Report to the Secretary of Defense

United States General Accounting Office

GAO

August 2001 MILITARY HOUSING

DOD Needs to

Address

Long-Standing

Requirements

Determination

Problems

GAO-01-889
Page 1 GAO-01-889 Military Housing

August 3, 2001

The Honorable Donald H. Rumsfeld

The Secretary of Defense

Dear Mr. Secretary:

One of the pressing issues the Department of Defense (DOD) faces is its

outsized and decaying infrastructure, and this problem is prominent in the

family housing program. By DOD’s estimates, about two-thirds of military

housing is inadequate and would require $16 billion and almost 30 years to

renovate or replace using traditional military construction. Efforts to use

private contractors to build and operate housing are off to a slow start and

may require long-term commitments (50 years or more) from the

government. DOD’s policy is to rely on the private sector first for housing,

but military members that live in private-sector housing and receive a cash

allowance have paid $200 or more monthly in out-of-pocket costs. These

additional costs are a significant disincentive for living in civilian housing,

and avoiding them appears to be a primary reason that military members

choose to live in military housing. In January 2000, the Secretary of

Defense announced an initiative to increase allowances for

servicemembers living in civilian housing to eliminate, by fiscal year 2005,

the additional costs. In a recent report, we noted that about 72 percent of

servicemembers prefer civilian housing if cost is not a factor, and

concluded that increasing allowances to remove this disincentive would

better satisfy the preferences of servicemembers and be likely to increase

the use of civilian housing.1

DOD’s Family Housing Program is designed to provide military housing

when adequate, affordable private-sector housing is unavailable. DOD

recently set out to implement a standard process for determining what

housing is needed on its installations. Prior reports by GAO and others

have found this process to be flawed because the military services have

inconsistently considered the availability of private sector housing (see

app. I). In the wake of the initiative to increase housing allowances—

which the Department estimated would cost over $3 billion in incremental

costs through 2005—it is critical to have an accurate requirements-setting

 1 Military Personnel: Higher Allowances Should Increase Use of Civilian Housing, but

Not Retention (GAO-01-684, May 2001).

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-889 Military Housing

process underpinning the program to avoid unnecessary housing

investments. Thus, we determined (1) whether DOD has implemented a

standard process for determining the required military housing based on

housing available in the private sector, and (2) how the increase in the

housing allowance is likely to affect the need for housing on military

installations over the long term.

DOD has still not implemented a Department-wide standard process for

determining military housing requirements, despite calls from Congress,

GAO, and DOD’s Inspector General. DOD and the services have worked to

develop the framework for the process, but technical concerns—such as

standards for affordable housing and commuting distance—have stalled its

adoption. A requirements-setting process that first considers the housing

available around installations would likely decrease the amount of needed

military housing. However, according to a recent study, the services

appear to want to protect their current family housing inventories, which

conflicts with DOD’s stated policy of relying on the private sector first for

housing. Without an accurate requirements-setting process based on the

availability of private sector housing, DOD will continue to have

inadequate information with which to make decisions about where it

should renovate, build, or seek to privatize military housing.

Increasing the housing allowance heightens the urgency for a consistent

process to determine military housing requirements because it is expected

to increase demand for civilian housing, and lessen the demand for

military housing. From a policy standpoint, increasing the allowance

better positions DOD to rely on the private sector first for housing because

it removes the financial disincentive to living in civilian housing. Since

military members prefer civilian housing if costs are equal, the demand for

civilian housing will likely increase as out-of-pocket costs are eliminated.

From a management standpoint, considerable evidence suggests that it is

less expensive to provide allowances for military personnel to live on the

civilian market than to provide military housing. While overall program

costs are increasing significantly in the short term to cover increased

allowances, DOD could save money in the longer term by encouraging

more personnel to move into civilian housing. In the meantime, without an

accurate determination of military housing needs, the Department may

spend millions of dollars to construct, renovate, or privatize housing that

in some locations is unnecessary.

We recommended that you expedite the implementation of a consistent

process for establishing military housing requirements and demonstrate

Results in Brief
Page 3 GAO-01-889 Military Housing

the need for new construction, renovation, or privatization projects,

before submitting requests for funding to Congress. The Department

reviewed a draft of this report and generally concurred with our

conclusions and recommendations. In comments on this report, the

Deputy Under Secretary of Defense (Installations and Environment)

agreed that a single, consistent requirements-setting process is needed.

However, he noted that significant issues--related primarily to service

concerns about losing military housing--still need resolution before such a

process is adopted. The Department partially concurred with our

recommendation that the need for new construction, renovation, or

privatization projects be demonstrated before submitting the requests for

funds to Congress, indicating that the amount of inadequate housing in the

inventory necessitates some investment while the requirements-setting

procedures are being developed. While we agree that some new projects

may need to go forward, DOD should closely review proposed projects

with the aim of limiting new construction, renovation, and privatization

projects until valid housing requirements can be determined. Projects

submitted for funding in the absence of a clear determination of need

based on consideration of available private-sector housing risk spending

scarce resources on infrastructure that DOD does not, or will not, need.

DOD’s housing management manual states that military-owned, -leased,

or -sponsored housing may be budgeted to meet long-range requirements

in areas where the local community cannot support the housing needs of

military members. Military housing may also be required if available

housing in the community has been determined to be unacceptable or if

personnel must reside on the installation for reasons of military necessity.2

Each service is responsible for determining family housing requirements.

In general terms, the services should determine their on-base housing

requirements based on the number of military families at an installation

that are seeking housing, minus the affordable and acceptable supply of

existing rental housing units available to the military in the private sector.

The supply of private sector housing should be calculated through a

detailed housing market analysis and should include a count of available

houses in the private sector based on the housing allowances for each pay

grade, considering family size. An installation has a housing deficit if a

greater number of personnel are seeking housing than the private sector

 2 DOD Housing Management Manual (DOD 4165.63-M, Sept.1993).

Background
Page 4 GAO-01-889 Military Housing

can support. Conversely, a surplus of on-base housing occurs if the private

sector housing supply is greater than the number of families seeking

housing.

DOD has acknowledged the need for further reductions and the

streamlining of its infrastructure. In the most recent Annual Defense

Report, the Secretary of Defense stated that the Department continues to

seek congressional approval for additional rounds of base realignments

and closures.3

 By eliminating excess infrastructure and consolidating its

forces at fewer bases, the Department believes it will be able to spend its

resources on forces and equipment critical to its modernization effort. As

part of our ongoing Performance and Accountability Series, we reported in

January of this year that infrastructure costs continue to consume large

portions of DOD’s budget. Our recent analysis of DOD’s Future Years

Defense Program documents for fiscal years 2001-2005 showed that the

proportion of resources devoted to direct infrastructure relative to mission

has not changed, despite expectations that it would decrease.4

After years of effort, DOD has not yet implemented a DOD-wide process

for determining requirements for family housing on its installations. As a

result, the Department cannot know with assurance how many housing

units it needs and where it needs them and may be investing in

infrastructure it no longer needs. The Department has worked to develop

the framework for a process to determine family housing needs that

requires reliance on the private sector first to house its servicemembers.

However, it has not adopted the process because of a lack of consensus

across DOD on common standards such as the definition of affordable

housing and acceptable commuting distances. Moreover, a recent study by

the Center for Naval Analyses indicates that the services seem to be

protecting their existing family housing infrastructures because of

concerns about a potential loss of military community.5

 3 2001 Annual Report to the President and the Congress.

4 Major Management Challenges and Risks: Department of Defense (GAO-01-244,

Jan. 2001).

5 Housing Requirements Methodology: An Interim Report (Center for Naval Analyses,

Mar. 2001).

DOD Has No

Department-Wide

Process to Determine

Military Housing

Requirements
Page 5 GAO-01-889 Military Housing

Over the past several years, the Congress, GAO, and the DOD Inspector

General have been critical of the inconsistent methodologies used by the

services to determine the availability of housing for military families in

private sector areas surrounding military installations. In September 1996,

we found DOD had not maximized the use of private sector housing

because, among other reasons, the housing requirements analyses often

underestimated the ability of the private sector to meet housing needs. The

Department’s Inspector General recommended in a 1997 report that DOD

develop a Department-wide standard process and standard procedures to

determine family housing requirements. Further, the Inspector General

cautioned that the Department and the Congress did not have sufficient

assurances that requests for funds for housing construction on military

installations addressed the services’ actual needs in a consistent and valid

manner (see fig. 1 for a chronology of selected reports concerning military

family housing).6

 Appendix I provides a summary of recent reports

concerning the military family housing program.

 6 DOD Family Housing Requirements Determination (Inspector General Report

No. 98-006, Oct. 1997).

Housing Requirements

Foundation Still Unreliable
Page 6 GAO-01-889 Military Housing

Figure 1: Chronology of Selected Reports Concerning DOD’s Housing Program

Source: GAO.

The Department has acknowledged that fundamental requirements-setting

problems linger. In the 2001 Annual Defense Report, the Secretary of

Defense reported that

“The Department continues to work on the development of a single model for determining

the government-owned housing needs using a set of standard DOD-wide factors along with

flexible variables that accommodate service differences. This model will help DOD

determine the number of government-owned housing units that need to be constructed or

maintained as well as determine the size of the Department’s housing privatization

projects.”

DOD and the services have worked to develop the framework for a single,

consistent process for determining housing requirements. The proposed

framework would require the military services to conduct a market

analysis surrounding each installation to determine the amount of
Page 7 GAO-01-889 Military Housing

adequate, affordable housing the private sector could provide. Once this

was determined, available housing would be compared to military

personnel needing housing and the difference would be the military

housing requirement. According to Department housing officials, the

proposed process would provide the services latitude in applying

service-specific criteria and military judgment in developing housing

requirements. For example, the requirement could be adjusted for the

retention of housing for key and essential personnel, a percentage of

personnel in each pay grade, and for the retention of historic housing.

According to DOD housing officials, each of these factors would usually

have a relatively small impact on the requirement. In our view, some

flexibility in the process is warranted because of the differences in private

sector housing around each installation, but DOD must carefully monitor

the services use of this flexibility to ensure that they adhere to Department

policy to use the private sector first for housing their service families.

While DOD has worked to develop the framework for a consistent process,

Department housing officials stated that several issues remain unresolved.

Issues such as what constitutes affordable civilian housing and reasonable

commuting distances have slowed the adoption of the process. For

example, the Air Force recently reduced the acceptable commuting

distance from the 60-minute standard used by the other services to a

30-minute standard. According to a recent Center for Naval Analyses

report, the services will need to agree on each element of the new

requirements procedure before it can be finalized. The report further

stated that the Office of the Secretary of Defense must obtain agreement

among the services or be forced to impose the standards.7

 Department

housing officials stated that once a new process is in place, it will take

years to update the housing requirements DOD-wide, since the detailed

market analyses must be performed base by base. This is of concern,

because the Department risks investing valuable resources in housing that

it does not need.

 7 Housing Requirements Methodology: An Interim Report (Center for Naval Analyses,

Mar. 2001).
Page 8 GAO-01-889 Military Housing

In late 1999 and 2000, each of the military services submitted Military

Family Housing Master Plans to Congress that document deficits in

military housing. These plans indicate that, DOD-wide, the services want

about 12 percent more military housing units than they have. In addition,

the plans show that about two-thirds of the approximately 285,000 aging

government-owned houses are in inadequate condition. The housing plans

show that the services plan to address inadequate and deficit family

housing through a combination of military construction and privatization

initiatives. About 3 percent of family housing units were deemed surplus.

(See fig. 2 for a status of military family housing units for each service.)

Figure 2: Summary of DOD’s Worldwide Military Family Housing, by Service

Note: Deficits exist at some installations, while surpluses exist at others.

Source: Military Family Housing Master Plans submitted to Congress.

The DOD Inspector General and GAO have previously reported that the

services use inaccurate housing market analyses when determining the

need for military housing. According to a July 1996 Inspector General

report, the requirements for seven military family housing projects at a

Marine Corps base were unsupported because the number of needed

family housing units was unknown. The report recommended that all of

New Requirements

Process Likely to Identify

Unneeded Housing

Infrastructure
Page 9 GAO-01-889 Military Housing

these construction projects be placed on hold and that the Marine Corps

perform a new housing analysis to justify the family housing construction

projects. Although management concurred with the recommendations, the

Marine Corps proceeded with two of the projects.8

We reported in 1996 that according to Army and Air Force information,

many military installations in the United States had not maximized the use

of private sector housing to meet military family housing needs. For

example, the Army’s housing requirements model estimated that 844 of

Fort Eustis’ 1,330 family housing units were surplus. If the model had

matched housing requirements against adequate private sector housing

before matching them against government housing, the model would have

estimated that 1,170 of these units were surplus.9

The Department still does not maximize the use of private sector housing.

As part of its effort to develop a standard requirements-setting process,

DOD asked a contractor to perform housing market analyses at selected

installations. We reviewed the results of three of these market analyses.

Two of the three installations were projected to have substantial surpluses

once the private sector’s ability to provide housing was factored in. Based

on these analyses, over half (1,599 of 3,039) of the military houses at these

installations would be surplus. According to DOD housing officials, the

third base—a remote, rural installation—had a modest shortage of military

housing units.

Surplus military housing is the nearly inevitable result if the Department

starts by setting housing requirements based on the availability of private

sector housing for its members. Surplus housing identified by the

proposed process will be disposed of at the end of its useful life, according

to DOD housing officials. During the 5-year transition period, the housing

officials said the Department would avoid investments in surplus housing

units, but admitted that this would be difficult to do without firm

requirements.

Demand for military housing—evidenced by long waiting lists and high

occupancy rates—could be seen as evidence that military housing is

 8 Quick-Reacting Report on Military Family Housing Construction at Marine Corps Base

Hawaii Kaneohe Bay (Inspector General Report No. 96-200, July 1996).

9 Military Family Housing: Opportunities Exist to Reduce Costs and Mitigate Inequities

(GAO/NSIAD-96-203, Sept. 1996).
Page 10 GAO-01-889 Military Housing

needed and that DOD does not have surplus family housing. However, as

we have previously reported, waiting lists can be misleading because many

personnel on them do not accept military housing when offered because

they have already found suitable civilian housing while waiting.10 One

service’s policy is to use occupancy rates to adjust the requirementssetting process: for example, if an installation’s family housing is filled to

capacity, all of it must be needed. This rationale is not consistent with

DOD’s stated policy of relying on the private sector first. The services—

through their referral offices—guide military families to find housing and

thus control occupancy. Essentially, the referral offices offer military

families a choice between free military housing or an allowance for private

sector housing that generally does not cover the total cost of rent and

utilities. However, the planned increases in the housing allowance will

gradually remove the financial disincentive associated with civilian

housing and should make living off base more attractive.

Although the change in the housing allowance program is likely to

decrease the demand for military housing relative to civilian housing, there

are indications that the services are reluctant to reduce on-base family

housing. DOD has recognized the concerns among service leaders that

housing military personnel off installations in civilian housing would

weaken the sense of military community. However, as we said in our May

2001 report, personnel live in military housing primarily because it is free

and they seek to avoid additional out-of-pocket costs associated with

living in civilian housing. According to a recent Rand report, members in

focus groups “scoffed” at the notion that living in military housing helped

them to do a better job. And only about 2 percent of servicemembers

selected “like having military neighbors” as the first or second most

important factor in the decision to live in military housing. Rand

concluded that most military members simply do not see a compelling

reason—beyond the economic benefit—to live on base.11

After meeting with each of the services to discuss the methodology for

determining housing requirements, the Center for Naval Analyses

concluded that a primary goal of the services seemed to be to protect their

 10 Military Personnel: Higher Allowances Should Increase Use of Civilian Housing, but

Not Retention (GAO-01-684, May 2001).

11 An Evaluation of Housing Options for Military Families (MR-1020-OSD, 1999). Rand

surveyed military personnel, using a cluster sample of 4,400 military members at 12 bases

across the country.
Page 11 GAO-01-889 Military Housing

current family housing inventories.12 The services were concerned about

how any change in procedure would affect the number of on base family

housing units. The Center reported that the services want to retain their

current military housing, regardless of the new requirements-setting

process. Reasons for this include the prospect of large amounts of surplus

housing, and concerns about possible morale problems resulting from

personnel being forced to move into private sector housing. The Center’s

report concluded that increased service resistance to accept a procedural

change that may reduce the number of housing units has delayed the

completion of formal DOD guidance.

The increase in housing allowances has several advantages but makes the

need for a DOD-wide requirements-setting process more urgent. The

Department could more readily implement its policy to rely first on the

private sector to house service families because the additional out-ofpocket costs would be eliminated by the increased housing allowance.

Thus, the demand for civilian housing is likely to increase, while the

demand for military housing should decrease. While costs for the

increased housing allowance appear substantial in the short term,

evidence shows that it is cheaper for the government to provide an

allowance for private sector housing than to provide a military house on

base. Until the Department sets accurate housing requirements DOD-wide,

however, it could face mounting costs to maintain its aging and in some

places unnecessary housing infrastructure.

The housing allowance increase should allow DOD to better satisfy the

preferences of servicemembers. We have previously reported that, based

on the results of DOD’s 1999 Active Duty Survey, military members prefer

civilian housing if costs are equal. Of those currently receiving a housing

allowance or living in military housing, about 72 percent said they would

prefer civilian housing if costs were equal, while 28 percent said they

would prefer military housing.13 In its 1999 report, Rand reported that only

about 20 percent of military members prefer military housing, and that the

predominant reason servicemembers live in military housing is for the

economic benefit.14 Department officials also believe the housing

 12 Housing Requirements Methodology: An Interim Report (Center for Naval Analyses,

Mar. 2001).

13 Military Personnel (GAO-01-684, May 2001).

14 Rand (MR-1020-OSD, 1999).

Increased Housing

Allowance Should

Result in Reduced

Need for on Base

Family Housing
Page 12 GAO-01-889 Military Housing

allowance increase will ultimately change the composition of the

population in military housing. Rand’s analysis indicates that demographic

characteristics are the main factor in the demand for military housing.

Those who prefer military housing include lower income personnel

(especially junior enlisted personnel), those with spouses who do not

work outside the home, and those with a greater number of children.

Military members with larger families tend to be entitled to a larger

residence in military housing than they would be able to afford on the

civilian market (housing allowances increase by pay grade).

Regardless of whether DOD fully implements a private sector first policy,

the increase in housing allowance will add substantial costs to the housing

program in the near term. By 2005, the Department projects total costs to

be $12.8 billion, about 34 percent more than the $9.6 billion for fiscal year

2000 (see fig. 3). The amount allocated to the housing allowance program

will grow from $6 billion in fiscal year 2000 to over $8.8 billion in 2005,

about a $2.8 billion increase. The amount allocated for military family

housing is expected to grow from $3.5 billion in 2000 to about $4 billion in

2005.
Page 13 GAO-01-889 Military Housing

Figure 3: Military Family Housing and Allowances Cost, Excluding Privatization

(Fiscal Years 2000-2005)

Note: Military housing estimates include costs for construction, improvement, planning and design,

operations, maintenance, and leasing of military family housing units.

Source: DOD-provided data.

Considerable evidence suggests that providing a housing allowance is less

expensive and more flexible than providing a military house. In 1993, the

Congressional Budget Office estimated that DOD saved about $3,800 per

family by paying a housing allowance versus providing military housing.15

In our 1996 report, we estimated that the military saved almost $5,000 per

unit by paying a housing allowance.16 In its 1999 report, Rand said that all

12 installations they visited had paid more to provide military housing—

from $3,000 to $10,000 per unit.17 Increasing the housing allowance will

somewhat narrow the savings that will result from putting personnel in

 15 Military Family Housing in the United States (CBO, Sept. 1993).

16 Military Family Housing: Opportunities Exist to Reduce Costs and Mitigate Inequities

(GAO/NSIAD-96-203, Sept. 1996).

17 An Evaluation of Housing Options for Military Families (MR-1020-OSD, 1999).
Page 14 GAO-01-889 Military Housing

private sector housing instead of family housing on base. Admittedly, these

estimates are very rough and are not based on life-cycle costs. However,

DOD officials told us that they do not compute life-cycle costs nor do they

capture all overhead and other costs associated with military housing,

since they are absorbed in many places in the DOD budget. For example,

military housing has other significant costs associated with it, including

the associated infrastructure like schools, childcare, recreational facilities,

and other amenities on installations. Thus, DOD budget officials told us

that current funding figures tend to understate the cost of military housing.

While these cost estimates are imprecise, it seems unlikely that the

government can provide housing cheaper than the private sector, which is

driven by market forces. Moreover, DOD housing officials told us that

maintaining family housing is not a core mission for the military services

and that family housing has been under-funded for many years. This, in

their view, is the reason why so much of the family housing stock is

inadequate today.

As the housing allowance increase is phased in—eliminating the financial

disincentive to living in civilian housing—demand for military housing is

likely to decrease. This decrease in demand for military housing reinforces

the need to implement a consistent housing requirements-setting process

quickly so that the Department of Defense and the Congress are assured

that the housing construction and privatization projects they review are

essential. Unless the Department can accurately determine the housing it

needs on its installations, it may spend funds for housing it does not, and

will not, need.

We recommend that you expedite the implementation of a consistent

DOD-wide process for establishing military housing requirements,

ensuring that the Department does not spend money on housing it does

not need. Specifically, we recommend you demonstrate the need for new

construction, renovation, or privatization projects using a process that

consistently and adequately considers the availability of civilian housing,

before submitting requests for funds for the projects to the Congress.

Under 31 U.S.C. 720, you are required to submit a written statement of the

actions taken on our recommendations to the House Committee on

Government Reform and to the Senate Committee on Governmental

Affairs not later than 60 days from the date of this report and to the House

Conclusions

Recommendations for

Executive Action
Page 15 GAO-01-889 Military Housing

and Senate Committees on Appropriations with the agency’s first request

for appropriations made more than 60 days after the date of this report.

We provided a draft of this report to the Office of the Deputy Under

Secretary of Defense for Installations and Environment for comment. The

Deputy Under Secretary generally concurred with our conclusions and

recommendations. The Department and the military services have agreed

that a single, consistent method for determining military housing

requirements is needed. The Deputy Under Secretary noted that the

Department has spent a great deal of time and effort developing a process

that would implement DOD’s long-standing policy of relying on the civilian

sector, but that significant issues still need resolution. He cited concerns

that a change in the housing requirements process could result in

divestiture of thousands of homes before the housing allowance increase

is fully phased in by 2005, but noted that this is mitigated because the

requirements-setting process under consideration projects private-sector

housing availability out 5 years. He indicated that the Department

recognizes some demand for on-base housing, but to include an on-base

housing demand factor in the housing requirements process would

inevitably require DOD to reverse or at least decrease its reliance on the

private sector. Rather, the Department’s housing inventory must be

validated through an auditable process that can project the extent to

which the private-sector housing around military installations can support

military families. We agree that considering demand for on-base military

housing would, in effect, reverse DOD’s long-standing policy to rely on the

private sector first and should therefore be avoided.

The Deputy Under Secretary partially concurred with our

recommendation that the Department demonstrate the need for new

construction, renovation, or privatization projects using a process that

consistently and adequately considers the availability of civilian housing,

before submitting the requests for funds for the projects to Congress.

While recognizing that funding the retention or construction of unneeded

housing diverts resources from other DOD priorities, he noted that the

current amount of inadequate housing argues for continuing military

construction investment while the requirements-setting process is

finalized. We agree that some military construction may be needed in

locations where the private sector cannot support the housing need, but

the Department should carefully review projects to ensure that the private

sector cannot meet the housing need before requesting funds from

Congress. In our view, these long-standing requirement-setting

Agency Comments

and Our Evaluation
Page 16 GAO-01-889 Military Housing

weaknesses need to be addressed now. Otherwise, DOD risks spending

millions on infrastructure that it does not, or will not, need.

To determine whether DOD has implemented a standard process for

determining the need for military housing based on available private

sector housing, we held discussions with, and reviewed documents from,

DOD housing officials about the Department’s efforts to develop such a

process. We reviewed numerous past reports, including but not limited to,

those from GAO, the Department of Defense Inspector General, and the

Center for Naval Analyses documenting problems with the current

processes used to establish military housing requirements, and obstacles

that must be overcome to implement a standard Department-wide process.

To assess how the housing allowance increase will affect the need for

housing on military installations over the long term, we held discussions

with, and reviewed documents from, DOD officials of the Under Secretary

of Defense for the Comptroller; the Deputy Under Secretary of Defense for

Installations and Environment; and the Under Secretary of Defense for

Personnel and Readiness. We relied on data from past GAO and Rand

reports.

We performed our work from January 2001 through June 2001 in

accordance with generally accepted government auditing standards.

Scope and

Methodology
Page 17 GAO-01-889 Military Housing

We are sending copies of this report to appropriate congressional

committees. We will make copies available to others upon request. The

report will also be available at http://www.gao.gov.

Please contact me at (202) 512-5559 or William Beusse, Assistant Director,

at (202) 512-3517 if you have any questions concerning this report. Major

contributors to this report were Jack Edwards, John Pendleton, and

Matthew Ullengren.

Sincerely yours,

Derek B. Stewart

Director

Defense Capabilities and Management
Appendix I: Recent Reports Concerning

Military Housing

Page 18 GAO-01-889 Military Housing

Recently, several organizations have reported on the military family

housing program. The Congress, GAO, and the Department of Defense

(DOD) Inspector General have identified problems with the military

services’ methodologies for developing housing requirements. Some have

recommended that the Department develop and implement a more

consistent requirements process. Table 1 provides a summary of the

current problems and recommendations that were made to the DOD to

improve its requirements.

Table 1: Recent Reports Concerning Military Housing

Title Findings

Military Personnel: Higher Allowances

Should Increase Use of Civilian Housing, but

Not Retention (GAO-01-684, May 2001)

In May 2001, we reported that because 72 percent of military personnel responded

that they would prefer to live in civilian housing if costs are equal, the Department’s

initiative to increase the housing allowance for personnel that live in civilian housing

should satisfy servicemembers’ preference for housing. As a result, DOD should be in

a better position to implement its stated policy of relying on the private sector first for

housing.

Housing Requirements Methodology: An

Interim Report, Center for Naval Analyses

(CAB D0003196.A2, Mar. 2001)

In March 2001, the Center for Naval Analyses assessed DOD’s effort to develop

standard military housing requirements-setting process. The report stated that several

open issues, such as standards for affordable housing and acceptable commuting

distances, remain unresolved between the services. In addition, the report stated that

the services appear to want to retain the current level of on base housing regardless of

the outcome from the new housing requirements-setting process.

Military Housing: Continued Concerns in

Implementing the Privatization Initiative

(GAO/NSIAD-00-71, Mar. 2000)

In March 2000, we reported that although initial privatization plans were aggressive,

actual progress had been slow. Some progress had been made in developing an

integrated housing strategy, but the Department had not yet balanced the various

housing options (military housing, housing allowances, and privatization). At that time,

DOD had just announced the proposal to significantly increase the housing allowance.

We reported that this proposal made addressing lingering requirements problems

even more important because the services could not be assured that they were

constructing, revitalizing, or replacing housing only at installations where this was

needed. We recommended that the Secretary of Defense require that assessments of

housing requirements be updated before any privatization projects were approved.

An Evaluation of Housing Options for Military

Families, RAND (MR-1020-OSD, 1999)

In 1999, Rand reported that DOD should consider decreasing military housing by

encouraging military members to live off base in private sector housing. Rand found

that the primary reason servicemembers choose to live in military housing is the

economic benefit. This dominated all other factors including security, proximity to

work, availability, better schools, and having military neighbors. Rand concluded that

increasing the housing allowance could ultimately be tied to cost savings in operating

fewer units on base and avoiding the expense of replacing the existing housing stock.

Military Housing: Privatization Off to a Slow

Start and Continued Management Attention

Needed (GAO/NSIAD-98-178, July 1998)

In July 1998, we reported that the Department’s privatization initiative to construct,

revitalize, and maintain military housing was slow in starting, and we raised concerns

about the costs and long-term nature of some contracts, up to 50 years in some

cases. In addition, we reported that the privatization initiative had not been fully

integrated as part of an overall housing strategy to meet DOD’s housing needs in an

optimum manner and that the Department still had not developed an accurate and

consistent housing requirements process. We noted that a more accurate process

would show that the communities around military installations could meet the housing

requirements for thousands of families. We recommended that the Secretary of

Defense direct the services to resolve long-standing inconsistencies in the housing

Appendix I: Recent Reports Concerning

Military Housing
Appendix I: Recent Reports Concerning

Military Housing

Page 19 GAO-01-889 Military Housing

Title Findings

requirements determination process so that the Department’s stated policy of relying

on the private sector first to house military personnel could be implemented.

An Evaluation of the Family Housing

Requirements Process, Center for Naval

Analyses (CRM 97-116, Jan. 1998)

In January 1998, the Center for Naval Analyses reported that the methodologies used

by the services to determine the requirements for military construction were seriously

flawed and were designed to project a housing deficit.

DOD Family Housing Requirements

Determination Audit Report (98-006, Oct.

1997)

In October 1997, the DOD Inspector General reported that each of the services had

used different policies, processes, and procedures to incorporate their particular needs

into housing planning. The practices varied significantly in cost and did not produce

comparable results for determining family housing requirements. The Inspector

General recommended that the Deputy Under Secretary of Defense (Installations)

develop DOD standard processes and procedures to determine family housing

requirements.

Military Family Housing: Opportunities Exist

to Reduce Costs and Mitigate Inequities

(GAO/NSIAD-96-203, Sept. 1996)

In September 1996, we reported that DOD’s policy of relying on the private sector to

house military personnel was cost-effective. We estimated that the government spent

about $5,000 less annually for each family that lived in private instead of military

housing. Further, we reported that DOD had not maximized the use of the private

sector to house military personnel partly because DOD’s housing requirements

analyses underestimated the private sector’s ability to meet military housing needs.

We recommended that the Secretary of Defense reduce the level of military housing to

the minimum possible level.

National Defense Authorization Act for Fiscal

Year 1996: Committee on National Security

House of Representatives (Report 104-131,

June 1995, at 282, 283).

In June 1995, the House National Security Committee stated its concern that the

means of acquiring and improving family housing and supporting facilities for the

armed services were not used in a consistent manner. The Committee directed the

Secretary of Defense to conduct a study of the standards among the military

departments and develop a common Department-wide process to determine military

housing deficiencies.
Appendix II: Comments From the Department

of Defense

Page 20 GAO-01-889 Military Housing

Appendix II: Comments From the

Department of Defense
Appendix II: Comments From the Department

of Defense

Page 21 GAO-01-889 Military Housing (350086)

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