The Arroyo Center has been investigating alternative approaches to reducing the cost of base operations at FORSCOM installations. Researchers analyzed expenditure data from the eight major installations (Forts Bragg, Campbell, Carson, Drum, Hood, Lewis, Riley, and Stewart) and visited six of them to discuss with garrison personnel their reengineering efforts, contracting experience, the Installation XXI initiatives, and other aspects of base operations. The data indicate that for a variety of reasons, expenditures for base operations functions can differ widely across installations. Limitations of the Army financial accounting system make it difficult to draw specific conclusions about these expenditures without detailed analysis of data from each installation. Decentralized approaches to reengineering seem to hold some promise for reducing future operating costs, but it may be difficult for the Army to realize all potential savings in the long term. Proposals to create a hub/satellite structure or centralize functions should be examined carefully before implementation. The civilian pay cap to be applied in FY96 and the implementation of Integrated Sustainment Maintenance have the potential to create some problems if unit and installation incentives are not aligned with overall Army policy. Finally, although increased use of contracting has been proposed as an alternative to civilian employees, this will not solve all current problems. Contracting has advantages, but the A-76 (Commercial Activities) process must be simplified, and installation experience with contracts should be more widely disseminated. Moreover, contracting functions does not necessarily save money, although installations with major contracts are generally satisfied with contractor performance.