Military Housing Privatization: DOD Faces New Challenges Due to Significant Growth at Some Installations and Recent Turmoil in the Financial Markets

Abstract : In response to challenges the Department of Defense (DoD) was facing to repair, renovate, and construct military family housing, Congress enacted the Military Housing Privatization Initiative in 1996. The initiative enables DoD to leverage private sector resources to construct or renovate family housing. As of March 2009, DoD had awarded 94 projects and attracted over $22 billion in private financing. DoD plans to privatize 98 percent of its domestic family housing through 2012. Since GAO's last housing privatization report in 2006, major force structure initiatives have placed new demands on DoD for housing. GAO was asked to assess the following: (1) the progress of DoD's housing privatization program, (2) the occupancy rates of the housing projects, (3) the impact of various force structure initiatives and DoD's efforts to mitigate any challenges, and (4) the effect of financial market turmoil on some projects. To perform this work, GAO visited 13 installations with privatization projects; analyzed project performance data; and interviewed DoD officials, real estate consultants, and private developers. GAO recommends that DoD provide more current information on investment caps and the impact of the current financial market on projects in its semiannual report to Congress. In response to a draft of this report, DoD concurred with GAO's recommendations.