The Department of Defense (DOD) spends about $8 billion annually to provide housing for military members and their families either by paying cash allowances for members to live in private sector housing or by assigning members to military-owned or -leased quarters. Over the past several years, DOD has expressed concern over the poor quality of the military housing inventory and the need for renovations and improvements to bring the housing up to contemporary standards. To improve housing faster and more economically than could be achieved if only traditional military construction appropriations were used, the Congress approved DOD's request for a new initiative, known as the Military Housing Privatization initiative, that allows and encourages private sector financing, ownership, operation, and maintenance of military housing. Under the initiative, DOD can provide direct loans, loan guarantees, and other incentives to encourage private developers to construct and operate housing either on or off military installations. Because it represents a new approach to improving military housing, GAO reviewed the implementation of the new initiative to (1) measure progress to date, (2) assess issues associated with privatizing military housing, and (3) determine whether the new initiative is being integrated with other elements of DOD's housing program.

"This report describes the Military Housing Privatization Initiative (MHPI), a pilot program authorized by Congress in 1996 to encourage privately-funded development of housing for use by members of the U.S. Military Services (including the Army, Navy, Marine Corps, and Air Force). The quality of housing available to members of the Military Services is considered one of the most important components (along with pay and quality of workplace) in defining the military's "quality of life," directly influencing the ability of the Military Services to retain personnel on active duty."

Renovating or replacing 168,000 inadequate military family housing units using traditional military construction methods would take over 20 years and cost about $16 billion. In 1996, to improve housing faster and more economically, Congress authorized the Military Housing Privatization Initiative to allow private-sector financing, ownership, operation, and maintenance of military housing. At the request of the Subcommittee on Military Construction, House Committee on Appropriations, GAO examined the reliability of military housing needs assessments, as well as achievement of privatization financial goals and government protections in contract provisions.

Discusses the DoD's new military housing program known as the Military Housing Privatization Initiative, which allows and encourages private sector financing, ownership, operation, and maintenance of military housing. DoD hopes that this initiative will improve military housing faster and more economically than could be achieved if only traditional military construction appropriations were used. Reviews the implementation of the new initiative to (1) measure progress to date, (2) assess issues associated with privatizing military housing, and (3) determine whether the new initiative is being integrated with other elements of DoD's housing program.