The U.S. Government Accountability Office (GAO) is an independent agency that works for Congress. The GAO watches over Congress, and investigates how the federal government spends taxpayers dollars. The Comptroller General of the United States is the leader of the GAO, and is appointed to a 15-year term by the U.S. President. The GAO wants to support Congress, while at the same time doing right by the citizens of the United States. They audit, investigate, perform analyses, issue legal decisions and report anything that the government is doing. This is one of their reports.

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.

DoD estimates that about 200,000 military family housing (MFH) units are old, lack modern amenities, & require renovation or replacement. To improve MFH more economically & faster, Congress authorized a 5-year pilot program, termed the Military Housing Privatization Initiative (MHPI), to allow private sector financing, ownership, operation, & maintenance of military housing. This report reviews the implementation of the MHPI to determine the status of current & planned MFH privatization projects, examine the accuracy of life-cycle cost analyses for proposed projects, & asses progress toward integrating the initiative with other MFH programs. Charts & tables.

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.

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