DEFENSE BASE REALIGNMENT AND CLOSURE
BUDGET DATA FOR THE CONSTRUCTION OF
A MULTIPLE PURPOSE FACILITY AT
FORT McCOY, WISCONSIN
Report No. 96-119
May 14, 1996
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Department Of Defense
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Acronyms
BRAC
MILCON
Base Realignment and Closure
Military Construction
INSPECTOR GENERAL
DEPARTMENT OF DEFENSE
400 ARMY NAVY DRIVE
ARLINGTON, VIRGINIA 22202-2884
May 14, 1996
MEMORANDUM FOR UNDER SECRETARY OF DEFENSE (COMPTROLLER)
ASSISTANT SECRETARY OF THE NAVY (FINANCIAL
MANAGEMENT AND COMPTROLLER)
SUBJECT: Audit Report on Defense Base Realignment and Closure Budget Data for
the Construction of a Multiple Purpose Facility at Fort McCoy, Wisconsin
(Report No. 96-119)
We are providing this audit report for review and comment. This report is one
in a series of reports about FY 1997 Defense base realignment and closure military
construction costs. It discusses a project that was added to the FY 1996 budget too late
to be included in previous audit coverage. Comments from the Under Secretary of
Defense (Comptroller) on a draft of this report were considered in preparing the final
report.
DoD Directive 7650.3 requires that all recommendations and potential monetary
benefits be resolved promptly. No written comments were received from the Navy;
therefore, the Navy is requested to provide comments on this final report that conform
to the requirements of DoD Directive 7650.3. We request that the Navy provide the
comments by June 14, 1996.
We appreciate the courtesies extended to the audit staff. Questions on the audit
should be directed to Mr. Terry L- McKinney, Audit Program Director, at
(703) 604-9288 (DSN 664-9288) or Mr. Bruce A. Burton, Audit Project Manager, at
(703) 604-9282 (DSN 664-9282). See Appendix G for the report distribution. The
audit team members are listed inside the back cover.
David K. Steensma
Deputy Assistant Inspector General
For Auditing
Office of the Inspector General, DoD
Report No. 96-119 May 14,1996
(Project No. 6CG-5001.21)
Defense Base Realignment and Closure Budget Data for the
Construction of a Multiple Purpose Facility
at Fort McCoy, Wisconsin
Executive Summary
Introduction. This report is one in a series of reports about FY 1997 Defense base
realignment and closure military construction costs. It discusses a project that was
added to the FY 1996 budget too late to be included in previous audit coverage. Public
Law 102-190, "National Defense Authorization Act for Fiscal Years 1992 and 1993,"
December 5, 1991, directs the Secretary of Defense to ensure that the amount of the
authorization that DoD requested for each military construction project associated with
Defense base realignment and closure does not exceed the original estimated cost
provided to the Commission on Defense Base Closure and Realignment (the
Commission). If the requested budget amounts exceed the original project cost
estimates provided to the Commission, the Secretary of Defense is required to explain
to Congress the reasons for the differences. The Office of the Inspector General, DoD,
is required to review each Defense base realignment and closure military construction
project for which a significant difference exists from the original cost estimate and to
provide the results of the review to the congressional Defense committees. Our audits
include all projects valued at more than $1 million.
Audit Objectives. The overall audit objective was to determine the accuracy of
Defense base realignment and closure military construction budget data. This report
provides the results of the audit for the construction of a multiple purpose facility,
valued at $3.5 million, for the closure of Naval Air Station Glenview, Illinois, and
realignment of the 25th Reserve Naval Mobile Construction Battalion to Fort McCoy,
Wisconsin.
Audit Results. The Navy did not accurately estimate the Defense base realignment
and closure military construction requirements and costs for the construction of the
multiple purpose facility at Fort McCoy. As a result, the project overstated
requirements and costs by $1.5 million.
See Part I for a discussion of the finding. See Appendix D for a summary of invalid
and partially valid requirements for the project we reviewed.
S ummar y of Recommendations. We recommend that the Under Secretary of Defense
(Comptroller) place funds on administrative withhold for the multiple purpose facility
until a revised DD Form 1391, "FY 1996 Military Construction Project Data," is
submitted reflecting valid requirements and costs. In addition, we recommend that the
Navy revise and resubmit the DD Form 1391 to reduce the cost of the project by
$1.5 million to reflect accurate requirements and costs.
Management Comments. We issued a draft of this report to management on
March 25, 1996. No written comments were received from the Navy. We request that
the Commander, Third Naval Construction Brigade, provide comments to the final
report by June 14, 1996. The Under Secretary of Defense (Comptroller) generally
agreed with the recommendations and placed the project on administrative withhold
pending resolution. A summary of management comments is in Part I, and the
complete text of management comments is in Part III of the report.
11
Table of Contents
Executive Summary i
Part I - Audit Results
Audit Background 2
Audit Objectives 2
Reserve Naval Mobile Construction Battalion Facilities 3
Part II - Additional Information
Appendix A. Scope and Methodology 8
Appendix B. Summary of Prior Audits and Other Reviews 9
Appendix C. Background of Defense Base Realignment and Closure
and Scope of the Audit of FY 1997 Defense Base
Realignment and Closure Military Construction Costs 10
Appendix D. Projects Identified as Invalid or Partially Valid 12
Appendix E. Recommended Space Occupancy 13
Appendix F. Organizations Visited or Contacted 14
Appendix G. Report Distribution 15
Part III - Management Comments
Office of the Under Secretary of Defense (Comptroller) Comments 18
Part I - Audit Results
1
Audit Results
Audit Background
The Office of the Inspector General, DoD, is performing various audits of the
Defense base realignment and closure (BRAG) process. This report is one in a
series of reports about FY 1997 BRAG militapry construction (MILGON) costs.
It discusses a project that was added to the FY 1996 budget too late to be
included in previous audit coverage. For additional information on the BRAG
process and the overall scope of the audit of BRAG MILGON costs, see
Appendix G. See Appendix D for a summary of invalid and partially valid
requirements for the project we reviewed.
Audit Objectives
The overall audit objective was to determine the accuracy of BRAG MILGON
budget data. The specific objectives were to determine whether the proposed
projects were valid BRAG requirements, whether the decision for MILGON was
supported with required documentation including an economic analysis, and
whether the economic analysis considered existing facilities. Another audit
objective was to assess the adequacy of the management control program as it
applied to the overall audit objective.
This report provides the results of the audit of project P-701T, "Equipment
Maintenance Facility," valued at $3.5 million, resulting from the closure of
Naval Air Station Glenview, Illinois, and realignment to Fort McGoy,
Wisconsin. See Appendix A for a discussion of the scope and methodology and
Appendix B for a summary of prior coverage related to the audit objectives.
The management control program objective will be discussed in a summary
report on FY 1997 BRAG MILGON budget data.
2
Reserve Naval Mobile Construction
Battalion Facilities
The Navy did not accurately estimate the BRAC MILCON requirements
and costs of project P-701T. The inaccurate estimates occurred because
the Navy:
o did not consider more cost-effective designs that the Army
already used at Fort McCoy for similar facilities,
0 overstated the requirement and unit cost for administrative
space, and
o did not adjust costs for relocation of the building site to an area
that required fewer supporting facilities.
As a result, the project, valued at $3.5 million, was overstated by
approximately $1.5 million.
BRAC Decision
The 1993 Commission on Defense Base Closure and Realignment recommended
that the Navy close Naval Air Station Glenview, Illinois. As a result, the 25th
Reserve Naval Mobile Construction Battalion relocated to Fort McCoy,
Wisconsin. The Navy authorized $3.5 million of BRAC MILCON funds to
construct a building for the battalion at Fort McCoy.
The Navy did not accurately estimate the requirements and costs for
project P-701T, "Equipment Maintenance Facility," on the DD Form 1391,
"FY 1996 Military Construction Project Data," to construct a building
consisting of administrative, instructional, operational storage, and vehicle
maintenance spaces. The project also include supporting facilities costs for
utilities, fencing, and site improvements.
Similar Facilities
The Navy did not consider placing the battalion into several Army-designed
facilities at Fort McCoy, even though the Reserve Naval Mobile Construction
Battalion was located in several buildings at Naval Air Station Glenview. The
Navy proposed meeting the requirement for the entire battalion by constructing
one 20,685-square-foot facility. Included in the facility was 5,500 square feet
3
Reserve Naval Mobile Construction Battalion Facilities
of operational storage space and 5,000 square feet of vehicle maintenance space.
The estimated costs for those portions of the facility were $444,432 and
$652,600, respectively. The total cost for those two portions was estimated to
be $1,097,032.
The Army recently constructed two facilities, for $220,000 each, at Fort
McCoy that were similar in size (6,000 square feet) and use to those the Navy
requires for the vehicle maintenance and operational storage requirement. If the
Navy used that design for both requirements. Base Closure Account funds of
$657,032 ($1,097,032 minus $440,000) could have been put to better use.
Furthermore, the Navy could optimize the excess space in the Army-designed
buildings by placing the "A" company headquarters and operations area in the
vehicle maintenance facility because "A" company operates that facility. The
Navy had expressed interest in using those buildings for the same purposes upon
its arrival at Fort McCoy, but did not consider the option during construction
design.
Administrative Space
The Navy overstated the requirement and unit cost for administrative space by
$123,267 for its battalion headquarters component. In addition, the Navy
overstated the unit cost for administrative space for its "A" and "B" companies
headquarters components.
Battalion Headquarters Space. The Navy originally proposed that the
battalion headquarters occupy 6,240 square feet at a unit cost of $122.75 per
square foot, for a total cost of $765,960. Naval Facilities Engineering
Command Publication P-80, "Facility Planning Criteria for Navy and Marine
Corps Shore Installations," provides facility planning criteria for use in
computing quantitative facility requirements for Navy and Marine Coips
installations. The publication states that the maximum requirement for battalion
headquarters of a Reserve Naval Mobile Construction Battalion is 5,700 square
feet. In addition, the unit cost for administrative space in the Fort McCoy area
is $113.14 per square foot. Applying that unit cost to 5,700 square feet, the
cost would be $644,898. Therefore, the Navy overstated administrative space
by 540 square feet (6,240 square feet minus 5,700 square feet) and a toti of
$121,062 ($765,960 minus $644,898).
"A” and "B" Companies Space. The Navy proposed to occupy 1,760 square
feet at a unit cost of $122.75 per square foot for the "A" and "B" companies
headquarters at a total cost of $216,040. However, the Navy requires an
additional 130 square feet for the "A" company headquarters, which results in
1,890 square feet for both companies. Applying the most current unit cost of
$113.14 per square foot to 1,890 square feet tot^s $213,835. Therefore, the
Navy understated administrative space by 130 square feet (1,760 square feet
plus 130 square feet) but overstated the cost of the "A" and "B" companies
administrative space % $2,205 ($216,040 minus $213,835).
4
Reserve Naval Mobile Construction Battalion Facilities
Reconunended Space Occupancy. We recommend construction of three
separate facilities instead of construction of one multiple purpose facility to
accomplish the requirement for project P-701T. See Appendix E for
recommended space occupancy.
Supporting Facilities
The Navy did not adjust costs for relocation of the building site to an area that
would require fewer supporting facilities. The original site for which the costs
were estimated for die DD Form 1391 was in a more remote part of Fort
McCoy, which required larger amounts of supporting facilities costs. However,
when the site was relocated to the main portion of Fort McCoy, the cost for
supporting facilities decreased from $802,000 to $220,000, a difference of
$582,000.
Summary
The Navy overstated the cost of project P-701T by approximately $1.5 million
because it did not consider using an Army-designed maintenance and storage
facility, overstated the requirement and unit cost of administrative space, and
did not adjust costs for relocation of the building site to an area that would
require fewer supporting facilities.
The table below shows original cost estimates and overstated amounts.
Summary of Original Costs and Overstated Amounts for Project P-701T
Description
Original
Costs
Overstated
Amounts
Operational storage
$ 444,432
$ 224,432
Vehicle maintenance
652,600
432,600
Administrative
Battalion Headquarters
765,960
121,062
Company Headquarters
216,040
2,205
Instructional
298,449
0
Supporting facilities
802,000
582,000
Contingency (5 percent)
159,000
68,141
Supervision, inspection and
overhead (6 percent)
200.000
85.518
Total
$3,538,481
$1,515,958
5
Reserve Naval Mobile Construction Battalion Facilities
Recommendations and Management Comments
1. We recommend that the Under Secretary of Defense (Comptroller) place
funds for project P-701T, "Equipment Maintenance Facility," on
a dminis trative vrithhold until the Navy submits a revised DD Form 1391,
"FY1996 Military Construction Project Data," to accurately reflect
requirements and costs.
Management Comments. The Under Secretary of Defense (Comptroller)
concurred with the recommendation, stating that the project was placed on
administrative withhold pending resolution. In addition, any savings resulting
from the audit would be reprogrammed to other BRAC requirements.
2. We recommend that the Commander, Third Naval Construction
Brigade,
a. Submit a revised DDForm 1391, "Equipment Maintenance
Facility," that reflects valid BRAC requirements and that accurately
reflects the revised design of the project, including revised square feet and
unit cost, and the reduced supporting facilities cost and
b. Reduce budget estimates by $1,515,958.
Management Comments. The Commander, Third Naval Construction
Brigade, did not respond to the draft of this report. We request that the
Commander, Third Naval Construction Brigade, provide comments on the final
report.
6
Part II - Additional Information
1
Appendix A. Scope and Methodology
Scope of This Audit. We examined the FY 1996 BRAC MILCON budget
request, economic analysis, and supporting documentation for space
requirements for one realignment project regarding the transfer of the
25th Reserve Naval Mobile Construction Battalion from Naval Air Station
Glenview, Illinois, to Fort McCoy, Wisconsin. Project P-701T, "Equipment
Maintenance Facility," is estimated to cost $3.5 million.
Audit Period, Standards, and Locations. This economy and efficiency audit
was made from January through February 1996 in accordance with auditing
standards issued by the Comptroller General of the United States as
implemented by the Inspector General, DoD. The audit did not rely on
computer-processed data or statistical sampling procedures. Appendix F lists
the organizations visited or contacted during the audit.
8
Appendix B. Summary of Prior Audits and
Other Reviews
Since 1991, numerous audit reports have addressed DoD BRAC issues. This appendix
lists the summary reports for the audits of BRAC budget data for FYs 1992
through 1996 and BRAC audit reports published since the summary reports.
Inspector General, DoD
Report No.
96-112
96-108
96-104
96-101
96-093
94-040
93-100
Report Title
Date
Defense Base Realignment and Closure
Budget Data for the Closure of Naval Air
Station Cecil Field, Florida, and
Realignment of the Aviation Physiology
Training Unit to Naval Air Station
Jacksonville, Florida
Defense Base Realignment and Closure
Budget Data for the Naval Shipyard
Philadelphia, Pennsylvania
Defense Base Realignment and Closure
Budget Data for the Construction of the
Overwater Antenna Test Range Facility at
Newport, Rhode Island
Defense Base Realignment and Closure
Budget Data for the Closure of Naval Air
Station Barbers Point, Hawaii, and
Realignment of P-3 Aircraft Squadrons to
Naval Air Station Whidbey Island,
Washington
Draft of Summary Report on the Audit of
Defense Base Realignment and Closure
Budget Data for FYs 1995 and 1996
Summary Report on the Audit of Defense
Base Closure and Realignment Budget
Data for FYs 1993 and 1994
Summary Report on the Audit of Defense
Base Closure and Realignment Budget
Data for Fiscal Years 1992 and 1993
May 7, 1996
May 6, 1996
April 26, 1996
April 26, 1996
April 3, 1996
February 14, 1994
May 25, 1993
9
Appendix C. Background of Defense Base
Realignment and Closure and Scope of the Audit
of FY 1997 Defense Base Realignment and
Closure Military Construction Costs
Cominission on Defense Base Closure and Realignment. On May 3, 1988,
the Secretary of Defense chartered the Commission on Defense Base Closure
and Realignment (the Commission) to recommend military installations for
realignment and closure. Congress passed Public Law 100-526, "Defense
Authorization Amendments and Base Closure and Realignment Act,"
October 24, 1988, which enacted the Commission's recommendations. The law
also established the Defense Base Closure Account to fund any necessary facility
renovation or MILCON projects associated with BRAC. Public Law 101-510,
"Defense Base Closure and Realignment Act of 1990," November 5, 1990,
reestablished the Commission. The law also chartered the Commission to meet
during calendar years 1991, 1993, and 1995 to verify that the process for
realigning and closing milit^ installations was timely and independent. In
addition, the law stipulates that realignment and closure actions must be
completed within 6 years after the President transmits the recommendations to
Congress.
Required Defense Reviews of BRAC Estimates. Public Law 102-190,
"National Defense Authorization Act for Fiscal Years 1992 and 1993,"
December 5, 1991, states that the Secretary of Defense shall ensure that the
authorization amount that DoD requested for each MILCON project associated
with BRAC actions does not exceed the original estimated cost provided to the
Commission. Public Law 102-190 also states that the Inspector General, DoD,
must evaluate significant increases in BRAC MILCON project costs over the
estimated costs provided to the Commission and send a report to the
congressional Defense committees.
Military Department BRAC Cost-Estimating Process. To develop cost
estimates for the Commission, the Military Departments used the Cost of Base
Realignment Actions computer model. The Cost of Base Realignment Actions
computer model uses standard cost factors to convert the suggested BRAC
options into dollar values to provide a way to compare the different options.
After the President and Congress approve the BRAC actions, DoD realigning
activity officials prepare a DDForm 1391, "FY 1997 Military Construction
Project Data," for each individual MILCON project required to accomplish the
realigning actions. The Cost of Base Realignment Actions computer model
provides cost estimates as a realignment and closure package for a particular
realigning or closing base. The DD Form 1391 provides specific cost estimates
for an individual B^C MILCON project.
Limitations and Expansion to Overall Audit Scope. Because the Cost of
Base ResJignment Actions computer model develops cost estimates as a BRAC
package and not for individual BRAC MILCON projects, we were unable to
determine the amount of cost increases for each individual BRAC MILCON
10
Appendix C. Background of Defense Base Realignment and Closure and Scope of
the Audit of FY1997 Defense Base Realignment and Closure Military
Construction Costs
project. Additionally, because of prior audit efforts that determined potential
problems with all BRAC MILCON projects, our audit objectives included all
large BRAC MILCON projects.
Overall Audit Selection Process. We reviewed the FY 1997 BRAC MILCON
$820.8 million budget submitted by the Military Departments and the Defense
Logistics Agency. We excluded projects that were previously reviewed by DoD
audit organizations. We grouped the remaining BRAC MILCON projects by
location and selected groups of projects that totted at least $1 million for each
group. We also reviewed those FY 1996 BRAC MILCON projects that were
not included in the previous FY 1996 budget submission, but were added as part
of the FY 1997 BRAC MILCON budget package.
11
Appendix D. Projects Identified as Invalid or
Partially Valid
Table D-1. Causes of Invalid or Partially Valid Projects
Project
Project Location Number
Causes of
Invalid Projects
Overstated Unsupported
Causes of
Partially Valid Projects
Overstated Unsupported
Fort McCoy P-701T
X
Table D-2. Recommended Changes in Project Estimates
Amount of
Recommended Amount of Change
Estimate on
Invalid
Partially Valid
Project
DD Form 1391
Projects
Projects
Project Location
Number
fthousands)
('thousands')
('thousands')
Fort McCoy
P-701T
$3,500
$1,500
Total
$3,500
$1,500
Total Invalid and Partially Valid Projects
$1,500
12
Appendix E. Recommended Space Occupancy
The original Navy proposal was to have one 20,685-square-foot multiple
purpose facility, encompassing administrative, instructional, hazardous storage,
vehicle maintenance, and operational storage space.
We recommend construction of three separate facilities as an alternative for
project P-701T. Two facilities would be based on the Army-designed facility,
and the third facility would be an administrative facility.
Facility Size of Facility
Designation
Proposed Use of Space
("square feef)
Facility 1
Operational Storage
Hazardous Storage
5,500
225
5,725*
Facility 2
Vehicle Maintenance
"A" Company Headquarters
5,000
630
5,630
Facility 3
Battalion Headquarters
"B" Company Headquarters
Instructional Area
5,700
1,260
1,960
8,920
Total Area
20,275
*Using the Army design. Facilities 1 and 2 are 6,000 square feet each, for a
total of 12,000 square feet. As a result, if the design is used, the Navy will
have an extra 645 square feet (5,725 plus 5,630 equ^s 11,355 subtracted from
12 , 000 ).
13
Appendix F. Organizations Visited or Contacted
Department of the Army
Fort McCoy, Sparta, WI
Department of the Navy
Third Naval Construction Brigade, Pearl Harbor, HI
25th Reserve Naval Mobile Construction Batt^ion, Fort McCoy, WI
Naval Air Station, Glenview, IL
Naval Facilities Engineering Command, Alexandria, VA
Southern Division, Charleston, SC
14
Appendix G. Report Distribution
Office of the Secretary of Defense
Under Secreta^ of Defense (Comptroller)
Deputy Chief Financial Officer
Deputy Comptroller ^rogram/Budget)
Assistant Secretary of Defense (Economic Security)
Deputy Assistant Secretary of Defense (Installations)
Assistant to the Secret^ of Defense (Public Affairs)
Director, Defense Logistics Studies Information Exchange
Department of the Army
Commander, Fort McCoy
Auditor General, Department of the Army
Department of the Navy
Assistant Secreta^ of the Navy (Financial Management and Comptroller)
Commander, Third Naval Construction Brigade
Commander, Naval Facilities Engineering Command
Auditor General, Department of the Navy
Department of the Air Force
Assistant Secretary of the Air Force (Financial Management and Comptroller)
Auditor General, Department of the Air Force
Other Defense Organizations
Director, Defense Contract Audit Agency
Director, Defense Logistics Agency
Director, National Security Agency
Inspector General, National Security Agency
Inspector General, Defense Intelligence Agency
Non-Defense Federal Organizations and Individuals
Office of Management and Budget
Technical Information Center, National Security and International Affairs Division,
General Accounting Office
15
Appendix G. Report Distribution
Non-Defense Federal Organizations and Individuals (cont'd)
Chairman and ranking minority member of each of the following congressional
committees and subcommittees:
Senate Committee on Appropriations
Senate Subcommittee on Defense, Committee on Appropriations
Senate Subcommittee on Military Construction, Committee on Appropriations
Senate Committee on Armed Services
Senate Committee on Governmental Affairs
House Committee on Appropriations
House Subcommittee on Military Construction, Committee on Appropriations
House Subcommittee on Nation^ Security, Committ^ on Appropriations
House Committee on Government Reform and Oversight
House Subcommittee on National Security, International Affairs, and Criminal
Justice, Committee on Government Reform and Oversight
House Committee on National Security
Honorable Russell Feingold, U.S. Senate
Honorable Herbert Kohl, U.S. Senate
Honorable Steven Gunderson, U.S. House of Representative
16
Part ni - Management Comments
n
Office of the Under Secretary of Defense
(Comptroller) Comments
OFFICE OF THE UNDER SECRETARY OF DEFENSE
11OO DEFENSE PENTAGON
WASHINGTON, DC 20301*1100
COMPTROLLER \ 5 |996
(Program/Budget)
MEMORANDUM FOR ASSISTANT INSPECTOR GENERAL FOR AUDITING, DODIG
SUBJECT: Quick-Reaction on Defense Base Realignment and Closure Budget Data for the
Realignment of the Construction of a Multiple Purpose Facility at Fort McCoy,
Wisconsin (Project No. 6CG-5001.21)
This responds to your March 25,1996, memorandum requesting our comments on
subject report.
The audit recommends that the USD (Comptroller) place project P-701T, “Equipment
Maintenance Facility,” on administrative withhold until the Navy submits a revised DD 1391 form
that accurately reflects requirements and costs for the project.
We generally agree with the audit and reconunendations, however, since the Navy has not
officially commented on the audit and the amount of the savings has not been resolved, we will
place the project on administrative withhold pending resolution. Further, any savings resulting
from the audit will be reprogrammed to other BR AC requirements as appropriate.
B R PASEUR
DiaeCTOR FOR CONSTRUCTION
18
Audit Team Members
This report was prepared by the Contract Management Directorate, Office
of the Assistant Inspector General for Auditing, DoD,
Paul J. Granetto
Terry L. McKinney
Bruce A. Burton
John A. Seger
Ana M. Myrie
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the Construction of A Multiple Purpose Facility at Fort McCoy, Wisconsin
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400 Army Navy Drive (Room 801)
Arlington, VA 22202-2884
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