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located throughout the world. Naval installations are major components of the shore establishment and are complex enterprises. Some are comparable to cities, which perform many different functions while supporting numerous tenant organizations and often include child care and commissary facilities, family housing, hospitals, and so on.

The Office of the Chief of Naval Operations (CNO) Shore Installation Management Division (OPNAV-N46) is the CNO's lead office for Navy shore installation programs.4 Its primary responsibilities include installation operations; base operating support; quality-of-life mission support; infrastructure vision, strategic planning, plans, and policy; housing; and the Navy's Smart Base project. The Deputy Chief of Naval Operations for Logistics (N4) is leading a campaign to reduce the cost of the infrastructure through an improvement in efficiency and the consolidation of activities encompassing naval installations.5 This campaign includes initiatives such as regionalization (the consolidation of base operating support functions in regions where individual installations and facilities formerly operated more independently) and Smart Base (a collection of experiments and tests designed to reduce costs and improve the delivery of support services at naval shore installations). Although some of these initiatives are projected to result in significant savings, the committee estimates that these initiatives will most likely yield annual savings of no more than about $500 million. This shortfall is due primarily to the fact that the managers of these naval installations (i.e., base commanders and regional commanders) control only a small fraction of all the resources located within their installations. For example, in the San Diego region, with about 56,000 military and civilian Navy employees and an annual personnel cost of about $2.5 billion, the regional base commander has control of less than $500 million of Navy costs per year. The vast majority of annual costs at naval installations are controlled by other major commands that may or may not be tenants of the specific installation. These “claimants” are the Navy organizations that are responsible for expending the portions of the Navy budget apportioned to them. Examples of claimants are the Pacific Fleet (PACFLT), the Naval Sea Systems Command (NAVSEA), and the Commander, Navy Education and Training (CNET).

Partitioning of the responsibility for financial resource management is the reason that initiatives limited to base commanders, and to the supporting functions under their control, are estimated to result, at best, in limited ($500 million) annual infrastructure cost reductions. The relatively small potential cost reduc-

4Deputy Chief of Naval Operations, Logistics (N4) and the Office of the Deputy Chief of Staff for Installations and Logistics. 1997. Navy and Marine Corps Annual Logistics Review, Washington, D.C.,p.9.

5Hancock, VADM W.J., USN, Deputy Chief of Naval Operations for Logistics (N4). 1997. 21st Century Shore Support Infrastructure: Navy Infrastructure Vision and Strategic Plan, Washington, D.C., June 24.

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