Pentagon housing plan needs oversight: GAO

May 4, 2006 at 11:42 AM
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WASHINGTON, May 4 (UPI) -- A Pentagon program to privatize military housing needs better oversight, the GAO says.

In a report released Friday and referenced as GAO-06-438, the Government Accountability Office examined management and oversight of the Department of Defense's initiative to upgrade military housing by privatizing about 87 percent of its domestic housing stock by 2010, reported Wednesday.

The DOD housing initiative, ongoing since 1996, was undertaken to improve housing options seen at the time as substandard.

The program entails joint military-developer oversight of long contracts -- many of them set at 50 years -- for new and renovated family homes. The initiative is about halfway complete, with 52 projects awarded by the end of last year and an additional 57 lined up for the next four years.

However, reviewers found that rental occupancy rates in the privatized units were lower than anticipated, with a third of the projects below the 90 percent target rate. Private developers bear most of the risk for low rental income, but the projects are overseen by the service branches, which bank a portion of the rental income for future upgrades and maintenance. Reviewers said insufficient income could threaten the long-term viability of the projects, and DOD's housing plans, said.

Auditors called for improved Navy and Marine Corps oversight of privatization projects, noting that the Army and Air Force had better procedures in place.

In five of eight project status reports reviewed for the Navy and Marine Corps, auditors found inaccurate information. The report on a San Diego project, for example, put the total development cost at $304 million, rather than the correct $427 million. A Camp Pendleton, Calif., project overstated its reinvestment account balance at $725,000, rather than $104,000, said.

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