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Appendix B
The Construction Buciget
Prep oration Process at the
Naval Facilities Engineering Command
Prepared by Donald Iselin*
The Navy, like most federal agencies, has total
facilities requirements that dramatically exceed the
amount of funding that is likely to be available in
any given year, and specifically in the budget year.
Thus, some system of prioritizing and screening is
needed. The Navy has a standing instruction that
requires each of its field units to identify on a
continuing basis all of its current and foreseen fa-
cility needs by developing a Basic Facilities Re-
quirements List (BFRL) to support the mission,
task, and functions that have been assigned to that
base by its next senior command. The Navy issues
nobles and guidance for the preparation of the BF1lL,
to achieve some degree of realism across its many
BFEL submittals. Each BFRL must be reviewed,
modified if necessary, and approved by a very sen-
ior command. This process provides a certain
amount of leavening to all Me lists. Each facility
on the list will show the square footage required,
construction class, and a quick parametric or pre-
programming cost estimate.
After determining the basic facilities require-
ments, each naval base commander then evaluates
rather rigorously all his existing facilities to see
how well they are being used or can be used to
satisfy the basic facilities on He list that has been
approved for his base. From that review, a list of
deficiencies is produced, and then, through some
*Donald Iselin, Rear Admiral, Civil Engineer Cotps, USN
retired, was Commander of the Naval Facilities Engi-
neering Command from 1977 to 1981.
29
form of master planning effort, a series of discreet
projects is generated, prioritized at the base, and
arranged into program years (up to 5 years), or
shown as "unprogrammed" if the local priority is
not high enough to fit the project within the total
dollar availability for facilities in any of the ensu-
ing 5 years.
The dollar amount of projects that are permitted
to be carried in each of the 5 program years results
from negotiations up the chain, and the amount
itself is frequently 50 percent to 100 percent more
than can be realistically expected in the final budget
results. However, that procedure enables senior
reviewers to balance area-wide and Navy-wide pri-
onties in putting both the budget year and the 5-
year defense program together.
As one might expect, all of the foregoing actions
occur in a continuum, rather than as one-time or
annual events. BFRLs are updated at 3-5 year
intervals or whenever a major change in the base's
mission takes place. The base Master Plan, which
looks ahead as far as 20 years, provides basic char-
acteristics of all He discreet facilities that exist or
should be planned and eventually programmed. The
Master Plan is updated perhaps every five years or
whenever major changes in mission are projected.
But it is the updated Master Plan that usually gives
credibility to the programming for the new proj-
ects.
Most of the preceding activities take place with-
out too much argument or challenge, because they
are basically preliminary, are related to a single
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30
base, and do not really have much direct impact on
the one key issue—the "budget year" projects that
will go to Congress.
As for the "budget year" process, a rather thor-
ough screening of all the projects permitted to be
"programmed" for that year is: done at the agency
top management level. (Recall that in total they
were 150-200 percent of the anticipated facility
budget request). The timing of this initial budget
year review is ideally about 15 months before the
President submits his budget to Congress. The
review results in a specific list of projects (perhaps
110 percent of real expectation) authorized to have
preliminary engineering and design done and hard
budget estimates prepared. This is the "35 percent
design" effort. This is the first expenditure of a
significant amount of money on each project, and
may be the fast time that the user and the designer
come to a meeting of Me minds as to just what is
being designed. This key step has a success ratio
that goes from 0 to 100, depending on the user, the
designer, and the agency's sophistication in pro-
moting a true meeting of the minds that is still
consistent with the programmed intent of the proj-
ect. If the user overreaches to get more than the
basic documents justified and descnbed, he may
lose the whole project because the engineered esti-
mate could well be dramatically higher than the
"programmed amount," and there isn't time to re-
cycle the preliminary design. Result: the project
goes on the shelf for at least a year.
Those projects whose preliminary engineering
and related estimates are in the programming ball-
park will stand at least two more rounds of scru-
tiny. One review results from competition with
late-breaking requirements, such as a new overseas
base or special facilities to support a research and
development breakthrough. At this stage, very in-
fonned decisions are made at the top management
level of the agency, after considerable input from
APPE~D]X B
knowledgeable in-house proponents, usually in
Washington. A second challenge may occur when
the Office of Management and Budget (OMB)
convinces He President that gross cuts or deferrals
should be Marie at He appropriation level. Here the
time Dame is frequently from several days to a
week maximum. Again, just about He same play-
ers engage as In the-p~ng round, but a cut must
be taken quay, projects must be selected out, and
usually there is only limited guidance other than
gross dollar amounts. (In the military, there is a
Secretary of Defense review intertwined before and
among the two reviews just discussed).
The impact of the "estimate" can be seen from
the foregoing. If the "program estimate" Is unreal-
istically low, the project stands a good chance of
dropping out just before it comes to bat, because
the late-breaking realistic cost estimate is a shock
to the system. If the estimate based on preliminary
design (30-35 percent) is high, the project could
drop in review because of a decrease in cost effec-
tiveness. If it is intentionally and inaccurately low,
the project may have to be bob-tailed during execu-
tion, or the agency will have to use some of its
limited goodwill to gain special congressional ap-
proval to spend funds beyond those authorized.
Regardless of the specific agency procedures in-
volved, and the temptation toward gamesmanship,
experience shows that Hose projects with realistic
programmed amounts and accurate (within 5-10
percent) engineered or budget estimates will fare
the best in the long run, consistent with their priori-
ties.
Obviously, over factors are important in prepar-
ing individual projects and in preparing the agency's
budget request for facilities, such as carrying out
the remainder of the final design for each project,
and effectively and satisfactorily constructing the
project once it is authorized and funds are appropri-
ated.
Representative terms from entire chapter:
facilities requirements
