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You requested that we review the Defense Logistics
Agency's decision to merge the Defense Contract Administra-
tion Service's Cleveland regional office into the Chicago
2-regiona. office. Recent events have eliminated Chicago as a
potential location, and as Admiral E. M. Kocher, Assistant
Director, Defense Logistics Agency, advised you in his October
16, 1979, letter, the Agency has now decided to locate the
consolidated office in Cleveland.
The merger of these two offices is part of an overall
Department of Defense plan. By reducing the number of Defense
Contract Administration Service's regions from nine to five,
Defense will reduce overhead and administrative costs and
attain a more efficient support structure. The Agency pro-
jected that this consolidation could save about $40 million
over 5 years, about $18 million attributable to the Cleveland-
Chicago consolidation. The Agency also projected that if the
consolidated office was located in Chicago, about $1 million
more could be saved.
On October 11, 1979, our review team provided a briefing
on the progress of our work. Our preliminary analysis showed
that Chicago was economically more advantageous than Cleveland.
However, the estimates and projections contained so many judg-
ments and assumptions that a decision could not be based
unequivocally on economic factors. We also pointed out at
the briefing that the Air Force was studying the feasibility
of relocating its O'Hare activities to provide land for the
expansion of Chicago's O'Hare International Airport. We
indicated that such a relocation could be pivotal to the](ViewImageLocal?handle=hein.gao/gaobaazyy0001&div=1&collection=&method=preview&ext=.png&size=3)