According to a February 2013 DOD report to Congress on  government-owned housing for unaccompanied personnel, from fiscal  years 1996 through 2012, DOD spent over $20 billion of military  construction funds to build and modernize on-installation housing for  unaccompanied personnel. The Navy expects to complete this initiative by  fiscal year 2016 utilizing both privatization and military construction  authorities. Each of the Services Conducted Analyses and Considered Other Factors in Determining Whether to Privatize Housing for Unaccompanied Personnel

From 1997 to 2011, the services conducted several analyses of the costs  and suitability of privatization as a financing method for their housing  needs for unaccompanied personnel. The Air Force and  Marine Corps concluded that privatization was not desirable for housing  their unaccompanied personnel. These analyses used  different scenarios and data gathered from multiple locations. The Air Force and Marine Corps Analyzed the Feasibility of Privatizing Housing for Unaccompanied Personnel at Selected Installations

The Air Force and Marine Corps analyses of whether to privatize  unaccompanied personnel housing reviewed privatization at a few  selected locations. Further, the study concluded that since privatization of housing for  unaccompanied personnel was suitable only for certain locations, it could  be used only to augment traditional military construction funding, not to  replace it. Other Factors Influenced the Services’ Decisions Regarding Privatizing Housing for Unaccompanied Personnel

In addition to the three issues of OMB scoring, the life-cycle cost of  government construction and operation of housing versus that of  privatized construction and operation of housing, and unit integrity, the  services’ analyses and our interviews with service officials identified three  other factors that influenced the services’ decisions about whether to  privatize housing for unaccompanied personnel:
BAH: Most junior unaccompanied personnel without dependents are  not eligible to receive a housing allowance (and, in the case of junior  shipboard sailors, are not entitled by law to receive a BAH). Without  the assurance of a steady stream of income from the BAH, which  junior unaccompanied personnel could use to pay rent for privatized  housing, private-sector developers would likely be unwilling to  participate in privatized housing projects, the Army’s 2005  Unaccompanied Personnel Housing Privatization Task Force Study  concluded. The frequency or duration of unit deployments: With privatized family  housing, the frequency of deployments of the servicemember  generally does not affect the rent received because the  servicemember’s family remains behind and maintains the leased  property. Status of Military Services’ Projects to Privatize Housing for Unaccompanied Personnel

Between 1996 and 2013, the Army and the Navy implemented seven  privatized unaccompanied personnel housing projects. As stated  previously in this report, both the Army and Navy have also used military  construction funding to upgrade and renovate their housing for  unaccompanied personnel The Air Force and the Marine Corps have not  used the privatization authorities, and are instead using military  construction funds to improve the quality of their unaccompanied  personnel housing. Air Force housing officials told us that the Air Force  unaccompanied personnel housing inventory generally meets current  housing needs. According to Marine Corps officials, the Marine Corps  intends to eliminate existing housing deficiencies by demolishing  inadequate unaccompanied personnel housing, and using military  construction funds to replace or renovate such housing by the end of  fiscal year 2014. According to Office of the Secretary of Defense and  military-service housing officials, none of the services have plans to  pursue any future privatized housing projects for unaccompanied  personnel. Agency Comments

We are not making any recommendations in this report. Military Housing: Continued Concerns in Implementing the Privatization  Initiative.
Why GAO Did This Study

Partly in response to concerns that inadequate housing might be contributing to servicemembers' decisions to leave the military, Congress enacted the MHPI in 1996. The initiative gave the Department of Defense (DOD) legal authorities to replace or renovate inadequate housing for unaccompanied military personnel (those without dependents) and military families using private-sector financing, ownership, operation, and maintenance. Certain military personnel receive the BAH, which can be used to pay rent to live in privatized housing. Since 1996, DOD has built and modernized on-installation unaccompanied personnel housing using military construction funds. According to a February 2013 DOD report to Congress, from fiscal years 1996 through 2012, DOD spent over $20 billion of military construction funds to build and modernize on-installation housing for unaccompanied military personnel.
GAO was asked to review DOD's efforts to privatize unaccompanied housing. GAO discusses the (1) analyses the military services conducted to make decisions about privatizing housing for unaccompanied personnel and (2) status of housing projects the military services have privatized for unaccompanied personnel. GAO obtained and reviewed fiscal years 1996-2013 housing plans and analyses the services conducted, reviewed information on privatization projects, and interviewed DOD and service officials.
GAO is not making recommendations in this report.

What GAO Found

Since Congress enacted the Military Housing Privatization Initiative (MHPI) in 1996, the military services conducted several analyses and considered other factors to determine whether to privatize housing for unaccompanied personnel. These analyses were conducted between 1997 and 2011. The Army's and the Navy's analyses compared different scenarios--such as whether to rely on privatization or use traditional military construction funding to improve housing quality--and considered information from multiple installations in these analyses. In contrast, the Air Force and Marine Corps analyzed the feasibility of privatizing unaccompanied housing at a few selected installations. For example, the Air Force based its initial analysis on information for two locations, while the Marine Corps based its 2008 analysis on information specific to one installation. The Navy and Army concluded that privatization could be used under a narrow set of circumstances at specific installations, such as where unaccompanied servicemembers were already receiving the basic allowance for housing (BAH). The Air Force and Marine Corps concluded that privatization was not suitable for meeting any of their housing needs. For example, an April 2000 Air Force memorandum indicated that privatization could have a negative effect on building unit cohesion. Other factors also played a role in the four services' decisions about whether to privatize housing, including (1) the limited availability of the BAH for junior unaccompanied personnel, which may result in not having a dedicated stream of income to pay rent for privatized housing; (2) the frequency or duration of unit deployments, which could affect the occupancy rates of unaccompanied housing; and (3) uncertainty about the future size of the military, and whether there would be sufficient demand for privatized housing.
Between 1996 and 2013, the Army and Navy implemented seven privatized unaccompanied personnel housing projects. The Air Force and Marine Corps have not used the privatization authorities, and are instead using military construction funds to improve the quality of their unaccompanied personnel housing. Air Force housing officials told us that Air Force unaccompanied personnel housing inventory generally meets current housing needs. According to Marine Corps officials, the Marine Corps intends to eliminate existing housing deficiencies by demolishing inadequate unaccompanied personnel housing and using military construction funds to replace or renovate housing by the end of fiscal year 2014. According to Office of the Secretary of Defense and military service housing officials, none of the services have plans to pursue any future privatized housing projects for unaccompanied personnel.

What GAO Recommends

GAO is not making recommendations in this report.