Budgeting for the BRAC

San Diego’s Experiences and Expectations

by Patrick Kelly, MBA '13  Naval Base

As the national deficit continues to dominate the headlines, budget cuts seem to be inevitable for the Department of Defense (DoD), which makes up approximately 20 percent of total federal spending. Yet given the continued political wrangling, there remains a wide range of possibilities for the size, scope and timeline of such cutbacks. Among the options available, a reduction in military infrastructure will most likely be included. Accordingly, the White House has recommended forming a Base Closure and Realignment Committee (BRAC) for both 2013 and 2015 to cut excess military bases that are deemed no longer necessary. Included in those cuts could be thousands of San Diego, California jobs.

While the biotechnology and high-technology sectors have grown considerably over the past two decades, the DoD remains San Diego's single largest employer, with over 136,000 on the payroll. Despite great strides in economic diversification, the Gross Metropolitan Product (GMP) of San Diego County is still heavily dependent on both military installations and manufacturing from defense contractors that together contribute $35 billion locally, according to the San Diego Military Advisory Council (SDMAC). This reliance makes the county particularly sensitive to changes in the DoD budget.

San Diego's Military Synergy

With the largest port in the Navy's inventory and the most populated of all Marine Corps bases, San Diego is home to one of the highest concentrations of military personnel in the world. The 3.5 percent of San Diego residents currently on active duty starkly contrasts with the 0.5 percent of all Americans serving the same role.

The deep-water port, easily accessed training ranges and ideal weather for aviation training made San Diego a natural choice for the Department of the Navy, which first set up shop in the early 1900s. Over the years, San Diego became host to the top Navy and Marine Corps leadership on the West Coast, as well as the preponderance of maritime forces that support the U.S. Pacific Command.

Defense contractors who had direct access to the end user brought an economic engine to the region that became stronger as more retirees stayed in the area to work for these defense firms. Growth remained stable until the late 1980s, but San Diego — once considered a recession-proof economy — felt the effects of budget cuts as the Cold War began winding down. By the time General Dynamics dismantled Missile Park in Kearny Mesa in 1995, taking 17,000 jobs with it, the armed services had endured a 30 percent reduction in force over a seven-year period.

Nevertheless, San Diego emerged from the declining defense budgets and multiple BRACs as the primary location for Navy and Marine Corps personnel on the West Coast. The commitment to San Diego from the Department of the Navy has brought and maintained a defense industry cluster that has evolved alongside the Pentagon's focus and mission.

The BRAC Process

Since 1988, the DoD has convened five separate BRACs in order to create cost-saving efficiencies, primarily through consolidation of military installations. The first Base Closure and Realignment Commission was formed in 1988 to close excess bases amid the Cold War drawdown with a purpose of providing a "fair process that will result in the timely closure and realignment of military installations inside the United States" and ultimately reduce unnecessary spending. To date, there have been five BRACs formed — in 1988, 1991, 1993, 1995 and 2005 — accounting for a total of 120 major bases closed, another 88 major bases realigned and nearly $100 billion in savings. In past rounds, the Pentagon has been given six years on average to implement the plan.

History of the BRAC in San Diego

In each of the previous five commissions, bases within San Diego County have either been under consideration for closure or directly affected by the BRAC process. The map to the left shows all current military facilities within the county, as well as those that have been shut down since 1988. While California has experienced the majority of reductions from the five BRACs, San Diego has been a net gainer over the years.

The 1988 BRAC marked the beginning of the Navy's West Coast consolidation, with the decision to close Hunter's Point in San Francisco Bay. The ships stationed at the naval shipyard were dispersed to other bases along the coast, of which San Diego gained one cruiser, two destroyers and two frigates, along with 1,500 jobs.

The next BRAC round, in 1991, followed an adjustment to the public law that governed the process. From San Diego's perspective, it was once again a net gain, this time to the tune of 5,000 military and civilian jobs. Two local naval R&D facilities closed, but Naval Base San Diego was the primary beneficiary of the closure of Naval Station Long Beach.

In 1993, San Diego once again left the BRAC process with a net gain of over 5,000 jobs for the area. While the Navy left NAS Miramar for NAS Lemoore near Fresno, the Marine Corps took over control of the air station with jets, helicopters and additional jobs from MCAS Tustin and El Toro in Orange County. Meanwhile, the Navy continued expansion at Naval Base San Diego and NAS North Island with the arrival of additional ships and civilian depot jobs from NAS Alameda in Oakland. The biggest loss of the round for San Diego was the closure of the Naval Training Center (NTC), which has since been redeveloped into Liberty Station, a 361-acre cultural center in Point Loma.

In 1995, the BRAC increased the size of the Space and Naval Warfare Systems Command (SPAWAR) in San Diego, bringing in 1,500 civilian jobs from the Washington, D.C., area. North Island also received nearly 1,500 military jobs from various locations. In total, San Diego ended up with a net gain of more than 3,000 jobs.

The 2005 BRAC in San Diego

The 2005 BRAC was a change in process from the previous rounds. The Secretary of Defense declared that the U.S. military required a "transformation through Base Realignment and Closure" to update the Pentagon's new strategic initiatives. Therefore, its primary purpose was military alignment rather than cost concerns. In a process that began in 2002, it was the first BRAC that resulted in a net loss of jobs for the San Diego region.

"Prior BRAC rounds occurred at the dusk of the Cold War, when military budgets and force structure were shrinking. The 2005 BRAC round occurred in a post-9/11 environment with our armed forces deployed in combat in Iraq and Afghanistan with stable or increasing force structure and defense budgets."

- 2005 BRAC Commission Report

There were a number of minor adjustments to the San Diego military bases in the 2005 round, but the largest drain was from the Naval Medical Center, where over 3,000 total jobs were realigned in order to centralize medical training in San Antonio. The loss was largely offset by the continued growth of Naval Base San Diego, which received ships and personnel from base closures in Texas and New Orleans. Including other minor adjustments to local bases, San Diego ended up with a net loss of 2,804 jobs from the process.

What to Expect for the Next BRAC

An upcoming BRAC round may have a very different feel from those in the past. This time around, the defense budget is facing mandatory cuts and the potential for sequestration, a process where the military budget would be cut by a certain percentage across the board if Congress does not agree to deficit-reduction measures. Furthermore, there may be an increased focus on closing overseas bases, which is done outside of the BRAC process but may have a very large impact on the American bases to which those personnel return. The future BRAC round could at least indirectly affect all 11 of the Navy and Marine Corps centers in the county; however, only a few could reasonably be considered for closure based on perceived redundancy.

SPAWAR plays an integral role in the direct connection between the military and local defense contractors; however, San Diego is not its only location. SPAWAR Systems Center (SSC) Atlantic in Charleston, South Carolina, performs a similar role on the East Coast; and as such, SPAWAR may be under further consideration for consolidation by the next BRAC, which may add or remove thousands of local civilian jobs depending on the pendulum swing.

The Naval Aviation Depot (NADEP) at North Island serves a critical role for naval aviation and is the only one of its kind on the West Coast; however, there are other NADEP locations in Jacksonville, Florida, and Cherry Point, North Carolina. Similar to SPAWAR, NADEP North Island may stand to gain or lose a number of civilian jobs from a BRAC review.

Although the San Diego County Regional Airport Authority's proposed measure to use Marine Corps Air Station (MCAS) Miramar as a joint-use civilian and military airport was defeated by voters, the base may be defending itself once again. Although it is unlikely to result in a complete closure, MCAS Miramar may face a changing composition as the future of Marine Corps jets takes shape. Since 2008, three F/A-18 squadrons have either been decommissioned or relocated. Meanwhile, the Marine F-35B Joint Strike Fighter (JSF) program is well behind its original timeline, with some in Congress calling for significant cuts in funding. MCAS Miramar sits on 23,116 acres and employs over 10,000 personnel.

Finally, Marine Corps Recruit Depot (MCRD) San Diego, as always, will most likely be reviewed by a future Commission. The area, which once covered 800 acres, is now less than half that, but is home to over 6,000 jobs for the area and is responsible for training 21,000 recruits each year. However, few in the area are worried that MCRD would be lost to consolidation due to the same arguments that have kept it where it is following each of the previous rounds.

End State

Congressman Brian Bilbray, representative of the 50th Congressional District, which includes MCAS Miramar, does not think San Diego will be targeted during the next round: "San Diego has taken some hits, but we've always gained from every BRAC process that I've seen, and mostly because we've got the synergy to provide more bang for the buck. We're able to provide more national defense for dollars spent." He continued, "I don't fear a BRAC in any way. I do fear a major reduction from the sequestering if we are not flexible and innovative about how we address that." Clearly, sequestration could have a huge impact on San Diego, where a 10 percent cut across the board would result in an economic loss of over 13,000 jobs as well as millions of dollars in defense contracts.

Congresswoman Susan Davis agreed that sequestration would be problematic for San Diego and the military. Davis, who lobbied in 2005 for the removal of MCRD from the BRAC closure list, said that "we absolutely have to be prepared for both of those rounds if that is the way it proceeds."

Larry Blumberg, the director of the San Diego Military Advisory Council (SDMAC), lamented the delayed arrival of three aircraft carriers that had been scheduled to homeport in San Diego by now: "We have a three-car garage, and if you look out the window, there are no cars in the garage." Blumberg also said that "the economic impact of a carrier homeporting is really significant" for the area and would essentially offset many of the potential cuts the area could face.

Ruben Barrales, president of the San Diego Regional Chamber of Commerce, expects the business community to be as involved as it was during the last process. In 2005, "there was an effort mobilized to help support the region in terms of retaining and bring some of that economic benefit to the region." He added that "given the new priorities of the Pentagon and the Department of Defense, I think it's safe to say San Diego starts out well positioned in terms of the emphasis on Pacific and Asia and in terms of technologies and special forces, which are strong here in San Diego... but I wouldn't take it for granted, and so I think you'll see the business community be very active in this area for the next few years."

San Diego's long history as a military town may not be in jeopardy, but there has been a base in San Diego County considered by every commission thus far. The process has served to consolidate the military on larger bases, which will continue to benefit the county as a whole, as any loss of a smaller base will most likely be offset by a gain at one of the larger locations. But given the political process, there is always a wild card in the mix, and in this game the stakes include thousands of local jobs.

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Summer 2012

Table of Contents


Editorial & Production Staff

Joseph Dodson ('12), Co-Editor-in-Chief

Berna Kamyar ('12), Co-Editor-in-Chief

Mike Taylor ('13), Editor

William Seith ('13), Associate Editor

Drew Beal ('13), Associate Editor

Patrick Kelly('13), Business Manager

Barbra Blake, Editorial Director

Melinda Battenberg, Managing Editor

Maria G. Tasigiannis, Creative Director

Faculty Review Board

Robert S. Sullivan, Founding Dean,
Stanley and Pauline Foster Endowed Chair

Terrence W. August, Assistant Professor

Vish Krishnan, Professor,
Sheryl and Harvey White Endowed Chair

Rossen Valkanov, Professor of Finance