Summary: The Defense Department (DOD) estimates that about 200,000 units that house military families are old, lack modern amenities, and need to be renovated or replaced. To improve housing conditions more economically and faster that could be done using traditional military construction funds, DOD began a five-year pilot program in 1996 to allow private sector financing, ownership, and operation of military housing. GAO found that although initial plans for housing privatization were aggressive, actual progress has been slow. Nearly four years after the program was begun, DOD has awarded only two privatization contracts to build or renovate about 3,000 housing units for military families. A GAO review of the two privatization projects already awarded and 12 additional projects approved for solicitation found that the military did not prepare a life-cycle cost analysis for two projects approved for solicitation and that the analyses for the remaining 12 projects were incomplete, inaccurate, or inconsistently prepared. After making adjustments to provide consistency, considering all project costs under both options, and correcting other errors, GAO found that over the life of the projects the privatization option, on average, would be about 11 percent less costly than comparable projects financed with military construction funds. DOD has made progress in coordinating this effort with other housing options, such as housing allowances and military construction, by increasing the use of cross-organizational panels that review and coordinate housing policies and issues. However, it has yet to finalize an overall integrated housing strategy for addressing its housing needs in a timely manner that considers the interrelationships among these options, as directed by Congress and recommended by GAO.
