Military Housing: DOD Needs to Strengthen Oversight and Clarify Its Role in the Management of Privatized Housing

GAO-20-281 Published: Mar 26, 2020. Publicly Released: Mar 26, 2020.
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Fast Facts

Private-sector companies build, renovate, and maintain about 99% of family housing at military bases in the United States. However, with reports of hazards like mold and pest infestations, there are concerns about how well DOD monitors the condition of this housing.

Military departments have increased their monitoring of privatized housing conditions, but we found they don’t have reliable data on housing maintenance or resident satisfaction.

We made 12 recommendations, including that DOD ensure it is collecting information that accurately reflects housing conditions and is clearly communicating the role of military housing offices to residents.

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Highlights

What GAO Found

The Office of the Secretary of Defense (OSD) and the military departments conduct a range of oversight activities, but some of these activities have been more extensive than others. Specifically, GAO found that:

  • The military departments conduct some oversight of the physical condition of housing, but some efforts have been limited in scope. Military departments have authority to conduct oversight of the condition of privatized housing. That oversight generally consists of reviewing a sample of work order requests, visually inspecting housing during change-of-occupancy, and conducting other point-in-time assessments. However, GAO found that these efforts are limited in scope. For example, annual interior walk-throughs are limited to just a few homes at some installations, which may not comprehensively reflect the condition of the housing units at those installations.
     
  • The military departments use performance metrics to monitor private partners, but the metrics do not provide meaningful information on the condition of housing. OSD has recently issued guidance to the military departments to ensure consistency in the framework used to measure project performance. However, the specific indicators used to determine if the metrics are being met may not accurately reflect performance related to the condition of the home. For example, a common indicator is how quickly the private partner responded to a work order, not whether the issue was actually addressed.
     
  • The military departments and private partners collect maintenance data on homes, but these data are not captured reliably or consistently. The Department of Defense (DOD) is expanding its use of work order data to monitor and track the condition of privatized housing. However, based on GAO's analysis of data provided by all 14 private partners, these data cannot reliably be used for ongoing monitoring of privatized housing because of data anomalies and inconsistent business practices in how these data are collected.
     
  • DOD provides reports to Congress on the status of privatized housing, but some data in these reports are unreliable, leading to misleading results. DOD provides periodic reports to Congress on the status of privatized housing, but reported results on resident satisfaction are unreliable due to variances in the data provided to OSD by the military departments and in how OSD has calculated and reported these data.

OSD has made progress in developing and implementing a series of initiatives aimed at improving privatized housing. In addition, Congress established several requirements addressing privatization housing reform. However, DOD officials and private partner representatives have identified challenges that could affect implementation of these various initiatives. These include concerns that implementation could have unintended negative impacts on the financial viability of the privatized housing projects. However, DOD has not assessed the risk of the initiatives on project finances.

Why GAO Did This Study

Congress enacted the Military Housing Privatization Initiative in 1996 to improve the quality of housing for servicemembers. DOD is responsible for general oversight of privatized housing projects. However, private-sector developers are responsible for the construction, renovation, maintenance, and repair of about 99 percent of military housing in the United States. Recent reports of hazards, such as mold and pest infestation, have raised questions about DOD's oversight of privatized military housing.

Conference Report 115-952 included a provision for GAO to review ongoing issues within privatized housing. This report assesses, among other things, the extent to which OSD and the military departments (1) conduct oversight of privatized housing and (2) have developed and implemented initiatives to improve privatized housing. GAO reviewed policies and guidance; visited a non-generalizable sample of 10 installations; analyzed work order data; and interviewed DOD officials and private partner representatives.




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Recommendations

GAO is making 12 recommendations, including that DOD take steps to improve housing condition oversight, performance indicators, maintenance data, and resident satisfaction reporting as well as to assess the risk of the initiatives on project finances. DOD generally concurred with the recommendations and identified actions it plans to take to implement them.

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of the Secretary of Defense The Secretary of Defense should ensure that the Assistant Secretary of Defense for Sustainment, in collaboration with the military departments, provide updated guidance for the oversight of privatized military housing, to include oversight objectives for each service to monitor the physical condition of privatized homes over the remaining duration of the ground leases. (Recommendation 1)
Closed – Implemented
The Department of Defense (DOD) concurred with this recommendation. In August 2020, DOD noted that the Assistant Secretary of Defense for Sustainment, as the Chief Housing Officer, issued guidance requiring the military departments to monitor work order completion for housing privatized under the Military Housing Privatization Initiative (MHPI) based on a combination of resident input, timeliness of work order completion, and number of repeat work orders for the same repair. The guidance also required increased tracking of MHPI project work orders by installation staff. In addition, in January 2021 the ASD(S) issued guidance requiring quarterly program reviews of all MHPI portfolios with each military department. The reviews established oversight objectives for the military departments to monitor the physical condition of MHPI housing over the duration of their project ground leases and, among other things, include a portfolio summary, highlights, and information on challenged projects. The quarterly reviews are intended to enhance the Office of the Secretary of Defense's knowledge and understanding of the current status of the MHPI portfolio; identify opportunities, challenges, and future areas for improvement; and better maintain leadership engagement at the highest levels, among other things.
Office of the Secretary of the Army The Secretary of the Army should take steps, in collaboration with the Army's private housing partners, to review the indicators underlying the privatized housing project performance metrics to ensure they provide an accurate reflection of the condition and quality of the homes. (Recommendation 2
Closed – Implemented
The Department of Defense (DOD) concurred with this recommendation. In its August 2020 response, DOD noted that the Secretary of the Army has taken several steps toward addressing this recommendation. For example, the Army has taken steps to better understand the condition of its housing units and align performance indicators accordingly. Specifically, the Army updated Portfolio and Asset Management Handbook requiring 100 percent ground lease compliance inspections, change of occupancy inspections, follow-up on life, health, and safety work orders, and follow-up with dissatisfied residents in an effort to get a more accurate reflection of the quality and condition of the homes. The Army also put Commanders in charge, ensuring Army leadership at every Army installation is tracking housing quality and safety. With regard to the performance indicators, the Army and the private housing partners also reviewed and revised the Incentive Fee Performance Management Plan, placing increased emphasis on resident satisfaction and work order/maintenance management to ensure that the metrics accurately reflected the condition and quality of the homes. These updates became effective on July 1, 2021. In addition, Army Installation Management Command continues to execute a series of meetings with the private housing partners and Garrison leadership that focus on the current condition of housing and development plans, culminating in a joint meeting with all private housing partner and Army leaders focusing on programmatic issues across the Army's privatized housing portfolio.
Office of the Secretary of the Air Force The Secretary of the Air Force should take steps, in collaboration with the Air Force's private housing partners, to review the indicators underlying the privatized housing project performance metrics to ensure they provide an accurate reflection of the condition and quality of the homes. (Recommendation 3)
Closed – Implemented
The Department of Defense (DOD) concurred with this recommendation. In its August 2020 response, DOD noted that the Air Force is engaging in several steps to address this recommendation. In response to a memo to the military departments to provide consistency of performance incentive fees, the Air Force negotiated with the privatized housing project owners to update performance incentive fee metrics in accordance with Assistant Secretary of Defense-directed categories and weightings. By February 2021, the Air Force finalized agreements with 2 of the 5 Air Force partners and expected agreements with the remaining partners. In addition, the Air Force worked with the project owners to deploy third-party survey tools to independently measure resident satisfaction with projects' work order performance, across all Air Force projects As of February 2021, 62 of the Air Force's 63 installations had completed this deployment, but the 63 installations had chosen not to convert to a third-party survey system.
Office of the Secretary of the Navy The Secretary of the Navy should take steps, in collaboration with the Navy and Marine Corps' private housing partners, to review the indicators underlying the privatized housing project performance metrics to ensure they provide an accurate reflection of the condition and quality of the homes. (Recommendation 4)
Closed – Implemented
* The Department of Defense (DOD) concurred with this recommendation. In March of 2022, the Navy and Marine Corps provided us with information on the actions they have taken to address this recommendation. Specifically, the Navy has revised its performance incentive metrics to align with the framework established by the Office of the Secretary of Defense in October 2019. Further, the Navy has revised the underlying indicators for these metrics to focus on the condition and quality of the homes and resident satisfaction. For example, whereas the old indicators only monitored the percent of work orders that met the response and/or completion criteria, the new indicators have been expanded to measure response time and completion separately for each type of work order (routine, urgent and emergency). The Navy also expanded its metric related to resident satisfaction. The Navy used to only use the annual satisfaction survey as an indicator, they now use the annual survey in addition to resident move-in surveys and work order surveys. The Navy also added new indicators to its metrics, such as preventive maintenance and capital repair and replacement. The Navy is in the process of negotiating these new indicators with its private partners.
Office of the Secretary of Defense The Secretary of Defense should ensure that the Assistant Secretary of Defense for Sustainment, in collaboration with the military departments and private housing partners, establish minimum data requirements and consistent terminology and practices for work order data collection for comparability across installations and projects and to track trends over time. (Recommendation 5)
Closed – Implemented
The Department of Defense (DOD) partially concurred with this recommendation, noting that the department cannot mandate changes to existing MHPI project legal documents. However, DOD has established data requirements for MHPI housing unit work order collection and reporting. Specifically, the department collects and reports quarterly work order data as part of Secretary of Defense reviews of DOD programs. In addition, in January 2021, the Assistant Secretary of Defense for Sustainment (ASD(S)), as the Chief Housing Officer, issued guidance directing the military departments to conduct quarterly program reviews of all Military Housing Privatization Initiative (MHPI) portfolios. The ASD(S) also provided instructions and templates for the military departments to use when conducting the quarterly reviews, to include information on and details for tracking average portfolio satisfaction with work orders. Through the instructions and templates, the ASD(S) took steps to establish minimum data requirements that the military departments are to report on. For example, each military department is required to prepare a slide presentation capturing, among other things, data on the number of projects, installations, and partners; existing inventory; occupancy; work order satisfaction; and net operating income. Each military department was provided with a template so that consistent information is captured and available to track trends over time.
Office of the Secretary of Defense The Secretary of Defense should ensure that the Assistant Secretary of Defense for Sustainment require the military departments to establish a process to validate data collected by the private housing partners to better ensure the reliability and validity of work order data and to allow for more effective use of these data for monitoring and tracking purposes. (Recommendation 6)
Open
The Department of Defense (DOD) concurred with this recommendation. In its August 2020 response, DOD noted that the Assistant Secretary of Defense for Sustainment, as the Chief Housing Officer, issued guidance directing the military departments to exercise proper oversight to ensure Military Housing Privatization Initiative (MHPI) projects perform in accordance with legal agreements, to include due diligence in monitoring and auditing project maintenance records and other project performance data. The guidance also required military departments to review their entire portfolios of MHPI projects to ensure accurate and appropriate work order management processes. In response to the new guidance, DOD noted that the military departments put in place appropriate oversight measures and undertook the required reviews, though the investigations of project business practices were ongoing in some cases. In addition, OSD noted that they have coordinated and tracked military department progress toward implementing requirements for access to MHPI project electronic work order systems to track all maintenance requests relating to a housing unit. According to OSD, the military departments have verified that this access is now available and that the maintenance work orders and their completion are being tracked as appropriate. However, as of April 2022, DOD has not provided documentary evidence to support these actions, so we will continue to monitor the status of this recommendation.
Office of the Secretary of Defense The Secretary of Defense should ensure the Assistant Secretary of Defense for Sustainment, in collaboration with the military departments, develop a process for collecting and calculating resident satisfaction data from the military departments to ensure that the data are compiled and calculated in a standardized and accurate way. (Recommendation 7)
Closed – Implemented
The Department of Defense (DOD) partially concurred with this recommendation based on the fact that the draft report listed the incorrect office as the source for addressing the deficiency, but subsequently changed its response to concur after the recommendation was directed to the appropriate office in the final report. DOD has taken steps to implement this recommendation. In November 2020, the Assistant Secretary of Defense for Sustainment, as the Chief Housing Officer, issued guidance requiring that the DOD Tenant Satisfaction Survey requires the use of standardized questions across all Military Departments and all housing types, effective in Fiscal Year (FY) 2021. The guidance further notes that beginning in Fiscal Year 2022, the military departments are directed to jointly review the survey questions annually for relevance to oversight and management of privatized housing.
Office of the Secretary of Defense The Secretary of Defense should ensure the Assistant Secretary of Defense for Sustainment provides additional explanation of the data collected and reported in future reports to Congress, such as explaining the limitations of available survey data, how resident satisfaction was calculated, and reasons for any missing data, among other things. (Recommendation 8)
Open
The Department of Defense (DOD) concurred with this recommendation. In its fiscal year 2018 annual Military Housing Privatization Initiative (MHPI) report, which the department provided to Congress in September 2020, the Assistant Secretary of Defense for Sustainment provided additional explanation of the MHPI resident satisfaction data collected and reported. Specifically, the additional information included, among other things, details on how resident satisfaction was calculated. The Fiscal Year 2018 annual report addressed a vast majority, but not all, of the requirements identified in our recommendation. For example, the Fiscal Year 2018 report did not provide details on the limitations of available survey data. In March 2022, DOD issued the report covering fiscal year 2019. While this report reflected the improvements included in the fiscal year 2018 report, there were still some limitations to be addressed. For example, while the reported noted that in fiscal year 2019 a customer satisfaction survey was not conducted for several installations, including some relatively large housing projects, it did not articulate why surveys were not conducted in these locations. However, the report noted that in fiscal year 2020, DOD put in place measures to ensure that all MHPI housing projects, and all installations with MHPI housing, are included in each year's annual Military Department survey of MHPI resident satisfaction effective in fiscal year 2021. Another limitation is in the department's reporting of customer satisfaction. The annual report includes consolidated scores for resident satisfaction, as well as the specific scores to residents' response to a survey questions asking whether they agree or disagree with the statement "I would recommend this community to others." In our March 2020 report we stated that this question may be misleading because a resident's satisfaction with his or her community and inclination to recommend it to others may not be reflective of satisfaction with either the privatized housing unit or privatized housing in general. Subsequently, DOD added a question to the fiscal year 2019 survey asking residents to rate their satisfaction with the overall condition of their home. However, the fiscal year 2019 report to Congress, which was released in March 2022, did not include the results of this question. In light of these imitations, as well as the lack of timeliness of these data, we will continue to monitor DOD's actions to implement this recommendation.
Office of the Secretary of the Army The Secretary of the Army should develop and implement a plan to clearly and systematically communicate to residents the difference between the military housing office and the private partner. At a minimum, these plans should include the Army housing office's roles, responsibilities, locations, and contact information and should ensure that all residents are aware that they can directly contact Army housing office officials. (Recommendation 9)
Closed – Implemented
In a March 2020 report entitled "Military Housing: DOD Needs to Strengthen Oversight and Clarify Its Role in the Management of Privatized Housing" (GAO-20-281), we reported that the military departments should develop and implement a plan to clearly and systematically communicate to residents the difference between the military housing office and the private partner. We stated that, at a minimum, these plans should include the Army Housing office's roles, responsibilities, locations, and contact information and should ensure that all residents are aware that they can directly contact Army Housing office officials. The Department of Defense (DOD) concurred with this recommendation. Since then, the Army developed a "Plain Language" briefing as required by the 2020 National Defense Authorization Act that included the Army Housing Office's roles, responsibilities, location, and contact information at each privatized housing project site. In information provided to GAO, DOD noted that the intent of the briefing is to ensure that all residents are aware of their ability to directly contact Army Housing Office and/or the Garrison Commanders. Army policy requires the briefing to be presented at all newcomer briefings, and Army officials informed GAO that the briefing will be provided to all current residents of privatized military housing. In addition, in information provided to GAO, DOD noted that Headquarters, Department of the Army tasked Army Materiel Command to develop a more detailed plan to communicate to residents the difference between the Army Housing Office and the private housing partner. The Army is in the process of updating signage at its installations to distinctly clarify the difference between the military housing office and the private partners. As of December 2021, 87 percent of the installations were complete with correcting the signage to the housing offices and 92 percent of installations were complete with correcting the signage to/from the privatized housing partner company offices. The Army anticipates completing the process of correcting the signage by March 2022. In addition, the Army has completed its plan for communicating with residents, the details of which are included in its FRAGMENTARY ORDER 04 to OPERATIONS ORDER 19-082: Installation Command (IMCOM) Army Housing Campaign Plan (U). This order also details new requirements for installation signage. Taken together, we have determined that these actions satisfy the intent of the recommendation and provide residents additional clarity on the Army's role in providing assistance with their privatized housing experience.
Office of the Secretary of the Air Force The Secretary of the Air Force should develop and implement a plan to clearly and systematically communicate to residents the difference between the military housing office and the private partner. At a minimum, these plans should include the Air Force housing office's roles, responsibilities, locations, and contact information and should ensure that all residents are aware that they can directly contact Air Force housing office officials. (Recommendation 10)
Closed – Implemented
The Department of Defense (DOD) concurred with this recommendation. In its August 2020 response, DOD noted that the Air Force has taken steps to address this recommendation. Specifically, the Air Force published updated guidance in March 2020 directing all Military Housing Offices (MHO) to clearly distinguish themselves from project owner personnel through signage, appearance, and by clearly designating space for residents to meet with MHO personnel to discuss any issues. DOD noted that all Air Force bases' MHOs reported they are compliant and that the Air Force will confirm compliance during annual site visits. In addition, the Air Force has provided materials communicating the MHOs' roles, responsibilities, locations, and contact information and ensures all residents are aware that they can directly contact Air Force housing office officials. Specifically, the Air Force developed and provided a briefing and move-in checklist for the MHOs and discussed the information in a virtual mass briefing to provide implementation guidance and sent the information to the MHOs in April 2020 with a May 1, 2020 implementation. The briefing and checklist emphasizes information specific to the MHO and confirms that residents are aware of their rights and responsibilities and that they have copies of the Tenant's Bill of Rights recently signed by the Secretary of Defense and the military departments. In addition, the Air Force provided a mass training session for the MHOs on this information in April 2020 and has been conducting checks at sites and confirming that Air Force installations are using the materials to brief residents of privatized housing . We consider these actions responsive to the recommendation.
Office of the Secretary of the Navy The Secretary of the Navy should develop and implement a plan to clearly and systematically communicate to residents the difference between the military housing office and the private partner. At a minimum, these plans should include the Navy housing office's roles, responsibilities, locations, and contact information and should ensure that all residents are aware that they can directly contact Navy housing office officials. (Recommendation 11)
Closed – Implemented
The Department of Defense (DOD) concurred with this recommendation. In March of 2022, the Navy and Marine Corps provided us with information on the actions they have taken to address this recommendation. For example, the Department of the Navy has ensured that each installation has a specific issue resolution process description marketing flyer available, both in hard copy and on the public housing websites, with a reminder that residents can contact both the privatized housing property manager and the Navy and Marine Corps housing offices with any issues. Moreover, every housing unit has been provided with a refrigerator magnet reminding residents that they can and should contact the Navy or Marine Corps housing office if they have any issues with their home. Additionally, the Navy and Marine Corps have issued a Plain Language Brief in accordance with NDAA language, which established a requirement to contact each privatized housing resident not later than 15 days after move-in and again 60 days after move-in to provide an opportunity to request assistance and remind them of available support. The Marine Corps has also updated all links to its housing websites. In addition, the Marine Corps has implemented an initiative to procure name tags for all MHO employees to wear, identifying themselves as distinct and separate from privatized housing property management company, which will be standardized across all USMC installations. The Marine Corps has also developed a standard welcome aboard package to include magnets and other items with key point of contact information. Taken together, we have determined that these actions satisfy the intent of the recommendation and provide residents additional clarity on the Navy's role in providing assistance with their privatized housing experience.
Office of the Secretary of Defense The Secretary of Defense should ensure that the Assistant Secretary of Defense for Sustainment, in collaboration with the military departments, assess the risks of proposed initiatives aimed at improving the privatized military housing program on the financial viability of the projects. (Recommendation 12)
Closed – Implemented
The Department of Defense (DOD) concurred with this recommendation. In January 2021, the Assistant Secretary of Defense for Sustainment, as the Chief Housing Officer, issued guidance delineating what actions require notification and approval for the Military Housing Privatization Initiative (MHPI) program. The criteria outlined for the MHPI Approval and Notifications policy noted that an area of focus for the Chief Housing Officer would be the financial viability of MHPI projects. Specifically, the criteria sets forth a requirement that the Chief Housing Officer monitor the financial viability of privatization projects while balancing government risk in the delivery of quality housing over the long term. The criteria further states that the Chief Housing Officer will maintain visibility over every privatized housing project and will review proposed project modifications, to confirm those modifications do not jeopardize housing quality or solvency, or increase government risk beyond the level of acceptability.

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