Leased Military Housing Costs in Europe Can Be Reduced by Improving Acquisition Practices and Using Purchase Contracts

GAO reviewed the weaknesses and inconsistencies in the Department of Defense's (DOD) lease acquisition practices for family housing in Europe and actions to improve these practices.

GAO noted that the shortage of adequate local housing with acceptable DOD standards of construction has required DOD to provide much of the needed housing through leasing construction agreements. GAO found that: (1) the military services' major commands responsible for leasing housing in Europe have developed different procurement procedures and practices for awarding and administering leases; (2) practices in awarding leases were inconsistent with those applicable to supplies and services established to ensure the United States obtains the best contract agreements at a reasonable cost; and (3) the services have different interpretations of congressional reporting requirements for lease agreements. GAO noted alternatives for reducing long-term lease costs, including: (1) the inclusion of buy-out provisions providing the United States the opportunity to buy the housing during or at the end of the lease period; (2) granting the services legislative authority to enter into purchase contract arrangements for foreign family housing; and (3) agreements with contractors for the construction and financing of family housing requiring installment payments for interest and amortization of the project's costs and profit. GAO found that congressional actions have been taken to: (1) direct that economic analyses be made to evaluate the comparative cost of new lease proposals with other alternatives for furnishing needed housing; (2) instruct that buy-out provisions be included in all new leasing construction agreements; and (3) increase appropriation of military construction funds.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Harry R. Finley Team: General Accounting Office: National Security and International Affairs Division Phone: (202) 512-5187