DoD housing privatization crawls slowly along

The Defense Department's privatization of military housing continues to move slowly, according to a new General Accounting Office report.

The program, known as the Military Housing Privatization Initiative, was enacted by Congress at the department's request in 1996 to refurbish houses and construct new housing for servicemembers and their families in a more timely and cost-effective manner. The Defense Department spends about $8 billion a year to provide housing for active military personnel and their families.

A previous GAO report, released in 1998, criticized the agency for a slow start. The new report, "Military Housing: Continued Concerns in Implementing the Privatization Initiative" (NSIAD-00-71), said progress continues to move at a snail's pace.

"Almost four years after the program was initiated, DOD has awarded only two privatization contracts to build or renovate 3,083 military family housing units," the report concluded. "Several more years will be required before all planned construction under these contracts is completed."

In 1998, the Pentagon said privatization projects aimed at creating about 87,000 units in 49 locations were planned for completion by 2001. The privatization plan is under a five-year test period that expires on Feb. 10, 2001. DoD said it has taken both the military and the private sector a long time to acclimate to a new way of doing business.

GAO expressed concern over the lack of an overall strategy regarding housing policy.

DoD "has not finalized an overall integrated housing strategy for addressing its housing needs in a manner that considers the interrelationships among these options, as directed by a congressional committee and as previously recommended by GAO," the report said.

In January, DoD announced a plan that would substantially increase military service members' housing allowances over the next five years. If implemented, the plan would close the gap in housing costs between service members who live on-base and those who live off-base because "out-of-pocket costs for the typical military family would be reduced to zero," said GAO's report.

GAO concluded that privatizing the 12 currently approved projects would be about 11 percent less expensive than comparable projects financed by the military.

GAO recommended that DoD develop an evaluation plan for the program, improve policy guidance, and conduct routine assessments of housing requirements as part of the approval process for proposed privatization projects. DoD agreed with these recommendations.

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