflect
relatively recent rates for these allowances. These files include the following categories
of allowances:
basic allowance for housing (BAH)/Overseas Housing Allowance (OHA)
cost of living allowance (COLA), U.S. and overseas
family separation allowance.
We first determined which personnel were in each region, separating Japan and
South Korea because of substantial differences in allowances between the two countries,
especially depending on the service. We also separately determined rates for
Marine Corps personnel stationed at Camps Pendleton and Lejuene, given the concentration
of Marine Corps stationing at these two locations and the significant allowance
differences between these two locations. Finally, we include Hawaii and Guam for reference
because of the substantial U.S. forces in the former and current plans to increase
forces at Guam and their relatively high rates. We aggregated allowances for all personnel
stationed in the selected areas to develop region-, country-, state-, territory-,
and base-specific estimates on a per-person basis. To determine per-person rates for a
location and service combination, we included only personnel that were in the location
for the full year. We excluded records where personnel were in more than one region
during the year, as they received allowances for more than one region. The results are
shown in Table 8.3. The top portion of this table shows the annual per-person cost forthe above allowances. The bottom portion of the table shows the difference between
each region and CONUS.
Table 8.3 U.S. and Overseas Personnel Allowances
Generally, most of the cost differences are driven by higher overseas COLA, with
OHA sometimes making a significant difference as well. One can notice the especially
small difference for the Army in Europe. The BAH paid to Army personnel is actually
much smaller in Europe than the CONUS average, which could be due to more people
living on base. For the marines in Japan, most personnel receive barracks COLA,
which is much less than standard COLA, and very few receive OHA, limiting the difference for marines in Japan versus CONUS. That difference is even smaller when
comparing Japan with Camp Pendleton, which is an area with relatively high BAH.15
Additionally, overseas PCS costs are higher than for PCS moves within CONUS.
PCS move costs are incurred any time a service member must move, whether for
normal duties; schooling; overseas assignments; or, in some cases, separation. Moves
between CONUS and OCONUS (referred to as transoceanic travel) cost more than
those within CONUS, so OCONUS positions incur that additional cost.16 These
occur as a single movement of one service member (and his or her family and household
belongings) from one station to another. Additionally, OCONUS assignments
tend to be shorter, increasing the number of moves per assigned person, magnifying
the effect of the higher costs per PCS move.
To derive PCS move costs, we looked to each service’s budget estimate, which list
the total expenditures for PCS move, called PCS travel, which is divided into several
categories.17 Operational travel includes moves to and from permanent-duty stations
located within the United States or within another country or region involving no
transoceanic travel. Training travel includes moves to and from permanent-duty stations
located within CONUS to service or civilian schools. Rotational travel includes
moves from permanent-duty stations in CONUS to permanent-duty stations overseas,
and vice versa, as well movements among overseas regions involving transoceanic
travel. For accessions and separation travel, which include travel to and from first and
last duty station, respectively, regardless of whether in CONUS or OCONUS, we
allocated portions of each to CONUS and OCONUS categories based on the relative
proportions of assigned personnel to each for the respective service. We used FY 2011
costs, because they reflect actual spending, not estimates of spending, and were the
most recent such actuals available at the time of this study.
Because our aim is to calculate the total cost per person to be stationed in a particular
region, we divide the total PCS move spending in each category by the total
permanently stationed personnel in the corresponding region. Thus OCONUS PCS
costs in our modeling include rotational travel and OCONUS shares of accessions and
separation travel. The CONUS PCS costs in our modeling include operational travel,
training travel, and CONUS shares of accessions and separation travel. To determine
CONUS permanently assigned, we subtracted the number of people in service TTHS
accounts from the number of people we counted in CONUS from the DMDC data.
The results of our calculations are shown in Table 8.4.
The top half of Table 8.4 shows CONUS costs, OCONUS costs, and the differences
between the two. We show the total cost of PCS moves in each category, the
total personnel in the corresponding region(s), and the calculated cost per person. This
is not a cost per PCS move, but an effective cost per person for PCS costs, reflecting
both moves per assigned person and cost per move.
The cost per move does not show as much of a difference between CONUS
and OCONUS. For example, when all of the PCS travel categories are included, for
the Army, our estimate produces $5,700 per CONUS PCS move and $11,300 per
OCONUS PCS move, so that the OCONUS cost per move is about $5,600 more
than for CONUS. But PCS moves between CONUS and OCONUS occur more frequently than those within CONUS, so the cost differences are exacerbated. For
the Army, the OCONUS cost per person is about $6,800 higher than the same for
CONUS.
In the bottom half of Table 8.4, we show the number of moves by region our
method estimated based on the various PCS travel categories included and how they
were apportioned and how that converts into moves per person per year, reflecting two
moves per assignment change.
Table 8.4 PCS Move Costs
Installation-Related Costs
Installation Base Operating Support Costs
In the introduction to this chapter, we explained our basic approach using regression
analysis. We now explain this in more detail. Figure 8.1 shows a notional mathematical
model of installation-support costs as they relate to the size of the military presence
on that installation. The size of forces or the number of personnel (who drive support
costs) is on the x-axis, while support costs are shown on the y-axis. As the number of
personnel requiring support on a base increases, so do support costs. These costs can be
broken down into fixed and variable costs. Fixed costs are those that are independent of
an activity or output level, while variable costs are costs that change in proportion to an
activity or output. In other words, variable costs can be assigned to specific operational
activities and scale with the level of that activity. Fixed costs can be seen as overhead, or
costs that cannot be directly assigned in relation to the level of an activity. The variable
cost component (the slope of the line) corresponds to the size of a force at a location,
with potentially different variable cost relationships depending on location and force
type; the fixed-cost component (the y-intercept of the line) corresponds to the cost of a base in a given region, potentially varying by base type. A single installation would
occupy a single point on the blue line.
Figure 8.1 Installation-Support Costs Have Fixed and Variable Cost Components
In particular, “variable cost (move forces)” is meant to alert the reader that if the
installation stayed open but forces were moved from it, then the variable cost would
decrease at the installation but the fixed cost would remain unchanged. The variable
cost would increase at the receiving installation. Thus, there is a variable cost savings
only if there is a difference between the two installations. “Fixed cost (close bases)”
means that the annual fixed-cost portion of the installation—again not all of the costs
associated with the installation—would be saved if the installation were closed and the
forces inactivated or moved to an existing installation. Since some posture questions
may involve partial realignment of forces from and installation, it is important to have
a model that can disentangle the fixed versus variable costs and how the latter vary
with changes in base population.
We explain this further using installation-support cost data plotted in Figure 8.2.
This plot shows data for the Army using a subset of the installations we analyzed to
explain the concepts. We include complete sets of our raw data in Appendix A with
detailed explanations.
Figure 8.2 Example Data Plot of Army Installation-Support Costs to Illustrate the Need for Cost Modeling
On this plot, the x-axis shows the base population of Army bases, and the y-axis
shows the annual spending on installations support ($ millions, average FYs 2009–
2011). Each icon is a single location. Blue dots show a subset of U.S. bases (those with
permanently stationed operational forces, e.g., Ft. Bragg, Ft. Bliss), and red triangles show EUCOM Army bases with forces (e.g., Vicenza). We can see several things from
this plot.
First, for U.S. bases, costs visually correlate with base population, as reflected in
the purple line. From these data, then, one can derive a relationship between the size of
a force at a base and the support costs—a cost per person. We did a simple regression
analysis on these data points (excluding the two points in the middle oval, which we
discuss below). The line defined by the resulting regression equation is the thick purple
line, and the resulting cost per person is about $5,200 per person. This means that, all
other things being equal, reducing the military population of one of those bases would
reduce the net installation-support costs at those bases by about $5,200 per person per
year. This amount would be saved only if the forces were eliminated from the force
structure. Some savings would accrue if they were transferred to other bases with lower
variable costs per person.
We also note that the two blue dots near the top of the plot, in the middle oval,
are far above the other points. From left to right, these two bases are Schofield Barracks,
Hawaii, and Fort Benning, Georgia. There are potential reasons why these bases
have significantly higher costs than other U.S. bases with operational forces. For example,
the costs of goods and services are much higher in Hawaii than elsewhere in the
United States, and, while Ft. Benning does host some operational forces, a large portion
of the personnel and activity there are focused on training, because it hosts the
Army’s Maneuver Center of Excellence with the Infantry and Armor schools. But it
is not necessary to explore every possibility. We can say that these two bases are not
representative of the general pattern the rest of the bases demonstrate, but for specific
reasons.
Third, the regression does not intersect the y-axis at zero, but rather does so at
about $95 million. This means that if military personnel relocate from one base, and
that base’s cost moved along the regression line, when all military personnel left the
base, theoretically there would still be $95 million in installation-support costs. These
costs could include security, engineering for facilities, various contracting costs to sustain
the base, and a host of services for those people still providing services. This is a
theoretical scenario, but that fixed-cost component (the y-intercept) provides a way to
estimate the costs that would be reduced at one installation and increased at another
installation if a portion of the military personnel were simply moved from one base to
another, and how much of the costs remain at the sending installation given it lost only
a portion of its personnel. In reality, costs would change at some point before reaching
zero or some other very low number, but we are interested only in the range of base
populations that are typically used, and we use the fixed cost to estimate the amount
of cost that is invariant to population within the range of observed base populations.
Those personnel moving would take with them their associated variable costs, which
could change, depending on the variable cost rate at the receiving base, and leave the fixed costs. The fixed cost also represents the opportunity for savings from closure of a
base and consolidation of forces at other bases.
Next, even though our regression analysis has estimated the fixed and variable
parameters with a standard, accepted level of statistical confidence, it does not
perfectly explain the costs of every data point. Our statistical outputs tell us that this
regression model (the combination of fixed and variable parameter estimates) explains
about 79 percent of the variation in installation-support costs based on the number of
military personnel on a base. The dots in the oval to the right show that even two bases
with virtually identical numbers of military personnel can have significantly different
installation-support costs. There is some natural variation inherent in systems like this,
but there could also be knowable specific local attributes that could explain some of
that variation. However, in this study we have not attempted to determine all of the
specific local factors that would cause all of the variation, and it may not even be possible
to do so. Regardless, the model is a generalization to quickly estimate the effects
of changes and will rarely predict any single data point perfectly, but should predict
costs well enough to determine whether an option is worth further consideration. If an
option appears promising to pursue given all considerations—estimated costs, risks,
and benefits—then one would need to determine the exact costs at the specific bases
under consideration to finalize the decision. But the model should produce reasonable
estimates for comparing potential courses of action to consider.
Next, we highlight the EUCOM bases, the red triangles in Figure 8.2. It appears
that four of the five EUCOM bases fall more or less in the range of the U.S. bases.
At the same time, there is an extreme outlier, which is circled. This is Grafenwoehr,
Germany. Again, there are good reasons, similar to those for Ft. Benning, why this is
the case, given the significant training facilities located at Grafenwoehr, which incur
costs to train transient populations. There are too few data points to perform a separate
regression analysis on EUCOM bases alone, and any generalization should be
approached with caution. It does appear that the four EUCOM bases in the range of
U.S. bases in fact have similar cost relationships, and that Grafenwoehr is an outlier
with installation-support costs not explained by military personnel alone. We can say
that from these data, there is not enough evidence to show that, in general, EUCOM
bases have higher or lower fixed or variable costs for installation support than U.S.
bases.
Finally, we have plotted the regression lines that would result from analyzing
these U.S. and EUCOM bases separately and forcing the y-intercept through the
origin. These results are shown by the thin lines. The purpose of this is to demonstrate
the result of taking the simple average costs per person of these two data sets, instead
of trying to estimate fixed versus variable costs. To simply divide the total support costs
by the total military personnel in these two data sets would result in per person costs
of about $9,000 per person for U.S. bases and $42,000 per person for EUCOM bases.
(Here, Grafenwoehr does not significantly change the regression line.)
Aside from problems with statistical fit or significance, this approach creates two
problems. First, it misrepresents the cost dynamics at Army bases. We know that there
are fixed costs (i.e., overhead) built in to some military planning factors—and virtually
all facilities and organizations—and the data support this. To use a simple average is
to overstate per-person costs, potentially overstating savings from realigning personnel,
and would not identify those costs that would likely only be saved if the base were
closed.18
The second shortcoming is that this approach (that of taking a simple average
cost per person) actually makes overseas locations appear relatively more expensive
than U.S. bases when they may not actually be so. This is because for most of the services,
overseas bases have smaller base populations than those in the United States.
(This can be seen in the data plots in Appendix A.) If we include the four clustered
EUCOM data points with the U.S. data points in Figure 8.2, it does not significantly
change the regression results compared with the U.S. base–only regression. However,
because EUCOM bases are smaller and therefore closer to the origin than U.S. bases,
the slope of the regression line if using only these four bases and if forced through the
origin is much steeper, implying higher per-person costs. It may be that EUCOM bases
do have higher per-person installation-support costs, and that the difference between
EUCOM and U.S. bases would be saved were units relocated to the United States from
EUCOM. But from the data shown in Figure 8.2, the case is not convincing. In short,
the EUCOM bases are smaller, have a higher proportion of their installation-support
costs in fixed costs than U.S. bases with likely similar variable costs per-person, and
have relatively similar fixed costs per base. This can be thought of as akin to spreading
the overhead across a larger population.
This does not mean that there are no cost differences between U.S. and overseas
bases. Installation-support costs are only one of the components we analyze, and we do
find significant incremental overseas costs in other areas.
For all the reasons above, when possible, we develop regression-based models to
explain the relative costs of overseas posture. Given the discussion above, one can also
see that the case is not always clear-cut. As we proceed with our analysis, we do so
cautiously, explaining our assumptions clearly, so the reader can understand when we
utilized our own analytic judgment in ways that influence the results. In addition, we tabulate and graph each data set we use, display the results of each regression analysis,
and explain our findings in detail in Appendix A.
Our overall analytic approach for installation support is shown in Figure 8.3.
In the first two steps, on the left, we compiled data on cost and personnel from various
sources. We built cost and personnel databases based on raw data inputs from the
services and defense agencies. We then integrated these data, matching cost and personnel
figures at the installation level. Next, we analyzed these data, applying various
methods to produce cost factors. We then assembled these cost factors into a single cost
model that we then applied to each of our illustrative postures to estimate their cost
effects. In the succeeding sections, we explain each of these steps in more detail.
Figure 8.3 Installation-Support Cost Analytic Approach
Compile Cost Data
We obtained detailed installation-support cost data from each of the services in the
form of obligations for FYs 2009–2011.19 Because the data were from different sources,
we first compared the data across the services to ensure that we included comparable
categories. DoD organizes its spending around programs and designates them with
codes called program elements (PEs), the smallest resource aggregation controlled by
the Office of the Secretary of Defense (OSD). OSD provides a set of PEs to the services
to track installation-support costs, and the data we received contained costs binned by
PE and installation, so we could make comparisons of the installation-support cost
data across the services’ disparate systems. Table 8.5 shows the common PE categories
across the services from their installation-support cost data.
Table 8.5 Installation-Support Cost Data Program Element Categories
These PEs form the baseline comparison for all services. We also sought to eliminate
any service-specific differences in funding categories or funding not directly related
to the day-to-day support of a service’s activities on a particular installation. Thus, we
excluded overseas contingency operations (OCO) funding, reimbursable costs (e.g., a
tenant unit paying another service for installation support), and transportation working
capital fund spending from our analysis.
Several other PE categories not common to all four services were provided by the
respective services. The Air Force uses some military personnel for installation support
and tracks them in a category called Combat Support. We believe these costs should be
included in any estimate of the full cost DoD bears for installation support, and thus
we include them in our cost models and calculations. This is explained in more detail
in Appendix A, which explores different assumptions regarding the costs to include for
Air Force bases. The Navy is the only service that provided a category for Port Operations,
which we included for the Navy. We treat medical costs in a separate section.
Table 8.6 shows the number of bases and annual installation-support costs by
service and region, including the United States, EUCOM, and PACOM. Cost numbers are average values for FYs 2009–2011. We used multiple years of data to smooth
out the impacts of events unique to a given year for a base. For these data, we excluded
most U.S. territories, and considered only Guam and bases on foreign soil for inclusion
in PACOM. The purpose of this was to create data sets from which we could estimate
regional cost differences, and traditional definitions of some COCOM AORs include
a mix of U.S. soil, U.S. territories, and foreign soil. We differentiated among these to
keep cost categories clear.20
Compile Personnel Data
Our second step was to analyze personnel data. We obtained personnel data from
DMDC.21 The 2012 posture tables in Chapter One summarize these personnel data,
with totals for each major installation (permanently assigned personnel only). In addition
to raw personnel numbers, an important element in these data is the unit, specified
by the unit identification code (UIC). A UIC is a unique identifier assigned to a
unit or organization in DoD. Table 8.7 summarizes the personnel data we obtained. It
shows the total number of locations and UICs worldwide in the DMDC data, by service,
for locations with greater than 100 active duty personnel. These UICs are important
to our analysis because of our approach to analyzing the personnel and cost data.
Forces stationed at an installation demand base services, and this drives support costs.
However, not all personnel on base demand the same level of support, and some personnel
are providing those base services. We therefore introduce a classification system
to categorize military activities on an installation to inform our analysis.
For the purposes of our analysis, we classified all military units (by UIC) in one
of three broad categories based on whether (and how) they drive installation support or
provide it. These categories are mutually exclusive and completely exhaustive.
Table 8.7 UIC Data Summary
Referring back to Figure 8.1, we classified two types of activities as drivers of
installation-support costs, i.e., as independent variables: operational and institutional
forces. Within operational forces, we include both deployable forces—e.g., fighter
wings, BCTs, battalion landing teams, and carrier groups—and nondeployable operational
forces such as space, missile, and cyber forces that have ongoing operational
missions but employ them from home-station. One way to encapsulate operational
forces is to ask whether these units or activities are directly employed by COCOMs for
operations, whether from the U.S. or foreign soil.
The second subclass of installation-support drivers we call institutional. Institutional
activities are those that sustain the organization as a whole (including the
needs of the operational forces—other than installation support) but do not themselves
directly execute operational missions assigned to COCOMs. Examples of institutional
forces are support activities such as recruitment, training, and supply chain management.
These activities are generally found in commands managing materiel (e.g., Army
and USAF material commands), executing training, and conducting R&D, along with
entities such as service headquarters.
These operational and institutional activities must be performed somewhere, and
they incur costs wherever they are located. Thus, these two activities drive installationsupport
costs (often called base operating support), our dependent variable. Installation
support includes all the facilities, equipment, and personnel needed to run the
installation where those operational and institutional units and activities are located:
to feed, protect, provide medical support to, and otherwise service the population,
whatever task that population performs on a day-to-day basis. Their purpose is essentially
directed at supporting other units and activities on the installation. In general, the
location of institutional forces is not determined by the size and shape of operational
forces on that base. So, at base level, operational and institutional forces are independently
located and do not, on the whole, affect one another on a given base. We treat
operational and institutional activities separately, even though they are both drivers, or
demanders, of base support, because they place different types of demands on installation
support with different cost implications.22 We applied this framework to the personnel
data to derive cost relationships for base support. We assigned all UICs to one
of those three categories.
We now walk through a couple of examples of how we classified UICs at different
bases (see Table 8.8). The first set is from Ramstein Air Base, in Germany. The
UICs are all for Air Force units. The first UIC is for the 37th Airlift Squadron, which
operates C-130Js to conduct airlift, airdrop, and aeromedical evacuation operations.
The second unit shown is an element of the USAFE headquarters, which we classify as
institutional. The third unit there, the 86th Mission Support Group, provides installation support to Ramstein, including mission support, communications, security, and
base services.
Table 8.8 Example UIC Classification
The second base is an example from the Army: Fort Bragg. The first UIC is for
the 1st Battalion, 319th Field Artillery Regiment, which we classify as operational. The
second unit shown is Headquarters of the Army Forces Command, which we classify
as institutional. The third unit is the U.S. Army Garrison, Fort Bragg. This unit, composed
mostly of civilians, provides installation support at Fort Bragg.
We used this approach to classify the over 38,000 UICs from the DMDC data.
To do so, we drew on service documentation about the structure of UICs and information
contained in the UIC data (such as the title and composition). We produced a
single data set with all personnel and UIC classifications for all four services, for U.S.
and overseas locations. We note here that we exclude personnel from one service living
at the base of another service, as well as their support costs.23 This data set fed the next
step of our analysis.
Integrate Personnel and Cost Data
The third step in our analysis was to integrate the cost and personnel data. This essentially
amounted to matching the cost and personnel data for the same installations,
across services and regions. We were left with very few mismatches between the data
sources.
Analyze Personnel and Cost Data
The fourth step in our approach was to analyze the personnel and cost data and create
the installation-support cost model. To do so, we performed several least-squares
regression analyses to isolate the fixed and variable components of installation support.
In addition to the general relationships between military forces and support costs,
we sought to differentiate among the services and regions to the degree possible. This
entailed modeling each service separately (i.e., conducting separate regression analyses
on each) and creating variables to differentiate among regions and types of bases.24
For our mathematical models, we sought to capture the basic dynamics of each
subset (e.g., region/service). We thus excluded bases that were far outside the range of
typical values.25 An example of this is that some Air Force training bases in the United
States have significant training facilities that bring with them additional costs out
of proportion with the aircraft and personnel located there, relative to bases without
training operations.26 In general, when separating classes of installations, we filtered to
develop sets that had viable analogs from set to set (e.g., we excluded large depot maintenance
facilities, because they do not have analogs in overseas locations).
We focused on two primary dependent variables: total installation-support costs
and numbers of support personnel. We iteratively tested a range of models that specified
different independent and control variables to identify the primary drivers and
best predictors of support costs. We used statistical fit methods to determine the best
regression models.27 Table 8.9 summarizes the results of the regression analysis, with the top section of the table showing the fixed costs in millions of dollars per base by
service and region and the bottom section showing the additional variable costs in
thousands of dollars per person. We use the values shown in Table 8.9 in our cost
models to assess comprehensive posture options. In cases where bases are outliers in
terms of cost versus personnel, we treat them separately rather than using these generalized
values to develop posture cost estimates. We discuss these exceptions in more
detail in Appendix A.
The top row of the upper table in Table 8.9 shows the estimated fixed cost for
installations on U.S. soil.28 These figures represent the net annual installation-support
costs that would be estimated to be saved were that service to close an installation (notwithstanding
any investments made to close the base). The fixed-cost components for
U.S. bases are similar across the services.
The next two rows show the estimated fixed costs for EUCOM bases, both without
and with operational forces. This differentiation, between bases with or without
operational forces, only mattered for Air Force and Navy bases in our regression analyses.
The Air Force, for example, occupies some small installations in the UK with units
(e.g., communications) but no aircraft. The regression analysis showed these smaller
installations to have significantly lower fixed costs than those with fully functioning
airfields and flying units. The Navy installations showed similar differentiation between those with and without operational forces, while that designation did not
make a significant difference for costs at Army and Marine Corps locations (cells with
“–” for not applicable).29
In general, we found little difference in the fixed-cost component between U.S.
and overseas bases (comparing the first, third, and fifth rows). The Marine Corps and
Army are statistically indistinguishable between the U.S. and overseas, and the Navy’s
fixed installation-support costs are estimated to be slightly higher overseas. In effect,
this means that overseas bases with base populations similar to those in the United
States had installation-support costs that were also similar. For the Navy, our regression
model was not able to differentiate between EUCOM and PACOM with statistical
significance, but was able to differentiate them from the United States when grouped
together, which is why the table shows the same values for EUCOM and PACOM.
The Air Force installation-support fixed cost estimate is significantly higher for
overseas bases for several reasons. First, overseas Air Force installations appear to have
significantly more facilities (higher number and more square footage) than their U.S.
counterparts with similar base populations. These facilities drive operations, sustainment,
and other costs. In addition, overseas Air Force bases have a significantly higher
number of military personnel providing installation support than do U.S. bases of
similar size. These additional support personnel in turn require more on-base services,
and they incur additional overseas allowances and PCS costs. The difference between
EUCOM and PACOM Air Force installations is driven by slightly different proportions
of military personnel providing installation support.
The fact that our analysis did isolate a fixed-cost component for installation support
is quite important. Having a fixed cost for an installation presents an opportunity
for efficiency through consolidation or concentration, regardless of whether installations
are in the United States or overseas. If a base is closed and its forces moved to
existing bases, the recurring fixed costs of the closed bases become recurring savings
(even if one-time investment costs for new facilities are required). If, instead, moving a
force from one region to another requires opening a new base, then the savings or cost
increase would be the fixed cost differential for similar base types in the two regions.
When we apply these numbers to develop estimates of the cost effects of changes in
posture, the fixed component would be saved were a base in that region closed and altogether
vacated. Again, note that is not the total installation-support cost for the base,
just the fixed cost portion.
The bottom table in Table 8.9 shows the variable cost per person, in thousands
of dollars, for installation support. The values shown in this table are for the variable
costs per person for operational personnel only, following the categories we described the top section of the table showing the fixed costs in millions of dollars per base by
service and region and the bottom section showing the additional variable costs in
thousands of dollars per person. We use the values shown in Table 8.9 in our cost
models to assess comprehensive posture options. In cases where bases are outliers in
terms of cost versus personnel, we treat them separately rather than using these generalized
values to develop posture cost estimates. We discuss these exceptions in more
detail in Appendix A.
Table 8.9 Installation-Support Costs Regression Analysis Results
The top row of the upper table in Table 8.9 shows the estimated fixed cost for
installations on U.S. soil.28 These figures represent the net annual installation-support
costs that would be estimated to be saved were that service to close an installation (notwithstanding
any investments made to close the base). The fixed-cost components for
U.S. bases are similar across the services.
The next two rows show the estimated fixed costs for EUCOM bases, both without
and with operational forces. This differentiation, between bases with or without
operational forces, only mattered for Air Force and Navy bases in our regression analyses.
The Air Force, for example, occupies some small installations in the UK with units
(e.g., communications) but no aircraft. The regression analysis showed these smaller
installations to have significantly lower fixed costs than those with fully functioning
airfields and flying units. The Navy installations showed similar differentiation between those with and without operational forces, while that designation did not
make a significant difference for costs at Army and Marine Corps locations (cells with
“–” for not applicable).29
In general, we found little difference in the fixed-cost component between U.S.
and overseas bases (comparing the first, third, and fifth rows). The Marine Corps and
Army are statistically indistinguishable between the U.S. and overseas, and the Navy’s
fixed installation-support costs are estimated to be slightly higher overseas. In effect,
this means that overseas bases with base populations similar to those in the United
States had installation-support costs that were also similar. For the Navy, our regression
model was not able to differentiate between EUCOM and PACOM with statistical
significance, but was able to differentiate them from the United States when grouped
together, which is why the table shows the same values for EUCOM and PACOM.
The Air Force installation-support fixed cost estimate is significantly higher for
overseas bases for several reasons. First, overseas Air Force installations appear to have
significantly more facilities (higher number and more square footage) than their U.S.
counterparts with similar base populations. These facilities drive operations, sustainment,
and other costs. In addition, overseas Air Force bases have a significantly higher
number of military personnel providing installation support than do U.S. bases of
similar size. These additional support personnel in turn require more on-base services,
and they incur additional overseas allowances and PCS costs. The difference between
EUCOM and PACOM Air Force installations is driven by slightly different proportions
of military personnel providing installation support.
The fact that our analysis did isolate a fixed-cost component for installation support
is quite important. Having a fixed cost for an installation presents an opportunity
for efficiency through consolidation or concentration, regardless of whether installations
are in the United States or overseas. If a base is closed and its forces moved to
existing bases, the recurring fixed costs of the closed bases become recurring savings
(even if one-time investment costs for new facilities are required). If, instead, moving a
force from one region to another requires opening a new base, then the savings or cost
increase would be the fixed cost differential for similar base types in the two regions.
When we apply these numbers to develop estimates of the cost effects of changes in
posture, the fixed component would be saved were a base in that region closed and altogether
vacated. Again, note that is not the total installation-support cost for the base,
just the fixed cost portion.
The bottom table in Table 8.9 shows the variable cost per person, in thousands
of dollars, for installation support. The values shown in this table are for the variable
costs per person for operational personnel only, following the categories we described earlier—operational, institutional, and support. Operational personnel are those that
populate the operational units that our posture options consider relocating.30
Notice that the installation-support variable costs do not differ by region. This
means that for the installation-support cost data provided to us, the variable costs
associated with installation support were not measurably different when comparing
overseas to U.S. installations. The variable costs per person are roughly comparable
for the Army, Navy, and Marine Corps, but are significantly higher for the USAF.
We show only the parameter estimates, but each one has an associated error (shown in
Appendix A), so some of these estimates could be closer to one another. These results
include the pay for USAF military personnel providing installation support, which
greatly increases the overall support costs for the Air Force. If one excludes the PE category
with that military pay, the Air Force installation-support variable cost decreases
to about $8,300 per person, which is comparable to the other services.31
The fact that the USAF chooses to provide a significant portion of its installation
support with military personnel is a policy choice that has costs and benefits.
These military personnel receive experience directly relevant to many wartime tasks on
an everyday basis. In addition, using military personnel for installation support who
will then deploy in wartime arguably saves money over a policy that provides installation
support solely with civilians and contractors and requires a completely separate
military population for warfighting. There are disadvantages of this policy choice
from a force management perspective, but the net results relevant to this discussion
are two. First, this use of military personnel makes USAF installation-support costs,
when viewed in isolation, appear to be more expensive than the other services’. Second,
and more important, because these military personnel offset some number of civilians
who would be doing those jobs and the military personnel would still be needed for
wartime missions, arguably the total costs of the USAF providing its total inventory of
capabilities is lower.32
In contrast to the fixed-cost component for bases, our calculations of cost differences
for personnel use only the difference between U.S. and overseas installations (i.e.,
the difference between the variable cost of personnel in the United States and the variable cost of personnel overseas). In a posture option, if a unit, say a fighter squadron,
were moved from PACOM to the United States, installation support would have to be
provided there, too. Because the rate (the variable cost) is the same, there would be no
net cost savings on just the installation support. That is, unlike for fixed costs where
absolute levels matter for estimating the cost effects of posture changes, for variable
costs only the relative costs among regions matter.
It is generally believed that overseas bases do cost more to operate than those
in the United States. Indeed, the two previous sections showed that for training and
personnel-related variable costs, along with installation-support fixed costs in some
cases, there is a premium to be paid for stationing forces overseas. Recall that this section
analyzed only operating and sustainment installation-support costs as accounted
for in service accounting data. One explanation for the lack of differentiation in variable
installation-support costs among regions could be that host-nation contributions
to installation-support costs, as discussed in Chapter Seven, may suppress the “real”
cost of basing overseas. HNS may contribute enough to “level the playing field,” thus
making overseas installation-support variable costs indistinguishable from those in the
United States. Recall that the costs we show in this section are net of HNS, showing
the actual costs to DoD after HNS is accounted for. We discuss these regression analyses
and results in greater detail in Appendix A.
Medical Service Costs
While medical services are provided at installations, we separate the costs from installation
support for our analysis. We obtained detailed medical-support cost data from
the Air Force and Navy, and more aggregated data from the Army. In addition, the
Army FCM contains cost factors for Defense Health Program operating costs. The net
result of our analysis of medical cost data is that medical costs do not appear to be significantly
different between U.S. and overseas locations, so we exclude them from our
analysis and cost models.33
Construction Costs to Recapitalize Infrastructure
The majority of DoD installation-support costs go to supporting the many facilities on
bases. DoD defines three categories of facility support. Operations refers to day-to-day
operational expenses, e.g., utilities, service contracts. Sustainment refers to the maintenance
and repair activities on real property that are necessary to keep facilities in good
working order. Recapitalization refers to major renovation or reconstruction activities
(including replacement facility construction) needed to modernize facilities and prevent
obsolescence.34 For the purposes of this discussion, when we use the term facility recapitalization, we mean the complete replacement of a facility—at a comparable level
of capability—that has reached the end of its serviceable life.
We seek to capture the full range of these recurring costs to DoD, but these definitions
of facility support activities do not align precisely with accounting data. The
spending data we obtained from each of the services includes operations and maintenance
spending, and covers facilities operations, sustainment, and non-MILCON
restoration and modernization. To calculate the sum of DoD spending on the range
of facility support activities, one could add to that the spending from the MILCON
appropriation.
However, MILCON expenditure data would be problematic to use to estimate
recurring construction costs for recapitalization, for several reasons. Only one application
of MILCON spending is simply to replace aging facilities—recapitalization—
that have reached the end of their serviceable lives. Given no changes in mission (e.g.,
introduction of a new weapon system) or size of the force, these expenses would be
relatively constant over a long enough time period. It is important for us to include
these in the recurring costs of maintaining military presence. However, MILCON is
performed on a project basis, and a range of factors drive which projects are planned
and performed from year to year; it is not steady based on a long-term annual requirement.
These factors include, but are not limited to, availability of funding, criticality of
need (e.g., mission needs, facility conditions), the step or periodic function of conduction
recapitalization of a building rather than the same amount every year, and political
considerations.
Beyond the replacement of facilities, changes in mission or activities at a base
drive MILCON. New weapon systems drive the need for different kinds of facilities
or simply additional ones. These are introduced irregularly, and thus create spikes in
construction activity. Also, DoD has reduced its forces and consolidated installations
since the end of the Cold War. Both of these trends, sometimes operating independently
of each other, also affect the total demand for and funding for MILCON from
year to year, as BRAC and other restationing often require investments at installations
at which consolidation is occurring.
Finally, while MILCON spending is proposed and funded on the basis of specific
projects at named locations, actual MILCON data do not make completely clear
exactly which projects occurred at which locations. As discussed in Chapter Six, we
could not assign the totality of the MILCON estimates to particular locations. Without
doing so, we cannot confidently use installation-level MILCON spending data to
estimate the relative cost differences among regions. Thus, it is not possible to develop
cost models of the sort—based on actual spending at the installation level—in which
we are interested.
Considering all these factors, actual MILCON expenditures are not a reliable
source from which to develop cost models to predict, based on a (potentially small)
shift in the overseas posture, what the net effect on MILCON would be. Analysis of MILCON data shows large increases and decreases in spending from year to year,
many of which cannot be definitively explained by the factors listed above, or associated
cleanly with recurring facility recapitalization costs.
Nonetheless, for completeness, we need to estimate the recurring costs of maintaining
DoD’s inventory of buildings in an operational status. Rather than using
MILCON, we instead chose to model these costs by estimating the total dollar value
of DoD facilities and incorporating a periodic recapitalization rate. This leads to what
is termed a requirements model. The main advantage of this approach is that it avoids
the variations in spending described above. There are potential disadvantages. First,
as described in Chapter Seven, host nations often share a substantial cost burden for
DoD’s overseas installations. Some of these contributions go to construction, whether
directly or indirectly. The United States does not currently bear the full cost burden of
construction costs at some of its foreign installations. In that sense, a pure PRV-based
cost estimate may overestimate the effective cost burden for facility recapitalization.
We discuss below how we seek to control for this factor. Second, the requirement is
not always executed based on the factors listed previously. Nevertheless, given the challenges
associated with the alternative, we believe the benefits of our approach outweigh
the costs.
To perform the analysis, we used the RPAD described in Chapter Six. First, we
tallied the PRV of facilities at DoD installations, categorized by service and region. We
excluded from our calculations all closed or disposed facilities, all land-only infrastructure,
and all Guard- or Reserve-only installations. Table 8.10 summarizes these data.
Table 8.10 shows the total number of unique installations and the total associated
PRV for each service and region. We matched these installations and their PRV values
to the personnel data described above. Similar to our installation-support cost analysis,
we performed a least-squares regression analysis to determine the fixed PRV per installation
and the variable PRV per person by service and region. We used total military
and civilian personnel as the independent variable and the PRV for each installation as
the dependent variable. To then estimate the amount of annual MILCON necessary
to recapitalize these facility levels, we used a recapitalization rate. Given a life span for facilities, we can estimate what fraction of the inventory of facilities would, on average,
need to be recapitalized each year. We used a 67-year factor recapitalization rate drawn
from a 2002 DoD analysis on the topic.35 This means that 1/67th of the total value of
facilities on each installation would need to be replaced per year. One can think of this
as an upper bound estimate of potential recapitalization spending, i.e., a requirement.
Table 8.10 RPAD PRV Data Summary
There are several factors that would affect actual levels of spending. First, HNS
offsets a substantial portion of the DoD’s cost burden, including for facility construction.
HNS would likely reduce the actual recapitalization cost burden on the DoD,
but because of the difficulty inherent in fully parsing all HNS contributions, we are
unable to estimate exactly how much of this total requirement would be offset by
HNS. Second, the services can simply choose to defer recapitalization beyond the
67-year policy, accepting the risks and impacts of deteriorating facilities.36 Third, it
is generally believed that restoration and modernization impacts recapitalization such
that maintaining facilities at too low a level can shorten their serviceable lives. The
services could choose to take that risk, and if this belief is true, this would cause facilities
to need to be replaced earlier than policy would suggest, which would make our
estimates too low.
Considering these caveats, this method is a replicable way to produce a rough
estimate of recapitalization requirements. Later, we discuss a method to adjust our estimates
to better estimate likely spending, but first we show the results of our regression
analysis. Table 8.11 summarizes the results of the PRV regression analysis.
Table 8.11 shares the same format as the one in the previous section for installationsupport
costs. The top section shows values for the fixed PRV component per base; the
bottom section shows values for the variable PRV component (again, this is PRV per
person, not recapitalization cost per person). We divide these PRVs by 67 to approximate
the annual recapitalization requirements for each category.
Table 8.11 Regression Results for PRV Data Analysis
In some cases, overseas bases show a significant difference in fixed cost per base
when compared to U.S. bases. Air Force installations overseas have a fixed-cost component
about twice as high for overseas installations than for the United States. To
achieve statistical significance with this small sample size, we combined EUCOM and
PACOM into one overseas estimate. This does not mean that their PRVs or costs would
be exactly the same, but we use this as a general factor.
For the Army, most overseas bases’ PRVs are in the range of comparably sized
U.S. bases. The exceptions to this are Grafenwoehr and Kaiserslautern. These are outliers
relative to U.S. bases. This is consistent with the findings from our installationsupport
cost section, where those two bases were also outliers.37 It is likely that the
activities they support, training and central logistics for USAREUR, respectively, drive
both high installation-support costs and PRV relative to their assigned populations,
with the higher PRV in turn also magnifying the support costs.
For the Marine Corps, the only significant permanent overseas presence is in
Japan, and most of that is on Okinawa. The results for PRV are driven by the Camp
Butler Complex. PRV relative to assigned personnel for Iwakuni is in line with comparable
U.S. bases. For Camp Butler, the PRV is an outlier relative to U.S. bases given
its population (this includes, as does the estimate for PRV in Table 8.11, the 5,600 personnel
on Unit Deployment Program [UDP]38 rotations to Okinawa in the total base
population), but roughly half the additional PRV for Camp Butler can be attributed to
its relatively high area cost factor relative to the United States. We estimated the difference
between Camp Butler and the U.S. predicted value from our regression model as
described in Appendix A. The illustrative posture options described in Chapter Nine do not include the closure of Camp Butler, so the fixed MILCON recapitalization estimate
derived from the fixed PRV does not affect the posture cost results. Additionally,
HNS compensates for a portion of the MILCON requirement in Japan, as discussed
in Chapter Seven and later in this section.
The Navy had more data points for the regression analysis, but the two data
sets—U.S. and overseas locations—simply exhibited similar cost relationships. Thus,
we assign them the same fixed-cost component. Guam, like Camp Butler, was an
extreme outlier, and we treat this separately from other overseas locations. We did not
include the closure of Guam in our illustrative posture options, so again the fixed cost
itself does not drive our cost results.
Some of the higher PRVs can be explained by higher area cost factors (ACFs) for
the countries and territories where the United States has forces. The PRVs incorporate
these ACFs. Japan, Italy, Germany, and Guam have significantly higher ACFs than
CONUS, while the UK and South Korea have only slightly higher values. In nearly
every case where a base has a higher PRV than comparably sized U.S. bases, it is in a
country with significantly higher ACFs. In most of the cases where an overseas base is
located in a country where the ACFs are more in line with the U.S. average (e.g., South
Korea and the UK), the PRVs were, too.39 In any case, it is this annual fixed cost of
MILCON for recapitalization that would be saved were a particular installation closed.
The bottom section of Table 8.11 shows the variable costs per person. In all cases,
overseas bases were either extreme outliers (preventing detailed comparison of variable
costs) or were well in line with U.S. bases. From this we conclude that the variable cost
components are similar for analogous cases, and we use the same factor for all regions.
The net result of this is that for per-person costs, MILCON for recapitalization does
not factor into our estimates of the relative costs of different postures. The total variable
PRV will factor into one-time investment costs, though, which we discuss later in
this chapter.
The cost factors derived from the figures shown in Table 8.11 are predicted requirements
for recapitalization construction, based on PRV of facilities in those regions. To
better understand the difference between the requirements estimates our method produces
and actual MILCON spending, we developed a comparison to actual spending.
First, we took aggregate PRV levels for the United States and several key overseas
countries and regions.40 We then estimated the annual recapitalization requirement
using the 67-year guideline. Next, we compared actual MILCON spending for these same regions to our PRV-derived estimates. The results of this comparison are shown
in Figure 8.4.
Figure 8.4 omparison of PRV-Derived Recapitalization Needs and MILCON Spending
In this figure, various countries and regions are shown along the y-axis. The
length of each bar shows how MILCON spending for that region has compared with
our PRV-estimated recapitalization requirement. The top series of bars shows average
FYs 2011–2013 MILCON spending relative to the MILCON recapitalization requirements
we estimated; the bottom series shows maximum one-year MILCON spending
for FYs 2011–2013 versus the requirements estimates.41 Starting at the top, the first
red bar shows that for the United States (excluding territories), MILCON spending
during that time period was about 78 percent of our PRV-derived requirements estimate.
Spending for the UK and Germany are very close to this ratio. Spending in Italy
is lower, and it is significantly lower in Japan and South Korea.
The same trend is consistent in the bottom section, which shows the one-year
maximum MILCON spending versus the estimated requirement. The United States,
UK, and Germany are all roughly comparable, Italy is noticeably lower, and Japan and
South Korea are still lower. We deduce several things from this. First, the similarity
among the United States, UK, and Germany is consistent with our understanding that
the latter two countries provide little, if any, MILCON support purely for recapitalization.
42 Second, DoD MILCON spending for U.S. installations in these three countries
is, on average, no more than about 80 percent of a simple 67-year PRV-based recapitalization
calculation.
Further, South Korea and Japan appear to offset a significant amount of MILCON
spending the DoD would normally provide for facility recapitalization. We do not want
to make too much of the exact percentages, because of the small sample size and variation
within only three years of data (e.g., MILCON cost in Japan varied by an order
of magnitude from year to year for these three years, reflecting the factors discussed
above). However, the trend seems clear and is consistent with what is reported on
HNS: In relative terms, DoD spends significantly less on MILCON for installations in
Japan and South Korea as compared with those in Europe and the United States. We
assume this is due to HNS provided by these countries, as discussed in Chapter Seven.
Because of what these findings suggest, we adjust our PRV-derived recapitalization
requirements to better capture what actual DoD spending would be for installations
in these regions. Therefore, for our cost models, we make the following adjustments
to the estimates:
baseline estimate
–– U.S. and Europe: 80 percent of calculated value
–– Japan and South Korea: 40 percent of calculated value
upper bound estimate
–– U.S. and Europe: 80 percent of calculated value
–– Japan and South Korea: 60 percent of calculated value.
For the U.S. and Europe estimates, we simply adjust them to be more in line with
what actual MILCON spending looks like on average. For Japan and South Korea, our
logic is as follows. As a baseline for our cost calculations, we use a 40 percent adjustment
to mirror the data analysis shown above and to parallel the adjustment made to
U.S. and European bases. The MILCON portion for Japan is lower on average, but the
few values we have varied widely in just a few years. Thus, we use a more conservative
estimate and use 40 percent for both South Korea and Japan. For the upper bound, we
use a different adjustment for Japan and South Korea. We were told by Marine Corps personnel that Japan offsets 25 percent of its MILCON recapitalization requirement
(but a little more than 25 percent of the actual construction costs since Japan budgets
to only about 90 percent of the requirement).43 If we use 80 percent as a starting point
for all PRV-generated MILCON estimates, and then multiply that estimate by 75 percent
(per the Marine Corps), the resulting factor is 0.8 x 0.75 = 60 percent. We use
the lower, baseline estimate for Japan and South Korea in our posture cost estimates in
Chapter Ten but point out the potential difference if the higher factor is used.
Dependent Education
DoD, by means of the DoD Education Activity (DoDEA), administers and delivers
programs that provide education for the dependents of military personnel both in
the United States and overseas. Two of these programs are relevant to our cost analysis.
DoD Domestic Dependent Elementary and Secondary Schools (DDESS) support
those in the United States, and DoD Dependents Schools (DoDDS) provide education
to those overseas.44 We excluded impact aid from our analysis.45
We obtained data from DoDEA operating costs for FYs 2009–2011 at the installation
level. Table 8.12 summarizes the data.46
Table 8.12 shows the total number of installations with DDESS and DoDDS
support and the total annual operating costs (average FYs 2009–2011) for those facilities
for the United States, Europe, Japan, and South Korea. Most U.S. installations do
not have DDESS support. Half of those that do are Army installations. DDESS has a
presence at seven Army installations in the United States, and those installations have
about a third of Army personnel stationed in the United States. Thus, it is possible that
Army forces realigning to the United States will relocate to a base with DDESS support.
Most overseas installations do have DoDDS support (28 out of 34 locations with more than 1,000 active duty personnel, 40 out of 79 installations with more than 100
active duty personnel).
To derive cost factors for dependents’ education, we performed a least-squares
regression analysis, using the DMDC personnel data applied to each installation in
the data set summarized in Table 8.12. Table 8.13 shows the results of our regression
analysis.
Table 8.12 Summary of DoDEA Cost Data, by Region
Table 8.13 Regression Analysis Results for DoDEA Annual Costs, by Region
In this table, the fixed cost represents the cost that would be saved by DoD for
DoDEA services if a single installation where DoDEA is active were closed. Note that
this is not the full cost to the U.S. taxpayer, because most dependents in the United
States attend non-DoD schools, with service members contributing local taxes when
appropriate and federal impact aid compensating when the service members and their
families live on base on federal property and thus do not pay property tax.
In the course of our regression analysis, we found that Europe and Japan had similar
dependents’ education costs, so we grouped them into one category for the purpose
of estimating cost parameters. It is apparent from looking at the data points for bases in
South Korea that their costs differ from other countries and regions, but there were too
few data points to develop a meaningful regression model. But this is also consistent
with the fact that accompanied tours in South Korea remain limited. We therefore do
not include a cost estimate for dependents’ education activities at Korean bases. Our posture options in Chapter Nine do not explore closing any bases in South Korea, so
this does not affect our net cost results.
The variable cost represents the cost per person borne for each service member.
Because most overseas installations do have DoDDS support, for our cost calculations,
we assume all forces incur overseas DoDDS costs. Because few U.S. installations have
DDESS support, when we do our cost calculations, we assume the following as a baseline
for forces realigning to the United States:
One-third of Army forces move to installations with DDESS support. We thus
subtract one-third of the U.S. DDESS variable cost from the appropriate region’s
variable cost differential to estimate the savings per person.
All other forces move to installations with no DDESS support. We thus count
the full DoDDS variable cost for the appropriate region toward the savings for
realigning forces from overseas to the United States.
Regional Logistics Costs
This section discusses regional logistics costs not assigned to personnel or installations,
but which must be allocated to reflect the real cost burden on DoD to support
overseas forces. The most relevant activities in this category are Defense Logistics
Agency (DLA) distribution centers and transoceanic transportation costs. DoD activities
that need supplies to conduct operations or other activities purchase supplies from
the service and DLA working capital funds, transferring operations and maintenance
funding to do so. The prices they pay are based on the acquisition cost of the material,
which covers the cost of transportation for delivery to DoD or first destination
transportation, and a cost recovery rate or surcharge to cover the working capital fund
organization’s overhead and operational costs; the working capital fund organizations
have to recover their costs on a reimbursable basis. The surcharges do include second
destination transportation (SDT) for the delivery of supplies within CONUS; however,
they do not include over-the-ocean SDT, called “over the ocean transportation”
(OOT), which is ultimately paid through central service accounts. Therefore, overseas
customers actually slightly subsidize U.S. customers’ SDT whenever they order an
item since overall CONUS SDT is included in item prices. Thus, the costs reflected
in overseas operations and maintenance accounts are slightly inflated with U.S. SDT
costs. Conversely, since those overseas customers are not directly charged for their
own OOT, with these costs paid centrally, their spending does not reflect the full cost
of operations. Therefore, it is necessary to estimate the costs of transportation for the
delivery of supplies overseas as well as to estimate the amount by which these overseas
customers subsidize CONUS sustainment. The difference between these two costs is the amount of additional overseas transportation we need to account for in determining
the variable costs of overseas logistics with respect to transportation.
Additionally, OCONUS support is based on a combination of direct delivery from
CONUS defense distribution depots and regional forward distribution depots (FDDs),
adding a layer to the support of OCONUS operational forces. These OCONUS FDDs
play a significant role in minimizing the OCONUS transportation cost difference
but add facility fixed and variable operating costs and require additional total inventory
in the system to be effective. In sum, delivering material to overseas forces costs
more than delivering to forces in the United States, consisting of the transportation
and FDDs—and the requisite inventory—used in tandem to do this in the lowest cost
manner possible.
Incremental Transportation Costs for the Delivery of Supplies Overseas
To estimate annual transportation costs within CONUS and OCONUS for the delivery
of supplies, we extracted data on CONUS and OOT costs from the Strategic Distribution
Database at RAND and used the data to directly compute the cost of transportation
by region.47 We calculated the total cost of OOT for supplies by service and
region and subtracted the amount of U.S. SDT they would have subsidized (by using
regional transaction data), and then we scaled the difference to a per-person cost. We
show the results of this calculation in Table 8.14, which shows the incremental OOT
cost per person.
Table 8.14 Annual Over the Ocean Transportation Costs per Person, by Service and Region
DLA Forward Distribution Depots Costs
We then estimated costs for the second component of DLA overseas support, the FDDs
themselves. This includes the transactional costs of the overseas facilities. We obtained
data from DLA on the annual operating costs of its distribution centers. Table 8.15
summarizes the cost data.
Table 8.15 DLA Forward Distribution Depot Data
In Table 8.15, each FDD is shown on a separate row, and U.S. locations are
totaled for comparison. The first column shows the average operating costs (millions of
dollars), from the DLA data; the next column shows the total military personnel from
the DMDC data, and the last column simply divides the former by the latter. Here,
the Guam FDD supports only forces on Guam. The FDD at Sigonella mainly supports
the Navy and transiting ships.
The main FDD in Europe, in Germersheim, Germany, also provides support
to contingency operations in the Middle East, so it is important to separate the costs
incurred to support forces in the region where the FDD is located from the costs
incurred to support forces deployed to contingency operations in another theater.48 In
our cost model, we add the cost per person rate for Europe, Japan, and South Korea.
We assign Guam costs only to Guam, and Sigonella costs only to naval forces in that
region.
Summary of Recurring Fixed Costs
To provide an integrated view of some of these costs, we now show all recurring fixed
costs that inform our cost model. Figure 8.5 shows each component of the fixed cost
differences by region for bases with operational forces.
In Figure 8.5, the height of each column shows the total fixed-cost component of
overseas military installations by service and region, along the x-axis, i.e., the approximate
annual cost that could be saved by closing an installation of a given service in a given region. Because some costs differ between Japan and South Korea within
PACOM, we show these separately. Also, the Air Force costs reflect an additional overseas
premium for combat support, the military personnel providing installation support,
because we find a higher number of “fixed” combat support personnel per base
overseas; these personnel also incur the higher overseas variable cost, which is not
accounted for in the combat support PE costs in the AFTOC data. We explain this
cost in depth in Appendix A. The chart shows that installation-support costs usually
comprise the majority of the fixed cost for installations, between about half and threequarters
of the total for overseas installations.
Figure 8.5 Summary of Fixed Cost Components, Bases with Operational Forces
Summary of Incremental Overseas Variable Costs
We now provide the same view of the variable costs within our cost model, integrating
all the components discussed throughout this chapter. Figure 8.6 shows each component
of the variable costs among the regions, relative to the same for the United States.
In Figure 8.6, the height of each column shows the relative per-person difference
to have a military person stationed overseas, rather than in the United States (the graph
is started in negative territory for Japan and South Korea to produce the right net value
at the top of the columns, because the MILCON is a negative value for those two locations
due to lower costs than CONUS). The results are shown by service and region, along the x-axis. Because some costs differ between Japan and South Korea within
PACOM, we show these separately.
The chart shows that differential allowances and PCS costs for personnel stationed
overseas comprise the vast majority of the variable cost differential for each service and
region, between about 60 percent and 80 percent of the total. Installation-support
costs do not appear at all, because there was not a statistically significant variable cost
difference between the U.S. and overseas locations for that category. When contemplating
a realignment of, but not reduction in, forces, only the differential matters. For
MILCON, PACOM bases had a lower cost per person than their U.S. counterparts,
because we incorporate a discount factor to account for the HNS contributions of
Japan and South Korea. Also, as with the fixed costs in Figure 8.5, the Air Force costs
in Figure 8.6 reflect the additional premium for combat support, the military personnel
providing installation support, because we find that they increase with the number
of operational personnel and also incur the higher overseas variable cost. We explain
this in detail in Appendix A.
Figure 8.6 Summary of Incremental Variable Cost Components
We now show the final result of our cost model, with all fixed and incremental
components, for bases with operational forces. Table 8.16 shows the total of all fixed
and incremental variable components, by service and region, for overseas basing and
stationing. This is net of any HNS and includes all the cost components in our modeling
(except for unit training cost differences since they are dependent on unit types, not bases and number of people), which aimed at capturing as complete a picture of
the costs that overseas basing affect as possible: allowances, PCS, installation support,
MILCON, dependents’ education, and regional logistics. We use these figures directly
in our calculations of the aggregate cost effects of posture options discussed later in
this report.
As an example, suppose a fighter squadron were moved from Europe back to the
United States. If it were an F-16 squadron from Aviano Air Base, that would comprise
about 685 personnel from the squadron plus a slight reduction in the wing headquarters.
At $38,800 per person, that would save about $26.5 million per year given the
variable costs shown in Table 8.16. Given the training cost differences for an F-16 unit
shown in Table 8.1 (about $0.3 million lower per F-16 in Europe than in the United
States), that would offset about $6.3 million for 21 aircraft, so the total annual savings
for operating and support costs would be about $20.2 million for the single squadron.
That excludes the cost of any rotational deployments to replace the permanent presence
or any investment costs to make the move (e.g., one-time movements or new construction
in the United States). However, if both squadrons were realigned, and Aviano were
closed, that would entail $40.4 million in savings for the unit moves and $211 million
for base closure, for a total of $251 million per year.49
Table 8.16 Overall Recurring Annual Cost Model for Overseas Basing and Stationing
Alternatively, suppose Vicenza, Italy, were closed and all forces, including the
173rd Airborne BCT, were moved to the United States. That would save $32.7 million
for the 2,165 operational military personnel. The military and civilians supporting the
garrison would essentially transfer to the United States. Those 174 military personnel would save another $2.6 million. Then another $21.3 million would be saved in
reduced training costs, and $115 million would be saved for the fixed cost of the installation.
This would total $172 million per year, again not including rotational deployments
or investment costs.
Rotational Cost Analysis
The purpose of this section is to assess the costs of non-contingency rotational operations
to understand the cost implications if they were to be used to compensate for
reduced permanent overseas presence or how much they would cost if used to increase
presence and engagement.50 In this section, we describe our methodology for calculating
rotational costs. We then show the results of our quantitative analysis for several
illustrative examples.
Figure 8.7 shows a schematic of our cost model. The box on the left shows the
inputs to the model. These are the parameters that drive different cost profiles for a
given rotational deployment. The unit type drives the personnel and equipment that
must be transported back and forth for rotations. The region determines the distances
traveled, expenses for personnel during travel, and any special compensation paid to
unit personnel. The frequency and duration determine how often a given unit type
does a rotation and how long they stay deployed. For example, one could provide 100
percent forward presence (i.e., 365 days/year) with one 12-month rotation per year,
two six-month rotations, etc. The frequency and duration of rotations are driven by the
strategic aims of the rotational presence. Finally, there are several policy options available
to provide equipment and personnel support, which we describe below.
Figure 8.7 Rotational Cost Computations
The box in the middle shows the components of rotational costs that the model
calculates. Deployment and redeployment costs reflect those to transport the unit and
its equipment (and aircraft in the case of air units) to and from the overseas location.
Personnel support costs during deployment include food, lodging, and special compensation.
Policy option costs are those associated with whether or not to preposition
equipment sets and the level of installation support present at rotationally deployed
locations. While a unit does incur training costs while deployed, we exclude training
costs during the operation. We assume that the training each unit receives during the
deployment is used to satisfy a portion of its annual training requirement. Additionally,
we assume no change in the force structure would be needed to support rotations.51
The box on the right articulates the level of detail of the outputs. The model calculates
the total cost to sustain rotations by the specific unit type to the specified location
under the conditions (frequency, duration, and policy options) specified. For example,
it would cost approximately $100 million per year to sustain two three-month deployments
per year of an IBCT to South Korea.
The following sections explain more about the components of rotational operations
(including our data sources and methods), policy options important to the cost calculations,
and some example rotational deployment packages to illustrate our approach.
We note here that this cost model applies to the Army, Air Force, and Marine Corps
but not the Navy, with the partial exception of aircraft units.
Components of Rotational Presence
We break down a rotational deployment by its component parts and calculate the costs
of each element. We then sum these to compute a total cost for a rotational deployment
under each set of policies. We seek to capture the total costs that DoD would
incur to support each cost element and deployment. For a given rotational package,
a unit could incur a range of costs. We divide these costs into five categories: personnel
deployment; aircraft deployment; unit equipment deployment, prepositioning, and
maintenance; personnel support during a deployment; and special compensation. In
the following sections, we discuss these cost elements, data sources, and our cost estimation
methods.
Personnel Deployment and Redeployment
The cost to deploy and redeploy unit personnel to and from a deployment simply translates
to their airfare. For each unit type specified in our posture options, we derive force
packages from standard service-specific data sets or models. For the USAF, we use
the Manpower and Equipment Force Packaging System (MEFPAK),52 for the Army,
we used the Military Surface Deployment and Distribution Command’s Deployment Planning Guide,53 and for the Marine Corps, we drew unit personnel and equipment
requirements from the Organization of Marine Corps Forces.54
Aircraft Deployment and Redeployment
Calculations for the USAF require the additional component of flying aircraft to and
from home-station. To do this, we derived cost per flying hour for each aircraft from
the AFTOC database.55 For each aircraft type, we took the cost elements that vary by
flying hour and divided them by the total flying hours for that mission design series
(MDS).56 We averaged the costs from 2009 through 2011.
We calculated the average distance from the United States to each overseas region
or country of interest to approximate the deployment distance for a typical aircraft
deployment. We then determined the typical block speed of each MDS to determine
the average flight time for each MDS.57 With the flight time and cost per flying hour,
we could then calculate the cost to deploy each MDS. The model multiplies this cost
times the number of aircraft in each deployment for each location. For fighters, we also
add a tanker air bridge to help deploy (and redeploy) the aircraft.58
Unit Equipment Deployment, Prepositioning, and Maintenance
We include three options in the model to provide equipment for rotationally deployed
units: sealift deployment, airlift deployment, and prepositioning. Each method has
costs and benefits (e.g., financial cost, speed, flexibility), and all may not be possible
in all circumstances. We tally the costs of each for each rotational deployment, and
use the range of estimates to define upper and lower bounds for our aggregate cost
calculations.
For sealift and airlift deployment, we use the same data sources to derive force
packages as for unit personnel but to derive equipment lists instead. When necessary,
we cross-referenced these data with the DoD’s Federal Logistics (FEDLOG) database
to obtain weight and cube data for calculating shipping costs.59 To estimate the cost to DoD of deploying these personnel and equipment to and from home station, we
used standard TRANSCOM rates and applied them to the cargo being transported.60
When estimating the costs for rotating an entire MEU, we assumed an Amphibious
Squadron (PHIBRON) would transport the MEU, thus obviating the need to pay
separately for personnel and equipment transportation.61
Prepositioning entails each service keeping sets of equipment in storage locations
and periodically maintaining them to ensure mission readiness. A given service
may have enough equipment sets (especially in light of planned drawdowns) to
place an “extra” set in storage for this purpose, thus saving the purchase price of such
equipment. However, equipment must be replaced at some point, so prepositioned
stocks would eventually have to be recapitalized. For the calculations in this report,
we assume that each service owns adequate equipment sets to support prepositioning,
and we do not incorporate equipment recapitalization. The services provided information
we were able to use to estimate the cost to have contractors store and maintain the
equipment sets.62 If equipment purchase or recapitalization were needed, that would
add an additional cost to the prepositioning options.
Personnel Support During Deployment
DoD personnel receive essentially one of two types of support or compensation when
forward deployed in peacetime. Food, lodging, transportation, etc., can be provided by
the destination military base, if those services are available, local contractor support,
or by per diem with which personnel can procure those services on the local market.
For short deployments (e.g., a 1–2 week exercise), units often make do with more austere
conditions, such as sleeping in the field and using field kitchens. The rotational
deployments our posture options explore are typically too long to assume austere conditions,
so we make several assumptions about providing personnel support, based on
the region and country.
For all regions, destination bases are assumed to provide support by means of
permanent facilities and personnel. In regions with a current permanent DoD presence
(e.g., Western Europe, Japan, South Korea), this assumes that the service overseeing
the installation will keep facilities and other support in-place in the event of any
unit realignments, or more will be constructed to handle rotational forces if needed.
In short, at least one base able to host rotational forces will be maintained in these
regions. In other regions, in practice, it may be DoD or the host nation that provides
or pays for these services. In Romania and Bulgaria, for example, these nations provide some support for U.S. rotational forces. Thus, as an upper-bound cost, we assume that
DoD will pay the host nation for this facility support. For a lower-bound estimate, we
exclude these base operating costs from our calculations, assuming that DoD maintains
ongoing capabilities in the region able to also support rotational forces. To pay
for the day-to-day installation support and upkeep of those facilities, we apply the cost
factors for installation support that we developed earlier in this chapter. We include in
this the per-person variable costs for installation support, MILCON for recapitalization,
and overseas logistics support. We exclude dependents’ education, because service
members’ dependents are living at home-station. Further, we decrement these installation-
support costs by 25 percent to represent reduced needs since dependents will not
be living on base (e.g., family housing, family and youth programs).
Beyond day-to-day facility operations and sustainment, we also assess the costs
to provide food and other incidentals. For forces in regions without current permanent
presence, we assume that food service is provided by local contractors, as has been
done for contingency operations or in countries in which the United States performs
rotational deployments on an ongoing basis. To estimate these costs, we use the local
food per diem rate as a proxy for this contractor support. The DoD Defense Travel
Management Office provides detailed per diem rates for travel to a range of countries
and cities in the world.63 We utilized these per diem factors for the overseas locations
identified in our posture options. When costs for specific locations were not available,
we used average regional costs.64
For forces deploying to regions with current permanent presence, we apply a
COLA as compensation. However, COLA factors available from sources like the FCM
or the aggregate figures we developed from Work Experience/Active Duty Pay files are
averages across the entire population for a given service and region. Since these averages
include some personnel living with dependents and off base, and the rotational deployments
for which we calculate costs assume personnel deploy unaccompanied and live
on base, the average values would overestimate COLAs needed to compensate deploying
personnel. These deployments would also be shorter and more austere than multiyear
PCS tours, where personnel would have a certain anticipated standard of living.
For these reasons, we apply only 50 percent of the COLA costs for each person for the
region of their deployment.65 Finally, because we already make provision for food and lodging, we apply the local incidental per diem rate to all personnel in all regions for
the duration of their deployment.
Special Compensation
DoD provides special compensation to those deploying overseas away from their homestation
location. This includes family separation and hardship pay. We apply family
separation for all deployments and hardship pay for all deployments outside of Western
Europe, Japan, and South Korea.
Example Rotational Deployment Cost Calculations
In this section, we review the details of a few example rotational deployment packages
to demonstrate how the cost analysis works. First, we show a detailed example of
an Army deployment to explain how we apply our methodology to each of the components
of rotational deployment. Table 8.17 shows three example deployment cost
calculations of an ABCT deploying from the United States to Germany, varying the
frequency and duration of rotations such that the examples all produce 12 months of
presence per year.
In Table 8.17, the top section shows the basic information about the unit and its
deployment, including the frequency and duration of deployment. The middle section
shows the component cost calculations. The bottom section totals the costs for each of
the three equipment support options.
Table 8.17 Costs of Rotational Components for ABCT Deployment from United States to Germany
In the middle section, one can see how the deployment costs vary for air and
sealift, but not prepositioning. The rest of the costs, for personnel and installation support,
are static, because the total duration of presence is always 12 months. The bottom
section, with totals, shows that airlift is significantly more expensive than sealift or
prepositioning. The ABCT is an extreme case because of its equipment weight, but in
general, airlift to transport equipment is not a realistic option for recurring peacetime
rotations for brigade-sized ground forces. Further, the left-most column shows that for
a single 12-month deployment, prepositioning is more expensive than sealift. On the
right side, however, as deployment costs increase with increased frequency, the prepositioning
option is slightly less expensive than using airlift. Sealift requires much more
time in transit, which has its own non-monetary costs.
For each service, unit type, and region, the trade-offs look slightly different,
depending on unit size, transportation rates, and prepositioning costs. For our cost
analysis, we use this same approach of calculating the cost of each rotational component
and then aggregating into total costs. We now show two more examples to show
the broader trade-offs involved with rotational operations, and how they compare with
savings from reducing permanent presence. We show another ground force example
using an Army Stryker brigade, and an Air Force example using an F-16 squadron.
Figure 8.8 shows the cost breakdown for an SBCT rotation from the United
States to Germany. In this chart, the total time spent deployed is shown on the x-axis,
and the total cost per year is on the y-axis. The blue areas show the amount saved by
realigning an SBCT from Europe (the lower shaded area only) and closing a base there
as well (the top of the shaded areas). The lines and dots depict the cost of each of several
options.
Figure 8.8 shows two equipment options—sealift and prepositioning—and three
deployment frequency/duration pairs. The solid purple line shows the cost relationship
of sending the SBCT on three-month deployments using airlift for personnel and
sealift for equipment. At the bottom left, the cost of one three-month deployment per
year is about $63 million per year, including all the costs described above. To increase
the total time deployed forward (y-axis), there must be more deployments, with the
gaps between them determining the average amount of annual presence, as indicated
on the x-axis. As the number of three-month deployments per year increases from two,
to three, to four, the deployment costs go up due to the increased airlift for deploying
personnel and sealift for equipment, which vary linearly with deployments per year,
as well as the personnel support, which is driven by the total duration or amount of
presence during the year. At 12 months of presence, or four rotations per year, the cost
reaches about $169 million for this option.
Figure 8.8 Rotational Deployment Costs for Stryker BCT from United States to Germany
The dotted purple line reflects the use prepositioning equipment instead of sealifting
it for each rotation. Because the equipment must be supported year-round, it comes
with a high fixed cost, so this option is more expensive than the sealift option when the
annual length of presence is limited, in this case less than six months, as sealift only
has to be paid for when it used. As the number of deployments increases, however, the
cost of prepositioning stays the same, so that option looks comparably better. For four
three-month deployments, prepositioning is significantly less expensive for the SBCT.
The two red lines show the same trade-off for six-month deployments. Here,
because there are fewer round trips to pay for, the prepositioning option does not save
money over using sealift, and they cost about the same for two six-month deployments.
Finally, with one 12-month deployment, the proportions are reversed. Sealift becomes
less expensive than prepositioning for this unit.
We contrast these cost estimates with the savings estimates shown by the two blue
blocks. The lower, light blue area shows the annual savings from simply realigning that
SBCT from Europe to the United States, incorporating all the variable cost savings described earlier in this chapter, which comes to about $75 million per year. The dark
blue area reflects also closing a single installation, adding about $87 million per year
to these savings.
What this shows is that the cost-savings trade-off depends greatly on the policy
options chosen. If an SBCT were realigned but the base was not closed, most rotational
options would cost DoD more money than leaving the unit in place. The least costly
12-month deployment option still produces a net cost of about $20 million per year. If
less presence were needed, those realignment savings could offset the rotational costs
for three or six months of presence per year, but it would still be roughly a break-even
proposition.
On the other hand, if an installation could be closed, saving the higher total
amount, that could underwrite all the options shown in Figure 8.8. Even providing 12
months of presence per year with three-month deployments would save money with
prepositioning and nearly break even with sealift, and would save about $67 million
per year with the lowest-cost policy option of one 12-month deployment via sealift per
year.
However, if a base were to be closed and its forces realigned, another permanent
base in that country or region must be maintained to support the rotating forces
(including considerations of facilities, space, and other accommodations) or a host
nation must agree to provide access to one of their bases.
In the next example, we show similar trade-offs for two F-16 squadrons rotating
to Japan. In this example, we use two squadrons of F-16s simply because most overseas
bases have two fighter squadrons, thus making a more even comparison when looking
at base closure savings. This chart follows the same format as the prior one.
In Figure 8.9, we see the same types of cost trade-offs as for the prior figure.
Here, prepositioning only offers real cost advantages over short, frequent deployment
options. In this case, merely relocating the units to the United States is just barely
enough to pay for even a single three-month rotation, let alone longer or more frequent
ones, given the annual savings of $19 million per year for relocating a single F-16
squadron from Japan to the United States.66 If shorter, more frequent deployments
were preferred, the savings would be quickly overridden. We note that this trade-off is
uniform regardless of the number of aircraft of this type. The costs and savings both
scale evenly with the number of personnel and aircraft.
Figure 8.9 Rotational Deployment Costs for F-16s from United States to Japan
When contemplating a base closure, however, the story looks different. Because
we estimate that overseas USAF installations have a significantly higher fixed cost,
which would be saved upon closing a base, this option more than offsets any of the rotational
deployment options considered here. The total recurring savings from realigning the two squadrons and closing the base are around $207 million per year (or about
$215 million if the upper-bound estimate for MILCON recapitalization is used). That
would enable robust rotational deployments while still achieving substantial savings.
However, it should be noted that the base closure options we consider here would preclude
the use of that same base for rotational operations. Those forces would have to
deploy to another base in the country or region.
Unit Rotation Costs
We show cost calculations for a range of unit types in several regions to provide a
means to explore combinations of rotational deployments.67 Table 8.18 shows the estimated
annual costs of rotational deployments for three types of Army BCTs to three
different regions. Each row shows the cost for a single rotation during the year, with
the duration shown on the left side. Sealift as a transportation mode applies only to
equipment; personnel are transported by airlift.
Table 8.18 Example Rotational Deployment Cost Calculations for Army Units ($ millions)
Table 8.19 shows the annual costs of rotational deployments for four types of Air
Force units to three different regions. Again, each entry includes the cost for a single
rotation during the year, with the duration shown on the left side.
Table 8.19 Example Rotational Deployment Cost Calculations for Air Force Units ($ millions)
Investment Cost Methodology
This section explains and demonstrates our methodology for estimating the investment
costs necessary to transition from the current posture to an alternative posture. First,
we discuss the data sources to which we looked to derive investment cost estimates.
Next, we describe each element of investment cost needed to alter the posture. Finally,
we demonstrate our methods with some example calculations.
Data Sources
To identify the cost elements relevant to posture changes, we looked to two main
sources. We first sought reports on actual overseas realignments and closures. Although
there have been a number of overseas base closures and force realignments since the
end of the Cold War and even before, there are few sources that catalog the implementation
costs borne by the United States for individual actions (i.e., the closure of a
single installation), let alone a more comprehensive analysis across a number of installations,
countries, or regions. Often the available sources focus on one or another specific
cost or issue, and thus do not comprehensively discuss or analyze all of the details of
closure or realignment actions. In our research, we found reports on base closures in Torrejon, Spain,68 the European drawdown (specifically highlighting base closures in
Germany from the late 1960s through the early 1990s),69 and U.S. bases in Thailand.70
The second source we looked to was BRAC documents and data. While the specific
cost factors used for the various rounds of BRAC do not always mirror the costs of
similar actions for overseas locations, these sources provided a framework for the general
cost categories relevant to relocating forces and closing installations, and provide a
starting point for estimating some cost factors. The BRAC cost-estimation model itself
was not readily available for use, and even the detailed commission reports did not
provide enough granularity to back-out rough cost factors for realignment and closure
costs. We thus looked to detailed data documentation to establish the specific inputs
to each BRAC action and their associated costs.71
After consulting these sources and synthesizing their findings, we created cost
factors for three broad categories: personnel-related movement and separation, baserelated
closure costs, and new construction for realigning units. We now describe the
cost elements in each category and our methods for estimating the costs.
Personnel-Related Movement and Separation
This category of personnel-related costs includes the one-time costs associated with
moving personnel and their dependents for a unit realignment, paying for persons
separated as part of a base or unit consolidation, and transportation of unit equipment.
For the movement of military personnel and their families, we use the standard
overseas PCS rates for overseas to U.S. movements (i.e., transoceanic) for a single move
(i.e., not annual rates). We referenced these earlier in this chapter. We used the same
cost factors for civilian moves as well.72 We thus apply these additional cost factors for
civilian personnel.
For realignments within a region, we use U.S. PCS rates for military and civilian
personnel, assuming movement will take place over land. For realignments from one
overseas region to another, we use the overseas PCS move rates for both military and
civilian personnel.
For civilians who are separated in a realignment (e.g., headquarters units no
longer needed, base or unit consolidations), we include severance pay, early retirement,
and unemployment compensation based on information from the most recent BRAC
round.73
In the past, some of the PCS moves accompanying a base closure have been
phased in as a part of normal periodic personnel rotations, so no additional PCS movement
is needed. So we consider our cost estimates to be an upper bound on the onetime
move costs, assuming all personnel require a move outside the timing of their
normal restationing.
One additional per-person cost found in the BRAC documentation is called
program management. This represents the costs of administrative support for movements
of personnel and equipment and is estimated as a per-person percentage overhead
fee on top of the individual personnel expenses described above. For this category,
we looked to major U.S. installation closures and realignments from the 2005
BRAC round from which to derive costs. We developed per-person cost estimates from
each example, and then averaged these costs across the examples (dismissing the highest
and lowest values in each set). The result was an average per-person cost for program
management costs. Table 8.20 shows these cost factors.
Table 8.20 Personnel-Related Closure and Realignment Cost Factors
We used these per-person costs as inputs to our total cost calculations. For each
person realigned in one of the posture options, whether to/from the United States or
across regions, we apply these cost factors to estimate the total one-time cost to realign
these personnel and their equipment. For unit moves, we use TRANSCOM sealift
shipping rates to and from the appropriate region. As an upper bound, we assume
military and civilian moves pay both PCS and program management costs. As a lower
bound, we exclude the PCS move costs, assuming that those moves can be made over
time as a part of normal personnel rotations.
Base-Related Closure Costs
Base closure costs include, but are not limited to, support contract termination, mothball/
shutdown,74 severance to foreign civilians, labor contract settlement costs, and a
range of one-time unique costs.75 These are the key costs we include in our analysis.
The closure of a military installation also inevitably includes environmental mitigation
costs. The overall scope of these costs vary widely from installation to installation,
and cleanup requirements have changed significantly over the past few decades
during which many closures have occurred. In addition, the cost-sharing burden for
these kinds of costs varies depending on the region and country, and the United States’
relations with the host nation government.
A 2004 GAO report had this to say about environmental remediation costs:
Historically, overseas regional commands have incurred limited costs for environmental
remediation as a result of these property returns. For example, the component
commands in South Korea and Japan have incurred limited costs to date,
while EUCOM currently estimates its potential costs for environmental remediation
at about $90 million, regardless of whether the property is returned in the
future. However, in the future, there is less certainty regarding potential costs
for environmental remediation because these issues are becoming an increasing
concern in South Korea and Japan. For example, according to PACOM officials,
South Korea has established procedures for addressing environmental remediation,
and the Government of Japan is enacting more stringent environmental laws.76
For these reasons, we exclude environmental mitigation costs from our total base closure
cost estimates.
For data sources, we looked to the reports on the closure process for the overseas
closures listed above, and the BRAC data for major installation closures.77 In particular,
the overseas closure reports provided cost estimates due to local national employee
litigations, as well as residual value negotiated settlements. Some of the U.S. costs we
use may be different from those that would actually occur during an overseas closure.
The data available to inform these estimates were sparse, so we looked to the best available
sources. We intend these calculations as illustrative of the kinds of costs that could
accompany an overseas base closure.
We developed per-base cost estimates from each example and then averaged these
costs across the examples (dismissing the highest and lowest values in each set). The
result was an average per-base cost for each category. The list below shows the cost factors
we developed for base closures:
support contract termination: $0–10.9 million
mothball/shutdown: $312,000 (average)
one-time unique costs: $0–10.5 million
litigation and local employee settlements: $19.2 million
total: $312,000–40.9 million.
We used these per-base costs as inputs to our total cost calculations.
New Construction
For each unit realigned to the United States, or within a region, there is a potential
need for new construction to provide barracks; training operations morale, welfare,
and recreation; and more. However, recent and planned force reductions will free up
some facilities for use by units being realigned to the United States. For example, the
Army is planning to draw down the force by 80,000 troops, and our posture options
contemplate only a fraction of that number of soldiers being realigned to the United
States. Thus, one could argue that in many cases excess capacity will be freed up to
accommodate these moves or the units could inactivate in place. We estimate the
potential construction costs necessary to accommodate all realigning forces and consider
these an upper bound to the expense DoD might incur to perform these realignments.
As a lower bound, we assume the Army can absorb all realigning forces at
existing U.S. bases with existing infrastructure, thus eliminating one-time MILCON
expenditures for force realignments. While the Marine Corps is downsizing as well,
it reports that it would not have slack capacity to absorb realigned units because it is
already short of capacity to support the 2012 level of 202,000 personnel. During the
buildup, temporary facilities were employed, and MILCON was not programmed for
expansion of facilities.78 We assume that the Air Force and Navy would also have to
expand their U.S. facilities if forces were realigned to the United States. If these two
services, especially the Air Force, did have some slack capacity at appropriate U.S.
installations, it would reduce the amount needed for new MILCON below the level of
the overall upper bound estimates shown for the illustrative postures in Chapter Ten.
To derive construction cost estimates, we again looked to the RPAD for data
on total PRV of military installations. Instead of seeking specific MILCON data on
unit moves and construction projects to find analogs to each of our unit moves (which
number up to several dozen), we used a similar approach to the one we developed for estimating annual MILCON recapitalization requirements described earlier in this
chapter.
We took the same inputs we used for the MILCON recapitalization variable cost
estimates developed earlier (Table 8.3), and used the PRVs instead of translating them
to an annual recapitalization expense. In other words, we calculated the total PRV,
by service, but did not divide by the 67-year recapitalization figure. Then we used the
regression results to determine the fixed level of PRV per U.S. base and the variable
level of PRV person for U.S. bases by service. Thus, we arrived at an estimate of the
total variable one-time cost per person to construct new facilities to accommodate
units and personnel arriving at new locations. These estimates ignore constraints or
costs on things like training ranges and airspace:
Air Force: $180,000
Army: $159,000
Navy: $134,000
Marine Corps: $191,000.
As one can see from these figures, the one-time MILCON expense to accommodate
a single person realigning to a U.S. location ranges from $134,000 to $191,000
per person across the services. These figures comport well with a 2004 Congressional
Budget Office study of overseas Army posture changes.79 That report included
MILCON estimates for unit training facilities (e.g., headquarters, operations); morale,
welfare, and recreation; barracks; and DoD schools. If one aggregates the Congressional
Budget Office study’s costs and inflates them to today’s dollars, the cost is roughly
$135,000 per person.
The Marine Corps also provided us with data to estimate MILCON costs for
realignment of personnel, derived from its recent analysis of construction costs to
accommodate the relocation of forces from Japan to Guam. For reasons we explain
in Appendix A, we believe the estimates derived from this assessment, while based on
detailed facilities analysis and accurate for estimating the MILCON needs in Guam
and somewhat similar circumstances, would overstate the investment costs for a relocation
to a large U.S. base rather than Guam. We therefore use our PRV-calculated estimate
as the baseline value for illustrative posture estimates. Nevertheless, in Chapter
Ten, we show the cost implications of using the Marine Corps’ per-person cost factor
instead of ours, as well as explore some of the cost differences involved with relocating
Marine Corps forces to Guam and Hawaii as opposed to CONUS.
Example Investment Cost Calculations
Now we apply these cost factors to two illustrative example base closures and realignments.
Table 8.21 shows the upper bound of the cost estimate for the investment necessary
to implement the closures of Misawa Air Base in Japan and Ansbach/Illesheim,
Germany, along with the full realignment of all their personnel and unit equipment to
the United States.
Table 8.21 Example Investment Cost Calculations
In Table 8.21, for each example overseas base, we show the inputs at the top,
including personnel and equipment measurement tons. For the equipment shipping
calculations, we use standard TRANSCOM sealift rates from Japan and Germany
to the United States.80 In the second section, we show the movement cost elements
and totals. In the third section, we show the base closure cost. Finally, we show the
MILCON cost for new facilities in the United States, followed by the total implementation
cost.
One can see that MILCON costs, which depend upon whether there would be
sufficient available capacity in CONUS, dominate the total, driving about 90 percent
of the total investment cost. This percentage, for these two examples, is consistent with
the range of calculations we perform for our aggregate cost assessments.
These investment costs should be considered rough estimates, for several reasons.
First, there is quite a bit of uncertainty surrounding the per-person MILCON
cost estimates (details can be seen in Appendix A). Since MILCON drives the overall
investment cost estimates, then, the estimates provided in Chapter Ten should be
treated as rough guides for the costs DoD might incur. Second, because the needs
are very site-specific and can vary greatly, we excluded environmental cleanup from
our total estimates. For similar reasons, we did not consider potential gains from the
residual value of installations returned to the host nation. GAO reported that, between
1989 and 2007, the U.S. government received approximately $592 million in residual
value and payment-in-kind compensation from property returns in EUCOM’s AOR.81
Given these considerations, more detailed analysis would be needed to develop budgetquality
investment cost estimates for overseas posture changes.
Implications for Posture
This chapter assessed the relative costs of maintaining and modifying overseas posture
by utilizing methodologies that estimate the recurring costs of overseas bases and stationed
forces, the costs of rotational presence, and one-time investment requirements
to shift from one posture to another. Beyond creating a useful tool for estimating the
financial effects of posture changes, though, the modeling effort also produced some
general conclusions that can be useful for thinking about how posture affects costs.
Our modeling results support our hypothesis that there are fixed and variable
costs to operating installations and stationing forces. Given fixed costs, to the extent
there are unit inactivations or realignments that can be accomplished by moving forces
to existing bases (even if some MILCON is necessary), consolidation produces savings.
This would apply whether in the United States or overseas, although it may be much
less feasible to consolidate further overseas, given already smaller bases without excess
land capacity and difficulties gaining new, larger bases to replace multiple smaller ones
or gaining expansions with host nations (an exception might be if the United States
were establishing bases in new regions and host nations). Beyond this, we did not find
systematically higher fixed costs for overseas bases. The exception to this was the Air
Force, which we found to have higher fixed costs for overseas bases than for U.S. bases.
Additionally, there are incremental variable recurring costs for stationing personnel
overseas in Europe and the Pacific region due to higher allowances related to the
cost of living and higher PCS move costs. However, there is wide variation among
these incremental costs, such that the cost outcomes of posture changes depend greatly on the service and region under consideration. The incremental differences in other
regions, were posture to shift, might be different.
Combining the variable cost findings of higher variable costs overseas with the
finding that there are fixed costs per base means that consolidating forces at fewer bases
would provide more savings when relocating forces from overseas to the United States
(i.e., closing overseas bases and moving their forces to U.S. bases) than simply consolidating
among bases within overseas regions. The fixed costs would be saved whether
consolidating only in the United States or only in an overseas region, but closing an
overseas base and relocating to the United States also saves on per-person (i.e., variable)
costs due to the higher overseas personnel-related costs (e.g., allowances, PCS costs).
However, the United States cannot repurpose overseas bases as it could in the United
States, which could produce non-DoD economic benefit. We did not examine the
typical benefits gained by the broader economy as the result of U.S. closures.
Finally, the costs of rotational presence present a complex picture. Generally, we
found that the savings produced by merely realigning forces while keeping installations
open is not sufficient to offset the cost of providing full presence through rotational
deployments. In most cases, realignments of permanent forces can underwrite only
partial rotational presence in the same location. If an installation is closed, however,
this will generally offset the costs of full rotational presence, with some net savings.
But the net savings depend greatly on the service, unit type, and location. For ground