KPMG Report on the Military Buildup

KPMG’s military buildup study details challenges, recommendations
By Gerardo R. Partido
Variety News Staff
11/21/07

KPMG, the government of Guam’s consultant on the military buildup, has released the results of its study, detailing the challenges that GovGuam faces. It also recommends courses of action for the government to take.

The comprehensive 150-page study made preliminary assessments of the military buildup impact on Guam infrastructure, the economy and social issues facing the island.

The study, which GovGuam will use in its unified approach to the U.S. Congress and military buildup authorities, was presented by KPMG with a governance strategy and public information program for GovGuam.

KPMG was chosen in May this year to assist GovGuam in preparing a strategic plan for military growth and integration.

The governance plan outlines two recommendations for the implementation of Guam’s governance principles and strategies to address the military buildup.

The first involves executive action by the governor through a Directorate for the Transition of Military Expansion and Integration Activities.

In the second recommendation, KPMG drafted legislation for the creation of a Guam Central Commission for Military Expansion and Integration Activities.

KPMG suggested that the governor’s executive action could set the foundation for the legislative approach.

After analyzing information provided by GovGuam and private industry officials, KPMG concluded that it does “not appear that the military can succeed on its own, and that the military, federal agencies, and the people and government of Guam must succeed together.”

KPMG said the cornerstone challenges are physical infrastructure, health and human services, labor, environment, economic development, and master planning.
The consultancy firm also put together nine point papers identifying challenges, and recommends courses of action to make the military expansion work for the benefit of both the military and civilian communities.

Some of the highlights of the point papers are:
• Port — The commercial port may need to double its capacity to sustain the buildup. There may be over-capacity once the buildup is over. The expansion could cost as much as $100 million. KPMG recommends enhanced budgetary support, a government debt program and private sector participation;
• Power — Some $665 million would be needed to complete several projects aimed at improving power generation, transmission, distribution system reliability, investigating fuel diversification, and renewable energy. The Department of Defense is the Guam Power Authority’s largest customer. If DOD develops its own power system, power rates for the civilian community could increase. KPMG recommends an integrated DOD/GPA approach for power generation and distribution;
• Water and wastewater — The Guam Waterworks Authority has made significant capital improvements. The anticipated influx of new residents will place a tremendous strain on water and wastewater resources. KPMG recommends GWA evaluate impacts carefully, update its Master Plan and develop funding alternatives;
• Solid waste — Both civilian and military solid waste facilities are nearing end of use life. There are several inefficiencies in solid waste collection and disposal. KPMG recommends increased private sector involvement, recycling options and assessment of funding;
• Labor — Guam’s existing labor shortage may be exacerbated by the military expansion in as little as two years. The Guam Department of Labor is addressing workforce development issues. KPMG recommends determining more specific labor demands from the buildup and how the buildup can increase sustainable employment opportunities.
• Transport and housing — Guam’s roadway system, which was built after World War II and is difficult to maintain, is undergoing a series of repairs that began in 2006. A major highway between Apra Harbor and Andersen Air Force Base is proposed. The Department of Public Works has a three-point plan to address military expansion roadways requirements. Property values are increasing because of the anticipation of the military influx. Current housing construction rates will not keep pace with demand, while finite land resources will impact development and housing inventory. KPMG recommends a comprehensive housing needs analysis, a review of regulations to eliminate barriers to affordable housing, a land use plan, a review of possible approaches to rent control, the investigation of investment opportunities, and potential funding approaches;
* IT and telecommunications - Guam is the telecommunications hub of the Pacific. However, the physical infrastructure is outdated. There will be a substantial increase in demand for information and communications systems. Guam needs a sustainable technical skills base. KPMG recommends GovGuam play a leading role in encouraging development on the island of fourth generation technologies for convergence of wireless voice, video and data services;
* Economic development - Guam is going through a prolonged expansion due to increased tourism and construction activity. Military buildup presents unprecedented opportunity for long-term development. KPMG recommends GovGuam and private sector develop an Economic Development Master Plan;
* Environment - Guam faces serious environmental challenges including groundwater contamination, negative ecological impact and scarcity of regulatory agency resources. KPMG recommends sustainable development and appropriate environmental management practices to maintain Guam’s natural environment; and
* Health and social services - Healthcare and education in Guam are divided along military and civilian lines. Civilian healthcare infrastructure should be expanded and modernized, along with the workforce capacity. The influx of construction workers and off-island investors will cause healthcare concerns. There are crowding, under-funding, infrastructure and transportation issues in the civilian education system. Guam education system at all levels needs more information from the military in order to properly plan.