(Washington, DC)  --  U.S. Rep. Steven C. LaTourette (R-Concord Township) today told four members of the Base Realignment and Closure (BRAC) Commission that the Cleveland Defense Finance and Accounting (DFAS) office should be spared from any consolidation effort.  A regional hearing was held this afternoon in Buffalo, NY. 

 LaTourette provided BRAC Commissioner Gen. Lloyd Newton with specific performance data about the Cleveland DFAS office that Newton requested last week during a site visit in Cleveland.  Internal documents called Balanced Scorecards show that the Cleveland DFAS office received all green performance ratings – the highest possible – in April and May 2005 in categories including customer satisfaction, managing costs, employee competence, employee satisfaction and budget execution.  A yellow rating means a performance goal was nearly met and red means failure.   Cleveland DFAS had no yellow or red ratings in the scorecards, LaTourette said.

 LaTourette also provided the commission with documents from May 2005 showing that more than 99 percent of Navy Active Duty Pay accounts were closed within 30 days and 100 percent of Reserve Pay accounts were closed within 30 days.  Cleveland DFAS handles all Navy Active Duty Pay and handles almost all Reserve pay.

 LaTourette also made the following arguments in a Powerpoint Slide presentation:

Last DFAS Consolidation was Botched – Proposed Consolidation will be Costly

• DoD wants to spend $282 million to close or realign about two dozen DFAS offices around the country, including the Cleveland DFAS Office, which is the granddaddy of all military payroll centers and has been around since 1942

• It will cost nearly $29 million to effectively shut down the Cleveland DFAS office with no savings for many years, and Cleveland stands to lose more jobs through the BRAC process than the entire state of New York, and more net civilian jobs than the states of Florida or California

• A decade ago, DoD decided to open 20 small DFAS offices across the country – mostly at military bases slated to close -- even though Congress, DoD and GAO said only a few offices were needed;  DoD projected $8 to $9 billion in savings over 20 years

• DoD spent at least $173 million renovating the aging buildings to get them “up to par” and staffed these new DFAS offices with 5,000 employees; DoD now plans to spend $159 million to shut them down long before real savings can accrue

• The previous botched consolidation was the subject of congressional hearings and two explosive General Accounting Office (GAO) Reports:  DoD’s Planned Finance and Accounting Structure Is Larger and More Costly Than Necessary (September 1995); and
 DoD is Opening Unneeded Finance and Accounting Offices (April 1996)

Military Payroll should be consolidated in Cleveland, not Indianapolis

• Cleveland DFAS was spared in the last consolidation effort and has been called a “nerve center” of DoD financial operations; Cleveland DFAS handles more military payroll functions than any other DFAS office in the country, and was chosen in July 2004 as the site of the new Reserve Pay Center of Excellence

• DFAS Indianapolis now handles just one of 12 major military pay functions: Army Active Duty Pay, plus some Army National Guard Pay; The 12 major military payroll functions are:  Active Duty Pay for all four branches; Reserve Pay for all four branches; and Retired Pay for all four branches

• Cleveland DFAS currently handles 8 of the 12 military payroll functions, and already does Navy Active Duty Pay, Reserve Pay for three of the four branches, and Retired Pay for all branches; Cleveland DFAS also handles all Garnishment issues, including withholding child support, and Cleveland is home to one of two national call centers to help soldiers with pay issues

DFAS in Indianapolis lacks space for an additional 3,500 employees

• DFAS Offices in Indianapolis, Denver and Columbus will be maintained in the proposed DFAS Consolidation;  DoD plans to spend $34 million to realign the Columbus office and add about 1,750 employees, and $39.5 million to realign the Denver office and add 1,500 employees

• How is it possible that DoD will spend only $2.892 million to realign the Indianapolis office and add 3,500 employees?  DFAS Indianapolis building lacks space to house an additional 3,500 employees; DoD says the current DFAS building contains 1.6 million square feet; The landlord, the GSA (General Services Administration), says DFAS is now using about 1 million square feet and has access to 99,000 additional “usable” square feet;  GSA has leased the building to the military since 1995 and is in a position to know exact square footage

• DFAS Indianapolis is housed in a 1953 building that just underwent a top-to-bottom renovation costing $123 million;  BRAC Report says that the realignment of DFAS Indianapolis, which includes adding 3,500 employees, has a one-time cost of $2.892 million; No government building can be retrofitted to add 3,500 workers for $2.892 million

• Internal BRAC documents show that DoD plans to move Human Resources Command out of Indianapolis, freeing 76,740 square feet.  Also, another usable 99,000 square feet will be available in Indianapolis, per GSA ; How can 3,500 new DFAS workers fit into about 175,000 square feet?   DoD says it will be accomplished by “over-time and/or additional shifts” and “additional capacity (space and equipment) . . .will not be required”

Proposed Consolidation Makes Little Sense and is a Shell Game

• DoD plans a massive shell game of DFAS jobs and job functions across the country; DoD should strive for accurate accounting and payroll, not a giant game of Musical Chairs

•  DFAS Indianapolis, Denver and Columbus will stay open and a Rube-Goldberg Job Shuffle will ensue

 • Up to 55% of Accounting Operation functions in Columbus will be shifted to Denver, and up to 25% of Accounting Operations in Denver will go to Columbus or Indianapolis
 • Up to 30% of Commercial Pay functions in Columbus will go to Indianapolis, and up to 10% of the Commercial Pay functions now in Indianapolis will go to Columbus
 • Indianapolis will shift up to 10% of its Accounting Operations to Columbus or Denver
 • Denver will move up to 35% of its Military Pay functions to Indianapolis

Is Proposed Consolidation a Wise Use of Taxpayer Funds?

• DoD will spend $6 million to close DFAS Dayton after $8.4 million in renovations.  The office has about 230 workers, rent is $1 a year, and no savings are expected for several years.
• DoD will spend $9.2 million to close DFAS Norfolk and will save $9,000 in FY 2006.
• DoD will spend more than $7 million to close DFAS Rock Island (IL) to save $19,000 in FY 2006
• DoD will spend more than $8 million to close DFAS Rome (NY), which just underwent $10 million in renovations.  No savings are expected in FY 2006, 2007 or 2008. 
• DoD wants to spend nearly $6.4 million to close DFAS Limestone (ME), which just completed a $6 million renovation.
• DoD wants to spend $4.6 million to close DFAS San Bernardino (CA) which was the subject of a $14 million renovation.
• DoD wants to spend $7.7 million to close DFAS Omaha after $7.5-$10 million in renovations.
• DoD wants to spend $5.9 million to close DFAS Lawton (OK ) after a $12.8 million renovation.  It has about 233 employees.

Remove Cleveland From BRAC List

• Cleveland DFAS should be removed from the BRAC list and commissioners should demand that DoD come up with a simple, streamlined, sensible and cost-effective consolidation plan

• DoD has no one to blame but itself for having too many buildings, too much vacant office space and too many workers doing the same thing

• The problem does not lie in Cleveland, OH, but rather in 20 small DFAS offices nationwide that were never needed in the first place

• Taxpayers already paid hundreds of millions of dollars for the last botched DFAS consolidation and should not be fleeced again -- This consolidation makes about as much sense as the purchase of $400 toilet seats

• The DFAS consolidation costs too much, causes unnecessary upheaval of accounting and payroll functions, and the eventual savings cannot be justified:   At most, $120.5 million a year will be saved in the post-BRAC years, or $1.3 billion over 20 years