    Military Housing: Opportunities That Should Be Explored to
    Improve Housing and Reduce Costs for Unmarried Junior
    Servicemembers (10-JUN-03, GAO-03-602).

    Each year, the Department of Defense (DOD) spends billions of
    dollars to house unmarried junior enlisted servicemembers,
    primarily in military barracks. Over the next several years, the
    Army, Navy, and Air Force plan to spend about $6 billion to
    eliminate barracks with multi-person bathroom facilities and
    provide private sleeping rooms for all permanent party members.
    Given the cost of the program, GAO looked at (1) the status of
    efforts to examine the potential for private sector financing,
    ownership, operation, and maintenance of military barracks; (2)
    the opportunity to reduce the construction costs of barracks
    through widespread use of residential construction practices; and
    (3) whether opportunities exist to make better use of existing
    barracks.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-03-602
        ACCNO:   A07107
      TITLE:     Military Housing: Opportunities That Should Be Explored
    to Improve Housing and Reduce Costs for Unmarried Junior
    Servicemembers
         DATE:   06/10/2003
      SUBJECT:   Military cost control
    	     Military facilities
    	     Military housing
    	     Strategic planning
    	     Construction costs

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    GAO-03-602

    Report to the Secretary of Defense

    United States General Accounting Office

    GAO

    June 2003 MILITARY HOUSING Opportunities That Should Be Explored to
    Improve Housing and Reduce Costs for Unmarried Junior Servicemembers

    GAO- 03- 602

    GAO found three areas where DOD could potentially reduce costs in its
    unmarried servicemember housing program:

    DOD and the services have not determined whether *privatization,* or
    private sector financing, ownership, operation, and maintenance of
    military barracks is feasible and cost- effective. Barracks privatization
    involves a number of unique challenges ranging from the funding of
    privatization contracts to the location of privatized barracks. Recently,
    each service has independently given increased attention to developing
    privatization proposals. A collaborative, rather than independent,
    approach could minimize duplication and optimize lessons learned.

    DOD could reduce the construction costs of government- owned barracks
    through the widespread use of residential construction practices rather
    than traditional steel frame, concrete, and cement block. The Army
    estimated that residential type construction could reduce barracks
    construction costs by 23 percent or more. However, concerns about barracks
    durability and unanswered engineering questions have prevented widespread
    use of these practices.

    DOD*s full use of required existing barracks space could reduce the cost
    of housing allowances paid to unmarried junior members to live off base in
    local communities. GAO found that the services have authorized housing
    allowances for unmarried members to live off base even when existing
    barracks space was available. This occurred because of lenient barracks
    utilization guidance, which in some cases does not require full use of

    existing barracks, and possible noncompliance with guidance. The Air Force
    could have potentially reduced annual housing allowances by about $20
    million in fiscal year 2002 by fully using available barracks space.

    New Style Barracks at Fort Eustis

    Source: GAO. Newly constructed barracks at Ft. Eustis, Va., feature
    private sleeping rooms and semi- private bathrooms, improving the
    servicemember quality of life.

    Each year, the Department of Defense (DOD) spends billions of dollars to
    house unmarried junior enlisted servicemembers, primarily in military
    barracks. Over the next several years, the Army, Navy, and Air Force plan
    to spend about $6

    billion to eliminate barracks with multi- person bathroom facilities and
    provide private sleeping rooms for all permanent party members. Given the
    cost of the program, GAO looked at (1) the status of

    efforts to examine the potential for private sector financing, ownership,
    operation, and maintenance of military barracks; (2) the opportunity to
    reduce the construction costs of barracks through widespread use of
    residential construction practices; and (3) whether opportunities exist

    to make better use of existing barracks.

    GAO recommends that the Secretary of Defense promote a coordinated,
    focused effort to determine the feasibility and cost

    effectiveness of barracks privatization. GAO also recommends that DOD
    undertake engineering studies to resolve questions about the use of
    residential construction practices, issue guidance to direct the maximum
    use of required existing

    barracks space, and identify and eliminate any barracks space determined
    to be excess. In commenting on a draft of this report, DOD generally
    agreed with the recommendations.

    www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 602. To view the full report,
    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- 03- 602, a report to the

    Secretary of Defense

    June 2003

    MILITARY HOUSING

    Opportunities That Should Be Explored to Improve Housing and Reduce Costs
    for Unmarried Junior Servicemembers

    Page i GAO- 03- 602 Military Housing Letter 1 Results in Brief 2
    Background 4 DOD and the Military Services Have Not Determined the
    Feasibility of Barracks Privatization 9 Residential Construction Practices
    Offer Opportunities to Reduce

    Costs of Government- Owned Barracks 14 Opportunities Exist to Make Better
    Use of Existing Barracks 21 Conclusions 25 Recommendations for Executive
    Action 26 Agency Comments and Our Evaluation 27 Appendix I Scope and
    Methodology 30

    Appendix II Photographs of Old and New Style Barracks and Quarters Aboard
    Navy Ships 32

    Appendix III Details on Cost Differences in Barracks Built with
    Residential and Traditional Construction Practices 35

    Appendix IV Comments from the Department of Defense 37

    Tables

    Table 1: Cost Comparison of Army Barracks with a Private Sector Extended
    Stay Hotel 15 Table 2: Cost Comparison of the Different Construction
    Practices

    at Fort Meade, Maryland, and Fort Bragg, North Carolina 19 Table 3:
    Utilization of Air Force Permanent Party Barracks in the United States as
    of September 30, 2002 23 Contents

    Page ii GAO- 03- 602 Military Housing Figures

    Figure 1: Photographs of the Fort Meade, Maryland, Barracks Project and a
    Traditional Barracks at Langley Air Force Base, Virginia 18 Figure 2: Old
    and New Style Barracks at Fort Eustis, Virginia 32 Figure 3: Typical
    Living Quarters and Gang Latrines in Old Style

    Barracks and Aboard Ship 33 Figure 4: Typical Living Quarters in New Style
    Barracks 34 Abbreviation

    DOD Department of Defense

    This is a work of the U. S. Government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. It may contain
    copyrighted graphics, images or other materials. Permission from the
    copyright holder may be necessary should you wish to reproduce copyrighted
    materials separately from GAO*s product.

    Page 1 GAO- 03- 602 Military Housing June 10, 2003 The Honorable Donald H.
    Rumsfeld Secretary of Defense

    Dear Mr. Secretary: Each year the Department of Defense (DOD) spends
    billions of dollars to house unmarried servicemembers at their permanent
    duty locations in the United States. Unmarried junior enlisted members are
    normally required to live on base in furnished living quarters commonly
    referred to as barracks. If barracks space is unavailable, these members
    can be authorized a housing allowance and live off base in local civilian
    communities. Because DOD views housing as a key factor affecting quality
    of life, the services have initiated plans to improve barracks living
    conditions. Over the next several years, the services plan to spend about
    $6 billion to eliminate barracks with multi- person bathroom facilities,
    or

    *gang latrines,* and provide private sleeping rooms for all permanently
    assigned members. 1 The Navy has an additional goal to provide barracks
    for approximately 20,000 sailors who currently live aboard ships even when
    in homeport. To improve military housing faster than could be achieved if
    only traditional military construction funds were used, legislation was
    enacted in 1996 at DOD*s request to authorize private sector financing,
    ownership, operation, and maintenance of military housing, including
    barracks. 2 Because of the cost of the program and the importance of
    housing on servicemembers* quality of life, we examined, on the basis of
    the Comptroller General*s authority, DOD*s housing program for unmarried
    members and explored whether opportunities exist to reduce costs.

    1 For reasons of unit cohesion, the Marine Corps plans to provide barracks
    rooms shared by two junior enlisted members. 2 The National Defense
    Authorization Act for Fiscal Year 1996 (P. L. 104- 106), Feb. 10, 1996.
    The *alternative authority for construction and improvement* (i. e., the
    military housing privatization program) provided in this legislation was
    to expire 5 years after the date of enactment on February 10, 2001.
    However, authority for the program was first extended by the National
    Defense Authorization Act for Fiscal Year 2001 (P. L. 106- 398), Oct. 30,
    2000,

    from February 10, 2001, to December 31, 2004. Subsequently, the authority
    for the program was extended by the National Defense Authorization Act for
    Fiscal Year 2002 (P. L. 107- 107), Dec. 20, 2001, from December 31, 2004,
    to December 31, 2012.

    United States General Accounting Office Washington, DC 20548

    Page 2 GAO- 03- 602 Military Housing Since 1998, we have issued six
    reports on DOD*s military housing program* three about the military
    housing privatization initiative, one

    about the services* barracks design standard, one about DOD*s process for
    determining military housing requirements, and one about the opportunity
    for the services to reduce future barracks construction costs and improve

    quality of life by allowing more unmarried members to live off base. This
    report examines additional opportunities for reducing unmarried enlisted
    servicemember housing costs and discusses (1) the status of DOD and
    military service efforts to examine the potential for private sector
    financing, ownership, operation, and maintenance of military barracks; (2)
    the opportunity to reduce the construction costs of government- owned

    barracks through widespread use of residential construction practices; and
    (3) whether opportunities exist to make better use of existing barracks.

    Our review included interviews with DOD and service housing officials;
    analysis of DOD and service data; and site visits to Fort Eustis,
    Virginia; Fort Meade, Maryland; Naval Station Norfolk, Virginia; Langley
    Air Force Base, Virginia; and Marine Corps Base Quantico, Virginia. A more
    detailed description of our scope and methodology is included in appendix
    I.

    Although the authority for private sector financing, ownership, operation,
    and maintenance of military housing was initially approved in 1996, DOD
    and the military services have not determined the concept*s feasibility
    and cost- effectiveness as it relates to military barracks. In contrast,
    DOD has actively pursued this privatization concept for its military
    family housing program. Compared to family housing privatization, however,
    barracks privatization involves unique challenges, such as the potentially
    higher amount of appropriated funds needed to secure a privatization
    contract, differences in where private developers and the military prefer
    barracks to be located, impacts from unit deployments, and the
    availability of funds for housing allowances paid to members occupying
    privatized barracks. While each service has separately studied barracks
    privatization over the years, DOD has concentrated on family housing
    privatization and has provided little centralized direction and focus to
    help overcome these challenges. Recently, each service has independently
    given increased attention to developing project proposals, with the Navy
    hoping to do so by the end of 2003. Without more coordination of
    activities to address the challenges associated with barracks
    privatization, efforts might be duplicated and potential opportunities to
    optimize lessons learned might be lost. Results in Brief

    Page 3 GAO- 03- 602 Military Housing Construction costs of government-
    owned barracks built and operated on military installations could be
    significantly reduced through widespread

    use of residential construction practices. Traditional barracks
    construction practices call for commercial- type construction that
    includes the use of steel frame, concrete, and cement block. Similar
    multi- unit housing in the private sector, such as apartments, college
    dormitories, and extended stay hotels, normally use residential- type
    construction practices that include the use of wood frame construction.
    Compared to steel frame, concrete, and cement block construction, the Army
    estimated that residential type construction could reduce typical barracks
    construction costs by 23 percent or more. For example, at its pilot
    barracks project under construction at Fort Meade, Maryland, the Army
    estimates that using residential construction practices will cost from
    $12,600 to $31,800 less per occupant. Army analyses also indicate that a
    barrack*s total costs over its lifetime would be less if constructed with
    residential practices because of its lower initial construction costs and
    comparable operations and maintenance costs for many building components.
    Although the Army and Navy have undertaken three pilot projects, barriers*
    including concerns about durability and unanswered questions about the
    ability of wood- frame barracks to meet all antiterrorism force protection
    requirements* have prevented widespread adoption of these cost- saving
    practices.

    Additional DOD efforts to fully use existing government- owned barracks
    space could reduce the cost of housing allowances paid to unmarried junior
    members to live off base in local civilian communities. Our review
    corroborated previous reviews from Army and Air Force audit groups, which
    found that these services have authorized housing allowances for unmarried
    junior members to live off base even when existing barracks space was
    available. This occurred because of lenient barracks utilization guidance,
    which in some cases does not require full use of existing barracks, and
    possible noncompliance with guidance. Simultaneously paying for

    unused barracks spaces and housing allowances obviously wastes available
    resources. We estimated that the Air Force alone could have potentially
    prevented about $20 million in annual housing allowances in

    fiscal year 2002 by fully using available barracks space. At the same
    time, if the services were to change their barracks occupancy requirements
    and permit more junior members to live off base, then the services could
    reduce costs by identifying and eliminating excess barracks space.

    We are recommending that the Secretary of Defense promote a coordinated,
    focused effort to determine the feasibility and costeffectiveness of
    barracks privatization by addressing the associated

    Page 4 GAO- 03- 602 Military Housing challenges and facilitating the
    development of pilot project proposals. We also are recommending that DOD
    undertake engineering studies to resolve

    questions about the use of residential construction practices for
    barracks, issue guidance to direct the maximum use of required existing
    barracks, and identify and eliminate any barracks space determined to be
    in excess of needs. In comments on a draft of this report, DOD generally
    agreed with the report*s recommendations.

    Under the overall direction of the Under Secretary of Defense for
    Acquisition, Technology and Logistics, the military services provide
    onbase furnished living quarters for over 200,000 unmarried enlisted
    servicemembers at their permanent duty locations in the United States.
    Commonly referred to as barracks, housing for unmarried members is often
    cited by DOD officials as a problem area because many military barracks
    are old, rundown, and otherwise do not meet contemporary DOD standards for
    size, privacy, and other amenities designed to enhance the quality of life
    of unmarried members. Junior unmarried members often share dilapidated
    barracks rooms with one or two other members and a gang latrine with
    occupants from several other rooms. Also, about 20,000 junior enlisted
    members assigned to Navy ships continue to live in cramped onboard
    quarters even when their ships are in homeport. The living conditions in
    barracks are far different from an apartment or townhouse with two
    bedrooms, living area, bath, and full kitchen that is the normal housing
    standard for junior enlisted married members.

    The services have established specific goals and milestones for improving
    the housing provided to unmarried junior enlisted members. First, the
    services plan to eliminate permanent party barracks* i. e., barracks for
    servicemembers at their permanent duty locations* with common bath and
    shower facilities, or *gang latrines,* through barracks replacement or
    renovation. The Air Force already has achieved this goal and the Army,
    Navy, and Marine Corps plan to eliminate gang latrines by fiscal years
    2008, 2007, and 2005, respectively. Second, the Army and the Navy plan to
    provide each junior enlisted member in the United States a private

    sleeping room with a kitchenette and bath shared by one other member*
    referred to as the 1+ 1 barracks design standard* by fiscal years 2010 and
    2013, respectively. The Air Force, which already provides private sleeping
    rooms, plans to eliminate its barracks deficit and replace its worst

    barracks by fiscal year 2009. The Marine Corps, given a permanent waiver
    from the Secretary of the Navy to use a different barracks design
    standard, plans to provide barracks with sleeping rooms and baths shared
    by two junior members by fiscal year 2012. Third, the Navy plans to
    complete its Background

    Page 5 GAO- 03- 602 Military Housing homeport ashore initiative by fiscal
    year 2008, which will provide barracks spaces for about 20,000 junior
    members who are currently required to live

    aboard their ships while in homeport. To improve barracks conditions and
    achieve these goals, the services plan to spend about $6 billion over the
    next 6 years. Appendix II shows photographs of old and new style barracks
    as well as typical living conditions aboard Navy ships.

    Service officials state that unmarried junior enlisted servicemembers
    should live in barracks to help instill service core values, provide for
    team building and mentoring, and meet operational requirements. However,
    significant differences exist among the services regarding personnel who
    are required to live in barracks. More specifically:  the Army requires
    unmarried personnel in pay grades E1 through E6 to

    live in barracks,  the Navy requires unmarried personnel in pay grades E1
    through E4

    with fewer than 4 years of service to live in barracks,  the Air Force
    requires unmarried personnel in pay grades E1 through

    E4 to live in barracks, and  the Marine Corps requires unmarried
    personnel in pay grades E1

    through E5 to live in barracks. The Military Housing Privatization
    Initiative, authorized by law on February 10, 1996, provided new
    authorities that, among other things, allows DOD to provide direct loans,
    loan guarantees, and other incentives to encourage private developers to
    construct and operate military family and unaccompanied housing (barracks)
    either on or off military installations. 3 According to DOD, the
    initiative was aimed at solving its inadequate housing problem faster and
    more economically by taking advantage of the private sector*s investment
    capital and housing construction expertise. With private- sector
    investment, DOD planned to obtain at least 3 dollars in military housing
    improvements for each dollar that the government invested, thereby
    reducing the amount of government funds initially required to revitalize
    housing and accelerating the elimination of inadequate housing. Although
    there can be exceptions, DOD*s position is that the government*s estimated
    total costs for a privatization project also should be equal to or less
    than the total costs for the same project financed by military
    construction funding. Servicemembers who live in privatized housing
    receive a housing

    3 The National Defense Authorization Act for Fiscal Year 1996 (P. L. 104-
    106), Feb. 10, 1996.

    Page 6 GAO- 03- 602 Military Housing allowance to pay for rent and
    utilities. In fiscal year 1997, the Congress appropriated $5 million for
    the services to use to initiate privatized

    barracks projects. However, the Congress rescinded these funds in fiscal
    year 1999 because the services had developed no plans for privatized
    barracks.

    In June 1997, DOD and the Office of Management and Budget agreed to a set
    of guidelines that would be used as a frame of reference for scoring
    privatization projects. 4 The guidelines state that if a project provides
    an occupancy guarantee, then funds for the project must be available and
    obligated *up front* at the time the government makes the commitment of

    resources. In other words, if a project provides an occupancy guarantee,
    then the value of the guarantee* the cumulative value of the rents to be
    paid for the housing over the entire contract term* must be obligated at
    the beginning of the project. As a result, DOD officials stated that such
    a project might not be financially attractive because the amount of
    appropriated funds required would be approximately equivalent to the
    military construction funding that would be required to build the
    barracks. According to DOD officials, this issue has not been a problem
    for family housing privatization projects because DOD does not provide
    occupancy guarantees and does not mandatorily assign members to family
    housing. Military families can choose where to live and the project
    contracts

    4 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. The Office of Management and Budget*s Circular A- 11 provides
    guidelines on how obligations should be recorded in the budget. The
    guidelines are designed to ensure that the budget records the full amount
    of the government*s commitments when a commitment is made.

    Page 7 GAO- 03- 602 Military Housing include provisions for civilians to
    rent privatized housing if military families choose not to live there. 5
    Since 1998, we have issued six reports on DOD*s military housing

    program* three about the military housing privatization initiative, one
    about the services* barracks design standard, one about DOD*s process for
    determining military housing requirements, and one about the differences
    among the services concerning who is required to live in barracks.

     In July 1998, we reported on several concerns related to the new
    military housing privatization program. 6 These 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 1999, we reported on the status of the
    services*

    implementation of the 1+ 1 barracks design standard. 7 The report also 5
    In February 2003, the Congressional Budget Office issued a report, The
    Budgetary Treatment of Leases and Public/ Private Ventures, on budget
    scoring. The office concluded that (1) DOD*s family housing privatization
    projects have been treated in the budget in a manner inconsistent with
    federal budgeting principles that require federal financial commitments to
    be recognized up front in the budget, and (2) military housing
    privatization projects that result in the construction of family housing
    on military bases should be reflected in the budget as if they were
    investments. This would require the up- front scoring

    including the value of the rental payments that will be made over the life
    of the project. The report also noted that the Office of Management and
    Budget disagrees with this view because DOD may have little, if any,
    equity ownership in privatized housing, DOD may not be legally liable for
    the projects* debts, and the rental payments are made by individual
    servicemembers. The report made no recommendations, stating that the
    report*s purpose was to identify the challenges that financing federal
    projects through leases and public/ private ventures, such as the military
    housing privatization program, pose for congressional control over
    spending as well as for the transparency of the budget and its ability to
    facilitate cost- effective investment decisions. 6 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).

    7 U. S. General Accounting Office, Military Housing: Status of the
    Services* Implementation of the Current Barracks Design Standard, GAO/
    NSIAD- 99- 52 (Washington, D. C.: Mar. 24, 1999). Prior GAO Reports on the

    Military Housing Program

    Page 8 GAO- 03- 602 Military Housing discussed DOD*s rationale for
    adopting the standard, the costs of alternatives to the standard, and
    service views of the impact of the

    standard from a team- building, individual isolation, or similar
    perspective.  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. 8 DOD subsequently
    quickened the pace of family housing privatization, issued standard
    guidance for privatization life- cycle cost analyses, and developed a
    program evaluation plan.  In August 2001, we reported that despite
    earlier recommendations,

    DOD had not implemented a standard process for determining military
    housing requirements. 9 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 a new standard family housing requirements
    determination process.  In June 2002, we noted that by investing about
    $185 million of military

    construction funds 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. 10 We also reported that privatization projects were not
    supported by reliable or consistent needs assessments, and 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.

    8 U. S. General Accounting Office, Military Housing: Continued Concerns in
    Implementing the Privatization Initiative, GAO/ NSIAD- 00- 71 (Washington,
    D. C.: Mar. 30, 2000). 9 U. S. General Accounting Office, Military
    Housing: DOD Needs to Address LongStanding Requirements Determination
    Problems, GAO- 01- 889 (Washington, D. C.: Aug. 3, 2001).

    10 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).

    Page 9 GAO- 03- 602 Military Housing  In January 2003, we reported on the
    widely varying standards among the services regarding who should live in
    barracks and the effect this

    can have on program costs and quality of life. 11 We noted that requiring
    more personnel (more pay grades) to live in barracks than is justified
    results in increased barracks program and construction costs and has
    negative quality- of- life implications because most junior servicemembers
    would prefer to live off base. We noted that by allowing junior enlisted
    personnel already living off base with a housing allowance to continue to
    live off base, the Air Force could reduce planned barracks construction
    spending by $420 million. Accordingly, we recommended that the rationale
    behind the services* barracks occupancy requirements be based, at least in
    part, on the results of objective, systematic analyses that consider the
    contemporary needs of junior servicemembers, quality- of- life issues, the
    services* mission requirements, and other relevant data that would help
    provide a basis for the services* barracks occupancy requirements. While
    DOD agreed in principle with our recommendation, it reiterated the
    importance of military judgment in such decisions and left unclear the
    extent to which it is likely to make changes.

    While the services have considered barracks privatization over the past
    several years, they have not yet initiated pilot project proposals to
    determine the feasibility and cost- effectiveness of private sector
    financing, ownership, operation, and maintenance of military barracks.
    According to DOD officials, barracks privatization involves unique
    challenges compared

    to family housing privatization. These challenges range from the
    potentially higher amount of appropriated funds needed to secure a
    privatization contract (as a result of the services* requirement that
    unmarried junior members live in barracks) to the differences in where
    private developers and the military prefer barracks to be located.
    Deferring to the individual services, DOD has provided limited centralized
    direction and focus to help overcome the challenges associated with
    barracks privatization. Recently, each service has independently given
    increased attention to developing project proposals, with the Navy hoping
    to do so by the end of 2003. Still, there are unresolved issues associated
    with barracks privatization and, without more coordination of activities
    to address these issues, efforts might be duplicated and the benefits from
    collaboration might be lost.

    11 U. S. General Accounting Office, Military Housing: Opportunity for
    Reducing Planned Military Construction Costs for Barracks, GAO- 03- 257R
    (Washington, D. C.: Jan. 7, 2003). DOD and the Military

    Services Have Not Determined the Feasibility of Barracks Privatization

    Page 10 GAO- 03- 602 Military Housing Compared to family housing
    privatization, barracks privatization includes unique challenges that,
    thus far, have prevented the development of pilot

    project proposals. DOD has actively pursued privatization of military
    family housing and has awarded contracts to construct or improve about
    26,000 family housing units by the end of fiscal year 2002 and has plans
    to privatize an additional 96, 000 units by the beginning of fiscal year
    2006. The primary problem with privatizing barracks lies in the services*

    mandatory assignment policy for unmarried junior enlisted servicemembers
    and whether this policy implies that DOD would provide private- sector
    housing developers with an occupancy guarantee. Mandatory assignment, if
    viewed as an occupancy guarantee, might make a proposed barracks
    privatization project financially unattractive because a higher amount of
    appropriated funds would be needed to secure the contract than would be
    needed for a similar military construction project. Other challenges are
    related to barracks locations, unit deployments, and funding for housing
    allowances.

    The current policy in each service requires mandatory assignment of
    unmarried junior members to barracks located on base, provided that space
    is available. According to DOD officials, most military leaders support
    this policy because they believe that mandatory assignments provide for
    military discipline and unit integrity. Mandatory assignments, however,
    might result in the need for more appropriations* in comparison to
    military construction financing* to cover the obligations that the Office
    of Management and Budget determines should be recorded at contract award.
    This could make a proposed barracks privatization project financially
    unattractive. The amount of appropriations needed hinges on whether the
    mandatory assignment policy would provide private- sector housing
    developers with a DOD guarantee of occupancy.

    Because there have been no barracks privatization project proposals to
    date, it is unclear whether the services* mandatory barracks assignment
    policies for junior members might be viewed as an occupancy guarantee.
    Office of Management and Budget officials stated that having a mandatory
    assignment policy alone would not necessarily guarantee that the rent paid
    to the developer over the life of the project would have to be scored up
    front. However, if the privatization contract specifically stated that
    mandatory assignment would occur, the officials stated that the office
    probably would view this as an occupancy guarantee and the project*s
    projected rent would be scored up front.

    As with family housing projects, Office of Management and Budget officials
    stated that the scoring of a barracks project depends on the Barracks
    Privatization

    Involves Unique Challenges Compared to Family Housing Privatization

    Page 11 GAO- 03- 602 Military Housing details and circumstances involved
    in a proposed project and the associated risk to the government. Key
    issues that might be considered

    include whether the project allows the private developer enough autonomy
    to manage the project without significant military control and whether the
    contract includes provisions for civilians to rent vacant barracks spaces
    in the event of reduced government demand. Obviously, such issues present
    problems for the services* specifically, the willingness of the services
    to relinquish their control of barracks and allow civilians to occupy
    vacant barracks spaces. With a specific barracks privatization proposal,
    the Office of Management and Budget officials stated they would work with
    DOD to address the associated scoring questions.

    Although the potentially high amount of appropriated funds needed to
    secure a contract appears to be the most significant challenge to barracks
    privatization, there are other challenges as noted below.  Barracks
    location. According to DOD officials, private developers have

    indicated that they would prefer that privatized barracks be located off
    base or along an installation*s boundary and be severable from the
    installation. Developers would then have greater flexibility in renting
    the units to civilians in the event of reduced government demand. However,
    the services do not want barracks located off- base or near installations*
    perimeter fences largely for force protection reasons and, currently, most
    existing barracks are not located along installation boundaries.
    Deployments. In the event of unit deployments, many servicemembers

    would not be in the barracks and possibly entire buildings could be empty
    for months. As a result, the developer*s normal rental income could be
    reduced or eliminated even though the developer would still need to pay
    for expenses such as mortgage payments and operations and maintenance
    costs. This is less of a problem in privatized family housing because
    family members normally continue to occupy the housing and pay rent if the
    servicemember deploys.  Funding for housing allowances. Service officials
    stated that identifying

    and shifting funds to pay housing allowances to servicemembers living in
    privatized barracks could be an administrative problem. This is less of a
    problem with privatized family housing because military family housing has
    a separate operations and maintenance budget account. When a private
    developer takes over existing military family housing, funds from the
    family housing operations and maintenance account can be shifted to help
    pay for housing allowances used to pay rent for the families living in the
    housing. However, barracks operations and maintenance is not funded by a
    similar separate account. Instead,

    Page 12 GAO- 03- 602 Military Housing barracks operations and maintenance
    funds are included in each installation*s overall base operating budget.
    According to service

    officials, it is more difficult to identify, break out, and shift barracks
    funding to the personnel accounts to pay housing allowances for a
    privatized barracks project.

    With its attention largely concentrated on initiating and managing
    privatization of military family housing, DOD has provided limited
    centralized direction and focus to help the services overcome the
    challenges associated with barracks privatization and proceed with pilot
    project proposals. Also, in August 1998, 2 years after the military
    housing privatization legislation was enacted, DOD shifted primary
    responsibility for implementing the privatization program to the
    individual services. Since that time, the services have independently
    studied the barracks privatization concept but have not developed actual
    project proposals. More recently, the services have given increased
    attention to exploring barracks privatization, but their efforts continue
    to be independent and non- coordinated. The status of barracks
    privatization in each service follows.

    While no service has yet initiated a barracks privatization project, the
    Navy and the Marine Corps currently appear to be the most active among the
    services in examining its potential use. Navy officials stated that they
    believe barracks privatization offers an opportunity for the Navy to more
    quickly meet its barracks improvement goals, including the goal of
    providing barracks space for all junior sailors currently required to live
    on their ships even while in homeport.

    In order for barracks privatization to be feasible, Navy officials
    believed that the Navy needed additional authorities not contained in the
    Military Housing Privatization Initiative legislation. Specifically, Navy
    officials believed that existing housing allowance rates provided more
    money than would be needed to develop a privatized barracks project. The
    housing

    allowance rate for unmarried junior members is targeted to cover the costs
    of a one- bedroom apartment in the civilian community. Yet, the barracks
    occupancy standard is based on a lesser standard* the modern 1+ 1 barracks
    design standard where two members share a module consisting of two small
    bedrooms with a kitchenette and bath. As a result, Navy officials believe
    the current housing allowance could provide more money than would be
    needed to pay rent for a similar design standard in a privatized barracks,
    and the rental income received by the private- sector developer would be
    more than is needed to finance the construction and DOD Has Provided
    Limited

    Centralized Direction and Focus for Barracks Privatization

    Navy and Marine Corps Efforts to Privatize Barracks

    Page 13 GAO- 03- 602 Military Housing management of the project. To
    address this situation, the Bob Stump National Defense Authorization Act
    for Fiscal Year 2003 provided the Navy with specific legislative authority
    to undertake three pilot projects to

    privatize barracks. 12 According to Navy officials, the legislation will
    allow the Navy to pay occupants* allowances in the amounts needed to
    provide the rental income to support the privatized barracks projects and
    will allow junior sailors on ships to be assigned to privatized barracks.

    With this authority, Navy and Marine Corps officials stated that they plan
    to develop specific proposals for privatization. Candidate installations
    for barracks privatization include the Naval Station Norfolk, Virginia;
    the Naval Station San Diego, California; and the Marine Corps Base Camp
    Pendleton, California. Although remaining challenges, such as those noted

    above, must be addressed, Navy officials hope that specific proposals will
    be developed by the end of calendar year 2003.

    In May 1997, the Air Force issued the results of a barracks privatization
    feasibility study. The study concluded that privatization was feasible and
    recommended that the Air Force pursue development of a barracks
    privatization project at one base to further define the concept. However,
    the study, which was performed prior to issuance of the budgetary scoring
    guidelines for privatization projects, stated that occupancy guarantees
    would be provided in order to facilitate private financing. According to
    Air Force officials, the study recommendation was not implemented because
    of the costs associated with occupancy guarantees and the other challenges
    associated with barracks privatization. More recently, however, the Air
    Force has again begun to explore the

    issue. In August 2002, an Air Force team was formed to establish a
    baseline for an Air Force barracks privatization program including the
    development of policy and guidance. Air Force officials also stated that
    Air Force major commands have been asked to identify potential
    privatization candidates. One potential candidate identified was Elmendorf
    Air Force Base, Alaska, where a family housing privatization project is
    already underway. However, officials stated that they do not expect any
    privatized barracks proposals in the near future and that they planned to
    monitor the Navy*s progress under its pilot program.

    12 The Bob Stump National Defense Authorization Act for Fiscal Year 2003
    (P. L. 107- 314), Dec. 2, 2002. Air Force Efforts to Privatize

    Barracks

    Page 14 GAO- 03- 602 Military Housing Army officials stated that they have
    explored the concept of barracks privatization but that they have made
    relatively little progress toward

    reaching a consensus that the concept should be pursued. They also stated
    that they were not optimistic that the many challenges facing barracks
    privatization could be overcome and did not expect any project proposals
    in the near future. Nevertheless, the Army is continuing to review the
    issue. For example, in an April 2002 memorandum, the Army Assistant
    Secretary for Installations and Environment stated that the time was right
    to pursue the issue and requested the support of the Army*s Training and
    Doctrine Command and the Army*s Forces Command in formal studies of
    barracks privatization. At the time of our review, no studies had been
    completed. In addition, Fort Lewis, Washington, has a barracks

    privatization study underway that is expected to be completed in 2003. To
    the extent the services continue to rely on government built and operated
    barracks on military installations, opportunities exist to reduce costs of
    constructing those barracks through adoption of residential construction
    practices. In the past, DOD policies generally required that traditional
    barracks construction practices use commercial- type construction
    including use of steel frame, concrete, and cement block. Similar multi-
    unit residential housing in the private sector, such as apartments,
    college dormitories, and extended stay hotels, normally use residential
    construction practices that include the use of wood frame construction.
    Compared to steel frame, concrete, and cement block construction, Army
    analyses show that residential construction practices could reduce typical
    barracks construction costs by 23 percent or more. DOD policies now
    generally allow use of residential construction practices. However, some
    barriers still exist to DOD*s adoption of these cost- reducing practices
    as a normal way of doing business, including concern about durability and
    unanswered questions about the ability of wood- frame barracks to meet all
    antiterrorism force protection requirements.

    Concerned with the high construction costs of barracks built to the 1+ 1
    design standard, the Army began to search for savings opportunities and
    concluded that using residential construction practices to build barracks
    would cost less than using traditional construction practices. In June
    2000, the Army revised its barracks construction guidance to permit Army
    construction projects to be of any construction type. Subsequently, the
    Army began a pilot barracks project using residential construction
    practices at Fort Meade, Maryland. Army Efforts to Privatize

    Barracks Residential Construction Practices Offer Opportunities to Reduce
    Costs of Government- Owned Barracks

    Army Analyses Show That Residential Construction Practices Cost Less

    Page 15 GAO- 03- 602 Military Housing As the Army began building new
    barracks in accordance with the 1+ 1 barracks design standard adopted in
    1995, Army officials became

    concerned with the high construction costs of these barracks. To explore
    reasons for the high costs and opportunities for savings, the Army Corps
    of Engineers performed a study in 1996 that compared the construction
    costs of three typical Army 1+ 1 barracks with the construction costs of a
    similar private sector multi- unit project* specifically a national brand,
    all suites, extended stay hotel. After making adjustments to account for
    differences in geographic location and dates of construction, the Army
    Corps of Engineers found significant cost differences between the projects
    as shown in table 1.

    Table 1: Cost Comparison of Army Barracks with a Private Sector Extended
    Stay Hotel Difference Factor Average for Army barracks Average for private

    extended stay hotel Amount Percent

    Construction cost per occupant $48,700 $34,600 $14,100 29 Construction
    cost per square foot $131 $56 $75 57 Key amenities and square feet per
    occupant  Two occupants share a

    bath and kitchenette.

     Common area for socializing.

     372 square feet per occupant.

     Private bath and full kitchen.

     Private living room.

     621 square feet per occupant.

    Source: Army Corps of Engineers.

    The extended stay hotel provided each occupant with more amenities and
    space than the Army barracks at a construction cost per occupant of
    $14,100, or 29 percent, less than the barracks* average construction cost
    per occupant. The Army Corps of Engineers determined that although many
    factors accounted for the cost difference between the projects, the
    primary reason was the type of construction used to build the projects.
    The barracks were constructed in accordance with Uniform Building Code
    type I/ II (commercial) standards that call for non- combustible
    construction built from concrete, masonry, and/ or steel. The private
    extended stay hotel was constructed in accordance with Uniform Building
    Code type V (residential) standards that permit use of any building
    material allowed by the code, including wood. The Army Corps of Engineers*
    data showed that if the barracks had been built using residential
    construction practices instead of traditional barracks construction
    practices, the Army*s average construction cost per occupant would have
    been about $37,500, a reduction of about $11,200, or 23

    percent, per occupant. This study did not address differences in the
    barracks* total costs* i. e., construction costs and operations and Army
    Concern Over Barracks

    Costs Resulted in Search for Savings Opportunities

    Page 16 GAO- 03- 602 Military Housing maintenance costs* over their
    lifetimes. However, subsequent Army analyses indicate that a barrack*s
    total costs over its lifetime would be less

    if constructed with residential practices because of its lower initial
    construction costs and comparable operations and maintenance costs for
    many building components. (See app. III for additional details on the
    Army*s analyses.)

    A subsequent Army study also concluded that the materials and methods
    traditionally used to construct government- owned barracks were more
    costly than the materials and methods normally used to construct similar
    multi- unit residential buildings in the private sector. In a joint
    February 2001 report, the Army*s Assistant Chief of Staff for Installation
    Management and the Army Corps of Engineers concluded that using
    residential construction practices, similar to the practices used to build
    apartment buildings, could achieve considerable cost reductions without
    adversely impacting barracks* durability or maintainability. 13 The report
    included an additional example comparing barracks built using traditional
    construction practices with a residential condominium built using
    residential construction practices. Specifically, the report cited an Army
    1+ 1 barracks built in fiscal year 2000 at Fort Leavenworth, Kansas. Each

    two- bedroom, bath, and kitchenette module had 506 square feet and cost
    $193, 000. During this time frame, the construction cost of a 1, 500
    square foot residential unit with two bedrooms, two baths, full kitchen,
    living room, laundry room, and balcony in a new private condominium
    complex in Maryland was $180,000. Although the condominium unit was almost
    three times larger than the barracks module, it cost $13,000 less.

    The Army revised its barracks construction guidance in recent years to
    permit construction projects to be of any construction type, largely in
    response to its analyses. When building barracks, the Army had been
    following guidance in Military Handbook 1008C, which provides direction

    on the design and construction of DOD facilities. 14 The handbook stated
    that construction of new buildings should be limited to use of traditional
    barracks construction practices. However, in June 2000, the Army Corps

    13 U. S. Department of the Army, Report on the Barracks Mid- Program
    Review (Washington, D. C.: Feb. 2, 2001). 14 U. S. Department of Defense,
    Military Handbook: Fire Protection For Facilities Engineering, Design, And
    Construction, Military Handbook 1008C (Washington, D. C.: June 10, 1997).
    Because the handbook provided an exception for Navy and Marine Corps
    barracks, the handbook*s requirements for barracks construction applied
    only to the Army and the Air Force. Army Revised Barracks Construction
    Guidance

    Page 17 GAO- 03- 602 Military Housing of Engineers issued guidance that
    authorized Army construction projects to be of any construction type as
    long as they complied with the Uniform

    Building Code requirements for the construction type used. Further, in a
    July 2002 memorandum, the Army Vice Chief of Staff stated that use of less
    restrictive residential practices in barracks construction would improve
    soldier quality of life and provide better value to the Army. An enclosure
    to this memorandum stated that, although Army barracks traditionally have
    been designed in many cases to exceed industry codes and standards, such
    an approach is not in the Army*s best economic interests.

    A 1+ 1 barracks design project currently under construction at Fort Meade,
    Maryland, is the Army*s first barracks to be built using residential
    construction practices. According to Army officials, the project calls for
    eight new three- story barracks buildings with a total of 576 private
    sleeping rooms. The project*s initial design assumed use of traditional
    construction practices. However, on the basis of this design, the Army
    Corps of Engineers estimated that the project would cost $48 million*

    about $11 million more than had been approved for the project. In an
    effort to reduce construction costs, the Army decided to redesign the
    project using multi- unit residential 1- hour fire resistive construction
    practices. After the redesign and solicitation process, the project was
    awarded for about $31 million. With the project 83 percent complete in
    January 2003, the Army Corps of Engineers estimated that the final project
    cost* including supervision and overhead costs and costs of changes and
    enhancements to the contracted design* would be about $39 million. In

    addition, the project*s estimated completion date was about 8 months ahead
    of the contracted completion date of January 2004.

    In January 2003, we visited the Fort Meade barracks construction site.
    Visually, we noted few differences in the appearance of these barracks
    compared to traditional barracks. Figure 1 shows photographs of the Fort
    Meade barracks project contrasted with a traditionally constructed
    barracks at Langley Air Force Base, Virginia. Fort Meade Barracks Project
    Is

    Army*s First to Use Residential Construction Practices

    Page 18 GAO- 03- 602 Military Housing Figure 1: Photographs of the Fort
    Meade, Maryland, Barracks Project and a Traditional Barracks at Langley
    Air Force Base, Virginia

    For a comparison with the Fort Meade project, we asked the Army for cost
    data on two 1+ 1 barracks projects under construction at Fort Bragg, North
    Carolina. One project is building 960 rooms using traditional
    noncombustible construction practices and the other project is building
    608 rooms using traditional 1- hour fire resistive construction practices.
    Compared to the Fort Bragg projects, it appears that use of the
    residential construction practices in the Fort Meade project will result
    in considerable cost reductions* from $12,600 to $31,800 per occupant (see
    table 2).

    Page 19 GAO- 03- 602 Military Housing Table 2: Cost Comparison of the
    Different Construction Practices at Fort Meade, Maryland, and Fort Bragg,
    North Carolina

    Project Type of construction Cost per square foot Cost per

    occupant

    Fort Meade Residential: 1- Hour Fire Resistive $113 $38,800 Fort Bragg 1
    Traditional:

    1- Hour Fire Resistive 136 51,400 Fort Bragg 2 Traditional:

    Non- Combustible 193 70,600 Range of cost reductions using residential
    construction practices $23 to $80 $12,600 to

    $31,800 Source: Department of the Army.

    Note: The Army provided costs directly related to the barracks portion of
    the projects and adjusted the costs to account for the differences in
    construction time frames and geographic locations of the projects. We
    estimated cost per occupant by multiplying the cost per square foot by the
    project*s gross square feet per occupant. The Fort Meade, Fort Bragg 1,
    and Fort Bragg 2 projects provided 343, 378, and 366 gross square feet per
    occupant, respectively.

    There are barriers to DOD*s widespread adoption of residential
    construction practices as a normal way of doing business. Because Army
    studies and the pilot project at Fort Meade indicate the potential to
    reduce

    some costs by using residential construction practices, it would seem that
    the services would be eager to adopt these practices for all future
    barracks construction projects. However, this has not been the case due to
    concerns about barracks durability and concerns related to antiterrorism
    force protection issues.

    According to Army officials, the services have been reluctant to change
    construction practices because of the concern that switching to
    residential construction practices would result in barracks that are less
    attractive and less durable. However, the officials noted that the
    exterior appearance of barracks constructed with residential and
    traditional practices normally would be the same. Also, Army analyses
    indicate that there is little difference in durability with each type of
    construction and a barrack*s total costs over its lifetime would be less
    if constructed with residential practices because of its lower initial
    construction costs and comparable operations and maintenance costs for
    many building components. (See app. III for additional details.) Still,
    the officials stated that the idea of switching construction practices
    continues to face resistance. Because of this, even the Army had no
    definite plans, as of February 2003, for additional barracks construction
    using residential construction practices. Barriers Exist to Greater

    Use of Residential Construction Practices

    Page 20 GAO- 03- 602 Military Housing The Air Force also had no plans to
    use residential construction practices for its barracks projects. The
    Navy, which has completed two barracks

    projects using residential construction practices, has no additional
    barracks projects underway or planned using these practices. 15 Another
    barrier to widespread adoption of residential construction

    practices for barracks relates to unresolved questions on whether use of
    these practices would result in barracks that fully complied with new
    antiterrorism guidance for force protection. In July 2002, DOD finalized
    guidance requiring military components to adhere to common criteria and
    minimum construction standards to mitigate antiterrorism vulnerabilities
    and terrorist threats. 16 The standards seek to minimize the likelihood of
    mass casualties from terrorist attacks against DOD personnel in the
    buildings where they work and live. As applied to barracks construction,
    two standards in the antiterrorism

    force protection guidance are particularly important* standoff distance
    and prevention of building collapse. Standoff distance refers to the
    minimum distance that buildings should be situated from roads, parking
    lots, trash containers, and an installation*s perimeter. According to the
    guidance, the easiest and least costly way to achieve appropriate levels
    of protection against terrorist threats is to incorporate sufficient
    standoff

    distance into project designs. In situations where the standoff distance
    standards cannot be achieved because land is unavailable, the guidance
    calls for building hardening or other techniques to mitigate possible
    blast effects. According to Army officials, because most barracks projects
    in the United States could be situated to meet required standoff
    distances, use of residential construction practices and compliance with
    this standard would not be a problem in most instances. Navy officials,
    however, stated that enough land to meet required standoff distances was
    not available at

    many of its installations. The DOD standard for preventing building
    collapse applies to buildings of three or more stories and requires that
    they be designed with provisions

    15 The Navy used residential construction practices to build barracks
    projects at Naval Air Station Brunswick, Maine, and Naval Station Newport,
    Rhode Island. Compared to the use of traditional construction practices,
    Navy officials stated that the use of residential construction practices
    reduced the cost per occupant by about one- third. 16 U. S. Department of
    Defense, Unified Facilities Criteria: DOD Minimum Antiterrorism

    Standards For Buildings, UFC 4- 010- 01 (Washington, D. C.: July 31,
    2002).

    Page 21 GAO- 03- 602 Military Housing that permit the structure to sustain
    local damage without the entire building collapsing. According to Army
    officials, questions remain as to

    whether barracks built using residential practices would comply with the
    collapse standard. They stated that the primary issue is lack of
    engineering data. Most available building collapse information addresses
    structural systems typical of taller buildings that were not built using
    residential construction practices. Army officials also stated that
    complying with the collapse standard using residential barracks
    construction practices might not be a problem or might be solved with
    inexpensive adjustments to construction techniques. Designers do not have
    sufficient data on exactly what, if anything, needs to be done to ensure
    compliance with the standard when using residential construction
    practices.

    At the same time, some Army officials also questioned whether the collapse
    standard should apply to low- rise three- story barracks buildings. They
    noted that industry design standards usually make a distinction in
    structural requirements at four stories and above* not at three stories
    and above as required by the collapse standard. They further noted that
    today*s 1+ 1 barracks design standard provides relatively low occupancy
    densities that are more similar to family housing which is exempt from the
    force protection requirements as long as a family housing building
    contains no more than 12 family units.

    The services could minimize housing costs by ensuring full use of existing
    barracks space. Having unused government- owned barracks spaces and paying
    housing allowances at the same time wastes available resources. Air Force
    and Army barracks instructions, however, do not require installations to
    use all vacant space before authorizing housing allowances for junior
    members to live off base. 17 Our review, as well as previous reviews by
    military service audit groups, found that the lenient barracks utilization
    guidance, and in some cases noncompliance with the guidance, resulted in
    installations paying housing allowances when barracks

    vacancies existed. The services could also reduce costs by identifying and
    eliminating excess barracks infrastructure if they were to change their
    barracks occupancy requirements and permit more junior members to live off
    base.

    17 Service instructions also permit installation commanders to authorize
    junior members to live off base with a housing allowance for certain
    reasons other than lack of barracks space, such as for personal hardship
    reasons or for members with extensive household

    goods. Opportunities Exist to

    Make Better Use of Existing Barracks

    Page 22 GAO- 03- 602 Military Housing Army instructions allow its
    installations to authorize junior members to live off base with a housing
    allowance when barracks occupancy reaches

    95 percent. Air Force instructions only require that 90 percent of an
    installation*s available barracks spaces be used before authorizing junior
    members to live off base with a housing allowance. Prior to June 1998, the
    Air Force required 95- percent occupancy. Air Force officials stated that
    the change was made to facilitate flexibility and to help maintain unit
    integrity in barracks assignments. To put these instructions in
    perspective, such policies, if practiced in the private sector, would be
    the equivalent of the owner of a private apartment complex turning away
    prospective

    tenants even though 5 to 10 percent of the apartments were vacant* an
    action not likely to happen if the owner is concerned about costs and
    revenues. Further, allowing 5 to 10 percent of barracks spaces to go
    unused appears contrary to the services* policies requiring that all
    unmarried junior members live in the barracks as long as space is
    available.

    In contrast to Army and Air Force instructions, Navy and Marine Corps
    instructions state that maximum practical occupancy should be achieved
    before junior members are authorized to live off base with a housing

    allowance. The Navy instruction specifically states that barracks
    utilization should routinely approach 100 percent.

    In view of the differences in the services* barracks utilization guidance,
    we attempted to review barracks utilization and payment of housing
    allowances for unmarried junior members in each of the services. However,
    our analysis was limited to the Air Force and the Marine Corps because
    only those services require their installations to collect and centrally
    report barracks utilization data and the number of members authorized to
    live off base. The Navy requires barracks utilization reports, but the
    reports do not include the number of members authorized to live off base.
    Army officials stated that although utilization data is maintained by each
    installation, they had eliminated central reporting requirements years ago
    in order to reduce paperwork costs. With centralized data only available
    from the Air Force and the Marine Corps, we focused our review

    on an analysis of that information. The Air Force reported an inventory of
    about 43,400 adequate permanent party barracks rooms in the United States
    as of September 30, 2002. Table 3 shows that on September 30, 2002, about
    4,700 of these rooms were diverted from normal use for maintenance and
    other reasons. Of the remaining rooms, about 35,300, or 91 percent, were
    occupied and about Army and Air Force Instructions Do Not

    Require Full Utilization of Barracks Space

    Actual Barracks Utilization Varied Many Air Force Barracks

    Rooms Were Vacant

    Page 23 GAO- 03- 602 Military Housing 3,400 rooms, or 9 percent, were
    vacant. Among major Air Force installations, the occupancy rates for the
    available barracks rooms ranged

    from 100 percent at Minot Air Force Base, North Dakota, to 82 percent at
    Tinker Air Force Base, Oklahoma.

    Table 3: Utilization of Air Force Permanent Party Barracks in the United
    States as of September 30, 2002 Number of

    rooms a Percentage of total rooms

    Percentage of net available

    rooms Total 43,400 100

    Diverted for maintenance 1,900 4 Diverted for other reasons 2,800 6

    Net available 38,700 89 100

    Occupied 35,300 81 91 Vacant 3,400 8 9 Source: Department of the Air
    Force. a Numbers rounded. Rooms diverted for reasons other than
    maintenance include 1,219 rooms set

    aside for temporary and student lodging, 527 rooms set aside to
    temporarily house members arriving at an installation until they are
    assigned to a permanent room, 275 rooms set aside for offices, 218 rooms
    set aside for storage, 60 rooms set aside for training, and 507 rooms set
    aside for other miscellaneous reasons.

    The Air Force also reported that as of September 30, 2002, it had
    authorized about 24,100 unmarried junior servicemembers in pay grades E1
    through E4 to live off base with a housing allowance. We analyzed this

    data to estimate the housing allowance funds that the Air Force could
    potentially have prevented if members living off base had been assigned to
    the vacant barracks rooms. To do this, we compared* on an installationby-
    installation basis* the number of junior servicemembers living off base
    with a housing allowance to the number of barracks vacancies on September
    30, 2002. Our analysis showed that the vacant barracks spaces could have
    accommodated about 2,900 of the junior members who were living off base*
    suggesting a practice at variance with the Air Force*s stated policy of
    requiring E1 through E4 to live on base in barracks. Had these members
    been assigned to the barracks, the Air Force potentially could have
    reduced its annual housing allowance costs by about $20 million. Because
    the data used in this analysis reflected barracks use on a single date,
    September 30, 2002, our analysis reflects results as of this single date.
    Also, because barracks occupancy can change daily, results would have
    differed if utilization data on another date had been used or if data had
    been available to show daily utilization over a period of time.

    Page 24 GAO- 03- 602 Military Housing Although Air Force instructions
    require that 90 percent of an installation*s available barracks spaces be
    used before authorizing junior members to

    live off base, some Air Force installations apparently were not in
    compliance with this guidance. For example, data for Kirtland Air Force
    Base, New Mexico, indicated an 85- percent occupancy rate with 105
    vacancies and 392 junior members living off base with a housing allowance.
    Similarly, data for McChord Air Force Base, Washington, indicated an 86-
    percent occupancy rate with 101 vacancies, and 118 junior members living
    off base with a housing allowance. Air Force officials

    noted that installation occupancy rates are reported only twice a year and
    represent a snapshot in time. Thus, to determine whether installations
    reporting less than 90- percent occupancy were not complying with policy
    would require a detailed installation level review of occupancy rates over
    a period of time and the reasons why members living off base were allowed
    to do so. Air Force officials also noted that Air Force commands are
    reminded on a regular basis of the importance of complying with
    utilization policy and making full use of their barracks.

    The Marine Corps data as of September 30, 2002, showed that barracks at
    most Marine Corps installations were fully used. Of the few major
    installations that reported less than 100- percent utilization, only one
    also reported unmarried junior enlisted members living off base with a
    housing allowance. In this instance, however, the installation reported
    only three junior members with a housing allowance.

    Previous reports from service audit groups also have noted that
    noncompliance with existing guidance has resulted in installations paying
    housing allowances when barracks vacancies existed. For example, in a
    February 1999 report on barracks management at Langley Air Force Base,
    Virginia, the Air Force Audit Agency stated that housing managers did not

    require individual barracks to meet the occupancy goal before authorizing
    members to live off base. 18 The report also stated that maintaining
    barracks occupancy rates above the Air Force goal would provide direct
    savings to the Air Force budget. The Army Audit Agency reported in

    January 1997 that Fort Benning, Georgia, had authorized members to live
    off base even though barracks utilization was below the Army goal of

    18 U. S. Air Force Audit Agency, Installation Report of Audit: Dormitory
    Management 1st Fighter Wing, Langley Air Force Base, Virginia, EL099036
    (Langley Air Force Base, Va.: Feb. 3, 1999). Nearly All Marine Corps

    Barracks Were Occupied Audit Groups Have Reported Noncompliance with
    Utilization Guidance

    Page 25 GAO- 03- 602 Military Housing 95 percent. 19 The report stated
    that the unnecessary authorizations were issued because Fort Benning
    decentralized barracks management to the

    unit level and did not make sure that each unit fully used its barracks
    before authorizing members to live off base with a housing allowance.

    While it is important to make full use of existing barracks space, it is
    also important that the services maintain an inventory of barracks spaces
    only in the numbers actually required. In our January 2003 report, we
    discussed the widely varying standards among the services regarding who
    should live in barracks and the effect this can have on program costs and
    quality of life and recommended that the services review the rationale
    behind their barracks occupancy requirements. 20 DOD has left unclear the
    extent to which it is likely to make changes in its barracks occupancy
    requirements. However, if the services were to change their barracks
    occupancy requirements and permit more junior members to live off base
    with a housing allowance, then the services could reduce housing costs by
    identifying and eliminating excess barracks infrastructure. To use the Air
    Force case as an illustration, instead of bringing junior members back on
    base to fill up barracks vacancies, the Air Force could officially decide
    that many of these members should be allowed to continue to live off base.
    This decision would reduce barracks needs and the Air Force could then
    consider vacant barracks spaces as excess infrastructure that could be

    eliminated to reduce costs. DOD and the services have not fully explored
    barracks privatization to determine whether the concept could provide a
    better economic value to the government than the use of military
    construction financing. Although

    the services have separately studied the issues and unique challenges
    associated with barracks privatization, DOD has largely concentrated on
    family housing privatization and not on promoting a coordinated, focused
    effort to address the challenges and develop pilot project proposals to

    determine the overall feasibility and merits of barracks privatization.
    Without more coordination of activities to address the challenges
    associated with barracks privatization, efforts might be duplicated and
    potential opportunities to optimize lessons learned might be lost.

    19 U. S. Army Audit Agency, Space Utilization: U. S. Army Infantry Center
    and Fort Benning, Georgia, AA 97- 97, (Alexandria, Va.: Jan. 6, 1997). 20
    See GAO- 03- 257R. Changing Occupancy

    Requirements Could Reduce the Need for Barracks Spaces

    Conclusions

    Page 26 GAO- 03- 602 Military Housing For several reasons, DOD and the
    military services have not taken advantage of opportunities to potentially
    reduce their housing costs for

    unmarried servicemembers through use of residential construction practices
    in government- owned barracks construction and better utilization of
    existing government- owned barracks. First, widespread adoption of
    residential construction practices in building governmentowned barracks
    has been hampered because of concerns about barracks durability and
    unanswered questions about the ability of wood- frame barracks to meet all
    antiterrorism force protection requirements. Without engineering studies
    to resolve these questions and, if appropriate, adoption of residential
    construction practices, the services could be spending more than is needed
    on barracks construction. Second, lenient barracks utilization guidance*
    which in some cases does not require full

    use of existing government- owned barracks before authorizing housing
    allowances for junior members to live off base* and limited enforcement of
    existing guidance have led in some cases to the routine acceptance of less
    than maximum use of barracks and the payment of housing allowances when
    vacancies exist. The establishment of and compliance with guidance that
    requires maximum use of required existing barracks* specifically,
    utilization that routinely approaches 100 percent before unmarried junior
    members are authorized housing allowances* could result in reducing the
    services* housing costs for junior members. It is also important that the
    services maintain an inventory of barracks spaces only in the numbers
    actually required. If the services were to change their barracks occupancy
    requirements based on their review of the requirements* rationale and
    permit more junior members to live off base, then they could also reduce
    costs by identifying and eliminating barracks space that is no longer
    needed.

    To capitalize on opportunities for reducing housing costs for unmarried
    servicemembers, we recommend that the Secretary of Defense direct the
    Under Secretary of Defense for Acquisition, Technology and Logistics to:

     Promote a coordinated, focused effort among the military services to
    determine the feasibility and cost- effectiveness of barracks
    privatization by addressing the associated challenges and facilitating the
    development of pilot project proposals. This effort should support the
    Navy*s use of the pilot housing privatization authority provided to the
    Navy in the Fiscal Year 2003 Bob Stump National Defense Authorization Act,
    with lessons learned applied to the other services* efforts.
    Recommendations for

    Executive Action

    Page 27 GAO- 03- 602 Military Housing  Direct the Army Corps of Engineers
    and the Naval Facilities Engineering Command to jointly undertake an
    engineering study to

    resolve questions about use of residential construction practices for
    barracks and compliance with antiterrorism force protection requirements.
     Direct the military services to adopt residential construction practices

    for future barracks construction projects to the maximum extent practical,
    providing that the engineering studies show that barracks built with
    residential construction practices can economically meet all force
    protection requirements.  Issue guidance directing that the services
    maximize use of required

    existing barracks space* defined as utilization that routinely approaches
    100 percent* before authorizing unmarried junior members to live off base
    with a housing allowance.  Direct the military services to identify and
    eliminate excess barracks

    infrastructure if, by reviewing the rationale behind their barracks
    occupancy requirements, they determine that more unmarried junior members
    should be permitted to live off base with a housing allowance.

    In commenting on a draft of this report, the Director, Competitive
    Sourcing and Privatization, fully agreed with four and partially agreed
    with one of our recommendations and indicated that actions were underway
    or planned to deal with most of them. DOD stated that it was supportive of
    initiatives to energize barracks privatization and planned to build on
    lessons learned from the Navy*s pilot project to encourage barracks
    privatization. DOD also stated that it supports the study and use of
    commercial and residential construction standards and use of the
    privatization authorities to improve the living conditions for
    unaccompanied members as quickly as possible. In addition, it stated that
    the Army Corps of Engineers has already begun a study of residential
    construction methods and compliance with antiterrorism force protection
    requirements using the Fort Meade barracks project as a basis for the
    study. Further, as the first step to maximizing use of existing barracks,
    programming for new barracks, and divesting of excess infrastructure, DOD
    stated that the actual need for barracks space must be determined by
    establishing a common requirements process consistent with individual
    service missions.

    DOD partially agreed with our recommendation to issue guidance directing
    the services to maximize use of required existing barracks space. DOD
    stated that barracks requirements must first be determined before Agency
    Comments

    and Our Evaluation

    Page 28 GAO- 03- 602 Military Housing issuing such guidance. We agree that
    the services should maintain an inventory of barracks spaces only in the
    numbers actually required and that if the services were to reduce their
    barracks occupancy requirements

    and permit more junior members to live off base, then they could reduce
    costs by identifying and eliminating barracks space that is no longer
    needed, as DOD suggests in its comments. However, on the basis of their
    current barracks occupancy requirements and construction plans, the
    services have individually determined that most of their existing barracks
    spaces are needed. Unless stated barracks occupancy requirements are

    reduced, we believe that these spaces should be fully used before
    authorizing housing allowances for junior members to live off base and
    that additional DOD guidance is needed now to help achieve this. To do
    otherwise, results in having unused government- owned barracks spaces and
    paying housing allowances at the same time, which wastes available
    resources.

    DOD*s comments are included in appendix IV of this report. As you know, 31
    U. S. C. 720 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 29 GAO- 03- 602 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 letter, please contact me at (202) 512- 8412, or
    my Assistant Director, Mark Little, at (202) 512- 4673. Gary Phillips, Jim
    Ellis,

    Sharon Reid, Harry Knobler, and R. K. Wild were major contributors to this
    report.

    Sincerely yours, Barry W. Holman, Director Defense Capabilities and
    Management

    Appendix I: Scope and Methodology Page 30 GAO- 03- 602 Military Housing
    Our review of DOD*s housing program for unmarried servicemembers focused
    on enlisted members at their permanent assignment locations in

    the United States* after the members completed recruit and advanced
    individual training. We interviewed DOD and service headquarters housing
    officials; reviewed applicable DOD and military service policies and
    procedures; reviewed barracks improvement plans and milestones; and
    visited selected installations to view barracks conditions and discuss
    local management practices. Specifically, we visited the Naval Station
    Norfolk, Virginia; Langley Air Force Base, Virginia; Fort Eustis,
    Virginia; and Marine Corps Base Quantico, Virginia.

    To examine opportunities for reducing costs through barracks privatization
    and the barriers to developing barracks privatization project proposals,
    we examined the laws authorizing and funding the program, reviewed DOD*s
    experiences with family housing privatization, interviewed DOD and service
    officials, and reviewed available documentation to identify past efforts
    and current plans related to barracks privatization. We also discussed
    privatization plans and challenges with local officials at the
    installations visited and discussed budget scoring issues for barracks
    privatization with officials at the Office of Management and Budget.

    To examine opportunities for reducing costs through adoption of
    residential construction practices for barracks construction, we reviewed
    Army studies and analyses in this area. We also obtained and compared
    selected cost information for barracks constructed using traditional
    practices and for barracks constructed using residential practices. We did
    not attempt to validate this cost information. Further, we interviewed

    service officials to discuss the services* use of residential construction
    practices for barracks and to determine the reasons why the concept has
    not been widely adopted. We also visited Fort Meade, Maryland, to observe
    construction progress on the Army*s first barracks project that has
    incorporated residential construction practices.

    To examine opportunities for reducing costs through better utilization of
    barracks, we reviewed the services* policies and instructions related to
    barracks use, occupancy goals, and justification for authorizing unmarried
    junior members to live off base with a housing allowance. To determine
    whether greater use of barracks could reduce housing allowance costs, we
    obtained and analyzed readily available data showing the number of
    barracks vacancies and the number of junior servicemembers living off base
    with a housing allowance on September 30, 2002. To estimate the potential
    cost reductions, we multiplied the number of members who Appendix I: Scope
    and Methodology

    Appendix I: Scope and Methodology Page 31 GAO- 03- 602 Military Housing
    could have been assigned to the barracks vacancies by the national average
    basic allowance for housing rate. We also reviewed prior audit

    reports related to barracks utilization from military service audit
    organizations.

    We conducted our review between May 2002 and April 2003 in accordance with
    generally accepted government auditing standards.

    Appendix II: Photographs of Old and New Style Barracks and Quarters Aboard
    Navy Ships

    Page 32 GAO- 03- 602 Military Housing The military services are replacing
    old barracks, where junior members often share a sleeping room with one or
    two others and share a gang

    latrine with occupants from several other rooms, with new barracks, where
    in most cases junior members have a private sleeping room and share a bath
    and kitchenette with one other member. The Navy*s *homeport ashore*
    initiative intends to provide barracks spaces on base for junior members
    who are currently required to live in cramped quarters aboard their ships
    even when their ships are in homeport. During our visits

    to installations, we observed a variety of barracks in conditions ranging
    from outdated to newly constructed. Figure 2 shows photographs of typical
    old and new style barracks.

    Figure 2: Old and New Style Barracks at Fort Eustis, Virginia

    At the older barracks, we saw cramped living quarters, peeling paint,
    damaged walls and ceilings, and poor heating, ventilation, and air
    conditioning systems. On board ship, the space was cramped. Some examples
    of the living quarters and gang latrines in old style barracks and aboard
    ship are shown in figure 3. Appendix II: Photographs of Old and New

    Style Barracks and Quarters Aboard Navy Ships

    Appendix II: Photographs of Old and New Style Barracks and Quarters Aboard
    Navy Ships

    Page 33 GAO- 03- 602 Military Housing Figure 3: Typical Living Quarters
    and Gang Latrines in Old Style Barracks and Aboard Ship In contrast, we
    observed several newly constructed barracks that provided living quarters
    using the 1+ 1 barracks design standard. Some examples of the bedrooms,
    shared baths, and shared kitchenettes are shown in

    figure 4.

    Appendix II: Photographs of Old and New Style Barracks and Quarters Aboard
    Navy Ships

    Page 34 GAO- 03- 602 Military Housing Figure 4: Typical Living Quarters in
    New Style Barracks

    Appendix III: Details on Cost Differences in Barracks Built with
    Residential and Traditional Construction Practices

    Page 35 GAO- 03- 602 Military Housing Compared to traditional steel frame,
    concrete, and cement block construction, Army analyses show that use of
    residential construction can

    reduce typical barracks construction costs by 23 percent or more. Army
    analyses also indicate that a barrack*s total costs over its lifetime* i.
    e., initial construction costs and annual operations and maintenance
    costs* would be less if constructed with residential practices. The lower
    *lifecycle costs* from use of residential construction practices results
    not only from the lower initial construction costs, but also from
    comparable

    operations and maintenance costs for many building components regardless
    of the type of construction practices used* traditional or residential.
    Use of residential construction practices to build barracks could also
    reduce renovation costs and result in additional cost reductions in labor
    construction costs.

    Army officials noted that actual differences in barracks operations and
    maintenance costs are dependent on the particular building designs. In
    general, however, the officials stated that there should be no significant
    operations and maintenance cost differences with use of either traditional

    or residential construction practices in many architectural features, such
    as exterior and interior finishes, electrical and plumbing systems, doors
    and hardware, and windows. For other building components, such as roofs
    and heating, ventilation, and air conditioning systems, operations and
    maintenance costs could be lower with traditional construction. But,
    because of the lower initial construction costs, use of residential
    construction practices for such components could still result in lower
    costs over the life of the barracks. For example, the roof system for many
    traditionally constructed barracks consists of metal and concrete that
    would normally last for the entire life of the barracks. When using
    residential construction practices, the barracks roof system would
    normally consist of heavy- duty shingles that would require replacement
    during the life of the barracks. Yet, Army analyses show that a shingle
    roof system would have lower life- cycle costs than a metal and concrete
    roof system because of its lower initial construction costs.

    Army officials also noted that use of residential construction practices
    for barracks would result in buildings that could be renovated at lower
    costs than traditionally constructed barracks. They stated that many
    military buildings, including barracks, become functionally obsolete in 25
    years or less because of changed missions or design standards, such as the
    change in the barracks design standard in 1995 from multi- person to
    private

    sleeping rooms. The costs to renovate and reconfigure a traditionally
    constructed barracks with masonry interior walls would normally be
    Appendix III: Details on Cost Differences in

    Barracks Built with Residential and Traditional Construction Practices

    Appendix III: Details on Cost Differences in Barracks Built with
    Residential and Traditional Construction Practices

    Page 36 GAO- 03- 602 Military Housing greater than the costs to renovate
    and reconfigure a barracks built with residential construction practices
    using wood frame and sheetrock walls.

    According to Army officials, use of residential construction practices to
    build barracks could result in additional reductions in construction labor
    costs. Federal statutes, commonly referred to as the Davis- Bacon Act and
    related legislation, require that workers on most government construction
    projects be paid according to the prevailing local wage rates as
    determined by the Department of Labor. However, there are different
    prevailing local wage rate scales depending on the type of construction
    being performed. Traditionally, barracks construction has been considered
    commercial construction and the commercial wage rate scale has been used
    for these projects. In contrast, military family housing construction has
    been considered residential construction and the residential wage rate
    scale has been used for these projects. According to Army officials, the
    residential wage rate scale is normally 5 to 30 percent less than the
    commercial wage rate scale. Thus, using residential construction practices
    in a low- rise (three stories or less) barracks construction project and
    application of the residential, instead of commercial, wage rate scale,
    could result in additional reductions in barracks construction costs.

    Appendix IV: Comments from the Department of Defense

    Page 37 GAO- 03- 602 Military Housing Appendix IV: Comments from the
    Department of Defense

    Appendix IV: Comments from the Department of Defense Page 38 GAO- 03- 602
    Military Housing

    Appendix IV: Comments from the Department of Defense

    Page 39 GAO- 03- 602 Military Housing (350215)

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