At the same time, DOD is increasingly moving to  privatize its housing, relying on the private sector to renovate and operate  privatized housing as well as build and maintain many new housing units. Services Do Not Clearly and Consistently Explain the Impact of Privatization in Their Budget Justifications to Congress

Budget justification materials submitted to Congress for family housing  O&M funding do not clearly and consistently explain how the housing  privatization program impacts the services’ budget requests. The services  use similar assumptions and methods to develop budget requests for  family housing O&M, but they often rely on assumptions established up to  a year and a half before the budgets are executed. While the services have  the ability to revise and update their budget requests, they typically choose  not to because of the difficulty of doing so when faced, in part, with other  competing defense priorities, and the relatively small size of the family  housing O&M budget. Furthermore, changes in the pace of expected  privatization can affect funding required for individual accounts and  subaccounts, although not uniformly, but the impact of privatization is not  well explained in the services’ budget justifications. Rather, service officials said that they are more likely to make the  needed funding adjustments for family housing O&M during budget  execution through reprogrammings. Congress Has Limited Visibility Over the Reprogramming of Family Housing O&M Funds

Congress has limited visibility of the services’ reprogramming of family  housing O&M funds. However, appropriations such as the  regular O&M do provide such information. In  addition, their data reflecting reprogramming actions throughout the year  do not always match comparable official obligation data produced by the  Defense Finance and Accounting Service. However, Congress is not notified when reprogrammings are  below 10 percent or result in a funding decrease. In other appropriations, DOD provides congressional decision makers  with more information on reprogrammings than in family housing O&M. Conclusions

The services’ budget justification submissions to Congress have not  always been clear in explaining funding requirements and the impacts of  the privatization initiative on the budget requests for each of the nine  family housing O&M accounts and subaccounts. In  addition, the Navy and the Marine Corps provide even less visibility of  reprogrammings of family housing O&M funds because they do not report  obligations for the four operations subaccounts and, prior to fiscal year  2004, did not notify Congress of reprogrammings for these subaccounts. Until the  Navy and the Marine Corps report obligation data using the same structure  that congressional conferees use to designate funds for the four operations  subaccounts and resolve data inconsistencies between them and the  Defense Finance and Accounting Service, DOD and congressional decision  makers will continue to lack sufficient budget visibility, hindering their  ability to evaluate Navy and Marine Corps budget requests with the same  degree of confidence and detail as those of the other services. To improve visibility over the Navy and the Marine Corps’ reprogrammings  of family housing O&M funds, we recommend that the Secretary of  Defense direct the Secretary of the Navy to work with the Defense Finance  and Accounting Service to take the following two actions:    Report obligation data using the same budget structure that  congressional conferees use to designate how funds are to be used for  the four operations subaccounts, similar to reporting done by the other  military services. Justification materials summarize the assumptions and methods used to  develop the budget request:  Services have additional information that could help clarify the request. This is a summary account for accumulating  costs for the following: (1) lease cost—foreign account; costs for charges  and other payments specified in the lease agreement for housing in foreign  countries; (2) lease cost—foreign account government rental guarantee  program; costs for charges and other payments specified in the lease  agreement for housing in Europe under the Army’s foreign account  government rental guarantee program; (3) lease cost—domestic account;  costs for charges and other payments specified in the lease agreement for  housing in the United States including U.S. possessions and territories;   (4) lease cost—section 801 account; costs for charges and other payments  specified in the lease agreement for section 801-type housing; (5) other  operation and maintenance cost—foreign account; costs for maintenance,  utilities, and contracted services not provided by the lessor for housing in  foreign countries (also includes initial make-ready costs, costs of  government-owned furnishings, any pro rata share of the costs of  installation services, and administrative costs such as assignment, travel,  and inspection by installation personnel, and reimbursements to the  Department of State for foreign affairs administrative support costs);   (6) other operation and maintenance cost—foreign account government  rental guarantee program; costs for maintenance, utilities, and contracted  services not provided by the lessor for housing in foreign countries (also  includes initial make-ready costs, costs of government-owned furnishings,  any pro rata share of the costs of installation services, and administrative  costs such as assignment, travel, and inspection by installation personnel,  and reimbursements to the Department of State for foreign affairs  administrative support costs); (7) other operation and maintenance   cost—domestic account; costs for maintenance, utilities, and contracted  services not provided by the lessor for housing in the United States (also  includes initial make ready costs, costs of government-owned furnishings,  any pro rata share of the costs of installation services, and administrative  costs such as assignment, travel, and inspection by installation personnel);  and (8) other operation and maintenance cost—Section 801 account; costs  for maintenance, utilities, and contracted services not provided by the  lessor for Section 801-type housing (also includes initial make ready costs,  costs of government-owned furnishings, any pro rata share of the costs of  installation services, and administrative costs such as assignment, travel,  and inspection by installation personnel).
Why GAO Did This Study

The military services have owned and operated much housing on their installations but increasingly are privatizing housing, relying on the private sector to manage the renovation, construction, and maintenance of existing and new homes for military families. Funding to operate and maintain existing government-owned housing is provided through the family housing operation and maintenance (O&M) appropriations. The amount of funding required varies based on a number of factors, including how quickly privatization occurs to reduce requirements for government-owned housing. As requested, this report discusses the (1) services' assumptions and methods used to develop budget requests and how well their budget justifications explain the impact of privatization on family housing O&M funds and (2) the extent to which Congress has visibility over the services' reprogramming of family housing O&M funds.

What GAO Found

Budget justification materials submitted to Congress for family housing O&M funding do not clearly and consistently explain funding requirements and how the housing privatization program impacts the services' budget requests, frustrating congressional oversight. Various factors have contributed to this situation. The services use similar assumptions and methods to develop budget requests for family housing O&M, but they often rely on assumptions established up to a year and a half before the budgets are executed. While the services have the ability to revise and update their budget requests, they typically choose not to because of the difficulty of doing so related in part to other competing defense priorities and the relatively small size of the family housing O&M budget. Given these considerations, defense officials said that they are more likely to make the needed funding adjustments through reprogrammings. In addition, changes in the pace of expected privatization can affect funding required for the nine family housing O&M accounts and subaccounts--although not uniformly--but the effects of these changes are not well explained in budget justifications submissions to Congress. Although, in many cases, the services may have data that could result in better informed decision making, they do not always include such information in budget justifications. Congress has limited visibility of the services' reprogramming of family housing O&M funds. For example, Congress is not notified when reprogrammings are below 10 percent of the initial funding amount or result in a decrease. On the other hand, DOD provides congressional decision makers with more information on reprogrammings for other appropriations, such as regular O&M. In addition, compared with the other services, the Navy and the Marine Corps' reporting of reprogrammings provides even less visibility. For example, they did not report to Congress reprogrammings for the four subaccounts--management, services, furnishings, and miscellaneous--within the operations account. In addition, the Defense Finance and Accounting Service's obligation reports for the Navy and Marine Corps do not separate the four operations subaccounts, as they do for the other services. Navy and Marine Corps officials were not aware of the usefulness to separate the four operations subaccounts. Also, the Navy and the Marine Corps obligation data reflecting reprogramming actions do not always match comparable official obligation data produced by the Defense Finance and Accounting Service. Even though the two services have been working with the Defense Finance and Accounting Service, officials told GAO that this has been a long-standing issue and difficult to resolve. Collectively, this lack of visibility over the reprogramming of funds and data inconsistencies hinder the ability of congressional and DOD decision makers to evaluate family housing O&M budget requests and obligations.