Report to the Subcommittee on Military 

Construction, Committee on 

Appropriations, U.S. Senate 

United States General Accounting Office 

GAO

May 2004 DEFENSE 

INFRASTRUCTURE 

Issues Related to the 

Renovation of General 

and Flag Officer 

Quarters 

GAO-04-555 
www.gao.gov/cgi-bin/getrpt?GAO-04-555.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Barry W. 

Holman at (202) 512-8412 or 

holmanb@gao.gov. 

Highlights of GAO-04-555, a report to 

Subcommittee on Military Construction, 

Committee on Appropriations, U. S. 

Senate 

May 2004

DEFENSE INFRASTRUCTURE 

Issues Related to the Renovation of 

General and Flag Officer Quarters 

With few exceptions, the services’ reported costs for renovation projects for 

general and flag officer quarters were generally consistent with budget 

estimates provided to Congress. For fiscal years 1999 to 2003, GAO found 

that 184, or 93 percent, of the 197 renovation projects over $100,000 cost less 

than or the same as budget estimates. While the remaining 13 projects—6 

Navy and 7 Marine Corps—exceeded cost estimates, 5 Marine Corps projects 

exceeded their budgets by more than 10 percent. 

Customer-requested changes and unforeseen repairs were the main reasons 

for cost increases to renovation projects. For 5 of the 7 projects that 

exceeded their budgets by over 10 percent, about 45 percent of the increased 

costs was for customer-driven changes, 53 percent for unforeseen repairs, 

and 2 percent could not be determined. Though the services have guidance 

to limit customer-requested changes, the Marine Corps approved many such 

changes that contributed to project costs exceeding budgets. Customer 

requests included upgraded kitchen and bathroom renovations or initially 

unplanned work. Unforeseen repairs, such as for termite damage or 

unexpected historic preservation requirements, occurred because problems 

were not identified in the inspections on which the estimates were based. 

Military services did not properly account for gifts used for general officer 

quarters in two instances, one involving renovation costs. In that instance, 

the Marine Corps did not comply with existing regulations to properly accept

and account for all gifts used to renovate the Home of the Commandants. 

The Friends of the Home of the Commandants told GAO it provided about 

$765,500 in nonmonetary materials and services (e.g., furnishings and 

construction labor). However, the Marine Corps could list nonmonetary gifts 

totaling only $492,413 because it did not follow specified gift acceptance and 

accounting procedures. Navy General Gift Fund records show receipt of an 

additional $88,300 in monetary gifts from the Friends of the Home of the 

Commandants. The Marine Corps has receipts for monetary expenditures, 

but not property records for items purchased with the gift funds. The Navy 

and Army also accepted gifts to furnish general and flag officer homes. Of 

those, the Navy did not properly accept and account for about $3,970 in 

nonmonetary gifts. 

DOD and the military services could lose visibility over housing renovation 

costs for privatized general and flag officer homes. DOD does not require 

review of renovation costs for these quarters, such as costs over $35,000, as 

required for government-owned quarters. The Navy, Marine Corps, and Air 

Force are developing guidance to increase visibility and accountability over 

the spending for these quarters, but the draft guidance is not consistent. 

Although the services have privatized only 65 of their 784 general and flag 

officer quarters, they plan to privatize 426 or 54 percent by fiscal year 2008. 

Recent cost increases in renovation 

projects to general and flag officer 

quarters raised questions about the 

services’ management of the 

programs. GAO was asked to 

determine (1) how actual costs of 

renovation projects for general and 

flag officer housing compare to 

service budget estimates provided 

to Congress and (2) the primary 

reasons for any increases and the 

services’ procedures to control cost 

increases. Additionally, GAO is 

presenting observations about the 

services’ accountability over gifts 

provided to help renovate some 

general and flag officer quarters 

and the extent to which 

Department of Defense (DOD) 

guidance provides visibility and 

control over costs associated with 

renovation projects for privatized 

general and flag officer quarters. 

GAO is making several 

recommendations to the Secretary 

of Defense to improve controls 

over renovations to general and 

flag officer quarters and provide 

increased visibility and control of 

renovations to privatized general 

and flag officer quarters. 

In commenting on a draft of this 

report, DOD concurred with two 

recommendations and did not 

concur with the third, while 

indicating actions to be taken to 

meet the intent of our 

recommendation. 
Page i GAO-04-555 Defense Infrastructure 

Letter 1

Results in Brief 2

Background 5

Actual Renovation Costs Generally Were Consistent with or Less 

Than Budget Estimates 9

Cost Increases Due to Customer-Requested Changes and 

Unforeseen Repairs 10

Marine Corps and Navy Did Not Properly Account for Gifts Used to 

Help Renovate the Home of the Commandants 13

Privatization Could Reduce Oversight of Renovations to General 

and Flag Officer Quarters 16

Conclusions 17

Recommendations 17

Agency Comments and Our Evaluation 17

Appendix I Scope and Methodology 20 

Appendix II Concerns about Air Force’s General Officer Quarters 

Renovation and Replacement Plans 22 

Appendix III Comments from the Department of Defense 25 

Tables 

Table 1. Number of General and Flag Officer Quarters Maintained 

by the Military Services as of February 29, 2004 5

Table 2: Comparison of Actual Costs to Budget Requests for 

General and Flag Officer Quarters with Major Repair 

Projects of More Than $100,000 (Fiscal Years 1999 through 

2003) 9

Table 3: Reason for Cost Increases for Five Marine Corps Major 

Renovation Projects That Exceeded Their Budgets by 

More Than 10 Percent (Fiscal Years 1999 through 2003) 11

Table 4: Navy and Marine Corps Processes for Gift Acceptance and 

Accounting 14

Contents 
Page ii GAO-04-555 Defense Infrastructure 

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Page 1 GAO-04-555 Defense Infrastructure 

May 17, 2004 

The Honorable Kay Bailey Hutchison 

Chairman 

The Honorable Dianne Feinstein 

Ranking Minority Member 

Subcommittee on Military Construction 

Committee on Appropriations 

United States Senate 

Generally, the military services’ almost 700 general and flag officer1

quarters are older and larger than typical housing in the services’ family 

housing inventories, and many are historic, with some dating from the 

early nineteenth century. These factors make general and flag officer 

homes costly to maintain, which has been an ongoing concern to 

Congress. The services have used both appropriated funds and gifts to 

maintain and pay for renovation costs associated with some of these 

quarters.2

 Recent cost increases for some major renovation projects at the 

historic Marine Corps Barracks located at Eighth and I streets in southeast 

Washington, D.C., have raised congressional concern about the services’ 

management of these programs. Additionally, questions exist regarding the 

accounting for gifts used to supplement appropriations for renovation 

projects. 

At your request, we reviewed the services’ programs for renovating 

general and flag officer housing to determine (1) how the actual costs of 

renovation projects for general and flag officer projects compared to the 

service budget estimates provided to Congress and (2) the primary reasons 

for any cost increases, including the services’ procedures to control cost 

increases. Additionally, we are providing observations about the services’ 

accountability over monetary and nonmonetary gifts provided to help 

renovate certain general and flag officer quarters as well as information 

 1

 General and flag officers include the Army, Air Force, and Marine Corps ranks of general, 

lieutenant general, major general, and brigadier general and the Navy ranks of admiral, vice 

admiral, and rear admiral (upper half and lower half). 

2

 Military family housing funds are appropriated through the Military Construction 

(MILCON) Appropriation Acts. Other funds are provided through gifts of cash, materials 

and services. 

United States General Accounting Office 

Washington, DC 20548 
Page 2 GAO-04-555 Defense Infrastructure 

concerning the extent to which the Department of Defense (DOD) has 

issued guidance to provide visibility and control over costs associated 

with renovation projects for privatized general and flag officer quarters. 

We focused our review on the services’ major renovation projects 

budgeted for $100,000 or more during fiscal years 1999 through 2003. To 

determine how the reported costs of renovation projects for general and 

flag officer quarters compared to the service budget estimates provided to 

Congress, we reviewed the services’ reported data related to the cost of a 

project to the budget estimates. We did not validate service budget and 

actual cost data, but we did discuss data reliability with responsible 

service officials and obtained information from them on steps they had 

taken to ensure the data’s reliability. Based on this, we believe that the 

data we used was sufficiently reliable for the purposes of this report. To 

determine the primary reasons for cost increases, we reviewed contractual 

actions, interviewed service officials, and documented the reasons for 

increases. Furthermore, to determine the services’ accountability over 

gifts provided to help renovate general and flag officer quarters, we 

reviewed applicable laws, DOD and service guidance, gift acceptance 

documentation, and contract and funding documents and interviewed 

cognizant officials. Finally, to determine the extent to which DOD has 

issued guidance to provide visibility and control over renovation projects 

for privatized general and flag officer quarters, we reviewed and compared 

DOD and the services’ guidance for government-managed versus 

privatized general and flag officer housing. 

We conducted our work from October 2003 through March 2004 in 

accordance with generally accepted government auditing standards. A 

more thorough description of our scope and methodology is presented in 

appendix I. 

With a few exceptions, the services’ reported actual costs3

 for renovation 

projects for general and flag officer quarters were generally consistent 

with or less than the budget estimates provided to Congress.4

 During fiscal 

years 1999 through 2003, we found that 184, or about 93 percent, of the 197 

 3

 For the purpose of this report, we used the obligations reported for the specific project to 

report actual costs. 

4

 For the purposes of this report, we used obligation estimates included in budget 

justifications submitted to Congress as project budget estimates. 

Results in Brief 
Page 3 GAO-04-555 Defense Infrastructure 

renovation projects of more than $100,000 for general and flag officer 

quarters cost less than or the same as the estimate included in the 

service’s budget justification. While the remaining 13 projects—6 Navy and 

7 Marine Corps—exceeded the services’ cost estimates, only the Marine 

Corps projects exceeded their budgets by more than 10 percent. 

Customer requests for changes and unforeseen repairs were the primary 

reasons for cost increases to renovation projects.5

 The services have 

guidance that seeks to limit customer-requested changes based on 

personal preferences, but we found numerous Marine Corps approvals for 

customer-requested changes for renovations that contributed to project 

costs exceeding budget estimates. We found that for 5 Marine Corps 

projects that exceeded their budgets by more than 10 percent, about 45 

percent of the increased costs associated with the changes were customer 

driven, about 53 percent were due to unforeseen repairs and about 2 

percent could not be determined.6

 Cost increases due to customer requests 

included upgraded kitchen and bathroom renovations or work that was 

not included in the original scope of work and occurred because the 

customer wanted the change and the housing manager or higher level 

official acquiesced. Cost increases due to unforeseen repairs—such as for 

termite damage; undetected structural deficiencies, such as sagging floor 

supports; and unforeseen historical restoration costs—occurred because 

these deficiencies or requirements were not identified during the 

inspections upon which the initial project cost and budget estimates were 

based. 

We found two projects where military services did not properly account 

for gifts used for general officer quarters; the gifts for one project were 

associated with renovation costs and used to supplement appropriations 

for general officer quarters. The Friends of the Home of the 

Commandants7

 acknowledged providing about $765,500 in nonmonetary 

 5

 The “customer” is usually the quarter’s occupant, but sometimes is the installation’s 

housing or command officials. 

6

 Four of the five projects were located at the Marine Corps Barracks located at Eighth and 

I Streets, Washington, D.C., and one at Kaneohe, Hawaii. 

7

 The Friends of the Home of the Commandants (FOTHC) is a nonprofit organization under 

section 501(c) (3) of the Internal Revenue Code, established in 1999 under the auspices of 

the Community Foundation of the National Capital Region to receive tax-deductible 

contributions for the express purpose of generating privately donated funds to help 

renovate the Home of the Commandants. 
Page 4 GAO-04-555 Defense Infrastructure 

materials and services8 and about $88,300 in funding to supplement 

funding for renovation of the Home of the Commandants. The Marine 

Corps did not comply with existing guidance to properly accept and 

account for all nonmonetary gifts used to help renovate the home and had 

difficulty accounting for the gifts at the time of our review. After some 

delay, the Marine Corps could provide a listing of only $492,413 in 

nonmonetary gifts and had no documentation to support formal 

acceptance and recording of these gifts. In addition, Marine Corps records 

do not fully account for items bought with the monetary gifts provided to 

help renovate the Home of the Commandants, although Navy General Gift 

Fund financial records do document the receipt of $88,300 donated by the 

Friends of the Home of the Commandants. The Navy and Army also 

accepted gifts to furnish general and flag officer quarters. The gifts were 

not used for renovation expenses. Of those, the Navy did not properly 

accept and account for about $3,970 in nonmonetary gifts. 

DOD could lose visibility over maintenance and repair spending for an 

increasing number of general and flag officer housing units because DOD 

has no policy requiring the services to review renovation costs on these 

homes, such as is done for maintenance and repair projects over $35,000 

for government-owned quarters. By the end of fiscal year 2003, the 

services had privatized 65 of their 784 general and flag officer quarters and 

planned to privatize 426, or 54 percent, by the end of fiscal year 2008. The 

Air Force has developed draft guidance, expected to be issued in May 

2004, which will provide more visibility and accountability over spending 

to maintain and repair privatized general and flag officer housing. The 

Navy and the Marine Corps have also developed draft guidance that 

requires headquarters approval for all renovation projects over a certain 

dollar threshold. The Army has no such guidance. 

We are making recommendations to the Secretary of Defense to ensure 

that existing guidance regarding customer-driven changes to general and 

flag officer housing renovation projects is followed, to properly account 

for all gifts used to help renovate the Home of the Commandants, and to 

provide for review of renovation projects to ensure the standardization 

and periodic review of the expenditure levels for individual privatized 

units on a programmatic basis, to include general and flag officer quarters. 

 8

 Nonmonetary material gifts included materials such as kitchen cabinets, furniture, wall 

coverings, draperies, and furniture upholstery. Services included interior design services 

and construction labor. 
Page 5 GAO-04-555 Defense Infrastructure 

In commenting on a draft of this report, DOD concurred with our first and 

second recommendations and did not concur with the third, while 

indicating actions to be taken that meet the intent of our recommendation. 

We refined this third recommendation to better reflect our intent and stay 

within the parameters of the privatization program. 

General and flag officers’ quarters are government-provided quarters for 

military officers with the rank of brigadier general or rear admiral (lower 

half) (O-7) and above. The services have a total of 685 general and flag 

officer quarters, of which 372, or about 54 percent, are considered historic 

as table 1 below shows.9

Table 1. Number of General and Flag Officer Quarters Maintained by the Military 

Services as of February 29, 2004 

Service Historic Nonhistoric Total

Army 125 114 239

Navy 105 56 161

Marine Corps 10 9 19

Air Force 132 134 266

Total 372 313 685

Source: GAO analysis of DOD data. 

The general policy in the military services is that general and flag officer 

housing is to be maintained in an excellent state of repair, commensurate 

with the rank of the occupant and the age and historic significance of the 

building. Accordingly, general and flag officer housing is expensive to 

maintain; and the age, size, and historic significance of some of these 

quarters tend to escalate their operations and maintenance costs as the 

following examples show:10

• Army: The Commandant’s home at Carlisle Barracks was built in 1932. 

The house is a two-story stone structure with 8,156 square feet of living 

 9

 The National Historic Preservation Act (codified at 16 U.S.C. 470 et seq.) outlines the 

policy for designating a residence “historic.” 

10 Average annual maintenance and repair costs shown for the four examples are the 

average of reported maintenance and repair costs less major renovation costs, for fiscal 

years 1999 through 2003. 

Background 
Page 6 GAO-04-555 Defense Infrastructure 

space and is currently undergoing a major renovation. The residence 

has an average annual maintenance and repair cost of about $14,000. 

• Navy: Tingey House, the home of the Chief of Naval Operations, is 

located in the historic Navy Yard, Washington, D.C. Constructed in 

1803, the quarters was one of the earliest buildings erected at the 

Washington Navy Yard. The home is a 2 1/2-story brick structure 

containing 12,304 square feet of space and has an average annual 

maintenance and repair cost of about $27,500. 

• Marine Corps: The Home of the Commandants—located within the 

Marine Corps Barracks at Eighth and I Streets S.E., Washington, D.C. 

—has been the home of the Marine Corps Commandants since its 

completion in 1806. The Marine Corps considers the quarters as much a 

museum as a residence. The home is a three-story structure containing 

approximately 15,605 square feet of space and has an average annual 

maintenance and repair cost of about $41,811.11

• Air Force: Carlton House is the home of the Superintendent of the U.S. 

Air Force Academy and was constructed in the 1930s. The home is a 

two-story structure with a total of 10,925 square feet of space and has 

an average annual maintenance and repair cost of about $21,000. 

All of these homes are used extensively for official entertainment purposes 

and all but the Commandant’s home at Carlisle Barracks are listed on the 

National Register of Historic Places. However, the Commandant’s quarters 

at Carlisle Barracks is considered historic and is eligible for listing on the 

National Register of Historic Places. 

 11 The Marine Corps believes that $87,000 for a one-time emergency repair to termitedamaged basement stairs and floors in fiscal year 1999 should not be included when 

calculating the average annual maintenance cost even though it was reported as a cost in 

fiscal year 1999, and that the true average annual cost for fiscal years 1999 through 2003 

should be $14,239 
Page 7 GAO-04-555 Defense Infrastructure 

The services are to follow DOD Financial Management Regulations and 

service-specific guidance to prepare budget estimates for major repair 

projects to general and flag officer quarters.12 For example, the Navy and 

Marine Corps justify projects on the basis of mission, life-cycle economics, 

health and safety, environmental compliance, or quality of life. The 

services generally hire architectural and engineering firms to inspect and 

assess the property for projects expected to cost more than $50,000 to 

determine needed repairs and establish a project cost estimate. Using 

information developed during the project justification and cost-estimating 

process, the services are to prepare budget estimates that are submitted to 

Congress for approval during the annual appropriations cycle. 

Congress has acted to control spending associated with maintaining these 

homes by establishing expense thresholds and reporting and notification 

requirements. For example, the services must include in their annual 

family housing budget submitted to Congress detailed budget justification 

material explaining the specific maintenance and repair requirements for 

those homes expected to exceed an annual $35,00013 threshold for 

maintenance and repair expenses.14

Section 2601, of Title 10, United States Code authorizes the service 

Secretaries to accept, hold, administer, and spend any gift of real or 

personal property made on the condition that it is used for the benefit—or 

in connection with the establishment, operation, or maintenance—of an 

organization under the jurisdiction of their departments. Monetary gifts 

are accepted and deposited in the Treasury in service-designated 

 12 DOD Financial Management Regulation 7000.14R, Volume 6A, Chapter 9, Accounting and 

Reporting of Operations and Maintenance of the Family Housing Program, (Feb. 1996). 

Also, see, for example, DOD Manual 4165.63-M, DOD Housing Management, (Sept. 30, 

1993); DOD Directive 4710.1 Archeological and Historic Resource Management, (June 21, 

1984); Army Regulation 210-50, Housing Management, (Feb. 26, 1999); Secretary of the 

Navy Instruction SECNAVINST 11101-73A, Approval Authority for Maintenance and 

Repair of Flag and General Officers’ Quarter, (Oct. 27, 1989); and Air Force Instruction 

AFI 32-6003, General Officer Quarters, (Sept. 10, 2003). 

13 The Military Construction Appropriation Act, 2000, Pub. L. No. 106-52, Sec. 128 (1999), 

provided that “not more than $25,000 per unit may be spent annually for the maintenance 

and repair of any general or flag officer quarters without 30 days advance prior notification 

of the appropriate committees of Congress.” This reporting threshold was increased to 

$35,000 in the Military Construction Appropriations Act, 2003, Pub. L. No. 107-249, Sec. 127 

(2002). 

14 Maintenance and repair expenses include recurring work (service calls, preventive 

maintenance, and routine work between occupancies) as well as major repairs. 
Page 8 GAO-04-555 Defense Infrastructure 

accounts. In some instances, these funds have been used to supplement 

appropriations for renovations to general and flag officer quarters. The 

Military Construction Appropriation Act for fiscal year 200015 directed that 

funds, appropriated under the act, were to be the exclusive source of 

funds for repair and maintenance of all military family housing. This 

excluded the use of gift funds to repair or maintain general and flag officer 

quarters. A year later, however, Congress expressly authorized the use of 

gift funds pursuant to Section 2601, of Title 10, United States Code, to help 

fund the construction, improvement, repair and maintenance of the 

historic residences at the Marine Corps Barracks at Eighth & I Streets S.E., 

Washington, D.C.16 DOD guidance17 provides the services with a framework 

for property accountability policies, procedures, and practices. 

The 1996 Military Housing Privatization Initiative18 allows private sector 

financing, ownership, operation, and maintenance of military family 

housing including, in some cases, housing occupied by general and flag 

officers. The goal of the initiative is to help the services remove inadequate 

housing from their family housing inventories and improve servicemember morale. Under the program, DOD utilizes various means to 

encourage private developers to renovate existing housing or construct 

new housing on or off military installations. Service members, in turn, may 

use their housing allowance to pay rent and utilities to live in the 

privatized housing. The privatization firms use the housing allowances to 

pay for the maintenance and repair of the quarters. As of March 2003, the 

military services had privatized about 28,000 family housing units, only a 

small number of which were general or flag officer quarters. The services 

plan to privatize about 183,000 units, or 72 percent of their total family 

housing inventory, by fiscal year 2007 and will increasingly include general 

or flag officer housing. 

 15 Pub. L. No. 106-52, Sec. 128 (1999). 

16 Military Construction Appropriations Act, 2001, Pub. L. No. 106-246, Sec. 135 (2000). 

17 DOD Instruction 5000.64, Defense Property Accountability, (Aug. 13, 2002). 

18 See the National Defense Authorization Act for Fiscal Year 1996 (Pub. L. No. 104-106, 

Sec. 2801 (1996)). 
Page 9 GAO-04-555 Defense Infrastructure 

With a few exceptions, the services’ reported actual costs for renovation 

projects for general and flag officer quarters were generally consistent 

with or less than the budget estimates provided to Congress. For fiscal 

years 1999 to 2003, of the 197 projects estimated to cost more than 

$100,000, 184 (about 93 percent) were under or met their budget estimates; 

and 13 (about 7 percent) exceeded their budget. While we did not identify 

any Air Force renovation projects that exceeded their budgets, we did 

learn of other concerns about costs associated with Air Force plans to 

replace and repair general officer quarters. See appendix II for further 

information on this issue. 

Table 2 shows a comparison of actual costs to budget requests for the 197 

renovation projects of more than $100,000 included in our review. 

Table 2: Comparison of Actual Costs to Budget Requests for General and Flag 

Officer Quarters with Major Repair Projects of More Than $100,000 (Fiscal Years 

1999 through 2003) 

 Actual Cost 

Service Total projects

Same as or 

less than budget 

Greater 

than budget

Army 59 59 0

Navy 93 87 6

Marine Corps 10 3 7

Air Force 35 35 0

Total 197 184 13

Percent 100 93 7

Source: GAO analysis of DOD data. 

Of the 13 over-budget projects, 5 of the 7 Marine Corps projects—4 located 

at the Marine Corps Barracks at Eighth and I streets, Washington, D.C., 

and the other located at Kaneohe, Hawaii—exceeded their budgets by 

more than 10 percent. The other 2 Marine Corps projects exceed their 

budgets by about 9 percent, and the 6 Navy projects exceed their budgets 

by less than 2 percent. 

As seen in table 2, the majority of renovation projects stayed within their 

budgets. However, some projects cost less than budgeted because the 

scope of planned work was revised or canceled for a project. For example, 

the Navy identified instances where the scope of work was reduced or 

cancelled because a change in occupancy did not occur as scheduled and 

planned repair work could not be accomplished. Army housing officials 

Actual Renovation 

Costs Generally Were 

Consistent with or 

Less Than Budget 

Estimates 
Page 10 GAO-04-555 Defense Infrastructure 

cited examples where the scope of renovation projects was reduced 

because the contractor’s final bid for lead-based paint and asbestos 

removal exceeded the government’s estimate. The projects’ scope had to 

be reduced or the budgets would be exceeded. 

Customer requests for changes and unforeseen repairs were the primary 

reasons for cost increases to renovation projects. To help minimize costs, 

housing handbooks provided to general and flag officers occupying 

government quarters discourage customer-requested changes based on 

personal preferences and entrust final approval of such changes to the 

discretion of the installation housing officer or the commanding officer. 

Although these handbooks seek to limit customer-requested changes, we 

found numerous approvals for customer-requested changes granted for 

renovations at the Marine Corps’ Home of the Commandants that 

contributed to project costs exceeding the budget estimate. 

Customer driven requests, such as upgraded kitchen and bathroom 

renovations, or work that was not included in the original scope of work 

were responsible for about 45 percent of the total cost increase for the 5 

Marine Corps projects that exceeded their budgets by more than 10 

percent. 19 Table 3 shows the reasons for changes in scope for the projects 

as well as the amount of cost increase and the percent of the total increase 

associated with the changes. 

 19 The Marine Corps Barracks, at Eighth and I streets, Washington, D.C., established in 

1801, contains five historic quarters, four general officer quarters (Quarters 1, 2, 4, and 6) 

and one senior officer quarters (Quarters 3). Quarters 6 has been the Home of the 

Commandants since 1806. Renovations at Quarters 1 included three projects, two over 

budget and one the same as budget; Quarters 2 included two projects, both over budget; 

Quarters 4 included two projects, one over and one under budget; and Quarters 6 included 

two projects, one the same as and one over budget. 

Cost Increases Due to 

Customer-Requested 

Changes and 

Unforeseen Repairs 
Page 11 GAO-04-555 Defense Infrastructure 

Table 3: Reason for Cost Increases for Five Marine Corps Major Renovation 

Projects That Exceeded Their Budgets by More Than 10 Percent (Fiscal Years 1999 

through 2003) 

Reason Amounta Percent

Customer Driven $ 518,100 45

Unforeseen circumstances $ 607,000 53

Undetermined b $ 28,300 2

Total $ 1,153,400 100

Source: GAO analysis of Marine Corps Data. 

Note: Four of the five projects are located at Marine Corps Barracks, Washington, D.C., and one is 

located at Kaneohe, Hawaii. 

a

The dollar amounts shown for each reason reflect the total of the differences between each project’s 

actual cost and the initial budget estimate that was provided to Congress. 

b

The dollar amount shown reflects the difference between the actual cost and budget estimate, for 

which we could not conclusively determine the reason for the cost increase. 

Six Navy projects exceeded their budgets by less than 2 percent. 

According to the Navy, the overruns were mostly due to planned work 

costing more than was originally budgeted—a fairly regular occurrence 

since budgets are submitted nearly 18 to 24 months before the work is 

accomplished. However, some of the increases occurred due to such 

customer requests as additional interior painting and such unforeseen 

repairs as the need to replace an old, broken boiler heating system with a 

new forced-air system. 

Customer-requested changes for the 5 projects that exceeded their 

budgets by more than 10 percent occurred because the customer, usually 

the quarters’ occupants, wanted various changes and the housing manager, 

the commanding officer, and at times the service headquarters acquiesced 

and approved the changes. For example, at the Marine Corps Barracks 

Home of the Commandants, where one project exceeded its budget by 

about 52 percent, customer-requested changes resulted in identifiable cost 

increases totaling about $338,000. 20 The single largest identifiable increase 

 20 Conferees approved a $500,000 project for exterior repairs and roof replacement in 

Conference Report (H.R. Conf. Rep. No. 106-710, at 93 (2000)) accompanying the fiscal year 

2001 military construction appropriation bill, H.R. 4424 (which became Pub. L. No. 106-246 

(2000)). On June 25, 2001, the Deputy Assistant Secretary of the Navy (Installations and 

Environment) notified Congress of the Marine Corps’ intent to change the scope of the 

previously authorized project to include kitchen renovations and other interior renovations 

in lieu of the exterior improvements. 
Page 12 GAO-04-555 Defense Infrastructure 

was due to a customer request for a major kitchen renovation not included 

in the original scope of work and costing more than $197,256. Major cost 

drivers for the kitchen renovation included cabinets, granite counter tops, 

butler pantry, and flooring that the occupant requested. Other customerrequested changes included the renovation of attached guest quarters that 

included the construction of public, handicap-accessible restrooms and 

replacement of a newly installed marble tile floor. Cost increases due to 

customer requests for Quarters 1, 2, and 4 included requests for upgraded 

kitchen cabinets and counter tops, upgraded bathroom fixtures, and wallto-wall carpeting. 

To help minimize costs, the services’ provide handbooks to general and 

flag officers occupying government quarters that address the propriety of 

and seek to discourage customer-requested changes based on personal 

preferences. The installation housing officer or the commanding officer 

has final approval for such changes. However, we found numerous 

approvals for customer-requested changes granted for renovations at the 

Marine Corps’ Home of the Commandants and other quarters at the Marine 

Corps Barracks that contributed to project costs exceeding the budget 

estimates. Navy and Army housing officials told us that controlling costs 

due to customer requests is directly related to a housing officer’s ability to 

say no to requests that could be perceived as excessive and draw undue 

public scrutiny upon the service. 

For the 5 projects that exceeded their budgets by more than 10 percent, 

cost increases due to such unforeseen repairs as for termite damage or 

such undetected structural deficiencies as sagging floor supports occurred 

because these deficiencies or requirements were not identified during 

initial inspections. For example, at the Home of the Commandants, 

identifiable changes due to unforeseen repairs resulted in cost increases 

totaling about $559,416. The single largest cost increase due to unforeseen 

repairs was for the roof. The initial budget estimate was around $192,189. 

However, the architectural and engineering firm that did the initial 

inspection upon which the budget estimate was based did not actually 

inspect the roof for damage and did not perform destructive testing to 

look for structural deficiencies.21 The current roof estimate is around 

$582,730, an increase of more than $390,541 with about 70 percent of the 

 21 Destructive testing is accomplished by making openings/perforations in walls, floors, or 

other structural apparatus in order to inspect fully for problems, such as termites, sagging 

support beams, corroded pipes, or frayed wiring that cannot be detected unless the 

openings/perforations are accomplished. 
Page 13 GAO-04-555 Defense Infrastructure 

total increase due to unforeseen deficiencies at the Home of the 

Commandants. Another unforeseen repair involved replacing a portion of 

the wood flooring on the first floor because of severe termite damage that 

was not detected until the old flooring was removed. Again, the deficiency 

went undetected because destructive testing was not performed. 

According to service officials, destructive testing is often not 

accomplished because the quarters’ occupants do not want either the 

testing to interfere with their entertainment responsibilities or the 

inconvenience of having their homes in disrepair. 

Additionally, for the Marine Corps project in Kaneohe, Hawaii, unforeseen 

historical restoration requirements caused actual renovation costs to 

exceed the budget estimate by about $47,600 or nearly 25 percent. Marine 

Corps officials stated that the state historical preservation office wanted 

the interior walls restored with the same materials used when the house 

was originally built in 1941. The Marine Corps budget estimate did not 

include this requirement. 

The Army, Navy and Marine Corps each received private donations of 

cash, property, or services to furnish and renovate general and flag officer 

quarters. While the Army and Navy accepted gift funds to furnish quarters, 

the Marine Corps accepted and used gift funds to both furnish and help 

renovate the Home of the Commandants. Although guidance exists to 

ensure such gifts are properly accepted, held, and used in accordance with 

the donor’s wishes, neither the Navy nor the Marine Corps followed these 

procedures for all gifts associated with furnishing the quarters of the 

Superintendent of the Naval Academy and the renovation of the Home of 

the Commandants. 

Section 2601, of Title 10, United States Code, provides gift acceptance 

authority to each service Secretary to accept, hold, administer, and spend 

any gift of real or personal property made on the condition that it is used 

for the benefit—or in connection with the establishment, operation, or 

maintenance—of an organization under the jurisdiction of their 

departments. In addition to this legislative authority, the Secretary of the 

Navy has issued an instruction22 to help implement and centralize gift 

acceptance authority. The Marine Corps implements the Secretary’s policy 

and re-delegates authority to subordinate commands under its jurisdiction. 

 22 SECNAVINST 4001.2G CH-2, Acceptance of Gifts, (Dec. 7, 1999). 

Marine Corps and 

Navy Did Not 

Properly Account for 

Gifts Used to Help 

Renovate the Home of 

the Commandants 
Page 14 GAO-04-555 Defense Infrastructure 

The following table summarizes Navy and Marine Corps procedures for 

accepting gifts. 

Table 4: Navy and Marine Corps Processes for Gift Acceptance and Accounting 

Monetary Gifts Nonmonetary Gifts 

• Secretary of the Navy formally accepts 

gift funds; private funds then become 

appropriated funds of the Department of 

the Navy. 

• AAUSNa deposits funds in the Treasury, 

Department of the Navy General Gift 

Fund. 

• AAUSN allots funds to the intended 

recipient, such as the Marine Corp 

Barracks, so the funds may be 

disbursed. 

• Recipient is responsible for managing 

allotment. 

• Secretary of the Navy formally accepts 

gifts valued in excess of $50,000. 

• Commandant of the Marine Corps may 

accept on behalf of Navy Secretary gifts, 

other than real property, valued at 

$50,000,or less. 

• Navy or Marine Corps may take 

temporary custody over gifts pending 

formal acceptance. 

• Gift is placed on the property account of 

the recipient when formally accepted and 

treated as official U.S. property. 

Source: GAO analysis of SECNAVINST 4001.2G CH-2, and MCO P5800.16A. 

a

The Assistant for Administration, Under Secretary of the Navy (AAUSN) has oversight responsibility 

for the Navy’s space and facilities, services, Pentagon Renovations, and other “Special Programs” to 

include approving authority for the Navy Gift Fund. 

Although aware of these procedures, Navy and Marine Corps officials 

acknowledge that in two projects, they did not list nonmonetary gifts on 

the property accounts and cannot fully account for those gifts made to 

furnish and renovate two general and flag officer quarters. 

According to Marine Corps officials, they did not follow the prescribed 

procedures for accepting and accounting for the estimated $765,500 in 

nonmonetary gifts (materials such as kitchen cabinets, furniture, wall 

coverings, draperies, and furniture upholstery) from the Friends of the 

Home of the Commandants. We contacted the Friends of the Home of the 

Commandants, which provided us with a listing of donations and their 

value totaling $765,500 provided to the Marine Corps to help renovate the 

Home of the Commandants. After some delay, the Marine Corps provided 

us with a list of nonmonetary gifts totaling $492,413 from the Friends of 

the Home of the Commandants but had no documentation to support 

formal acceptance of the gifts and that the gifts were recorded in property 

records. According to Marine Corps officials, the Friends of the Home of 

the Commandants provided the remaining $273,087 in nonmonetary gifts 
Page 15 GAO-04-555 Defense Infrastructure 

directly to the project contractor.23 However, the Marine Corps also did not 

document that these gifts were formally accepted and accounted for in 

property records. Furthermore, Navy and Marine Corps financial records 

document receipt of about $88,300 donated to the Navy General Gift Fund 

from the Friends of the Home of the Commandants during fiscal years 

1999 through 2003. The Marine Corps, after some delay, produced receipts 

to account for expenditures using these gift funds to help renovate and 

furnish the Home of the Commandants. However, the Marine Corps 

property records do not include the items purchased with the gift funds. 

These gifts were used to supplement $2,269,000 in appropriations for 

renovations to the Home of the Commandants.24

The Navy and Army also accepted nonmonetary or monetary gifts for 

furnishings for flag and general officer quarters. The gifts were not used 

for renovations to the quarters. The Navy acknowledges receiving about 

$59,780 in nonmonetary gifts provided by various donors as furnishings to 

help decorate the home of the Superintendent of the Naval Academy. 

However, similar to the Marine Corps, the Navy did not properly accept 

and account for about $3,970 of the gifts in the property records.25 The 

Army properly accepted $50,000 in furnishings from the Army War College 

Foundation for the home of the Commandant of the Army War College at 

Carlisle Barracks.26

 23 These gifts were also used for interior design services. 

24 When we started our review, the Marine Corps could account for only about $51,000 in 

expenditures paid for with Navy General Gift Fund monies. After some delay, the Marine 

Corps was able to produce receipts for expenditures totaling $90,250. The Marine Corps 

also noted a discrepancy between the Navy General Gift Fund balance and the balance 

reported by the Defense Finance and Accounting Service. The Marine Corps and Defense 

Finance and Accounting Service are working to resolve the discrepancy. 

25 According to the Navy, the DOD Inspector General identified this discrepancy during a 

1999 audit of general and flag officer quarters. However, according to the Navy, the details 

concerning the $59,780 in nonmonetary gifts (reported during fiscal year 1999) were not 

included in the final report. 

26 The Secretary of the Army accepted another gift offer on Feb. 19, 2003, which included a 

donation of real property and an offer to construct three sets of general officer type 

quarters (with an estimated value of $1,000,000) for Redstone Arsenal, Ala., from the 

Federal Building Authority and the city of Huntsville, Ala. 
Page 16 GAO-04-555 Defense Infrastructure 

DOD and the military services could lose visibility over spending to 

maintain and repair an increasing number of privatized general and flag 

officer housing units because there is no consistent DOD-wide policy 

requiring review of maintenance and repair projects over certain dollar 

thresholds. By the end of fiscal year 2003, the services had privatized 65 of 

their 784 general and flag officer quarters and planned to privatize 426, or 

54 percent, by the end of fiscal year 2008. DOD has no policy requiring the 

services to review renovation costs on these homes, such as is done for 

maintenance and repair projects of more than $35,000 for governmentowned quarters. However, the Air Force has developed draft guidance, 

expected to be issued in May 2004, which will provide more visibility and 

accountability over spending to operate and maintain privatized general 

and flag officer housing. The Navy and the Marine Corps have also 

developed draft guidance that requires headquarters approval for all 

renovation projects over a certain dollar threshold. No such policy is 

under development in the Army. 

Currently, all service headquarters are required to review any renovation 

project exceeding $35,000 for a government-owned general or flag officer 

quarters. However, there is no such requirement to review renovations 

projects involving privatized general and flag officer quarters. Recognizing 

the need for direction, the Navy, Marine Corps, and Air Force are 

developing draft guidance and procedures that will provide more visibility 

over the spending to operate and maintain privatized general and flag 

officer housing. For example, the Air Force draft guidance applies the 

same project approvals for renovations to privatized general officer homes 

as currently exist for government-owned homes, which is all renovation 

projects over $35,000. 27 Likewise, the Navy and the Marine Corps have 

developed draft guidance for internally reviewing annual operating 

budgets for privatized housing that would require approval by Navy or 

Marine Corps headquarters officials for costs that exceed $50,000 in one 

year for any house. The Army has no plans to issue additional guidance 

regarding costs to maintain and repair privatized housing. According to 

Army officials, annual operating budgets for privatized housing are 

reviewed by headquarters officials, which they believe will provide 

adequate visibility over renovations to privatized housing. We agree that 

reviewing annual budgets provides visibility over renovation costs but 

question its ability to provide oversight where renovation costs for 

selected residences are higher than the norm. 

 27 Air Force Instruction AFI 32-6007, Privatized Family Housing (draft). 

Privatization Could 

Reduce Oversight of 

Renovations to 

General and Flag 

Officer Quarters 
Page 17 GAO-04-555 Defense Infrastructure 

The services’ procedures to develop cost estimates for renovation to 

general and flag officer quarters generally produce budget estimates that 

are consistent with the projects’ actual costs. However, Marine Corps 

officials approved costly customer-requested changes based on personal 

preferences notwithstanding guidance in handbooks discouraging the 

approval of such requests. The Marine Corps failed to follow established 

guidance and procedures and properly accept and account for gifts, 

especially nonmonetary gifts, used to help renovate and furnish the Home 

of the Commandants. Thus, they have no assurance that the nonmonetary 

gifts remain in their possession. Finally, DOD and the military services 

could lose visibility over renovations to general and flag office quarters 

that are privatized. While some services are taking some steps to ensure 

that renovation projects over certain dollar thresholds are reviewed 

internally, there is no consistent DOD-wide guidance. 

We recommend that the Secretary of Defense take the following three 

actions: Direct the Secretary of the Navy to (1) reemphasize the 

importance of limiting customer-driven changes to renovation projects for 

general and flag officer housing and (2) properly account for all gifts 

accepted and used to help renovate the Home of Commandants of the 

Marine Corps. Furthermore, we are recommending the Secretary of 

Defense direct the Under Secretary for Acquisition, Technology, and 

Logistics to ensure the standardization and periodic review of the 

expenditure levels for individual privatized units on a programmatic basis, 

to include general and flag officer quarters, with periodic reports to the 

office of the Secretary of Defense. 

In commenting on a draft of this report, DOD concurred with our first and 

second recommendations and did not concur with the third. With regard 

to the first two recommendations, DOD indicated that the Navy has agreed 

to reemphasize the importance of limiting customer-driven changes to 

renovation projects for general and flag officer housing, properly 

accounting for all gifts accepted and used to help renovate the Home of 

Commandants of the Marine Corps, and incorporating accountability 

measures into revisions of Secretary of the Navy guidance governing the 

general and flag officer quarters program. However, DOD did not provide a 

time frame for accomplishing these actions. 

Our draft report also contained a third recommendation to the Secretary 

of Defense. He was asked to direct the Under Secretary for Acquisition, 

Technology, and Logistics to develop departmentwide guidance that 

Conclusions 

Recommendations 

Agency Comments 

and Our Evaluation 
Page 18 GAO-04-555 Defense Infrastructure 

provides similar project review and approval for renovation projects to 

privatized general and flag officer housing as required for governmentowned quarters over certain dollar thresholds. However, DOD did not 

agree with that recommendation expressing the view that extending the 

same government oversight to privatized housing is contrary to the 

fundamental tenets of privatization. DOD added that currently projects are 

monitored to protect government interests, including expenditure levels 

on individual units, but that the monitoring is not linked to a specific type 

of housing such as general and flag officer quarters. DOD indicated that 

although it intends to continue to rely on private sector cost-control 

mechanisms, it would review standardization of individual unit 

expenditure levels on a programmatic basis. Such action, to the extent it 

incorporates general and flag officer housing, meets the intent of our 

recommendation. Accordingly, we refined our recommendation to better 

reflect this intent and stay within the parameters of the privatization 

program. 

Additionally, the Principal Assistant Deputy Under Secretary commented 

that our report did not capture the Air Force’s response to issues the DOD 

Inspector General raised concerning the Air Force’s plans to renovate or 

replace general officer housing. As we note in appendix II, the Air Force 

disagreed with the Inspector General’s findings. This disagreement 

appears largely based on differences between the Air Force and the 

Inspector General concerning individual renovation projects versus the Air 

Force’s broader strategic plans for addressing general officer quarters 

collectively and upgrading the housing to today’s standards, rather than 

undertaking only immediate repair needs. 

Other technical comments are incorporated in the report where 

appropriate. The Principal Assistant Deputy Under Secretary’s comments 

are included in appendix III of this report. 

We are sending copies of this report to interested congressional 

committees; the Secretaries of Defense, Army, Navy and Air Force; the 

Commandant of the Marine Corps; and the Director, Office of Management 

and Budget. We will also make copies available to others upon request. In 

addition, the report will be available at no charge on GAO’s Web site at 

http://www.gao.gov. 
Page 19 GAO-04-555 Defense Infrastructure 

Please contact me on (202) 512-8412 or Michael Kennedy, Assistant 

Director, on (202) 512-8333 if you or your staff have any questions. Major 

contributors to this report were Claudia Dickey, Jane Hunt, Richard 

Meeks, and Michael Zola. 

Barry W. Holman, Director 

Defense Capabilities and Management 
Appendix I: Scope and Methodology 

Page 20 GAO-04-555 Defense Infrastructure 

We performed our work at the headquarters offices responsible for 

general and flag officer housing at the Army, the Navy, the Marine Corps, 

and the Air Force. At each location, we reviewed applicable policies, 

procedures, and related documents and interviewed responsible officials 

for the family-housing and general and flag officer quarters program. We 

also visited and met with officials from several military installations, 

including Fort McPherson, Georgia, and Fort McNair, the Washington 

Navy Yard, the Marine Corps’ Barracks at Eighth and I, and Bolling Air 

Force Base, all of which are located in Washington, D.C. At each of these 

locations we toured general and flag officer quarters that were recently 

renovated, were undergoing renovation, or had not been renovated. We 

also discussed our review with officials of Housing and Competitive 

Sourcing, Office of the Secretary of Defense, and with DOD’s Office of the 

Inspector General. 

To determine how the actual costs of renovation projects for general and 

flag officer quarters compared to the service budget estimates provided to 

Congress, we reviewed all renovation projects of more than $100,000 for 

fiscal years 1999 through 2003. We obtained the budget estimate for each 

of these projects from the service budget submissions provided to 

Congress for the fiscal year. We obtained the reported actual obligations 

related to the cost for each renovation project from the military services. 

We compared this information to determine which projects were 

completed for less than or more than budget. We did not validate service 

budget and reported obligation data, but we did discuss data reliability 

with responsible service officials and obtained information from them on 

steps they have taken to ensure the data’s reliability. Based on this, we 

believe that the data we used were sufficiently reliable for the purposes of 

this report. 

To identify the primary reasons for any cost increases and the services’ 

procedures to control cost increases, we held discussions with responsible 

service family-housing, engineering, comptroller, general counsel, and 

command officials about those renovation projects that exceeded their 

service budgets. We also reviewed and analyzed documentation that 

supported the reasons for cost increases. 

To determine the services’ accountability over gifts provided to help 

renovate general and flag officer quarters, we reviewed applicable laws 

and interviewed cognizant officials to identify those general and flag 

officer quarters with major renovations of more than $100,000 during fiscal 

years 1999 through 2003 that received gifts used to help with renovations. 

We identified one Army, one Navy, and one Marine Corps quarters that 

Appendix I: Scope and Methodology 
Appendix I: Scope and Methodology 

Page 21 GAO-04-555 Defense Infrastructure 

received gifts either monetary or nonmonetary during the scope of our 

review. The Army ($50,000 nonmonetary items, such as furniture and 

drapery material) and Navy ($51,952 nonmonetary items, such as rugs, and 

$7,830 cash) gifts were for furnishings for the quarters. The Marine Corps 

used gifts—monetary and nonmonetary—to help with the renovation of a 

general officer quarters. To determine how the services accounted for 

monetary and nonmonetary gifts, we reviewed DOD and service gift fund 

and gift acceptance regulations and guidance; interviewed cognizant 

service officials; and reviewed administrative, contract, funding and 

accounting documents. Since only the Marine Corps accepted gifts 

intended to help with the renovation of a general officer quarters, we 

focused additional attention on determining how the Marine Corps 

accounted for monetary and nonmonetary gifts provided to help renovate 

the Home of the Commandants. We compared the Marine Corps listing of 

gifts received with a listing of gifts provided by the Friends of the Home of 

the Commandants—the primary contributor of gifts for the Home of the 

Commandants during fiscal years 1999 through 2003. We also asked to 

review property records that showed the Marine Corps’ receipt of these 

gifts. The Marine Corps was unable to provide receipts or produce 

property records for the nonmonetary gifts. Further, we compared the 

Navy Comptroller’s reported balance for the Navy General Gift Fund for 

the Marine Corps Barracks at Eighth and I, with the Marine Corps 

Barracks-reported expenditures and supporting documentation. The 

Marine Corps could not provide documentation to support all Navy 

General Gift fund expenditures as reported by the Navy Comptroller. As a 

result, we were unable to verify the total amount of gifts, monetary and 

nonmonetary, received by the Marine Corps to help renovate the Home of 

the Commandants. However, where we could, we reconstructed the flow 

of gifts to the Marine Corps and reconciled individual gifts that we could 

identify. 

To assess the extent to which DOD and the services have issued guidance 

to provide visibility and control over costs associated with renovation 

projects for privatized general and flag officer quarters, we interviewed 

Office of the Secretary of Defense and service officials responsible for 

family housing and privatization. Where available, we also obtained and 

reviewed service draft guidance regarding review of renovations to 

privatized housing. 
Appendix II: Concerns about Air Force’s 

General Officer Quarters Renovation and 

Replacement Plans 

Page 22 GAO-04-555 Defense Infrastructure 

While we did not identify any Air Force renovation projects that exceeded 

their budgets, we did learn of other concerns about costs associated with 

Air Force plans to replace and repair general officer quarters. The DOD 

Inspector General recently identified issues concerning the Air Force’s 

plans to renovate or replace general officer quarters.1 The Inspector 

General questioned $21.3 million of the $73.7 million in Air Force General 

Officer Quarters Master Plan requirements because its analysis showed 

the assessment methodology did not always reflect existing conditions. 

The Air Force issued a master plan in August 2002 to identify whole house 

investment requirements for their general officer quarters. Part of the 

GOQ master plan included a prioritized operations and maintenance plan 

for each GOQ to manage and minimize maintenance and repair 

expenditures that may become necessary prior to the execution of a 

whole-house improvement project. For all 267 general officer quarters, the 

Air Force developed an individual facility profile. The profile consists of a 

description of the home, a detailed analysis of existing conditions and 

functional deficiencies, recommendations for maintenance and repair, 

house plan suitability recommendations to correct functional deficiencies 

and bring the unit up to Air Force standards, and the estimated cost to 

perform a whole-house improvement project. Incorporated within the 

profile is a condition assessment score2

 for each of the homes major 

systems and subsystems and house plan suitability scores to arrive at an 

overall composite score for each general officer quarters. The 

assessments indicated that 219 or 82 percent of their 267 homes required 

whole house improvement projects to resolve deficiencies. Based on this 

information, the Air Force developed a plan to renovate 203 homes at a 

cost of about $52.3 million and replace 64 others at a cost of about $21.4 

million, an overall plan cost of about $73.7 million.3

In a January 23, 2004, letter to the Air Force Deputy Chief of Staff for 

Installations and Logistics, the DOD Inspector General reported that the 

 1

 Memorandum for the Air Force Deputy Chief of Staff, Installations and Logistics; 

Inspector General, Department of Defense, Arlington, Va., Jan. 23, 2004. 

2 Facility systems and subsystems are rated on a 1-to-5 scale (1 being worst, 5 

being best) based on appearance, condition, functionality, expansion capacity, life 

expectancy, energy, and life/safety compliance.

3

 The Air Force’s about $74 million plan also called for the renovation of 6 

ancillary buildings and the construction of a new general officers quarters at 

Peterson AFB, Colo. 

Appendix II: Concerns about Air Force’s 

General Officer Quarters Renovation and 

Replacement Plans 
Appendix II: Concerns about Air Force’s 

General Officer Quarters Renovation and 

Replacement Plans 

Page 23 GAO-04-555 Defense Infrastructure 

Air Force’s estimate for renovating and replacing general officer quarters 

may be overstated by $21.3 million because the profile recommendations 

were not consistent with Air Force assessments of existing conditions. 

According to the Inspector General, some of the homes’ systems such as 

the roof, structural components, or the house plan met standards or 

needed only minor maintenance and repair, but the Air Force 

recommended them for replacement, relocation, or reconfiguration. For 

example, one house at Bolling Air Force Base, Washington, D.C. had a 

system4

 with a condition rating of “good,” “indicating a fully serviceable 

condition which met standards,” but the Air Force master plan included a 

recommendation to reconfigure rooms and interior walls in the home at a 

cost of $190,000. The Inspector General concluded that the Air Force’s 

condition assessment matrix tool design might have contributed to the 

inconsistencies between existing conditions and maintenance and repair 

recommendations. The Inspector General also reported that the 

inconsistency of Air Force recommendations with existing condition 

assessments demonstrated that the Air Force did not always consider 

where the home was in its life cycle. 

Additionally, DOD Inspector General officials told us separately of their 

concerns about Air Force plans to replace two homes at Bolling Air Force 

Base, which under original Air Force plans were to be renovated. The 

original fiscal year 2002 project recommended renovating the homes for 

an estimated $345,000 per home. However, because the Air Force 

designated these two homes as Special Command Position quarters,5

 and 

these homes have additional space requirements for an enlisted aide and 

for added entertainment requirements, the Air Force now estimates the 

renovation will cost an estimated $555,000 per home—an increase of 

$210,000—that is more than 70 percent of the estimated cost to replace 

each house.6

 As a result, the Air Force recommended that each house be 

replaced rather than renovated as originally planned. Air Force officials 

 4

 The “system” in question was “house plan suitability,” which includes the size, location 

and layout of rooms as well as the expansion capacity of the home. 

5

 A “Special Command Position” is generally a general or admiral whose position 

carries public entertainment responsibilities that require the incumbent to 

represent the interest of the United States in official and social activities involving 

foreign or domestic dignitaries. 

6

 According to the Air Force General Officer Quarters Master Plan, if the cost of 

whole house renovation exceeds 70 percent of the replacement cost for the home, 

replacement is recommended unless the home is listed or eligible to be listed on 

the National Register of Historic Places. 
Appendix II: Concerns about Air Force’s 

General Officer Quarters Renovation and 

Replacement Plans 

Page 24 GAO-04-555 Defense Infrastructure 

stated that the $210,000 increase in estimated renovation costs was due to 

escalation from the 2002 project to the present as well as about $110,000 

for costs associated with structural work to modernize and expand the 

kitchen, provide an enlisted aide’s office area, and correct functional 

deficiencies in the dining room to provide a more usable space; about 

$30,000 for a two car garage; and the remaining approximately $70,000 to 

address various unforeseen environmental remediation, force protection, 

and basement waterproofing requirements, as well as other electrical, 

plumbing, floor repair, cabinets, countertops and appliances not included 

in the original estimate. Since the homes are eligible for the National 

Historic Register, the Air Force must seek approval for their plans with the 

District of Columbia Historic Preservation Office. According to the Air 

Force, it initiated contact with the office in October 2002, and is currently 

proceeding with the regulatory process to obtain approval for their plans. 

The District of Columbia Historic Preservation Office has not yet approved 

the Air Force’s plans. 

The Air Force disagreed with the Inspector General findings. 
Appendix III: Comments from the Department 

of Defense 

Page 25 GAO-04-555 Defense Infrastructure 

Appendix III: Comments from the 

Department of Defense 
Appendix III: Comments from the Department 

of Defense 

Page 26 GAO-04-555 Defense Infrastructure 
Appendix III: Comments from the Department 

of Defense 

Page 27 GAO-04-555 Defense Infrastructure 

Note: Page numbers in 

the draft report may differ 

from those in this report. 

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