GAO reports slow progress in military housing privatization

Monday, April 3rd 2000, 12:00 am

By: News On 6

A new study by the General Accounting Office concludes that the Pentagon's effort to privatize housing on military installations has made "limited progress" and may save less money than expected.

The Military Housing Privatization Initiative, a pilot program authorized by Congress in 1996, allows private developers to take over the management, maintenance and construction of housing on military installations.

The Department of Defense, fighting to retain its service members and improve their quality of life, is confronted with a nationwide housing crisis. Officials estimate that more than 180,000 military housing units need to be renovated or replaced. That job, at current funding levels and using traditional military construction methods, might take three decades and cost about $16 billion to complete.

Privatization has been widely touted as a way to improve military housing at a faster rate - and more inexpensively - than traditional methods.

But as of Jan. 1, according to the GAO report, the Defense Department had awarded only two privatization contracts to build or renovate 3,083 housing units.

Officials formally broke ground last weekend on a privatized housing project at Fort Carson, Colo. A private developer has contracted to renovate 1,823 housing units at the Army installation and will build 840 more. The contract was awarded last fall.

And a contract for 420 housing units at Lackland Air Force Base in San Antonio was awarded in 1998. Construction is scheduled to be completed early next year.

"Because progress has been slow and because the services have curtailed plans for using the initiative, it appears questionable whether the services will meet a . . . goal to eliminate all inadequate family housing by fiscal year 2010," the GAO report states.

The military, however, is poised to launch several other privatization projects. For example, Army officials say that a developer will soon begin working on a plan to privatize Army housing at Texas' Fort Hood, the world's largest military installation.

In a letter to the GAO, Defense Deputy Undersecretary Randall A. Yim disputed some of the GAO's cost analyses but also concurred with the "basic recommendations of the report."

Mr. Yim said that long-term savings from privatization is "an important benefit." He added that "of equal importance is the need to fix the inadequate housing inventory . . . within a reasonable period of time."

Another potential benefit is that service members who now manage, maintain and construct housing can be freed up for other duties.

Paul Taibl, a senior official with Business Executives for National Security, a nonpartisan policy think tank in Washington, suggests that the Pentagon has gotten off to a slow start, but, in general, isn't resisting privatization.

"The services definitely know that if they want to leverage what limited resources they've got, they've got to encourage the private sector to help them out," Mr. Taibl said. "Unfortunately, the Pentagon is kind of a risk-averse organization, and they wanted to make sure they could dot all the 'I's' and cross all the 'T's' before they moved forward on it. . . ."