Report to the Secretary of Defense

United States General Accounting Office 

GAO

May 2004 MILITARY HOUSING

Further Improvements 

Needed in 

Requirements 

Determinations and 

Program Review 

GAO-04-556 
www.gao.gov/cgi-bin/getrpt?GAO-04-556.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Barry W. 

Holman at (202) 512-5581 or 

holmanb@gao.gov. 

Highlights of GAO-04-556, a report to the 

Secretary of Defense 

May 2004

MILITARY HOUSING

Further Improvements Needed in 

Requirements Determinations and 

Program Review 

DOD’s policy of relying primarily on local community housing to meet 

military family housing needs has been and continues to be cost-effective for 

the federal government. GAO’s analysis of DOD’s fiscal year 2004 estimated 

housing costs showed that the annual costs to provide housing for a typical 

military family were about $13,600 for local community housing, $16,700 for 

privatized military housing, and $19,000 for military-owned housing. 

Although DOD’s revised housing requirements determination process 

represents a significant step in the right direction, the process has not 

resulted in consistent and reliable estimates of military installation housing 

needs and does not require the services to maximize reliance on local 

community housing—the least costly housing option. Because DOD has 

not provided the services with timely detailed guidance addressing the 

particulars of performing housing requirements assessments, the services 

often used inconsistent methodologies, questionable assumptions, and 

outdated information in performing these assessments. Further, although the 

use of military-owned or privatized family housing is clearly justified when 

local community housing is not acceptable or available, or to meet military 

mission requirements, the process provides the services with several 

exceptions to community housing use that may allow the services to build 

or retain more military housing than necessary. It is also unclear whether 

servicemembers’ housing preferences have changed in view of recent 

changes, such as increases in housing allowances and the increase in the 

number and length of deployments. 

DOD could improve the top-level review of proposed military housing 

construction projects. DOD has different top-level review and approval 

processes for service proposals for military housing construction and 

housing privatization projects with the process for privatization proposals 

including additional steps, for example, a top-level review of the adequacy of 

the associated housing requirements analyses. 

Privatized Military Family Housing at Fort Hood, Texas, and Elmendorf Air Force Base, 

Alaska 

Source: DOD.

Fort Hood, Texas Elmendorf Air Force Base, Alaska

Source: Air Force.

The Department of Defense (DOD) 

plans to spend about $9.8 billion in 

fiscal year 2004 to provide housing 

for about 711,000 families of activeduty military personnel in the 

United States. DOD’s policy for 

some time has been to rely on 

housing in the local communities 

and provide military-owned or 

privatized military housing when 

the communities cannot satisfy 

requirements. Historically, DOD 

has viewed private sector housing 

as more cost-effective. In January 

2003, DOD approved a revised 

housing requirements 

determination process designed to 

provide a solid basis for justifying 

on-base family housing needs. GAO 

looked at whether (1) reliance on 

community housing remains costeffective, (2) the revised process 

has resulted in consistent and 

reliable needs assessments, and (3) 

DOD’s top-level review of military 

housing construction proposals 

could be improved. 

GAO recommends that the 

Secretary of Defense (1) expedite 

efforts to provide more detailed 

guidance on the requirements 

determination process, (2) review 

the rationale for allowed 

exceptions to using community 

housing, (3) update information on 

servicemember housing 

preferences, and (4) apply a more 

consistent top-level review for 

housing construction and 

privatization proposals. DOD 

generally agreed with the 

recommendations. 
Page i GAO-04-556 Military Housing 

Letter 1

Results in Brief 3

Background 7

Community Housing Remains the Least Costly Option for Meeting 

Military Family Needs 11

Family Housing Requirements Assessments Are Inconsistent and 

Questionable 16

DOD’s Revised Housing Requirements Determination Process Does 

Not Maximize Reliance on Community Housing 21

Opportunities Exist to Improve the Top-Level Review of Proposed 

Housing Construction Projects 26

Conclusions 30

Recommendations for Executive Action 31

Agency Comments and Our Evaluation 31

Appendix I Scope and Methodology 34 

Appendix II Selected Information from Installation Housing 

Requirements Analyses 36 

Appendix III Comments from the Department of Defense 38 

Tables 

Table 1: Prior Estimates of Annual Government Costs for 

Military-Owned and Community Housing Options 13

Table 2: Estimated Annual Government Costs for Housing Options 

in 2004 15

Table 3: Selected Information from Installation Housing 

Requirements Determination Analyses 36

Contents 
Page ii GAO-04-556 Military Housing 

Abbreviation 

DOD Department of Defense 

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Page 1 GAO-04-556 Military Housing 

May 19, 2004 

The Honorable Donald H. Rumsfeld 

Secretary of Defense 

Dear Mr. Secretary: 

The Department of Defense (DOD) plans to spend about $9.8 billion in 

fiscal year 2004 under various programs to provide housing for about 

711,000 families of active-duty military personnel in the United States. 

DOD’s policy is to rely on private sector housing in the local communities 

near military installations as the primary source of family housing. About 

two-thirds of all military families in the United States live in local 

community housing and receive a cash housing allowance to help defray 

the cost of renting or purchasing a home. Until 2001, the housing 

allowance covered an average of 81 percent of the typical housing costs, 

and servicemembers paid the rest out of pocket. An initiative started in 

2001 has significantly increased housing allowances and is slated to cover 

100 percent of typical housing costs by 2005. When local community 

housing is unavailable, unsuitable, or too expensive, DOD’s policy is to 

provide families with military-owned or privatized housing.1

 Privatized 

housing, authorized by legislation in 1996, is housing normally located on 

military installations that is owned, operated, and maintained by private 

developers.2

 Families in privatized housing use their housing allowance to 

pay rent and typical utility costs while families in military housing receive 

no housing allowance but pay nothing for housing or utilities. In 

privatizing housing, DOD expects to leverage private sector funding to 

achieve greater gains in housing improvements than could otherwise be 

achieved through use of military construction appropriations. This report 

is being addressed to you to bring to your attention opportunities to 

strengthen program management. 

 1

 DOD considers local community housing to be unsuitable if it is structurally unsound; is 

not well maintained; poses a health, safety, or fire hazard; does not possess amenities or a 

size consistent with housing in the local area, or is located outside of the market area used 

to determine local housing allowance rates. The military services normally consider local 

community housing to be too expensive if it costs more than the servicemember’s housing 

allowance plus average out-of-pocket costs. 

2

 Section 2801, National Defense Authorization Act for Fiscal Year 1996 

(Pub. L. No. 104-106, Feb. 10, 1996). 

United States General Accounting Office 

Washington, DC 20548 
Page 2 GAO-04-556 Military Housing 

Prior reports from us and others have noted that DOD did not have a 

consistent and reliable process to determine family housing requirements.3

These reports showed that significant uncertainty existed in both the 

number and location of housing units required in the future because DOD 

often underestimated the ability of local communities to meet housing 

needs and thus overestimated the need for military-owned or privatized 

housing. In January 2003, DOD approved a revised housing requirements 

determination process designed to provide a solid basis for justifying the 

number of family housing units actually needed on each installation, 

whether financed through use of military construction funding or through 

privatization. In implementing the revised process, DOD reaffirmed its 

policy of primary reliance on housing in local communities and stated that 

the construction, operation, and maintenance of military-owned housing 

would be considered only when local communities could not provide 

military families with housing. 

In view of DOD’s housing policies, the potential impacts from increased 

housing allowances, and the importance of having a consistent and 

reliable housing requirements determination process to avoid unnecessary 

housing investments, this report, undertaken pursuant to our basic 

legislative authorities, addresses whether (1) DOD’s policy of primary 

reliance on local community housing remains cost-effective, 

(2) implementation of DOD’s revised housing requirements determination 

process has resulted in consistent and reliable needs assessments, 

(3) DOD’s revised housing requirements determination process maximizes 

reliance on local community housing, and (4) opportunities exist for DOD 

to improve its review of proposed military housing construction projects. 

To address these objectives, we used DOD’s budget and program 

information to determine and compare the government’s costs to provide 

housing for a typical military family using each of the three housing 

options—local community housing with payment of a housing allowance; 

military owned, operated, and maintained housing; and privatized housing 

that is owned, operated, and maintained by private developers under the 

military housing privatization program. We primarily used cost data 

 3

 U.S. General Accounting Office, Military Housing: Management Improvements Needed 

As the Pace of Privatization Quickens, GAO-02-624 (Washington, D.C.: June 21, 2002); 

U.S. General Accounting Office, Military Housing: DOD Needs to Address Long-Standing 

Requirements Determination Problems, GAO-01-889 (Washington, D.C.: Aug. 3, 2001); 

and DOD Family Housing Requirements Determination (Inspector General Report 

No. 98-006, Oct. 8, 1997). 
Page 3 GAO-04-556 Military Housing 

contained in DOD’s fiscal year 2004 budget justification material submitted 

to the Congress in February 2003 and did not test the reliability of this data 

because it represented DOD’s official information used to support the 

President’s budget. We reviewed the housing requirements determination 

analyses for 12 installations to evaluate the basis for the estimates and 

assumptions used and assess consistency and compliance with DOD’s 

guidance but did not otherwise attempt to independently determine 

housing requirements at the 12 installations. We reviewed and discussed 

the details of the revised housing requirements determination process with 

DOD and service officials and specifically examined the basis for 

provisions in the process that allow exceptions to using local community 

housing. Finally, we documented differences in DOD’s review and 

approval processes for service proposals for military housing construction 

and privatization projects and discussed with DOD officials the reasons for 

the differences and potential advantages from making the processes more 

consistent. We conducted our work from May 2003 through March 2004 in 

accordance with generally accepted government auditing standards. 

A more detailed description of our scope and methodology is included in 

appendix I. 

DOD’s policy of relying primarily on local community housing to meet 

military family housing needs has been and continues to be cost-effective 

for the federal government. Previous studies by the Congressional 

Budget Office4

 and DOD showed that compared to the cost of providing 

military-owned housing, the government’s cost was significantly less 

when military families were paid housing allowances and lived in local 

community housing. Since these studies were performed in the mid-1990s, 

several factors have affected military housing costs, such as the initiative 

to increase the amount of the housing allowance paid to individual 

servicemembers to eliminate average out-of-pocket costs and the 

implementation of a new military family housing option—privatization of 

military-owned housing. Nevertheless, our analysis of fiscal year 2004 

estimated housing costs showed that reliance on local community housing 

continues to be the government’s least costly option for housing military 

families. Specifically, our analysis showed that the government’s annual 

costs to provide housing for a typical military family were about $13,600 

for local community housing, $16,700 for privatized military housing, and 

 4

 Congressional Budget Office, Military Family Housing in the United States 

(Washington, D.C.: September 1993). 

Results in Brief 
Page 4 GAO-04-556 Military Housing 

$19,000 for military-owned housing.5 The cost difference between local 

community housing and military privatized housing was primarily caused 

by additional federal impact aid paid to local school districts for children 

of families living in on-base privatized housing that is not subject to local 

property taxes.6

 The cost difference between privatized and 

military-owned housing, according to DOD officials, primarily reflected 

the estimated difference in the costs of a housing unit constructed, 

operated, and maintained by the military and a unit constructed, operated, 

and maintained by private developers. Other factors possibly affecting cost 

differences include differences in construction specifications and the size 

of privatized, military-owned, and community housing units rented by 

military families. 

Although DOD’s revised housing requirements determination process 

represents a significant step in the right direction, the process has not 

resulted in consistent and reliable assessments of military installation 

housing needs and may result in over reliance on more costly 

military-owned family housing. Determining an installation’s housing 

needs requires a complex analysis involving many subjective factors and 

assumptions, and DOD did not provide the services with timely detailed 

guidance addressing these matters or the level of oversight needed as the 

services began to use the process. Thus, it is not surprising that the 

services adopted different methods for determining installation housing 

needs as they began implementing the process. For example, the services 

independently decided how to address many subjective factors, estimates, 

assumptions, and methodologies, including methods and assumptions 

(1) to determine an installation’s housing requirement considering base 

population, servicemember rank, family size, and associated bedroom 

 5

 In determining the costs for the privatization option, we used the budgetary scored costs 

of privatization projects as determined by the Office of Management and Budget. Each 

privatization contract that DOD enters into must be scored for budget purposes. Scoring 

seeks to determine the cost that should be recognized and recorded as an obligation of 

DOD at the time the contract is signed. However, there are differences between the Office 

of Management and Budget and the Congressional Budget Office over budgetary scoring 

for DOD’s military housing privatization program. In the view of the Congressional Budget 

Office, privatization projects should be scored at a higher amount. 

6

 Federal impact aid is paid to local governments to help cover the cost of educating 

dependents of military servicemembers. The impact aid for each dependent is significantly 

higher for students who live with their families in military-owned or privatized housing 

located on military installations because such housing is not normally subject to local 

property taxes. When military families live in housing in the local communities, a much 

smaller amount is paid for each student because the housing is subject to local property 

taxes. 
Page 5 GAO-04-556 Military Housing 

needs; (2) to project changes in the supply and availability of local 

community housing; (3) to estimate how many military families are 

home owners and therefore will not need community rental housing; 

(4) to identify unsuitable community housing units that are excluded from 

consideration for military family use; and (5) to estimate the competition 

between civilian and military families in securing available community 

housing. Collectively, differences in these factors result in inconsistent 

installation housing requirements analyses and could result in generating 

higher or lower on-base housing needs and costs than warranted. Without 

consistent and reliable housing requirements assessments, DOD cannot 

know with assurance how many housing units it needs, where it needs 

them, whether its housing investment decisions are justified, and whether 

its overall housing costs are minimized. 

In addition, DOD’s revised housing requirements determination process 

provides the services several exceptions to the policy of maximizing 

reliance on local community housing near military installations that could 

result in further reliance on on-base housing than necessary. Although one 

exception—military mission requirements—appears clearly justified, the 

other exceptions do not and could result in the services identifying more 

on-base family housing requirements than actually needed. For example, 

regardless of the availability of local housing, the revised process allows 

installations to maintain an on-base military housing community that can 

accommodate up to 10 percent of the projected number of families at the 

installations. Applying this exception, the 12 installation analyses we 

reviewed determined that 4,576 military family housing units were 

required regardless of the ability of local communities to meet these 

housing needs.7

 The process also permits installations to provide 

additional on-base military housing in some cases for servicemembers 

with lower incomes, even though housing allowances for these 

servicemembers are expected to fully cover the actual cost of local 

housing by 2005. Application of the permitted exceptions could decrease 

reliance on community housing and increase family housing costs. 

Also, the services had no analytical support showing that there would be 

negative impacts if military families were housed in suitable, affordable 

housing in the local communities rather than on base where some 

preferred to live. DOD’s 1999 survey of active duty personnel showed that 

72 percent of servicemembers preferred local community housing if costs 

 7

 The total on-base military community housing requirement is overstated by 31 housing 

units because one analysis made a computational error. 
Page 6 GAO-04-556 Military Housing 

were equal and that there was no clear link between housing and 

retention. However, we cannot be sure to what extent these survey results 

may change given other recent changes based on the increase in housing 

allowances and the increase in the number and length of troop 

deployments. 

Opportunities exist for DOD to improve the top-level review of proposed 

military housing construction projects to provide additional assurances 

that the projects are justified and optimally integrated with the 

privatization program. DOD has different review and approval processes 

for service proposals for housing construction and housing privatization 

projects. The process for reviewing privatization proposals includes 

additional steps, such as a briefing from service officials describing each 

project and its justification and a top-level review of the adequacy of the 

associated housing requirements analysis. These extra steps provide 

additional assurances that proposed projects are adequately justified 

before approval. Also, DOD’s top-level review of military housing 

construction proposals normally does not include an analysis of whether 

the planned improvements could be more economically achieved through 

housing privatization. Our review found that the Army, the Air Force, and 

the Marine Corps have recently used, or plan to use, military construction 

projects to build replacement military family housing at installations slated 

for privatization in the near future. The Army, for example, has an 

approved $41 million fiscal year 2004 project at Fort Knox, Kentucky, to 

replace inadequate housing with 178 new houses. The Army plans to 

convey the new housing units to a privatization developer when all Fort 

Knox family housing is privatized in 2006. Although military housing 

construction projects may be appropriate at installations scheduled for 

privatization, a top-level review of such proposals could provide additional 

assurances that the alternative used to achieve needed housing 

improvements is the more advantageous option for the government—a 

feature not always present in the current process. 

We are recommending that DOD expedite efforts to provide the military 

services with more detailed guidance on implementing the revised 

housing requirements determination process to help ensure that housing 

investments, whether through military construction or privatization, are 

supported by consistent and reliable needs assessments. We are also 

recommending that DOD (1) review the rationale supporting each of the 

exceptions to using local community housing provided in the revised 

process in an effort to reduce or narrow the scope of the exceptions 

and minimize family housing costs, (2) survey servicemembers with 

dependents to update information on preferences for family housing, and 
Page 7 GAO-04-556 Military Housing 

(3) apply a more consistent top-level review and approval process for both 

military housing construction and privatization project proposals to help 

ensure that proposed housing construction projects are adequately 

justified and appropriate consideration has been given to privatization 

options and plans. In commenting on a draft of this report, DOD generally 

agreed with our recommendations and indicated that actions were under 

way or planned to deal with most of them. 

DOD seeks to provide servicemembers and their families with access to 

adequate, affordable housing either by paying a cash allowance to help 

cover the costs of renting or purchasing a home or by assigning families to 

military-owned or leased housing. In fiscal year 2004, DOD plans to spend 

about $7.1 billion for housing allowances for about 527,000 military 

families living in local community or military privatized housing and about 

$1.8 billion to operate and maintain about 169,000 military-owned family 

housing units in the United States and lease about 15,000 units. The 

Congress also authorized DOD to spend about $908 million in fiscal year 

2004 to construct and renovate military-owned family housing units. 

Recognizing that housing is a major component of the military’s 

compensation package and a key factor affecting quality of life, DOD has 

placed priority on improving the family housing program for several years. 

Partly due to initiatives to improve the program, DOD’s family housing 

costs increased by about $2.4 billion, or 37 percent, between fiscal year 

1998 and 2004. For example, DOD began a quality-of-life initiative in 2001 

to increase housing allowances and eliminate average out-of-pocket costs 

paid by servicemembers for rent and utilities when living in community 

housing. Prior to this initiative, enlisted servicemembers with families 

living in community housing received, on average, an allowance of 

$681 per month and paid 19 percent more for housing costs out of pocket. 

In 2004, enlisted servicemembers will receive, on average, an allowance 

of $1,027 per month and pay 3.5 percent more for housing costs out of 

pocket.8

 Similarly, in 2004, officers will receive, on average, an allowance 

 8

 The amounts shown reflect the average housing allowance for servicemembers with 

dependents in all enlisted paygrades in all areas of the country. Actual housing allowance 

amounts vary based on the local cost of housing in about 350 geographic areas in the 

United States. Also, housing allowances increase by paygrade except for junior enlisted 

servicemembers in paygrades E1 through E4. Servicemembers with dependents in 

paygrades E1 through E4 in the same geographic area receive the same housing allowance 

amount. Housing allowances do not vary by family size. 

Background 

Family Housing Initiatives 
Page 8 GAO-04-556 Military Housing 

of $1,486 per month and pay 3.5 percent more for housing costs out 

of pocket. By 2005, DOD plans for the average housing allowance to 

fully cover the normal costs of housing and utilities with the typical 

servicemember paying no additional out-of-pocket costs. 

DOD also started initiatives to improve the condition of military-owned 

housing. A DOD official testified in 1998 that the majority of 

military-owned housing units were old, had not been adequately 

maintained and modernized, and needed to be renovated or replaced. DOD 

established a goal to eliminate nearly all inadequate family housing by 

2007 using a three-prong approach consisting of increased housing 

allowances, privatization, and military construction. First, DOD expects 

the housing allowance initiative to reduce the requirement for 

military-owned housing because more community housing units should 

become affordable to military families. Second, widespread use of military 

housing privatization is expected to result in renovating and replacing 

inadequate housing units faster than use of traditional military 

construction funds. DOD’s plans call for privatizing the majority—about 

146,000 units—of the existing military-owned housing inventory by 2007. 

Third, DOD plans to use military construction funds to eliminate 

inadequate housing at installations where privatization is not considered 

to be a viable option. Also, compared to the past, DOD officials stated that 

they are providing on-base family housing units with more bedrooms to 

meet the needs of larger families. 

DOD’s policy is to rely primarily on local community housing and provide 

families with military-owned or privatized housing when local community 

housing is unavailable, unsuitable, or too expensive. To help implement 

this policy, the military services follow a housing requirements 

determination process that includes a periodic analysis at major 

installations to estimate housing needs. Each analysis estimates the 

number of military families at an installation and their housing needs, 

including bedroom requirements, considering family size and 

servicemember rank. The analysis compares the housing requirement with 

the availability of local community rental housing that meets the military’s 

Housing Requirements 

Determination Process 
Page 9 GAO-04-556 Military Housing 

criteria for suitability and affordability.9 When the analyses predict that 

local communities cannot meet family housing needs, the services have a 

basis to justify military-owned or privatized housing. When the analyses 

predict that local communities could meet most or all housing needs, the 

services may have a basis to justify elimination of existing military-owned 

housing units that are no longer needed. 

The housing determination process is complex and involves many 

subjective factors, assumptions, estimates, and projections. In the past, the 

services used different methods to determine housing requirements, and 

DOD was criticized by us and others for not having a consistent process 

that produced reliable results.10 To address this issue, the Deputy Secretary 

of Defense issued a memorandum on January 8, 2003, directing the 

services to begin using a new, revised process for determining family 

housing requirements.11 This memorandum confirmed a revised process 

that the military services had already agreed to and put into use. 

Separate DOD organizations manage the two key components of the 

family housing program—housing allowances and military housing. 

Housing allowances are the responsibility of the Under Secretary of 

Defense for Personnel and Readiness and primarily are managed centrally 

at DOD headquarters by the organization responsible for all compensation 

issues, including basic pay and other types of allowances. Military-owned 

and -leased housing and the military housing privatization program are the 

responsibility of the Under Secretary of Defense for Acquisition, 

Technology and Logistics. Although DOD headquarters establishes 

overall policy for military and privatized housing, primary management 

responsibility is delegated to the individual services, their major 

commands, and individual installations. 

 9

 The analyses assume that military families will rent housing when living in local 

communities. However, to recognize that some families purchase homes, installation 

housing analyses normally estimate the number of military family home owners, assume 

that the home owners are adequately housed, and exclude the home owners from the 

installations’ rental housing requirements. 

10 See GAO-02-624, GAO-01-889, and Inspector General Report No. 98-006. 

11 See Memorandum for Secretaries of the Military Departments Directors of the Defense 

Agencies, Subject: Housing Requirements Determination Process Policy Guidance, 

the Deputy Secretary of Defense (Washington, D.C.: Jan. 8, 2003). 

Family Housing Program 

Management 
Page 10 GAO-04-556 Military Housing 

Since 1996, we have issued several reports on DOD’s family housing 

program that addressed the overall program, housing allowances, military 

housing requirements, and the military housing privatization initiative. 

• In September 1996, we reported that the family housing program allowed 

significant differences in the housing benefit provided to servicemembers 

of the same paygrade depending on whether they lived in military-owned 

or community housing because of the differences in out-of-pocket costs 

paid for housing.12 DOD’s initiative to reduce out-of-pocket costs to zero by 

2005 will eliminate this inequity. 

• In July 1998, we reported on several concerns related to the new military 

housing privatization program.13 These concerns included (1) whether 

privatization would result in significant cost savings and whether the long 

contract terms of many projects might result in building housing that will 

not be needed in the future; (2) whether controls were adequate to protect 

the government’s interests in the event developers might not operate and 

maintain the housing as expected; and (3) whether DOD would face 

certain problems if privatized housing units were not fully used by military 

members and were subsequently rented to civilians, as the contracts 

permit. 

• In March 2000, we reported that initial implementation progress for the 

privatization program was slow, the services’ life-cycle cost analyses 

provided inaccurate cost comparisons because DOD had not issued 

standardized guidance for preparing the analyses, and DOD lacked a plan 

for evaluating the effectiveness of the program.14 As DOD subsequently 

quickened the pace of family housing privatization, it issued standard 

guidance for privatization life-cycle cost analyses and developed a 

program evaluation plan. 

• In May 2001, we reported on the results of our analysis of selected results 

from a broad-based 1999 survey of active duty personnel.15 We noted that 

 12 U.S. General Accounting Office, Military Family Housing: Opportunities Exist 

to Reduce Costs and Mitigate Inequities, GAO/NSIAD-96-203 (Washington, D.C.: 

Sept. 13, 1996). 

13 U.S. General Accounting Office, Military Housing: Privatization Off to a Slow Start 

and Continued Management Attention Needed, GAO/NSIAD-98-178 (Washington, D.C.: 

July 17, 1998). 

14 U.S. General Accounting Office, Military Housing: Continued Concerns in 

Implementing the Privatization Initiative, GAO/NSIAD-00-71 (Washington, D.C.: 

Mar. 30, 2000). 

15 U.S. General Accounting Office, Military Personnel: Higher Allowances Should Increase 

Use of Civilian Housing, but Not Retention, GAO-01-684 (Washington, D.C.: May 31, 2001). 

Prior GAO Reports on the 

Military Family Housing 

Program 
Page 11 GAO-04-556 Military Housing 

although increasing the housing allowance to eliminate out-of-pocket 

costs should help satisfy servicemember preferences and increase 

servicemember demand for community housing, DOD should not expect a 

substantial increase in retention to result solely from increasing housing 

allowances. 

• In August 2001, we reported that despite earlier recommendations, DOD 

had not implemented a standard process for determining military housing 

requirements.16 In that report, we pointed out that the initiative to increase 

housing allowances heightened the urgency for a consistent process, 

because the initiative could lessen the demand for military housing by 

making housing in local communities more affordable. In January 2003, 

DOD approved the revised family housing requirements determination 

process addressed in this report. 

• In June 2002, we reported that by investing about $185 million in the first 

10 family housing privatization projects, DOD should obtain housing 

improvements that would have required about $1.19 billion in military 

construction funds had only government funds been used.17 We also noted 

that privatization projects were supported by inconsistent and 

questionable needs assessments and that the overall requirement for 

military housing was not well-defined. Further, although DOD had 

included provisions in project contracts designed to protect the 

government’s interests, our report identified several areas where DOD 

could further enhance protections to the government. DOD responded by 

outlining ongoing and planned management actions to address the 

concerns noted in the report. 

Similar to information we previously reported, our analysis of fiscal year 

2004 estimated housing costs showed that the government’s most 

economical option for meeting military family housing needs continues to 

be reliance on local community housing with payment of housing 

allowances. Although costs and other factors have changed over the past 

10 years, the results of our analysis are consistent with similar analyses 

performed in the mid-1990s and show that DOD’s policy of relying 

primarily on local community housing continues to be cost-effective. We 

estimated that the cost difference to the government for each family that 

lives in local community housing, instead of military-owned housing, is 

about $5,400 less annually. The difference for each family that lives in local 

 16 See GAO-01-889. 

17 See GAO-02-624. 

Community Housing 

Remains the Least 

Costly Option for 

Meeting Military 

Family Needs 
Page 12 GAO-04-556 Military Housing 

community housing, instead of military privatized housing, is about 

$3,100 less annually. The cost differences are primarily due to three 

reasons. First, the government pays significantly less federal impact aid 

for military dependents educated in local schools when they live in 

community housing, which is subject to local property taxes. Second, 

according to DOD officials, the private sector generally can build, operate, 

and maintain a family housing unit at less cost than the government. Third, 

according to DOD officials, other factors possibly affect cost differences 

such as differences in construction specifications and the size of 

privatized, military-owned, and community housing units rented by 

military families. 

In 1993, the Congressional Budget Office issued a report on military family 

housing that included an analysis comparing the average annual cost of a 

military-owned housing unit with the cost of a community housing unit 

obtained by a military family.18 The comparison showed that in the long 

run the government spent $5,500 more annually when military-owned 

housing was provided instead of paying an allowance for a family to live in 

community housing. In response to the report, DOD compared the same 

costs. Because of some differences in the assumptions and data used for 

some cost elements, such as long-term capital investment and federal 

impact aid costs, DOD’s estimates differed somewhat. Nevertheless, DOD 

also estimated that the reduced costs to the government when families 

used community housing were significant—about $3,200 per family 

annually. Details from these analyses are shown in table 1. 

 18 See Military Family Housing in the United States. 

Previous Cost 

Comparisons of 

Housing Options 
Page 13 GAO-04-556 Military Housing 

Table 1: Prior Estimates of Annual Government Costs for Military-Owned and Community Housing Options 

Then-year dollars 

1993 Congressional Budget 

Office study 1994 DOD study 

Category Cost per family Difference Cost per family Difference

Military-owned housing option 

Operations and maintenance $6,200 $6,505 

Capital investment 4,900 2,803 

Federal impact aid 1,900 1,478 

Total $13,000 $10,786 

Community housing option 

Housing allowance $7,500 $7,506 

Federal impact aid 0 62 

DOD housing referral services 0 37 

Total $7,500 $7,605 

Cost difference $5,500 $3,181

Sources: Congressional Budget Office, Military Family Housing in the United States (Washington, D.C.: September 1993) and U.S. General Accounting Office, Military Family Housing: Opportunities Exist 

to Reduce Costs and Mitigate Inequities, GAO/NSIAD-96-203 (Washington, D.C.: Sept. 13, 1996). 

The cost differences in these analyses were primarily caused by 

three factors. First, in the mid-1990s, prior to the initiative to eliminate 

out-of-pocket costs, military families living in community housing typically 

paid about 19 percent of their housing costs out of pocket because 

housing allowances covered about 81 percent of average housing costs. 

Thus, in comparison to military-owned housing where the government 

paid all housing and utility costs and families paid no out-of-pocket costs, 

the government’s annual cost for families living in community housing was 

smaller. Second, the federal impact aid paid by the Department of 

Education to local governments to help cover the cost of educating 

dependents of military families differed depending on where families lived. 

When military families lived in community housing, a relatively small 

amount of federal impact aid was paid for each student because the 

housing was subject to local property taxes, which can be used to help pay 

for schools. When families lived in military-owned housing, a significantly 

higher amount of federal impact aid was typically paid because the 

property was not subject to local property taxes. Third, the Congressional 

Budget Office concluded that the private sector can build, operate, and 

maintain housing more economically than DOD for reasons including 

DOD’s higher project contracting and oversight costs, higher labor costs, 
Page 14 GAO-04-556 Military Housing 

and more detailed regulations and constraints on housing design 

and construction. 

Because DOD had not updated its 1994 study of housing costs, we 

reviewed the current costs of each housing option to determine whether 

reliance on community housing continues to be the government’s most 

economical option in view of family housing program changes since the 

mid-1990s. As shown in table 2, our review showed that, even though 

housing allowances have increased significantly and the new privatized 

housing option is less costly than the military-owned housing option, the 

community housing option continues to be the federal government’s least 

costly option for meeting military family housing needs.19 Compared to the 

cost of military-owned and privatized housing, the government will 

typically spend about $5,400 and $3,100 less, respectively, each year for 

each family that lives in community housing. 

 19 See note 5. 

Relying on Community 

Housing Continues to Be 

the Least Costly Option for 

Meeting Military Family 

Housing Needs 
Page 15 GAO-04-556 Military Housing 

Table 2: Estimated Annual Government Costs for Housing Options in 2004 

Fiscal year 2004 dollars 

Category Cost per family Difference

Costs of military-owned housing option 

Operations and maintenance $9,006

Capital investment 6,923

Federal impact aid 3,106

Total $19,035

Costs of military privatized housing option 

Housing allowance $13,433

Federal impact aid 3,106

Other net privatization costs 165

Total $16,704

Difference with military-owned housing option $2,331

Costs of community housing option 

Housing allowance $13,433

Federal impact aid 149

DOD housing referral services 34

Total $13,616

Difference with privatized housing option $3,088

Difference with military-owned housing option $5,419

Source: GAO’s analysis of DOD data except for federal impact aid. 

Note: Federal impact aid estimates were obtained from the Congressional Research Service’s 

report: Impact Aid for Public K-12 Education: General Overview and Current Status, RL31885 

(Washington, D.C.: May 6, 2003). 

According to DOD officials, the privatization option costs less than the 

military-owned housing option primarily because of the efficiencies gained 

from the use of private sector housing construction and management 

expertise and the use of local building specifications instead of sometimes 

more stringent military construction building specifications. The cost 

difference between the privatization option and the community housing 

option is primarily the result of differences in federal impact aid costs. 

According to DOD officials, because most privatized housing is on 

military-owned land, which is not subject to local taxes, federal impact aid 

is normally paid at the higher rate when dependents of servicemembers 

living in this housing are educated by local public schools. DOD officials 

also noted that because DOD’s housing standards differ for 
Page 16 GAO-04-556 Military Housing 

servicemembers living in privatized and government-owned housing and 

for those living in community housing, cost differences might be affected 

by differences in the average size of privatized or military-owned housing 

units compared to the average size of community housing units rented by 

military families. Specifically, DOD considers family size when 

determining military housing requirements and assigning servicemembers 

to government housing, but ignores family size when determining housing 

allowances for servicemembers living in local communities. As a result, 

servicemembers in lower paygrades with larger families are entitled to a 

residence with more bedrooms in privatized or military-owned housing 

than they are able to afford in the local community on the basis of their 

housing allowance. However, detailed data is not available to determine 

whether the average size of privatized and military-owned housing units 

exceeds the average size of community housing units rented by military 

families. 

Although DOD’s revised housing requirements determination process 

represents a significant step in the right direction, the process has yet to 

achieve one of its key objectives—consistent and reliable assessments of 

military family housing needs. Determining an installation’s housing needs 

requires a complex analysis involving many subjective factors and 

assumptions, and DOD did not provide the services with timely detailed 

guidance addressing these matters or the level of oversight needed as the 

services began to use the revised requirements process. In the absence of 

detailed guidance, we found that the services used inconsistent methods 

and sometimes questionable data sources and assumptions when 

determining family housing needs at various installations. Collectively, 

these factors could result in installation housing requirements analyses 

generating higher or lower on-base housing needs than warranted. Without 

consistent and reliable housing requirements assessments, DOD cannot 

know with assurance how many housing units it needs, where it needs 

them, whether its housing investment decisions are justified, and whether 

its overall housing costs are minimized. 

The January 2003 memorandum that announced the revised housing 

requirements determination process directed the Deputy Under Secretary 

of Defense (Installations and Environment) to consult with the military 

services and prepare necessary guidance to implement the revised 

process. Determining an installation’s housing requirement involves a 

complex analysis of military housing needs and the ability of local 

communities to meet those needs, and DOD officials understood that 

Family Housing 

Requirements 

Assessments Are 

Inconsistent and 

Questionable 

DOD Has Not Issued 

Timely Detailed Guidance 

for Implementing the 

Revised Housing 

Requirements 

Determination Process 
Page 17 GAO-04-556 Military Housing 

detailed guidance was needed to help ensure consistency and accuracy as 

the services implemented the revised process. However, DOD officials 

stated that developing detailed guidance has taken more time and 

coordination than expected and that final guidance might not be ready 

until 2005. 

Without detailed DOD guidance, each service independently decided how 

to implement the revised requirements determination process and what 

level of oversight would be provided to the process and to the housing 

requirements analyses. Thus, the services independently decided how to 

address many subjective factors, estimates, assumptions, and 

methodologies associated with each housing analysis, including methods 

and assumptions (1) to determine an installation’s family housing 

requirement considering projected base population, servicemember rank, 

family size, and associated bedroom needs; (2) to project changes in the 

supply and availability of local community housing; (3) to estimate how 

many military families are home owners and therefore will not need 

community rental housing; (4) to identify unsuitable community housing 

units that are excluded from consideration for military family use; and 

(5) to estimate the competition between civilian and military families in 

securing available community housing. With the services independently 

deciding how to address these factors, it is not surprising that the services 

adopted different methods for determining installation housing needs as 

they began implementing the revised process. 

As illustrated below, our review of the services’ housing requirements 

analyses for 12 installations found areas of concern, including use of 

inconsistent methodologies, questionable assumptions, and outdated 

information. Most of the analyses appeared to underestimate the ability 

of local communities to meet military family housing needs and thus 

overestimate the need for more costly military-owned or privatized 

housing. 

• Ten of the 12 analyses used outdated information from military housing 

expenditure surveys completed from 1994 to 1997 as the basis for 

Housing Requirements 

Analyses Use Inconsistent 

Methodologies, 

Questionable 

Assumptions, and 

Outdated Information 
Page 18 GAO-04-556 Military Housing 

estimating the number of military family home owners.20 Since 1997, 

however, several factors have changed to make home ownership more 

likely for military families, such as significantly increased housing 

allowances, decreased average out-of-pocket housing costs, and lower 

mortgage interest rates. Yet, the analyses assumed that the home 

ownership rates reported in 1997 would remain constant through the end 

of each study period—specifically until 2006 to 2008. At Shaw Air Force 

Base, for example, the housing requirements analysis used 1994 to 1997 

data to estimate that 785 of the 3,151 military families at the installation in 

2002 were home owners and that approximately the same number, 784, 

would be home owners in 2007. Because underestimating the number of 

military family home owners can result in overestimating the need for 

more costly military-owned or privatized housing, accurate estimates are 

important and the use of outdated information to make home owner 

estimates appears unreasonable. 

• Eight of the 12 analyses eliminated suitable community rental housing 

units from potential use by military families simply because the units’ 

rental costs were too low. These analyses assumed that servicemembers 

would spend at least a stated minimum amount—either their full housing 

allowance, an amount based on spending patterns identified from housing 

surveys completed in 1997, or an amount determined on another basis—on 

housing costs and would not rent suitable local housing that cost less than 

this amount. For example, the analysis for Fort Eustis eliminated from 

consideration over 3,800 suitable two-, three-, and four-bedroom 

community housing units because they rented for less than $600 a 

month—the approximate amount of the housing allowance for 

servicemembers in the lowest paygrades at this installation. Also, the 

analysis for Naval Station Everett eliminated from consideration over 

12,500 suitable two-, three-, and four-bedroom community housing units 

because they rented for less than $800 a month—the minimum rental cost 

considered appropriate, which was about 80 percent of the maximum 

allowable housing cost for servicemembers in the lowest paygrades at this 

installation. Similarly, the analysis for Luke Air Force Base eliminated 

from consideration over 23,000 suitable two-, three-, and four-bedroom 

community housing units because they rented for less than about $700 a 

month—the minimum rental cost considered appropriate in the housing 

 20 Prior to 1998, DOD conducted an annual survey to collect housing expenditure 

information because housing allowances were partially established on the basis of the 

amounts servicemembers actually spent for housing and utilities. Beginning in 1998, the 

basis for housing allowances changed to the actual median costs of local housing in various 

geographic areas of the country. DOD conducted the last housing expenditure survey 

in 1997. 
Page 19 GAO-04-556 Military Housing 

analysis based on military family spending patterns identified in 1997 

survey data. However, servicemembers are not required to spend their 

entire housing allowance on housing, and if they spend less, they can 

keep the difference. One of the reasons that DOD changed the basis for 

determining housing allowances in 1998 from servicemember housing 

expenditures to actual housing costs was that servicemembers, 

particularly in high-cost areas, often spent less than expected on housing. 

Further, because housing allowances are determined on the basis of the 

median rental cost in each geographic area, half of the rental units in the 

area will normally rent for less than the housing allowance amount plus 

the average out-of-pocket costs. For these reasons, the methodology used 

in the 8 analyses appears questionable and could result in underestimating 

the ability of the local communities to meet family housing needs and 

overestimating the need for more costly military-owned or privatized 

housing. 

• Although DOD’s guidance states that normally no more than 20 percent 

of a local community’s total rental units would likely be unsuitable for 

military families, 3 of the 12 analyses estimated that more than 20 percent 

were unsuitable.21 Specifically, after eliminating rental mobile homes, 

these analyses eliminated from 30 to 50 percent of the local communities’ 

remaining rental units from consideration for use by military families 

because the units were judged to be unsuitable. According to the analyses, 

the suitability estimates were primarily based on interviews with local 

civilian housing officials, census and similar data, opinions from 

installation officials on areas that should be excluded from consideration 

and drive-by observations. However, the analyses did not include detailed 

information to explain or support their estimates. To illustrate, the 

analysis for Fort Sam Houston estimated that 50 percent of the 

approximately 205,000 rental units in the local communities surrounding 

the installation were unsuitable for use by military families because of 

quality or safety concerns. Similarly, the analysis for Dyess Air Force Base 

estimated that over 41 percent of the 22,000 local community rental units 

 21 Memorandum for Assistant Secretaries of the Army (Installations and Environment), 

Navy (Installations and Environment) and Air Force (Installations, Environment and 

Logistics), Subject: Standardization of Housing Requirements Determination for 

Housing Privatization Projects in Hawaii, Principal Assistant Deputy Under Secretary of 

Defense (Installations and Environment) (Washington, D.C.: Mar. 27, 2003). The 

memorandum discussed results from the services’ joint effort to apply the revised process 

in Hawaii. On the basis of an analysis of the results of this effort and in an effort to apply 

lessons learned, the memorandum noted that future housing requirements assessments 

should normally exclude no more than 20 percent of a local community’s total rental units 

due to unsuitability criteria. DOD officials stated that the 20 percent criterion is used after 

rental mobile homes in local market area have been excluded from consideration. 
Page 20 GAO-04-556 Military Housing 

were unsuitable for use by military families because of quality or safety 

concerns. Because it was beyond the scope of our review, we did not 

determine the validity of the suitability estimates. However, DOD 

headquarters officials stated that accurate estimates are critical to the 

results of the housing requirements process. They also stated they are 

suspect of unsuitable estimates that exceed 20 percent. If more 

rental units are declared unsuitable than is appropriate, housing analyses 

could underestimate the ability of communities to meet family housing 

needs and overestimate the need for more costly military-owned or 

privatized housing. 

• In defining the local community housing market area surrounding each 

installation, 9 of the 12 analyses did not use the definition prescribed in 

the revised process. The revised process stated that the services should 

use the same housing market area to determine housing requirements as 

DOD uses to determine housing allowances.22 The analyses that did not 

follow this guidance defined the local housing market area in four 

different ways. For example, the housing analysis for Fort Sam Houston 

defined the market area as the communities within 20 miles of the 

installation and the analysis for Marine Corps Air Station Yuma defined the 

market area as the communities within a 1-hour commute of the 

installation. In neither case did the market area used match the area used 

to determine housing allowance rates. Differences in the way the local 

housing market is defined can cause over- or underestimates of a local 

community’s ability to meet family housing needs. 

• Six of the 12 analyses included an assessment of the housing requirements 

for single servicemembers who live off base. These analyses assumed that 

single servicemembers who live off base competed with married 

servicemembers and civilians for available community housing. The other 

six analyses assessed only family housing needs and thus assumed that 

single servicemembers did not compete with married servicemembers for 

community housing. The two approaches were inconsistent and resulted 

in different assessments of family housing needs. Also, the housing 

analysis for Naval Station Everett included single servicemembers but 

inappropriately assumed that single personnel in paygrade E4 lived off 

base and that 269 single servicemembers in paygrade E4 would require 

either a two-bedroom or a three-bedroom housing unit in 2008. However, 

the Navy requires single E4 personnel with less than 4 years of service to 

live in military barracks, and the housing allowance standard for single E4 

 22 DOD determines housing allowances based on the local cost of housing in about 

350 geographic areas in the United States. Each geographic area, termed a military housing 

area, is defined by a set of zip codes surrounding an installation or a metropolitan area that 

includes housing markets generally within 20 miles or an hour’s drive in rush hour traffic. 
Page 21 GAO-04-556 Military Housing 

personnel living off base is a one-bedroom unit, not a two- or a 

three-bedroom unit. The faulty assumptions reduced the number of 

community rental units considered available to military families at the 

installation and increased the estimated requirement for military-owned or 

privatized housing. 

In combination, the use of inconsistent methodologies, questionable 

assumptions, and outdated information has resulted in inconsistent and 

questionable estimates of on-base military housing needs, which may 

result in under reliance on community housing. The results from our 

review also raise questions concerning the adequacy of the services’ 

reviews of completed analyses for accuracy and compliance with criteria. 

Service officials stated that they provide guidance to and approve the 

assumptions used by the contractors selected to perform the analyses. 

Also, they stated that installation officials review the initial results of the 

analysis for their installation prior to the analysis being finalized. 

Nevertheless, the use of inconsistent and questionable data sources, 

assumptions, and methodologies continues to exist. See appendix II for 

additional details on all 12 housing requirements analyses. 

DOD’s revised housing requirements determination process provides the 

services several exceptions to the policy of maximizing reliance on local 

community housing near military installations that could further detract 

from reliance on local housing. The basis for some of these exceptions 

was the consensus of DOD and service military housing officials rather 

than military mission requirements, results from analytical studies, or 

evidence that retention would be negatively affected if more families lived 

in local housing. Consequently, the basis for such judgments was not 

always clear and thus subject to question. If achievable, reducing or 

narrowing the scope of any of the exceptions could increase reliance on 

community housing and reduce family housing costs. 

The Deputy Secretary of Defense’s memorandum that announced the 

revised housing requirements determination process emphasized DOD’s 

long-standing policy requiring primary reliance on the local communities 

surrounding installations for housing military families. The memorandum 

stated that because housing is not a core defense function and adequate 

capability exists in the private sector to perform this function, DOD will 

consider the construction, operation, and maintenance of military housing 

only when the private sector is not capable of meeting family housing 

needs. 

DOD’s Revised 

Housing 

Requirements 

Determination 

Process Does Not 

Maximize Reliance on 

Community Housing 

Instances When the 

Services Are Not Required 

to Use Available 

Community Housing 
Page 22 GAO-04-556 Military Housing 

However, even in view of these policy statements, the memorandum also 

included guidance that provided four instances when the services are not 

required to use available, suitable community housing. Specifically, the 

guidance stated that notwithstanding the overall policy to look first to 

local community housing, the services may retain or build military housing 

by applying the following exceptions to the use of local community 

housing at each installation.23

• Exception for key and essential personnel. The services may provide 

military family housing for servicemembers identified as key and essential 

personnel at each installation. 

• Exception to establish a military housing community. The services may 

include up to 10 percent of the projected number of military families in 

each paygrade as a military housing requirement to establish a minimum 

military housing community at each installation. 

• Exception to provide targeted economic relief. The services may include 

as a military housing requirement housing to accommodate families when 

the servicemembers’ regular military compensation falls below 50 percent 

of the local median income in the community surrounding an installation.24

• Exception for historic housing. The services may include as a military 

housing requirement any historic family housing units that an installation 

is obligated to retain in government ownership by agreement, regulation, 

or other requirement. 

As discussed below, application of these exceptions individually or 

collectively could result in greater reliance on on-base family housing than 

is warranted in view of DOD’s policy of reliance on local community 

housing. According to DOD and service officials, the exceptions were 

formulated during the years-long effort to develop a revised housing 

requirements determination process. The services believed that there were 

legitimate reasons for an installation to maintain some on-base military 

family housing regardless of the availability of community housing, for 

example, the mission-related need to house on-base personnel identified 

as key and essential. To recognize and address these reasons, DOD and 

 23 The guidance stated that the exceptions may not be used cumulatively. The services may 

use the exception that produces the greatest military housing requirement for each 

paygrade, but they may not combine exceptions within paygrades to create a larger military 

housing requirement. 

24 Regular military compensation is considered the military equivalent of civilian salaries 

and includes servicemembers’ basic pay, allowances for housing and subsistence, and the 

tax advantage of the tax-free housing and subsistence allowances. 
Page 23 GAO-04-556 Military Housing 

service officials reached consensus that the four exceptions to the overall 

policy should be an essential part of the revised process. 

Although the justification supporting the exception for key and essential 

personnel appears well-founded, the justifications supporting the other 

exceptions appear less certain and subject to question. Service officials 

stated that the key and essential personnel exception was provided 

because of mission requirements. Specifically, a relatively small number of 

servicemembers at each installation normally are designated as key and 

essential and are required to live on base regardless of the local 

communities’ ability to meet military housing needs. At the 12 installations 

we reviewed, the estimated total number of military families ranged from 

365 to 13,998 and averaged 3,781, and the number of designated key and 

essential personnel ranged from 5 to 93 and averaged 24. However, as 

discussed below, the justifications for the other allowed exceptions to 

using available community housing appear less convincing and subject 

to question. 

Each of the 12 installation housing requirements determination analyses 

we reviewed applied the military community exception. Each analysis 

identified 10 percent of the projected number of military families at each 

installation as a military housing requirement and excluded this number of 

families from consideration for housing in the local communities 

surrounding the installation. In total, the 12 analyses determined that 

4,576 military family housing units were required regardless of the ability 

of local communities to meet these housing needs.25 On an installation 

basis, with total estimated families ranging from 365 to 13,998, the 

identified military housing community requirement ranged from 37 to 

about 1,400 housing units. 

DOD officials stated that the justification for the military housing 

community exception was not founded on mission requirements or the 

results from any economic or other analysis. Instead, the exception was 

provided on the basis of consensus of DOD and military service housing 

officials. Service officials stated that they believed an on-base military 

housing community was needed to recognize the value of the cohesive 

attributes of a military community to the morale of servicemembers. The 

officials said that some families wanted to live on base because they felt a 

 25 See note 7. 

Basis for Three of the 

Four Exceptions Appears 

Subject to Question 

Basis for Military Housing 

Community Exception Appears 

Subject to Question 
Page 24 GAO-04-556 Military Housing 

greater sense of security, received more support from military family 

neighbors, and were closer to work and on-base amenities, such as 

commissaries and recreation facilities. 

While some families may prefer to live on base, DOD’s position is that 

there is no mission requirement for families to live on base, except for the 

families of the servicemembers designated as key and essential. Also, the 

services had no analytical support showing that there would be negative 

impacts if military families were housed in suitable, affordable housing in 

the local communities rather than on base where some preferred to live. In 

a May 2001 report on DOD’s 1999 survey of active duty personnel, we 

noted that the survey showed that (1) 72 percent of servicemembers 

preferred local community housing if costs were equal and (2) there was 

no clear link between housing and retention.26 We do not know whether 

these survey results have changed given the recent increased housing 

allowances and the recent increase in the number and length of troop 

deployments. Nevertheless, the services had no analytical support showing 

that the optimum on-base housing community should consist of 10 percent 

of military families—as opposed to 5 percent, 20 percent, 10 percent plus 

some addition for the other exception criteria, or some other percentage. 

Also, although the services note the value of a cohesive military housing 

community, an installation’s military-owned housing inventory often is not 

sited in one on-base neighborhood but instead is sited in several dispersed 

locations, including, in some instances, off-base locations several miles 

from the installation. 

At 5 of the 12 installations we reviewed, the application of the economic 

relief exception increased military housing requirements above the level 

established by the military housing community exception. Application of 

the economic relief exception at these installations increased military 

housing requirements by a total of 414 housing units. DOD seeks to 

provide servicemembers with access to adequate and affordable housing 

and, according to some service officials, the economic exception was 

provided on the basis of consensus of DOD and service housing officials to 

recognize the financial strain placed on married servicemembers in lower 

paygrades who live in high-cost communities. Service officials stated that 

because housing allowances vary by paygrade, servicemembers in lower 

paygrades receive lower allowances and might have more difficulty in 

renting affordable housing in high-cost areas. Further, servicemembers 

 26 See GAO-01-684. 

Basis for Targeted Economic 

Relief Exception Appears 

Subject to Question 
Page 25 GAO-04-556 Military Housing 

living in high-cost areas normally are faced with higher incidental costs 

other than housing. 

However, the targeted economic relief exception does not appear to 

recognize that other measures are in place to help mitigate financial 

hardships facing military families living in high-cost areas. In particular, 

housing allowances for servicemembers in all paygrades are based on the 

actual median cost of local housing in each geographic area of the country. 

Thus, housing allowances in high-cost areas reflect the high cost of 

community housing in those areas. For example, the 2004 housing 

allowance in the San Francisco area is $2,153 a month for servicemembers 

with dependents in the lowest paygrades—paygrades E1 through E4. 

Also, DOD plans for the housing allowance to fully cover the average 

cost of housing and utilities by 2005, with the typical servicemember 

in all paygrades paying no out-of-pocket housing costs. Further, 

servicemembers living in 53 high-cost areas in the United States are paid 

a cost-of-living allowance to recognize the higher incidental costs of 

living in these areas.27 For example, the cost-of-living allowance in the 

San Francisco area for servicemembers with dependents in paygrades E1 

and E4 is $210 and $230 a month, respectively. Finally, because installation 

housing requirements determination analyses consider the availability and 

affordability of community housing for servicemembers in each paygrade, 

the analyses are designed to identify when military housing is justified 

because local housing is too expensive. 

At 2 of the 12 installations we reviewed, the requirements analyses 

identified 595 historic housing units, applied the historic housing 

exception, and increased total military family housing requirements by 

186 units above the level established by applying the military housing 

community exception. According to service officials, the historic housing 

exception was provided on the basis of consensus of DOD and service 

housing officials to recognize that some housing units at some installations 

have been designated, or are considered, historic in nature and normally 

are required to be retained. However, historic designation of a housing 

unit does not mean that the unit must be used to house military families or 

 27 According to DOD, cost-of-living allowances affect nearly 85,000 servicemembers in 

53 military housing areas and 23 other counties in the continental United States. The 

cost-of-living allowance compensates for a portion of excess costs for non-housing 

expenses incurred in areas that exceed costs in an average U. S. military location by more 

than 8 percent. Servicemembers must absorb the first 8 percent of expenses above the 

national average. 

Basis for Historic Housing 

Exception Appears Subject 

to Question 
Page 26 GAO-04-556 Military Housing 

that it should necessarily increase or reduce housing requirements beyond 

those identified for other purposes. 

Opportunities exist for DOD to improve the top-level review given to 

service proposals for military housing construction projects. Currently, 

DOD’s review and approval process for housing construction proposals 

lacks certain additional steps included in the review and approval of 

privatization project proposals, for example, a top-level assessment of 

each project’s supporting housing requirements analysis. Adopting 

additional review steps for housing construction proposals could provide 

additional assurances that the proposals are adequately justified and that 

the more cost-effective option, military construction or privatization, is 

used to achieve needed housing improvements when local communities 

cannot meet needs. 

DOD uses different top-level review and approval processes for proposed 

housing construction and privatization projects. DOD officials stated 

that the review process for housing construction proposals is rigorous, 

well-established, and similar to the process used for other types of 

projects financed with military construction funds. First, using the results 

from housing requirements analyses and assessments of the condition of 

existing on-base housing units, individual installations identify and justify 

needed housing construction projects. Project proposals are then 

submitted through the chain of command to service headquarters. During 

this process, service officials review the adequacy of project justifications, 

consider how the projects fit into the services’ housing master plans, and 

prioritize projects in view of competing demands and budgetary 

limitations. Finally, the services submit their proposals to DOD 

headquarters for a top-level review and approval as part of the normal 

budget process prior to being submitted to the Congress. DOD housing 

officials stated that although they might raise questions concerning 

particular projects, they primarily rely on the services to ensure that the 

need for each project is well-supported and justified. 

DOD headquarters uses a different review and approval process for 

privatization proposals. When the military housing privatization program 

began in 1996, DOD established a headquarters office to oversee and 

facilitate implementation of the program. In addition to creating the 

framework for the new program, the headquarters office established 

procedures for reviewing privatization proposals and criteria for 

approving proposals. Under these procedures, the service that proposes a 

project must provide DOD headquarters officials a detailed briefing that 

Opportunities Exist to 

Improve the Top-Level 

Review of Proposed 

Housing Construction 

Projects 

DOD Uses Different 

Review Processes for 

Housing Construction and 

Privatization Projects 
Page 27 GAO-04-556 Military Housing 

describes the project, its justification, and whether it meets specific 

financial criteria. Also, DOD headquarters officials stated that they review 

each proposal’s supporting housing requirements analysis. In this review, 

DOD evaluates the estimates, assumptions, and methodology used in the 

analysis for reasonableness and compliance with guidance. If concerns are 

identified, DOD asks the service for additional information before the 

proposal is approved. 

The additional top-level review steps for privatization proposals—and in 

particular the review given to the housing requirements analyses that 

support the proposals—provide additional assurances that each proposal 

is adequately justified before approval. In view of the concerns we 

identified in the services’ installation housing requirements analyses, it 

appears that including additional top-level review steps for proposed 

housing construction projects could provide additional assurances that 

these projects are adequately justified before approval. Further, 

because the initial amount of government funds needed to construct 

a military-owned housing project often exceeds the initial amount of 

government funds needed to start an equivalent privatization project, 

it appears appropriate that the top-level review provided to housing 

construction proposals be at least equivalent to the review provided to 

privatization proposals.28

According to DOD officials, the top-level review of service proposals for 

housing construction projects does not normally include an analysis of 

whether the improvements planned from the projects could be achieved 

more economically through privatization. DOD officials stated that they 

assume that the services have considered privatization alternatives to 

achieving needed housing improvements and that the use of military 

construction funds is appropriate when the services propose this option. 

Service officials also stated that prior to submitting a housing proposal 

they consider both construction and privatization alternatives and chose 

the option that is more appropriate. 

 28 As we reported in 2002, the initial amount of government funds needed in DOD’s first 

10 privatization projects averaged about $18.5 million. Had military construction projects 

been used to achieve the same housing improvements, the initial amount of government 

funds for the projects would have averaged about $119 million. See U.S. General 

Accounting Office, Military Housing: Management Improvements Needed As the Pace of 

Privatization Quickens, GAO-02-624 (Washington, D.C.: June 21, 2002). 

Top-Level Review of 

Housing Construction 

Proposals Does Not 

Normally Consider 

Privatization Alternatives 
Page 28 GAO-04-556 Military Housing 

During our review, however, we identified some approved housing 

construction projects that were being used as an intermediate step to 

privatization without a clear analysis of the benefits of one alternative over 

the other. Specifically, the Army, the Air Force, and the Marine Corps have 

recently used, or plan to use, military housing construction projects to 

build replacement housing at installations where the services plan to 

privatize all housing in the near future. In some instances, the construction 

of the new military-owned houses apparently will be completed just in 

time to convey ownership of the units to a privatization developer who 

will begin collecting rent from military occupants of the units. Examples 

of cases we identified are shown below. 

• The Army’s fiscal year 2004 budget included $41 million for a military 

construction project at Fort Knox, Kentucky, to replace inadequate houses 

with 178 new houses. The new houses will be conveyed to a privatization 

developer when all family housing at Fort Knox is privatized—scheduled 

for 2006. Army officials stated that the rationale for the project was to 

replace inadequate houses with houses that meet current requirements as 

quickly as possible and that this could be achieved by using military 

construction funding. The officials also stated that the project should 

result in reducing the amount of government funds that will be needed to 

initiate the privatization project at Fort Knox. 

• The Marine Corps’ fiscal year 2004 budget included about $68 million for 

two military construction projects at Camp Lejeune, North Carolina, to 

replace 519 inadequate family housing units. Also, the Marine Corps’ fiscal 

year 2003 budget included about $44 million for another military 

construction project to replace 317 inadequate family housing units at the 

installation. Marine Corps officials stated that the new housing units will 

be conveyed to a privatization developer when all family housing at Camp 

Lejeune is privatized—scheduled for 2005 or 2006. The officials also stated 

that the rationale for the projects was to improve the quality of life for the 

occupants of this housing and reduce the large number of inadequate 

housing units at Camp Lejeune. The officials stated that by using military 

housing construction projects to reduce the work that would be required 

by a privatization developer, the initial amount of government funds 

required to start the privatization project might be reduced, making the 

privatization project financially more feasible for the Marine Corps. 

• The Air Force’s fiscal year 2004 budget included about $20 million for a 

military construction project to replace 120 inadequate houses with 

112 new houses at Dover Air Force Base, Delaware. Also, the Air Force’s 

fiscal year 2002 and 2003 budgets included military construction projects 

to replace inadequate housing at the installation—about $18 million for 

120 units in fiscal year 2002 and about $20 million for 112 housing units in 

fiscal year 2003. Air Force officials stated that the new housing units will 
Page 29 GAO-04-556 Military Housing 

be conveyed to a privatization developer when all family housing at Dover 

Air Force Base is privatized—scheduled for 2005. The officials also stated 

that at the time the proposals for the construction projects were prepared, 

the Air Force did not consider that housing privatization was financially 

feasible at the installation. However, after re-evaluation, the Air Force 

concluded that the installation had privatization potential and added the 

installation to its privatization schedule. The officials stated that the 

Air Force also concluded that there would be less risk and greater value 

added by continuing the implementation of the military construction 

projects prior to privatization. 

Service officials stated that they have used military housing construction 

projects at installations slated for future privatization when justified by 

various reasons, such as those illustrated in the examples. We are not 

saying that use of military construction was not justified in any of these 

cases but rather point to opportunities for DOD to provide a higher level 

assessment of justifications for such projects and their privatization 

potential before the projects are approved. It is also important to 

recognize that DOD has pursued housing privatization because it provides 

certain advantages over military construction. DOD officials note that by 

leveraging government funds and using private sector capital, the military 

can stretch its available funds so that significantly more housing can be 

improved in comparison with traditional military construction financing. 

DOD officials also note, and our analysis supports, that the privatization 

option is a more cost-effective option than the military-owned housing 

option when local communities cannot meet family housing needs. 

Finally, DOD officials note that in most cases privatization offers less risk 

to the government if units are not used by military families because the 

privatization developer—not the government—owns and is responsible for 

the units. For these reasons, it is important that DOD’s top-level review of 

housing construction proposals ensures that the privatization option has 

been appropriately considered and that the alternative more advantageous 

to the government is used to accomplish needed improvements in every 

case. 
Page 30 GAO-04-556 Military Housing 

DOD’s stated policy of primary reliance on local community housing for 

military families—if implemented to the maximum practical extent—could 

help minimize housing costs because the use of local community housing 

remains the government’s least costly option for meeting military family 

housing needs. Closely related to achieving maximum reliance on local 

community housing is the need for a process that consistently and reliably 

determines housing needs at each installation. DOD’s revised housing 

requirements process represents a significant step in this direction. Yet, 

largely because DOD has not provided timely detailed guidance to the 

services on how to implement and oversee the revised requirements 

process, installation housing analyses are inconsistent and questionable. 

Faulty analyses could lead DOD to construct military-owned housing or 

enter into long-term contracts for privatized housing in areas where local 

communities might have provided housing at lower costs. Also, because 

DOD allows several exceptions to using community housing, the services 

might justify more costly military-owned or privatized housing in some 

cases when local community housing might meet the needs. If achievable, 

reducing or narrowing the scope of currently allowed exceptions to the 

use of community housing could increase reliance on such housing, 

reduce costs, and help ensure that military-owned or privatized housing 

is provided only when the local communities near military installations 

are not capable of fulfilling needs. In addition, considering the recent 

increases in housing allowances, increases in the number and length 

of troop deployments, and other changes, servicemember housing 

preferences also may have changed. Current family housing preference 

information is an important consideration as DOD addresses the housing 

needs of servicemembers with dependents. Further, in view of the high 

cost of providing military-owned housing and to help prevent housing 

investments that are not adequately justified, it is important that service 

proposals for military housing construction projects receive a top-level 

review consistent with the review provided to service proposals for 

privatization projects. Without such a top-level review of military housing 

construction proposals that also considers privatization options and plans, 

DOD has less assurance that the proposals are well-supported and that the 

more advantageous option, military construction or privatization, is used 

to achieve needed housing improvements when local communities cannot 

meet needs. 

Conclusions 
Page 31 GAO-04-556 Military Housing 

We recommend that the Secretary of Defense direct the Under Secretary 

of Defense for Acquisition, Technology and Logistics to take the following 

four actions: 

• Expedite efforts to provide the military services with more detailed 

guidance on implementing the revised housing requirements 

determination process to help ensure that housing investments, whether 

through military construction or privatization, are supported by consistent 

and reliable needs assessments. This guidance should include specifics on 

(1) the information sources, assumptions, and methodology to be used in 

each installation housing requirements determination analysis and (2) the 

appropriate service-level oversight of the requirements determination 

process to help ensure reliability and compliance with the guidance. 

• Review the rationale supporting each of the exceptions to using local 

community housing provided in the revised housing requirements 

determination process in an effort to reduce or narrow the scope of the 

exceptions and help minimize family housing costs. 

• Survey servicemembers with dependents to update information on the 

current preferences for family housing given recent changes, such as the 

increase in housing allowances and the increase in the number and length 

of troop deployments. 

• Apply a more consistent top-level review and approval process for both 

military housing construction and privatization project proposals to help 

ensure that proposed housing construction projects are adequately 

justified and appropriate consideration has been given to privatization 

options and plans. 

In commenting on a draft of this report, the Principal Assistant Deputy 

Under Secretary of Defense (Installations and Environment) fully agreed 

with two and partially agreed with two of our recommendations and 

indicated that actions were under way or planned to deal with most of 

them. DOD stated it will issue detailed guidance on implementing the 

revised housing requirements determination process in the DOD Housing 

Management Manual, scheduled for issuance in December 2004, and 

resurvey the housing preferences of servicemembers with dependents by 

the end of 2004. 

DOD partially agreed with our recommendations to review the rationale 

supporting each of the exceptions to using local community housing 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 
Page 32 GAO-04-556 Military Housing 

provided in the revised housing requirements determination process and 

apply a more consistent top-level review and approval process for both 

military housing construction and privatization project proposals. While 

DOD indicated it would review the rationale supporting each of the 

exceptions to using local community housing, it is not clear to what 

extent DOD plans to assess their collective effect on relying on local 

community housing to minimize family housing costs. Also, regarding the 

recommendation that DOD apply a more consistent top-level review and 

approval process for both military housing construction and privatization 

project proposals, DOD indicated that it would apply a top-level review 

process to the decision on whether to privatize or use traditional military 

construction as part of its master planning process. It did not state to what 

extent it intended to add a top-level review of the housing requirements 

analyses supporting proposed housing construction projects to help 

ensure that proposed housing construction projects are adequately 

justified. In view of the concerns we identified in the services’ installation 

housing requirements analyses, we continue to believe that DOD should 

perform a top-level review of the housing requirements analyses 

supporting each proposed housing construction project prior to approval. 

DOD’s comments are reprinted in their entirety in appendix III. 

As you know, Section 720, Title 31, United States Code, requires the head 

of a federal agency to submit a written statement of the actions taken on 

our recommendations to the Senate Committee on Governmental Affairs 

and the House Committee on Government Reform not later than 60 days 

after the date of this report. A written statement must also be sent to the 

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

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

report. 
Page 33 GAO-04-556 Military Housing 

We are sending copies of this report to the appropriate congressional 

committees, and it will be available at no charge on GAO’s Web site at 

http://www.gao.gov. If you or your staff have any questions on the matters 

discussed in this report, please contact me at (202) 512-8412 or my 

Assistant Director, Mark Little, at (202) 512-4673. Gary Phillips, Sharon 

Reid, and Deborah Owalabi were major contributors to this report. 

Sincerely yours, 

Barry W. Holman, Director 

Defense Capabilities and Management 
Appendix I: Scope and Methodology 

Page 34 GAO-04-556 Military Housing 

To determine whether the Department of Defense’s (DOD) policy of 

primary reliance on local community housing is cost-effective, we 

compared the government’s costs to provide housing for a typical military 

family using each of the three available housing options. Specifically, we 

used DOD and service budget and program information to determine and 

compare the government’s costs to house a typical military family in 

(1) local community housing with payment of a housing allowance; 

(2) military owned, operated, and maintained housing; and (3) housing 

owned, operated, and maintained by private developers under the military 

housing privatization program. We primarily used cost data contained in 

DOD’s fiscal year 2004 budget justification material submitted to the 

Congress in February 2003 and did not test the reliability of this data 

because it represented DOD’s official information used to support the 

President’s budget. We considered the major types of costs in each 

housing option including housing allowances; military housing 

construction, operations, and maintenance costs; privatization project 

costs; housing referral services costs; and costs of federal impact aid paid 

by the Department of Education for dependents of military 

servicemembers attending local schools. The typical military family was a 

composite representing officer and enlisted servicemembers in all 

paygrades. In addition to our analysis, we reviewed estimates of military 

housing costs prepared in the mid-1990s by DOD and the Congressional 

Budget Office. Also, we shared the details of our analyses with DOD and 

service officials. 

To determine whether DOD’s revised housing requirements determination 

process has resulted in consistent and reliable estimates of installation 

housing needs, we selected and reviewed the housing requirements 

analyses for 12 installations—3 from each service. We selected analyses 

that (1) included statements that they had been prepared in accordance 

with the revised process and (2) were for installations where military 

housing construction projects and/or housing privatization projects were 

recently approved or planned. For each analysis, we evaluated the stated 

basis for the estimates and assumptions used and assessed consistency 

and compliance with the January 2003 memorandum that implemented the 

revised process. We did not otherwise attempt to independently determine 

housing requirements at the 12 installations. We shared the results of our 

analyses with DOD and service officials and incorporated their comments 

as appropriate. We also discussed with DOD and service officials the 

procedures they use to review the adequacy of completed installation 

housing requirements analyses. 

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

Page 35 GAO-04-556 Military Housing 

To determine whether DOD’s revised housing requirements determination 

process maximizes reliance on local community housing, we interviewed 

DOD and service headquarters housing officials, reviewed applicable DOD 

and military service policies and procedures, reviewed family housing 

improvement plans and initiatives, and visited four military installations in 

Virginia—Fort Eustis, Langley Air Force Base, Naval Station Norfolk, and 

Marine Corps Base Quantico—to view family housing conditions and 

discuss housing options and associated costs. In reviewing the details of 

the revised process, we specifically assessed the basis for the provisions 

in the process that allow exceptions to using local community housing. 

This assessment included a review of the support for each exception, 

discussions with DOD and service personnel on the need for each 

exception, and consideration of the impact of the exceptions at 

12 installations where we reviewed housing requirements analyses. 

To determine whether opportunities exist for DOD to improve its review 

of proposed military housing construction projects, we documented and 

compared DOD’s review and approval processes for service proposals for 

military housing construction projects and military housing privatization 

projects. We discussed differences in the processes with DOD officials to 

determine the reasons for differences and the potential advantages of 

making the review and approval processes more consistent. We also 

reviewed the services’ military construction budgets for fiscal years 2002, 

2003, and 2004 to identify installations with approved military housing 

construction projects. We compared the installations identified with the 

list of installations that the services plan to privatize to identify 

installations with approved military housing construction projects that 

were also slated for future privatization. We discussed these installations 

with service officials to determine reasons for the construction projects in 

view of privatization plans. 

We conducted our work from May 2003 through March 2004 in accordance 

with generally accepted government auditing standards. 
Appendix II: Selected Information from 

Installation Housing Requirements Analyses 

Page 36 GAO-04-556 Military Housing 

Table 3 shows selected information from the services’ housing 

requirements determination analyses for the installations we reviewed. 

The information shows inconsistencies in how the analyses were 

prepared, ranges of estimates used, and projected results from the 

analyses. 

Table 3: Selected Information from Installation Housing Requirements Determination Analyses 

Installation 

Used DOD’s 

prescribed definition 

of local housing 

market? 

Considered single 

servicemembers’ 

housing needs? 

Used survey 

data from 1997 

to estimate 

home owners? 

Excluded rental housing 

costing less than housing 

allowance or amount based 

on spending patterns 

from1997 survey? 

Shaw Air Force Base, 

South Carolina 

No Yes Yes No 

Luke Air Force Base, Arizona No Yes Yes Yes 

Dyess Air Force Base, Texas No Yes Yes Yes 

Fort Eustis, Virginia No No No Yes 

Fort Knox, Kentucky No No Yes Yes 

Fort Sam Houston, Texas No No Yes Yes 

Naval Station Everett, 

Washington 

Yes Yes Yes Yes 

Naval Weapons Station Earle, 

New Jersey 

Yes Yes Yes Yes 

Naval Submarine Base New 

London, Connecticut 

Yes Yes Yes Yes 

Marine Corps Air Station Yuma, 

Arizona 

No No Yes Not shown in analysis 

Marine Corps Base Camp 

Lejeune, North Carolina 

No No No Not shown in analysis 

Marine Corps Air Ground 

Combat Center Twentynine 

Palms, California 

No No Yes Not shown in analysis 

Source: DOD information with GAO analysis. 

Note: The analysis stated that 21.3 percent of local community rental housing was unsuitable, 

including rental mobile homes. However, the analysis did not state the unsuitable percentage after 

eliminating rental mobile homes. 

Appendix II: Selected Information from 

Installation Housing Requirements Analyses 
Appendix II: Selected Information from 

Installation Housing Requirements Analyses 

Page 37 GAO-04-556 Military Housing 

Table 3 shows selected information from the services’ housing 

requirements determination analyses for the installations we reviewed. 

The information shows inconsistencies in how the analyses were 

prepared, ranges of estimates used, and projected results from the 

analyses. 

Percentage of local 

community rental housing 

considered unsuitable, after 

eliminating mobile homes 

Projected total number of 

military families

Projected minimum on-base 

housing requirement allowed 

by DOD’s revised 

requirements determination 

process 

Projected total on-base 

housing requirement

17.1 3,152 326 1,491

(see note) 2,658 287 426

41.2 2,920 299 1,261

18.1 2,690 300 874

10.0 3,833 667 1,192

50.0 4,625 621 1,334

12.3 2,557 322 434

14.0 365 41 85

30.0 3,227 447 2,099

16.2 2,147 217 842

10.3 13,998 1,407 6,373

11.7 3,201 331 1,989
Appendix III: Comments from the Department 

of Defense 

Page 38 GAO-04-556 Military Housing 

Appendix III: Comments from the 

Department of Defense 
Appendix III: Comments from the Department 

of Defense 

Page 39 GAO-04-556 Military Housing 
Appendix III: Comments from the Department 

of Defense 

Page 40 GAO-04-556 Military Housing 

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