Military Housing
Enhancements Needed to Housing Allowance Process and Information Sharing among Services Gao ID: GAO-11-462 May 16, 2011The Department of Defense (DOD) paid active duty military personnel over $18 billion in housing allowances in fiscal year 2010. DOD sets housing allowance rates annually based on market costs of rent, utilities, and renter's insurance. Also, DOD has identified 26 installations significantly impacted by expected growth in personnel due to various rebasing actions. The Senate report accompanying a bill for the National Defense Authorization Act for Fiscal Year 2011 (S. 3454) directed GAO to review DOD's rate-setting process, among other issues. GAO determined (1) whether there are enhancements to strengthen DOD's rate-setting process and (2) whether service members have encountered challenges in obtaining off-base housing. GAO reviewed program documents, including a 2010 DOD report to Congress, analyzed data, and interviewed DOD officials and subject matter experts.
DOD uses a data-intensive process to set housing allowance rates that officials said generally meets program goals. Key quality assurance steps in DOD's process include involving installations in the rental data collection process and verifying data prior to calculating allowance rates. However, some enhancements related to (1) providing additional information to installation officials and service members, (2) defining a key term for data collection, and (3) developing more accurate cost estimates for budget requests could further strengthen the process. First, installation officials and service members do not have access to information on the three costs that comprise the allowance--rent, utilities, and renter's insurance--because DOD issues a single rate for each pay grade. As a result, installation officials cannot help ensure the accuracy of the rates and service members are not fully informed of potential housing costs. Second, in areas with low vacancy rates, officials said it can be difficult to find enough rental properties that meet the definition of available because the definition is limited to rentals on the market within 4 to 6 weeks prior to data collection. As a result, properties that some installations submit may not be fully representative of rental costs in the area or representative properties may be excluded, increasing the possibility of inaccurate rates in an area. Third, the military services have consistently underestimated the amount needed to pay the allowance by $820 million to $1.3 billion each year since 2006 when preparing budget requests, in part because the services' processes do not allow them to accurately estimate the number of service members who will receive the housing allowance. GAO recognizes the difficulties in developing accurate housing allowance cost estimates. However, as a result of consistently underestimating the amount needed to pay the allowance--which is an entitlement for service members and must be paid--DOD has had to shift funds that were budgeted for other programs, which could disrupt the funding of the other programs. Also, DOD's budget does not provide the full picture of housing allowance costs, limiting the ability of Congress and DOD to make fully informed funding decisions. Some service members have encountered challenges in obtaining off-base housing at some growth installations. Military service data show current housing deficits, ranging from about 1 percent of total demand to more than 20 percent, at 19 of 26 installations DOD identified as significantly impacted by growth. Installation officials GAO interviewed expect such housing challenges to continue or worsen. DOD uses a number of tools to address these housing challenges that could be used at other installations, such as expanding housing privatization projects and encouraging collaboration between installations and communities. GAO found that installations share information on these tools on an ad hoc basis, such as through e-mail messages or at conferences, because DOD does not have a formal communications process that would allow them to store and share such information. As a result, DOD cannot ensure that installations that are currently experiencing housing challenges or may experience such challenges in the future will have the needed information on various tools that can be used to address these challenges. GAO is recommending that DOD (1) provide information on the costs that comprise the housing allowance to installation officials and service members, (2) assess the benefits and drawbacks of revising the definition of "available" properties for data collection, (3) improve its processes to estimate allowance costs for the budget, and (4) develop a formal process for installations to share information on housing tools. DOD generally concurred with all four of GAO's recommendations.
RecommendationsOur 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: Brian J. Lepore Team: Government Accountability Office: Defense Capabilities and Management Phone: (202) 512-4523GAO-11-462, Military Housing: Enhancements Needed to Housing Allowance Process and Information Sharing among Services
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United States Government Accountability Office:
GAO:
Report to Congressional Committees:
May 2011:
Military Housing:
Enhancements Needed to Housing Allowance Process and Information
Sharing among Services:
GAO-11-462:
GAO Highlights:
Highlights of GAO-11-462, a report to congressional committees.
Why GAO Did This Study:
The Department of Defense (DOD) paid active duty military personnel
over $18 billion in housing allowances in fiscal year 2010. DOD sets
housing allowance rates annually based on market costs of rent,
utilities, and renter‘s insurance. Also, DOD has identified 26
installations significantly impacted by expected growth in personnel
due to various rebasing actions. The Senate report accompanying a bill
for the National Defense Authorization Act for Fiscal Year 2011 (S.
3454) directed GAO to review DOD‘s rate-setting process, among other
issues. GAO determined (1) whether there are enhancements to
strengthen DOD‘s rate-setting process and (2) whether service members
have encountered challenges in obtaining off-base housing. GAO
reviewed program documents, including a 2010 DOD report to Congress,
analyzed data, and interviewed DOD officials and subject matter
experts.
What GAO Found:
DOD uses a data-intensive process to set housing allowance rates that
officials said generally meets program goals. Key quality assurance
steps in DOD‘s process include involving installations in the rental
data collection process and verifying data prior to calculating
allowance rates. However, some enhancements related to (1) providing
additional information to installation officials and service members,
(2) defining a key term for data collection, and (3) developing more
accurate cost estimates for budget requests could further strengthen
the process. First, installation officials and service members do not
have access to information on the three costs that comprise the
allowance”-rent, utilities, and renter‘s insurance-”because DOD issues
a single rate for each pay grade. As a result, installation officials
cannot help ensure the accuracy of the rates and service members are
not fully informed of potential housing costs. Second, in areas with
low vacancy rates, officials said it can be difficult to find enough
rental properties that meet the definition of available because the
definition is limited to rentals on the market within 4 to 6 weeks
prior to data collection. As a result, properties that some
installations submit may not be fully representative of rental costs
in the area or representative properties may be excluded, increasing
the possibility of inaccurate rates in an area. Third, the military
services have consistently underestimated the amount needed to pay the
allowance by $820 million to $1.3 billion each year since 2006 when
preparing budget requests, in part because the services‘ processes do
not allow them to accurately estimate the number of service members
who will receive the housing allowance. GAO recognizes the
difficulties in developing accurate housing allowance cost estimates.
However, as a result of consistently underestimating the amount needed
to pay the allowance”-which is an entitlement for service members and
must be paid-”DOD has had to shift funds that were budgeted for other
programs, which could disrupt the funding of the other programs. Also,
DOD‘s budget does not provide the full picture of housing allowance
costs, limiting the ability of Congress and DOD to make fully informed
funding decisions.
Some service members have encountered challenges in obtaining off-base
housing at some growth installations. Military service data show
current housing deficits, ranging from about 1 percent of total demand
to more than 20 percent, at 19 of 26 installations DOD identified as
significantly impacted by growth. Installation officials GAO
interviewed expect such housing challenges to continue or worsen. DOD
uses a number of tools to address these housing challenges that could
be used at other installations, such as expanding housing
privatization projects and encouraging collaboration between
installations and communities. GAO found that installations share
information on these tools on an ad hoc basis, such as through e-mail
messages or at conferences, because DOD does not have a formal
communications process that would allow them to store and share such
information. As a result, DOD cannot ensure that installations that
are currently experiencing housing challenges or may experience such
challenges in the future will have the needed information on various
tools that can be used to address these challenges.
What GAO Recommends:
GAO is recommending that DOD (1) provide information on the costs that
comprise the housing allowance to installation officials and service
members, (2) assess the benefits and drawbacks of revising the
definition of ’available“ properties for data collection, (3) improve
its processes to estimate allowance costs for the budget, and (4)
develop a formal process for installations to share information on
housing tools.
DOD generally concurred with all four of GAO‘s recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-11-462] or key
components. For more information, contact Brian J. Lepore at (202) 512-
4523 or leporeb@gao.gov.
[End of section]
Contents:
Letter:
Background:
DOD's Data-Intensive Process Helps to Ensure the Accuracy of Housing
Allowance Rates, and Some Enhancements May Further Strengthen the
Process:
Service Members Have Encountered Housing Challenges at Some Growth
Installations and DOD Does Not Have a Formal Information-Sharing
Process for Tools to Address Such Challenges:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Summary of DOD's Process to Set Housing Allowance Rates:
Appendix III: Comments from the Department of Defense:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: 2011 National Average Monthly Housing Allowance for Service
Members with Dependents, by Pay Grade:
Table 2: 2011 National Average Monthly Housing Allowance for Service
Members without Dependents, by Pay Grade:
Figures:
Figure 1: DOD Obligations for Basic Allowance for Housing for Fiscal
Years 2000 through 2010:
Figure 2: DOD's Annual Housing Allowance Rate-Setting Process:
Figure 3: Domestic Military Installations Expecting Significant DOD-
Related Growth as of January 2011:
Figure 4: Difference between Amount Estimated and Obligated for
Housing Allowances, Fiscal Years 2006 through 2010:
Abbreviations:
BRAC: Base Realignment and Closure:
DOD: Department of Defense:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
May 16, 2011:
Congressional Committees:
The Department of Defense (DOD) spent about $18 billion in fiscal year
2010 on housing allowances for active duty military personnel that
live in the United States.[Footnote 1] Comprising about 20 percent of
a service member's annual direct cash compensation, the Basic
Allowance for Housing is designed to cover the average monthly costs
of rent, utilities, and renter's insurance.[Footnote 2] Each year, DOD
collects data and sets housing allowance rates based on market costs
of these three housing cost components for 364 separate areas to
account for regional variances in housing expenses within the United
States. Since housing costs may change over time, DOD annually adjusts
housing allowance rates to better reflect actual costs of housing in
the community. DOD primarily relies on communities to provide housing
for about two-thirds of service members, so accurate housing
allowances and a supply of adequate and affordable housing are both
necessary to satisfy military housing needs. Twenty-six domestic
military installations have or are projected to experience population
growth due to the continued implementation of several DOD initiatives--
such as Base Realignment and Closure (BRAC), Grow the Force, Army
Modularity, and Global Defense Posture and Realignment. For some
installations, this growth has already occurred due to ongoing
implementation of these various major initiatives, creating increased
demands on both DOD and the surrounding communities to provide
adequate and affordable housing for service members and their families.
In 2009, Section 605 of Public Law 111-84 required the Secretary of
Defense to review two aspects of the housing allowance program and
submit a report that included recommendations, as appropriate.
[Footnote 3] DOD issued its report in June 2010.[Footnote 4]
Subsequently, the Senate report accompanying a bill for the National
Defense Authorization Act for Fiscal Year 2011 (S. 3454) directed GAO
to review DOD's report to determine if the department is using the
most effective, accurate, and efficient system for setting Basic
Allowance for Housing rates.[Footnote 5] The Senate report also
directed GAO to independently assess the effects of base realignment
decisions on military installation populations and whether DOD has
accounted for these basing decisions in determining housing allowance
rates. Based on the congressional direction on these two issues, we
determined (1) whether there are enhancements that DOD could
incorporate to strengthen its process to set housing allowance rates,
including DOD's process to budget for the allowance, and (2) whether
service members assigned to installations expecting significant growth
as a result of BRAC or other basing initiatives have encountered
challenges in obtaining off-base housing and the extent to which DOD
uses and shares tools to address these challenges.
To determine whether DOD could enhance its housing allowance rate-
setting process, we reviewed DOD's report on housing standards and
surveys and other guidance and reports discussing DOD's rate-setting
process. We also analyzed DOD's budget justification documentation for
the housing allowance. We met with officials from relevant
organizations and offices within DOD, including the Defense Travel
Management Office, the Office of the Under Secretary of Defense
(Comptroller), military service officials who oversee the housing
allowance program, military service officials involved with developing
the housing allowance cost estimates, officials from five military
installations expecting personnel increases, and the contractor that
assists DOD with collecting housing cost data used to set allowance
rates. Additionally, we interviewed representatives of organizations
with recognized expertise in military compensation and associations
that represent the interests of military service members and their
families. We considered a number of potential enhancements to DOD's
current rate-setting process and performed further analyses to
determine the benefits and drawbacks of each, including potential
financial savings or costs. To determine whether service members have
encountered challenges in obtaining off-base housing at installations
expecting or have incurred significant personnel increases over the
last several years and the extent to which DOD uses and shares tools
to address these challenges, we analyzed DOD and GAO reports related
to growth installations and housing demand. Additionally, we
interviewed housing officials from the Directorate of Housing and
Competitive Sourcing within the Office of the Under Secretary of
Defense (Acquisition, Technology and Logistics), each of the military
services, and five installations projected to increase in population.
(See appendix I for a more detailed description of our scope and
methodology.)
We conducted this performance audit from August 2010 through May 2011
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Background:
A member of the uniformed services--including the Air Force, Army,
Coast Guard, Marine Corps, National Oceanic and Atmospheric
Administration, Navy, and Public Health Service--who is entitled to
basic pay is also eligible to receive the Basic Allowance for Housing,
subject to certain exceptions.[Footnote 6] The Secretary of Defense--
through the Defense Travel Management Office within the Office of the
Under Secretary of Defense (Personnel and Readiness)--sets the housing
allowance rates for all personnel who receive the allowance. According
to the Defense Travel Management Office, senior executives and flag
officers from the Coast Guard, Public Health Service, and the National
Oceanic and Atmospheric Administration Corps, in addition to the three
military departments, provide oversight of the housing allowance
program through the Per Diem Travel and Transportation Allowance
Committee.
The legislation that created the Basic Allowance for Housing program,
Section 603 of the National Defense Authorization Act for Fiscal Year
1998,[Footnote 7] among other things, consolidated two authorities for
providing housing allowances--the Basic Allowance for Quarters program
and the Variable Housing Allowance program[Footnote 8]--and changed
the way DOD calculates housing allowances to be based on adequate
housing for civilians with comparable income levels in the same area,
rather than on service members' reported housing expenditures, which
was a major factor in calculating the Variable Housing Allowance.
[Footnote 9] According to DOD, housing allowance rates based on the
market costs of rental housing ensure a better correlation between
allowance payments and rental costs. In January 2000, the Secretary of
Defense announced a quality-of-life initiative to increase housing
allowances gradually over a 5-year period to eliminate a service
member's average out-of-pocket housing costs from an average of more
than 18 percent in 2000. Figure 1 shows the amounts DOD obligated for
the housing allowance and the number of service members who received
the allowance from fiscal years 2000 through 2010.
Figure 1: DOD Obligations for Basic Allowance for Housing for Fiscal
Years 2000 through 2010:
[Refer to PDF for image: combination line and vertical bar graph]
Year: 2000;
Obligation, adjusted for inflation (fiscal year 2011 dollars): $7
billion;
Military personnel that received the basic allowance for housing at
the ’with“ or ’without“ dependents rate: 654,000.
Year: 2001;
Obligation, adjusted for inflation (fiscal year 2011 dollars): $7.5
billion;
Military personnel that received the basic allowance for housing at
the ’with“ or ’without“ dependents rate: 657,000.
Year: 2002;
Obligation, adjusted for inflation (fiscal year 2011 dollars): $9.5
billion;
Military personnel that received the basic allowance for housing at
the ’with“ or ’without“ dependents rate: 740,000.
Year: 2003;
Obligation, adjusted for inflation (fiscal year 2011 dollars): $11.9
billion;
Military personnel that received the basic allowance for housing at
the ’with“ or ’without“ dependents rate: 877,000.
Year: 2004;
Obligation, adjusted for inflation (fiscal year 2011 dollars): $12.6
billion;
Military personnel that received the basic allowance for housing at
the ’with“ or ’without“ dependents rate: 914,000.
Year: 2005;
Obligation, adjusted for inflation (fiscal year 2011 dollars): $13.9
billion;
Military personnel that received the basic allowance for housing at
the ’with“ or ’without“ dependents rate: 948,000.
Year: 2006;
Obligation, adjusted for inflation (fiscal year 2011 dollars): $14.7
billion;
Military personnel that received the basic allowance for housing at
the ’with“ or ’without“ dependents rate: 947,000.
Year: 2007;
Obligation, adjusted for inflation (fiscal year 2011 dollars): $14.9
Military personnel that received the basic allowance for housing at
the ’with“ or ’without“ dependents rate: 938,000.
Year: 2008;
Obligation, adjusted for inflation (fiscal year 2011 dollars): $16
billion;
Military personnel that received the basic allowance for housing at
the ’with“ or ’without“ dependents rate: 991,000.
Year: 2009;
Obligation, adjusted for inflation (fiscal year 2011 dollars): $17.5
billion;
Military personnel that received the basic allowance for housing at
the ’with“ or ’without“ dependents rate: 1,051,000.
Year: 2010;
Obligation, adjusted for inflation (fiscal year 2011 dollars): $18.6
billion;
Military personnel that received the basic allowance for housing at
the ’with“ or ’without“ dependents rate: 1,087
Source: GAO analysis of DOD data.
Note: These amounts represent basic allowance for housing payments for
military personnel with and without dependents, but exclude the
partial Basic Allowance for Housing, Basic Allowance for Housing
differential, and Overseas Housing Allowance.
[End of figure]
Housing allowance rates vary based on a service member's pay grade,
dependency status, and geographic location. DOD established six
housing profiles, ranging from a one-bedroom apartment to a four-
bedroom single-family detached house, and associated each profile with
a military pay grade. Service members with dependents receive a higher
housing allowance than those in the same pay grade and location
without dependents. To set housing allowance rates by geographic area,
DOD established 364 housing areas within the United States. These
areas are generally within a 20-mile or 1-hour commute from military
installations. In total, DOD calculates nearly 20,000 separate
allowance rates each year. To set these rates, DOD uses a yearlong
multistep process that involves hundreds of officials from
installation housing offices, the Defense Travel Management Office,
compensation offices in each military service, and a contractor that
is a recognized leader in the field of collecting cost-of-living data.
Each year, installation housing officials submit rental data on the
six housing profiles in the 364 housing areas to the contractor. The
contractor then verifies the data; collects additional rental data on
its own; and determines average rental, utility, and renter's
insurance costs for each housing profile in the 364 housing areas. The
contractor then provides the housing cost data to the Defense Travel
Management Office, which calculates housing allowance rates for each
pay grade for service members with and without dependents in each
housing area. Figure 2 shows the annual housing allowance rate-setting
process. (See appendix II for a more detailed description of the
annual housing allowance rate-setting process.)
Figure 2: DOD's Annual Housing Allowance Rate-Setting Process:
[Refer to PDF for image: time line illustration]
January-March:
Contractor trains installation officials.
March-April:
Installations collect and submit first round of rental data.
May-mid-June:
Round 2 submission.
Mid-June-mid-July:
Round 3 submission.
May-July:
Contractor collects rental data and verifies installation-submitted
data.
First half of August:
Contractor calculates median rents for the 6 housing profiles in each
housing area and average utility and renter‘s insurance costs.
Second half of August:
Quality control review of data.
September:
Defense Travel Management Office calculates rates.
Late September-mid-November:
Military services review the rates.
Late November:
Office of the Secretary of Defense approves rates.
December:
Rates enacted by January 1.
Source: GAO analysis of DOD data.
[End of figure]
Housing allowance rates in a housing area can fluctuate from year to
year since local housing costs change over time. If housing allowance
rates in an area increase, then a service member stationed in that
area will receive the increased rate. However, if housing allowance
rates in an area decrease from one year to the next, the service
member retains the higher housing allowance rate, known as "rate
protection," as long as their location and dependency status remain
unchanged and their pay grade does not decrease. This protects service
members already committed to a lease. For example, at Nellis Air Force
Base near Las Vegas, Nevada, housing allowances decreased between 2010
and 2011 for all pay grades and dependency statuses. The monthly
housing allowance for an enlisted service member in the E-7 pay grade
without dependents decreased from $1,200 to $1,107. If a service
member stationed at Nellis Air Force Base in 2010 with this pay grade
and dependency status remained at the installation in 2011 with the
same pay grade and dependency status, then the service member's
housing allowance would remain $1,200. However, a service member at
the same pay grade and dependency status that relocated to Nellis Air
Force Base in 2011 would receive a monthly housing allowance of $1,107.
DOD policy is to rely on the private sector as the primary source of
housing for personnel normally eligible to draw a housing allowance.
While DOD may require certain service members to live on base, such as
key personnel and most junior-enlisted personnel without dependents,
about two-thirds of service members and their families in the United
States choose to live off base in the local community. If a service
member chooses to live on base in privatized family housing, the
service member pays the privatization developer rent that is usually
equal to the housing allowance. While DOD calculates the housing
allowance based on rental market costs, service members may choose to
apply their allowance toward purchasing a home or renting a housing
unit that could be more or less than their housing allowance. Service
members are permitted to keep any portion of their housing allowance
not spent on housing and conversely will have to use other funds to
pay housing costs that exceed their allowance.
Several DOD initiatives are contributing to changes in housing needs
in the local communities due to the relocation of military personnel,
including:
* Grow the Force: In January 2007, the President announced and
Congress approved an increase in the Army end strength by more than
74,000 active duty, National Guard, and reserve personnel and the
Marine Corps end strength by 27,000 Marines through the Grow the Force
initiative. The services met these increased end strength goals by
2009.
* BRAC: Several installations are experiencing growth due to
implementation of the 2005 BRAC round. Under the 2005 round, DOD is
implementing 182 recommendations which must be completed by the
statutory deadline of September 15, 2011. These recommendations
include a large number of realignments, prompting significant
personnel movements among installations.
* Army Modularity: The Army is restructuring its force as it
implements force modularity, which entails converting units to brigade
combat teams, resulting in some installations receiving one of more of
these brigade combat teams.
* Global Defense Posture and Realignment: DOD began to realign its
overseas basing structure in 2004 and planned to relocate about 44,500
Army personnel from overseas to domestic installations by 2013.
* Iraq Drawdown: DOD is relocating many troops from Iraq to domestic
installations, although the net growth at these installations may be
offset by troops deploying to Afghanistan.
As a result of these initiatives, DOD's Office of Economic Adjustment
has identified 26 domestic installations significantly impacted by the
growth in military populations.[Footnote 10] This growth has raised
several concerns, one of which is the availability of housing on base
and in the communities near installations. We have previously reported
on the growth-related challenges at growth installations and in the
communities surrounding them.[Footnote 11] Specifically, we found that
many communities will face growth-related challenges in the short
term, including challenges to identify and provide additional
infrastructure--such as schools, roads, housing, and other services--
to support the expected population growth.[Footnote 12] Figure 3 shows
the location of growth installations as defined by DOD's Office of
Economic Adjustment as of January 2011.
Figure 3: Domestic Military Installations Expecting Significant DOD-
Related Growth as of January 2011:
[Refer to PDF for image: illustrated U.S. map]
Aberdeen Proving Ground, Maryland;
Cannon Air Force Base, New Mexico;
Eglin Air Force Base, Florida;
Fort Belvoir, Virginia;
Fort Benning, Georgia;
Fort Bliss, Texas;
Fort Bragg, North Carolina;
Fort Carson, Colorado;
Fort Drum, New York;
Fort Hood, Texas;
Fort Knox, Kentucky;
Fort Lee, Virginia;
Fort Meade, Maryland;
Fort Polk, Louisiana;
Fort Riley, Kansas;
Fort Sill, Oklahoma;
Fort Stewart, Georgia;
Joint Base Andrews-Naval Air Facility Washington, Maryland;
Joint Base Lewis-McChord, Washington;
Joint Base San Antonio, Texas;
Marine Corps Air Station Cherry Point, North Carolina;
Marine Corps Air Station New River, North Carolina;
Marine Corps Base Camp Lejeune, North Carolina;
Marine Corps Base Quantico, Virginia;
Naval Support Activity Bethesda, Maryland;
Redstone Arsenal, Alabama.
Source: DOD; Map Resources (map).
[End of figure]
The National Defense Authorization Act for Fiscal Year 2010 required
the Secretary of Defense to conduct a review of two aspects of the
housing allowance program and submit a report by July 1, 2010.
[Footnote 13] DOD hired a contractor with expertise in human services
consulting to undertake the study and perform the analyses that served
as the basis for DOD's report. DOD submitted its report to Congress in
June 2010.[Footnote 14] DOD's report contained a review of the housing
profiles used to determine housing allowance rates and a review of the
process and schedule for collecting housing data that provide the
basis for setting DOD's housing allowance rates. DOD's 2010 report to
Congress states that overall housing allowance rates are generally
comparable to civilian housing expenditures for most pay grades but
are not identical.[Footnote 15] Also, data the contractor provided to
DOD for its use in preparing its report to Congress do not show a
clear trend in housing choices by civilians that would support
changing the profiles. Defense Travel Management Office officials said
that they study the relationship between housing choices of civilians
and the housing allowance rate about every 3 years, but have not made
changes to the housing profiles since implementing the current rate-
setting process. Although the contractor analyzed possible
alternatives to improve the rate-setting process, neither the
contractor nor DOD's report to Congress recommended any changes to the
current process.
DOD's Data-Intensive Process Helps to Ensure the Accuracy of Housing
Allowance Rates, and Some Enhancements May Further Strengthen the
Process:
DOD uses a data-intensive process to set housing allowance rates that
officials said generally meets the goals of the program, although
enhancements related to providing information to installation
officials and service members, defining a key term for data
collection, and developing more accurate cost estimates for the
allowance to use in budget requests, could further strengthen the
process.
DOD Uses a Data-Intensive Process to Set Housing Allowance Rates:
DOD uses a data-intensive process to set housing allowance rates that
includes a number of quality assurance steps designed to help ensure
the reasonable accuracy of the rates, such as:
* Involving installation officials in the data collection process: The
housing office and command leadership at each installation have the
opportunity to submit properties for inclusion in the data used to set
the rates and identify areas for exclusion from the data. Data
collection efforts involve numerous installation officials, with
officials from the five installations we reviewed estimating that they
spent from 12 to 275 staff days per year on data collection tasks. By
involving installation officials in the data collection process, DOD
benefits from local expertise to help ensure that the properties used
to set the housing allowance rates are adequate in terms of the
quality of the properties and appropriate for military personnel of
the designated rank.
* Reviewing the data before data collection is complete: After
installations submit their first round of housing cost data,
representatives from each of the military services meet with the
Defense Travel Management Office and the data collection contractor to
review the submitted data. The service representatives generally check
that each of the installation housing offices submitted data and that
the data submitted are reasonable when compared to past rental rates.
If a service representative identifies an installation that has not
submitted data or anomalies in the data, the service representative
typically contacts the installation to address the situation. The
service representatives and officials from the Defense Travel
Management Office said that these reviews have been effective at
verifying that the installations are following DOD's data submission
guidance and determining whether the data appear reasonable to include
in the rate-setting analysis.
* Verifying the rental data: The contractor hired by DOD to analyze
the data contacts landlords of installation-submitted properties to
verify that the rental rates are current and accurate and that the
property is located within the boundaries of the military housing
area. This verification process also helps to ensure the accuracy of
the data.
Officials we interviewed generally stated that DOD's rate-setting
process is an effective process that meets the purpose and goal of the
program, which is to provide fair housing allowances to service
members and to help service members cover the costs of housing in the
private sector. These officials identified few potential changes to
the rate-setting process, in part since DOD has implemented several
changes to the rate-setting process in the decade since establishing
the program. For example, in 2003, the contractor started comparing
the rental data submitted by the installation housing offices to the
data the contractor collected as an additional quality assurance step.
In 2011, the data collection contractor began a comprehensive review
of the housing area boundaries to verify that the housing areas are
accurate.
Along the same lines, DOD's 2010 report to Congress noted that their
review uncovered relatively few complaints or concerns with the rate-
setting process, that participants believe the current process works
well, and that problems have been addressed through refinements to the
process.[Footnote 16] Additionally, our 2001 review found that the
contractor followed reasonable procedures to ensure that the housing
data collected were accurate.[Footnote 17] DOD still uses the same
contractor for data collection and the fundamental procedures that we
reviewed in 2001 are still in place or have been enhanced. In appendix
II of this report, we have summarized DOD's data-intensive process for
setting housing allowance rates.
DOD sets its housing allowance rates for an area based, in part, on
current market rental cost data, which DOD collects annually for each
housing area. Thus, any cost increases--due to changes in the supply
of or demand for housing or any other reason--should be captured
through the annual rate-setting process, according to Defense Travel
Management Office and service compensation officials. These officials
noted that DOD does not explicitly consider the supply of or demand
for housing, including changes due to planned population changes at an
installation, when determining housing allowance rates, noting that
revising housing allowance rates to attempt to account for
installation population changes would likely lead to inaccurate rates.
From 2006 through 2009, DOD had the authority to temporarily increase
housing allowance rates in disaster areas or areas with installations
that experienced a sudden population increase.[Footnote 18] Defense
Travel Management Office officials stated that three installations--
Fort Riley, Kansas; Cannon Air Force Base, New Mexico; and Fort Drum,
New York--inquired about the authority, but the regular rate-setting
process was able to address the changes in housing costs and the
authority was not used. According to these officials, population
changes to date have not occurred so rapidly that they could not be
addressed through the regular rate-setting process, and they did not
expect to need to implement the provision in response to population
changes. However, they noted that they cannot speculate on the effects
of a natural disaster on housing costs, so having the authority to
react to such an event would be desirable.
Installation Officials and Service Members Do Not Have Access to All
Three Housing Allowance Rate Cost Components:
Installation officials and service members do not have access to
information on the amount or proportion of the housing allowance rate
derived from each of the three costs that comprise the housing
allowance. As part of the process to determine housing allowance
rates, the contractor calculates the median monthly rental costs,
average monthly renter's insurance costs, and average monthly utility
costs for each of the six housing profiles, based on local rental
market costs. DOD sums these figures to determine the total housing
allowance rate for each of the housing profiles, and then uses that
data to determine a single figure for the housing allowance for each
pay grade. Because DOD issues a single figure for the housing
allowance rate for each pay grade, installation officials and service
members do not know the amounts of the three costs that comprise the
total housing allowance rate.
Without access to information on the three costs that comprise the
housing allowance rate, installation officials cannot help ensure the
accuracy of the total housing allowance rates. The data collection
guidance provided to the military installations states that the
installations' expertise and knowledge of the local market is crucial
to the rate-setting process. Installation officials participate in the
rate-setting process by submitting data on rental costs in the area.
However, DOD is not taking full advantage of the installations'
expertise and knowledge of the local market to help ensure the
accuracy of the total housing allowance rates, and particularly the
utility and renter's insurance cost data. Rather, the data collection
contractor determines the average utility and renter's insurance costs
in each housing area for each housing profile through databases.
Furthermore, the contractor collects additional data on rental costs
in each housing area to supplement the data that installation
officials submit. Officials from the Defense Travel Management Office
said that installation officials do not have access to the final
calculations of median rent, average utilities, and average renter's
insurance costs since they believe most of the officials' questions
about housing allowance rates can be addressed without providing such
detail. While we did not identify specific concerns with the accuracy
of these databases or the rental data collected by the contractor,
installation officials we interviewed raised concerns that they do not
have access to information that would allow them to help ensure the
accuracy of the costs and the resulting housing allowance rates.
Officials we interviewed at the five installations said that the total
housing allowance rates in their area generally appeared to be
accurate for most of the housing profiles, but said that they could
not fully confirm the accuracy of the rates without additional
information on the three components--rent, utilities, and renter's
insurance--used to calculate the rate. For example, an official at one
installation noted that the housing allowance for the area appeared
slightly lower than the average housing costs in the area and
originally questioned the accuracy of the utility costs for the area.
When notified that utility costs comprised about 25 percent of the
total housing allowance in 2011 for that housing area, the housing
official said the utility cost used in the rate calculation appeared
reasonable for the amount that service members are paying for
utilities, but noted that the remaining amount of the allowance was
significantly lower than the rental data the installation submitted
and the rental costs in the area. While DOD's report to Congress does
not mention issues related to providing additional information to
installation officials or service members, the contractor's report
that served as the basis of DOD's report noted the need for a feedback
mechanism to allow installations to see the average cost data prior to
housing allowance rates being calculated.
Additionally, without access to information on the three costs that
comprise the housing allowance rate, service members cannot take such
costs into full consideration when choosing off-base housing,
particularly when moving into a new area. Overall, rental costs
comprise the majority of the housing allowance rate, averaging more
than 75 percent of the rate across all housing areas and profiles, and
the utility costs averaged more than 20 percent of the housing
allowance rate with renter's insurance costs comprising the remaining
portion. However, these averages vary by housing area and profile, as
is to be expected given the unique local housing markets. Our analysis
shows that the local utility costs DOD used to calculate the 2011
housing allowance rates are within 5 percent of the housing profile's
average in more than two-thirds of areas, but the utility costs ranged
from nearly 8 percent to nearly 40 percent of the total housing
allowance, which could be a significant cost difference when moving
between housing areas and could affect service members' decision-
making process for choosing affordable housing. For example, if an
enlisted service member with dependents in the E-6 pay grade relocated
from Schofield Barracks, Hawaii, to Fort Knox, Kentucky, the
percentage of the housing allowance rate calculated from the area's
utility costs would increase from about 15 percent of the total
housing allowance at Schofield Barracks to about 26 percent at Fort
Knox. Similarly, if a Marine with dependents in the same pay grade
relocated from Camp Pendleton, California, to Marine Corps Air Station
Cherry Point, North Carolina, the percentage of the housing allowance
calculated from local utilities would increase from about 15 percent
of the total housing allowance at Camp Pendleton to about 24 percent
at Marine Corps Air Station Cherry Point. Without knowledge of the
average utility costs as a percentage of the housing allowance in the
new area, the service member may make decisions on where to live and
how much of the housing allowance to spend on rent, utilities, and
renter's insurance based on his or her experience at the previous duty
location. In that case, the service member in either of the above
examples would underestimate the amount needed to pay the average
utilities at the new duty location by more than $100 per month, or
about 10 percent of the total housing allowance at the new locations,
and would have to pay the excess amount from other income sources.
Housing officials at four of the five installations we interviewed
said that without information on the breakdown of estimated costs for
utilities and renter's insurance, some landlords view the overall
housing allowance rate as the market rental rate and set rental rates
equal to the full housing allowance rate for a specific pay grade
without regard to utility expenses that would also need to be paid.
Also, some service members choose housing in which the rental cost is
equal to the full housing allowance rate without fully understanding
the financial implications when rent does not include the additional
costs of utilities or renter's insurance. A service member paying more
than the allowance rate to obtain housing does not necessarily mean
that the housing allowance rate in an area is not accurate. The
housing allowance rate is set based on the average housing costs in an
area and most service members in an area will not have housing costs
exactly equal to the average. A service member who chooses housing in
which costs exceed these averages will have to pay more than the
housing allowance for some housing costs and, conversely, a service
member with costs below the averages can keep the remaining amount. We
have previously reported on the importance of educating service
members on their compensation, specifically noting that past studies
suggest that revealing more information about components of
compensation has a greater impact on the component's satisfaction rate
than the actual amount itself.[Footnote 19]
Officials from the Defense Travel Management Office said they believe
that publishing information on the three costs that comprise the total
housing allowance may be distracting to the service members or may
lead to service members' feeling that their choices are restricted, as
few service members have housing costs that exactly match the costs
used to calculate the allowance. Installation housing officials and an
official from one military service that we talked to generally
disagreed with this view and said that the additional information
would allow service members to make better-informed decisions rather
than constraining service members' housing choices. During our review,
DOD began to make available some high-level information about utility
costs to service members and installation officials upon request.
Specifically, DOD's data collection contractor updated its information
sheet on the methodology for calculating utility costs, which each of
the military services' housing allowance representatives have and can
distribute when asked about utilities. DOD's service housing allowance
representatives said that they plan to provide the utilities
information sheet when responding to installation officials' questions
on utility costs. The Army representative said that the information
sheet could be distributed to installation officials, service members,
family members, or the general public in response to questions. The
Air Force representative said the Air Force plans to distribute the
information sheet along with the data collection guidance to all of
its installation housing offices. The updated information sheet states
that a nationwide percentage of the portion of the housing allowance
for utilities does not exist, but provides a range for expected
monthly utility costs ($120 to about $600) and an average ($294)
across all of the housing profiles and geographic areas, noting that
nearly one-quarter of housing profiles are within 10 percent of the
average. However, we believe that providing such a wide range of
expected costs, as opposed to information more tailored to a specific
geographic area and housing profile, does not provide installation
officials with information that would allow them to help ensure the
accuracy of the rates and does not provide service members with
information that would help them make informed and fiscally
responsible choices.
Definition of "Available" May Limit the Number of Properties Submitted
in the Rate-Setting Process:
Officials at four of the five installations we interviewed said that,
in areas with low vacancy rates, it can be difficult to find rental
properties for some housing profiles that are adequate and meet the
definition of currently available housing used in the data-gathering
process. These officials noted that rental properties that meet the
definition of available in such markets tend to be inadequate or
undesirable for a variety of reasons, including high rental costs,
poor physical condition of the property, or located in a high-crime
area and, therefore, are not representative of housing costs in the
area. The data collection guidance provided to military installations
defines "available" properties to include properties that are
currently on the rental market or have been on the market within 4 to
6 weeks prior to data submission.[Footnote 20] The law governing the
housing allowance program requires that rates be based on the costs of
adequate housing for civilians with comparable incomes in the same
area.[Footnote 21] However, because the definition of "available" used
in the data collection process limits data submission to only those
properties that were available for rent within 4 to 6 weeks prior to
data submission, the properties that some installations submit may not
be as fully representative of current market costs for adequate
housing for comparable civilians in the same area or properties that
are representative of such costs may be excluded, increasing the
possibility of inaccurate rates for the area. While some Defense
Travel Management Office and military service housing allowance
officials questioned whether revising the definition of "available"
would lead to additional properties submitted during the data
collection process, officials involved in the data collection process
at four out of the five installations we interviewed and one of the
military services indicated that extending the definition of
available--up to 90 days, for example--would allow installations to
submit cost data on additional rental properties, which could improve
the accuracy of the housing allowance rates. For example, housing
officials at Fort Drum, New York, told us that low vacancy rates in
the area make it difficult to collect enough housing cost data on
properties available only within a 4-to 6-week window. As a result,
they questioned the accuracy of the data they submitted stating that
if they were allowed to include housing cost data spanning a longer
availability timeframe, they would have more assurance that the data
they submitted would result in a more accurate cost estimate.
We recognize that revising the definition of "available" for data
collection has some potential drawbacks; however, it is unclear to us
whether these drawbacks would outweigh the potential benefits of
improved accuracy of the rates from the submission of additional
adequate properties. If DOD expanded the definition of "available"
used in the data collection process then rental cost data might not be
as current. Using the current definition, rental rates for properties
available 6 weeks prior to the first data submission are more than 9
months old when the housing allowance rates become effective. Revising
the definition of "available" to 90 days would mean that rental rates
for the earliest properties would be nearly a year old when rates
became effective. However, the extent to which rental costs would
significantly change in an additional 6 weeks is unclear.
Additionally, Defense Travel Management Office officials and a
representative of the data collection contractor noted that as rental
rates get older, it becomes increasingly difficult to verify the
rental rates with landlords for properties available more than 6 weeks
prior to data submission. If the contractor cannot verify the rental
rates, then the property cannot be included in the data used to set
the housing allowance rates, which could lessen the benefit gained
from submitting additional properties.
DOD Has Consistently Underestimated Costs of Housing Allowances in Its
Budget Estimates:
Since fiscal year 2006, DOD has consistently underestimated the total
costs of paying the housing allowance to service members by $820
million to $1.3 billion each year--or about 6 to 11 percent of the
amount estimated--meaning that DOD has spent more on the housing
allowance than estimated. Figure 4 shows the difference between the
amount that DOD estimated in its budget submission it would cost to
pay the housing allowance and the actual amount DOD obligated for the
housing allowance for fiscal years 2006 through 2010.[Footnote 22] A
difference of $0 would signify that DOD estimated the exact amount of
funding it needed to pay housing allowances. Positive amounts signify
that DOD's estimates were higher than the actual amount needed to pay
housing allowances. Negative amounts signify that DOD's estimates were
lower than the actual amount needed to pay housing allowances.
Figure 4: Difference between Amount Estimated and Obligated for
Housing Allowances, Fiscal Years 2006 through 2010:
[Refer to PDF for image: stacked vertical bar graph]
Year: 2006;
Army: -$510 million;
Navy: -$581 million;
Marine Corps: -$99 million;
Air Force: -$141 million;
Total differences: -$1.331 billion.
Year: 2007;
Army: -$410 million;
Navy: $13 million;
Marine Corps: -$53 million;
Air Force: -$371 million;
Total differences: -$820.8 million.
Year: 2008;
Army: -$301 million;
Navy: -$292 million;
Marine Corps: -$160 million;
Air Force: -$72 million;
Total differences: -$825.1 million.
Year: 2009;
Army: -$545 million;
Navy: $36 million;
Marine Corps: -$135 million;
Air Force: -$252 million;
Total differences: -$897.2 million.
Year: 2010;
Army: -$592 million;
Navy: -$99 million;
Marine Corps: -$185 million;
Air Force: -$187 million;
Total differences: -$1.063 billion.
Source: GAO analysis of DOD data.
Note: We could not compare DOD's estimates to its actual obligations
for the housing allowance prior to 2006, as the supplemental budget
requests prior to 2006 did not provide sufficient detail for us to
determine the amount estimated for the housing allowance and neither
the Office of the Under Secretary of Defense (Comptroller) or the
military services could provide this information.
[End of figure]
The military services generally use a four-step process to develop
housing allowance cost estimates for budgeting purposes. First, using
current year data, the services calculate the percentage of service
members who received the housing allowance for each pay grade and
dependency status, referred to as "participation rates." Second, the
services apply the participation rates to the projected force
structure to determine the number of people that will receive the
housing allowance at each pay grade for the budgeted year, which is
usually 2 years in the future. Third, the Office of the Under
Secretary of Defense (Comptroller) provides the military services with
an "inflation factor" to determine the housing allowance rates for
each pay grade for budget purposes. Fourth, the services multiply the
number of service members projected in a pay grade by the projected
housing allowance rate to determine the estimated cost of the housing
allowance. While the services have processes in place to develop
housing allowance cost estimates, budget officials in the Office of
the Under Secretary of Defense (Comptroller) and the military
services, as well as our analysis, indicated that the services have
consistently underestimated the total cost of the housing allowance in
part because the services' processes do not allow them to accurately
estimate the number of service members who will receive the housing
allowance.
A number of factors have affected the services' ability to accurately
estimate the cost of the housing allowance. A key underlying factor is
the timing of developing the budget estimates. The military services
begin their process to develop budget estimates about 18 months before
the housing allowance rates for the calendar year take effect, and the
President submits the budget request to Congress almost a year before
the new housing allowance rates take effect and about 2 months before
DOD begins collecting the data for the rates, leading to challenges in
accurately estimating the number of service members and housing
allowance rate for each pay grade. Other key factors that have
influenced the services' ability to accurately estimate the cost of
the housing allowance include:
* Changes in planned force structure. In recent years, the military
services have made changes in their planned force structure between
the time that the service developed the estimate and when the
allowances were paid to service members. For example, the Marine Corps
reached its end strength goals for Grow the Force 2 years ahead of
budget estimates, leading to more Marines than estimated actually
receiving the housing allowance.
* Increased use of mobilized reserve personnel. Budget officials said
that an increase in the number of mobilized reserve personnel has made
it difficult to accurately estimate the number of personnel that will
receive the housing allowance. The Tenth Quadrennial Review of
Military Compensation report also identified this as a challenge to
accurately estimating housing allowance costs, noting that the number
of reservists serving on active duty since 2001 and the higher
proportion of reservists with dependents compared with the active duty
force makes it difficult to estimate the number of service members who
will be eligible to receive a housing allowance.[Footnote 23] That
report recommended that DOD continue to improve its population
estimating procedures to ensure that the housing allowance budget is
as accurate as possible.
* Changes to the housing allowance rates. DOD does not set its housing
allowance rates until December of each year, about 10 months after the
President's budget is submitted to Congress and more than 2 months
after the new fiscal year begins. DOD budget officials said that the
rate estimates have been a factor in underestimating the housing
allowance costs to a lesser degree than other factors. Based on our
analysis, as well as the Tenth Quadrennial Review of Military
Compensation, errors in estimating the numbers of service members that
actually received the housing allowance were generally larger than
errors in estimating the actual housing allowance rates, although
errors in estimating the housing allowance rates did affect the
accuracy of the total cost estimates.
* Changes in housing policies. Budget officials noted that changes in
housing policies that allow service members to receive the housing
allowance who previously were not eligible for the allowance, changes
in the number of privatized housing units, or other changes to housing
or housing allowance policies affect the accuracy of the services'
estimates for the number of personnel and total cost of the housing
allowance.
The military services have taken some actions that they said should
help improve the accuracy of the housing allowance cost estimates. For
example, the Army is developing a methodology to account for rate
protection for service members if the rates decrease after being
stationed at an installation. Officials expect to start using the
methodology with estimates developed later this year. Since rate
protection allows service members to retain their higher housing
allowance rate in areas where rates decrease, the ability to better
account for rate protection could improve the accuracy of housing
allowance cost estimates. Additionally, the Marine Corps recently
developed tools that allow them to gather dependency rates monthly.
DOD budget officials provided suggestions for further improving
estimates, such as coordinating with the service budget office before
implementing housing policies that lead to increases in the number of
service members who receive the housing allowance.
We have previously reported that when full funding information is not
included in the President's annual budget submission or provided
during the congressional appropriations process, it understates the
true cost of government to policymakers at the time decisions are made
and steps can still be taken to control funding, which is even more
important in a time of constrained resources.[Footnote 24] While we
recognize the difficulties in accurately estimating the costs of the
housing allowance, consistently underestimating the amount needed to
pay the housing allowance affects other DOD programs. The housing
allowance is an entitlement for service members. As such, DOD must pay
the allowance to service members at the specified rates and,
therefore, has had to find another source of funding when
underestimating the amount needed to pay the allowance. This can
include shifting funds that Congress has appropriated for other
purposes, including other budget activities within the military
personnel appropriation or other defense appropriations, in accordance
with applicable laws and policies, or requesting additional funding in
a supplemental request. However, shifting funds from another program
could disrupt the funding of the other program. Additionally, while an
official from the Office of the Under Secretary of Defense
(Comptroller) said that DOD's budget provides the best estimates
available, as a result of consistently underestimating the amount
needed to pay the housing allowance, DOD's budget does not provide
decision makers in Congress and DOD with the full picture of housing
allowance costs, limiting the ability of both Congress and DOD to make
more fully informed funding decisions.
Service Members Have Encountered Housing Challenges at Some Growth
Installations and DOD Does Not Have a Formal Information-Sharing
Process for Tools to Address Such Challenges:
Some service members have encountered challenges in obtaining off-base
housing near some installations that are increasing in size due to
several major defense initiatives, such as BRAC, Grow the Force, Army
Modularity, and Global Defense Posture and Realignment. DOD officials
have used a number of tools to address challenges in obtaining off-
base housing, but DOD does not have a formal process that allows
installation officials to share information on these tools.
Housing Deficits Exist at Most DOD Growth Installations and Are
Expected to Continue or Worsen:
According to the military services' data, demand exceeds the supply of
housing at 19 of the 26 growth installations, resulting in housing
deficits.[Footnote 25] Current housing deficit estimates range from
about 1 percent of the total estimated demand at Fort Polk, Louisiana,
to more than 20 percent of estimated demand at Cannon Air Force Base,
New Mexico, according to service data. Economic conditions in recent
years, among other factors, have made it difficult for developers to
obtain funding for new construction projects in the communities,
particularly for multifamily rental housing projects. This has
contributed to the estimated housing deficits, according to
installation housing and community officials we interviewed. In
addition, these officials said that the high number of deployments in
recent years, among other issues, has led to concerns among lenders
about anticipated demand for newly constructed units, potentially
making lenders more reluctant to provide loans for construction.
Housing and community officials from four of the five installations we
reviewed--Fort Riley, Kansas; Cannon Air Force Base, New Mexico; Fort
Drum, New York; and Fort Bliss, Texas--noted that service members are
currently experiencing challenges in obtaining adequate and affordable
housing in the communities surrounding the installation and expected
that these challenges will continue or worsen in the future.
* Fort Riley has a current estimated deficit of about 700 family
housing units (about 4 percent of family housing demand at the
installation), based on Army data. Fort Riley officials stated that
based on current plans, all but one of Fort Riley's brigades--about 80
percent to 90 percent of the population assigned to the installation--
will be at the installation starting in October 2011. The return of
most of the brigades, combined with longer periods of time at the duty
station, will further increase the demand for housing on and around
Fort Riley. Installation housing officials said that due to the
limited amount of housing, service members have had to look further
away from the installation to find adequate housing. Community
officials noted that in recent years families have not relocated
immediately with service members due to continuous deployment, which
has led to difficulty in estimating the amount of family housing
needed in the future.
* Cannon Air Force Base has a projected deficit of about 530 family
housing units (about 20 percent of projected demand at the
installation), based on Air Force data. In addition to the planned
population increase at the installation, installation and community
officials expect additional demand for housing in the area from the
labor force expected to construct projects on the installation in
support of the planned growth and a large energy project in the
community. Installation officials said that occupancy rates for rental
housing in the community have exceeded 99 percent in 2010 and 2011.
Due to the limited availability of housing in the community,
installation officials said there is a high demand for even inadequate
family housing units on base, which are expected to be privatized in
2012. Additionally, some service members are purchasing homes in the
area and others are paying more than the housing allowance for rent or
renting in less desirable areas.
* Fort Drum has a current estimated deficit of about 1,700 family
housing units (nearly 20 percent of family housing demand at the
installation), based on Army data. Fort Drum officials stated that the
lack of available housing in the community surrounding the
installation, among other issues, has led an increasing number of
service members to relocate to the installation without their
families. By relocating to the installation unaccompanied, these
service members can find smaller housing units than they would need
for their family or share housing with another service member.
Alternatively, depending on the availability of housing, some service
members that relocate with their families obtain housing 30 to 40
miles away from the installation. Installation and community officials
stated they expect housing availability to be further limited starting
in 2012 when all but about 1,000 of Fort Drum's deployed soldiers are
expected to be at the installation for the first time since their
recent growth occurred. Having most of the units return is expected to
exacerbate current housing demand.
* Fort Bliss has a current estimated deficit of about 2,900 family
housing units (about 15 percent of family housing demand at the
installation), based on Army data. Due to the limited amount of
housing near the installation that is affordable to junior enlisted
personnel, Fort Bliss officials stated that junior enlisted personnel
typically obtain housing on the outskirts of El Paso and experience
long commutes to the installation. Officials noted that growth in the
civilian population of El Paso due to families relocating there from
Mexico has further limited the supply of housing available in the
community for service members, and as more soldiers return from
deployment over the next year, the community's housing supply will be
further strained.
* Camp Lejeune and Marine Corp Air Station New River, North Carolina,
have an estimated deficit of nearly 3,500 family housing units (nearly
20 percent of family housing demand at the installation), according to
Marine Corps data. Despite the estimated shortfalls, installation
housing officials said that service members have not encountered
challenges in obtaining housing in the community, in part due to the
number of mobile homes in the area. While DOD considers mobile homes
as inadequate housing and does not include these units in its housing
market analyses, some service members have chosen to live in these
homes, which helped mitigate the projected housing deficit.
DOD Uses Several Tools to Address Housing Challenges:
Service members are encountering challenges obtaining adequate housing
at some installations due to the limited supply of housing in the
area, but DOD's policy is to rely on the private sector as the primary
source of housing for personnel normally eligible to draw a housing
allowance and DOD is limited in its ability to increase the supply of
housing in the community. However, installation housing officials we
interviewed use or have plans to use several tools to help service
members and their families obtain housing either on base or in the
community, many of which could be replicated and used in other areas.
Selected tools include:
* Housing privatization: Since 1996, the military services have been
obtaining private sector financing and management to repair, renovate,
construct, and operate military family housing on the installations--
also known as housing privatization.[Footnote 26] In a typical
privatized military housing project, a military department leases land
to a developer for a term of 50 years. The developer is responsible
for constructing new homes or renovating existing homes and leasing
them, giving preference to military service members and their
families. Service members who choose to live in the privatized housing
then use their housing allowance to pay rent. Housing officials at
each of the installations we interviewed are developing and
implementing plans to negotiate with privatization partners to
increase the supply of adequate housing on base. For example, Fort
Bliss officials stated that their privatization partner has agreed to
build an additional 800 to 1,000 privatized homes on the installation
to help address the housing deficit. An installation official expected
that the homes would not be completed until 2012, at the earliest.
Additionally, the Army and Navy have privatized housing for
unaccompanied senior enlisted personnel and officers at five
installations: Fort Irwin, California; Naval Station San Diego,
California; Fort Stewart, Georgia; Fort Drum, New York; and Fort
Bragg, North Carolina. The Navy also privatized unaccompanied housing
for junior enlisted personnel at Naval Station San Diego, California,
and Naval Station Norfolk, Virginia. The Army and Navy selected these
sites due to projected deficits in housing for unaccompanied personnel.
* Domestic leasing program: The domestic leasing program provides
temporary housing for military families pending availability of
permanent housing through DOD payment of rent and other housing costs
of privately owned housing units that are assigned to military
families as government quarters. For example, Army officials stated
they are using the program as a short term bridging strategy for
housing service members and their families until local communities
respond to the increasing housing demand near installations. The
program is currently in use at two growth installations--Fort Drum and
Fort Bliss.
* Military Family Housing Leasing Program (commonly referred to as the
Section 801 housing program): Starting in 1984, a number of DOD
installations contracted with developers to build new rental housing
on or near military installations through the Section 801 housing
program--a forerunner to the current Military Housing Privatization
Initiative.[Footnote 27] DOD used the Section 801 Housing program as a
means for improving and expanding military family housing through
private developers' investment. The leases at four of the
installations within our scope have expired or will expire within the
next 2 years and will not be renewed, according to housing officials
at these installations. While the existing contracts at Cannon Air
Force Base will expire in 2012 and 2013, installation housing
officials stated that the installation is attempting to develop a
"bridge lease" that will allow service members to continue renting the
units with some revisions to the current lease agreement to help meet
the increased housing demand. In addition, as we previously reported,
Fort Hood, Texas, extended its Section 801 housing lease to 2029 and
renegotiated the lease terms to retain priority use of the units for
military personnel and DOD civilians.[Footnote 28]
* Low-Income Housing Credit: The Housing and Economic Recovery Act,
[Footnote 29] which Congress enacted in 2008, contained a provision
that altered the way the Basic Allowance for Housing was treated for
the purposes of determining eligibility under the Low Income Housing
Tax Credit Program.[Footnote 30] The provision, which is effective
through January 2012, applies only to certain military installations,
but according to installation officials it can, in some cases,
effectively expand the supply of available housing. Nine military
installations qualified for the program, including three installations
expecting significant growth--Fort Riley, Fort Bliss, and Fort Hood.
Fort Riley and Fort Bliss officials said that the provision can allow
more service members to qualify for low-income housing. One growth
installation--Fort Drum--did not qualify for the program, but Fort
Drum officials estimated that if the installation had qualified an
additional 200 tax credit housing units would likely have been
constructed near the installation.
* Housing requirements and market analyses: The military services
routinely conduct housing requirements and market analyses to
determine projected housing surpluses or deficits based on the number
of personnel expected to be stationed at the installation in a given
year and to determine housing requirements and the community's ability
to meet those requirements. Based on the results of these analyses,
the services can determine whether to use housing tools such as
housing privatization, government-owned housing, or leasing at an
installation. Officials at all five of the installations we
interviewed indicated they use the housing analyses as a tool to
determine current and projected housing deficits and how to address
the deficits. However, officials we interviewed at a few installations
raised concerns about the process to develop the analyses and the
accuracy of the results, noting issues with the data used to establish
the estimates and the lack of input from housing officials at the
installation.
* Extension of lodging allowance: The Temporary Lodging Expense
Allowance is designed to partially offset expenses when a service
member occupies temporary quarters in the continental United States
while relocating from one installation to another. The Army has
extended the use of this allowance at two growth installations--Fort
Drum and Fort Bliss--from 10 days to up to 60 days. While Fort Bliss
officials stated that service members have generally been able to find
housing within 10 days, the installation requested the extension in
anticipation of future growth at the installation when officials
expect that it will take longer for service members to find housing.
* Installation-community collaboration: Among other responsibilities,
DOD's Office of Economic Adjustment assists growth communities
affected by DOD actions, such as BRAC, that have expressed a need for
planning assistance. The Office of Economic Adjustment has encouraged
the communities near growth installations to establish "growth
management organizations" that are designed to work on issues
associated with community growth and typically include high-level
installation officials. The Office of Economic Adjustment has provided
grants to assist some of the organizations to plan to accommodate the
expected population increases and undertake studies to identify gaps
in local infrastructure, such as housing. In addition, the growth
management organizations provide a forum for community and
installation officials to communicate about challenges, including
housing, and develop plans to mitigate the challenges. For example,
community officials from the Fort Drum Regional Liaison Organization
said the organization has plans to host an event this year to bring
together installation officials, developers, financers, and state and
local officials to encourage new housing development around the
installation.
* Housing allowance waiver: The Navy and Coast Guard have identified
"critical housing areas" where there is a short supply of housing on
base and in the community. In such areas, a service member may choose
to leave their dependents at their previous duty location and relocate
to the new duty location unaccompanied while continuing to receive the
housing allowance at the rate for the prior location. By relocating to
an area unaccompanied, the service member may have more housing
choices, such as living in a smaller unit than the family needs or
sharing housing with another member. However, the service member has
to pay for housing for himself or herself in one location and his or
her family in another location, which could be costly. The Navy
designated six critical housing areas in 2009, but did not designate
any critical housing areas in 2010. The Coast Guard designated 23
critical housing areas in 2010. While the Army and Air Force have not
identified critical housing areas, officials told us that service
secretaries can authorize the housing allowance to be paid based on a
dependent's location or previous duty station on an exception basis if
circumstances require dependents to reside separately from the service
member or other circumstances deemed acceptable by the secretary.
* Rental Partnership Program: The Rental Partnership Program helps
service members obtain housing at a reduced cost. Installations
negotiate deals with local housing management companies to enter into
written agreements to make adequate housing available to service
members. Installations develop their own unique aspects of the
program. For example, Camp Lejeune uses the program to reduce move-in
costs for junior enlisted service members trying to obtain housing in
the community.
* Automated Housing Referral Network: The Automated Housing Referral
Network is an Internet-based rental database used by service members
to find housing. The database contains information on housing on base
and in the community, as well as temporary lodging, shared rentals,
and housing units for sale by owner. The network is widely used across
the services, including the Coast Guard, according to officials in
DOD's Directorate of Housing and Competitive Sourcing.
DOD Does Not Have a Formal Process for Sharing Information on Tools to
Address Housing Challenges:
Installation housing officials we interviewed generally share
information on tools they use or plan to use to address housing-
related challenges on a regular, but ad hoc basis. For example, Fort
Drum, Fort Riley, and Fort Bliss officials stated that most of their
information sharing is done through informal email communication with
other Army housing officials. In addition, housing officials we
interviewed at each of the five installations said that they
communicate informally with installations from other services at the
Professional Housing Management Association's annual conference, where
officials from all of the military services discuss, among other
topics, housing tools and challenges at their installations.
Installation housing officials we interviewed generally stated that
having a repository with information about tools, their use, and their
impact at addressing housing challenges would be beneficial as the
installations continue to plan for current and future growth.
According to the Standards for Internal Control in the Federal
Government, information should be communicated to the individuals
within an organization that need it to carry out their
responsibilities.[Footnote 31] Among other responsibilities, the
Deputy Under Secretary of Defense (Installations and Environment),
which is part of the Office of the Under Secretary of Defense
(Acquisition, Technology and Logistics), is responsible for providing
guidance and general procedures about housing, including community
housing and DOD housing, and communicating and coordinating with the
military departments, including through regular meetings about housing
policy and other housing issues. DOD's Housing Management Manual
states that, subject to the authority and direction of their
respective DOD components, installation commanders are responsible for
ensuring that service members have access to suitable housing.
[Footnote 32] However, installation housing officials do not readily
have access to information about certain tools and their use by other
installations and services that could help service members obtain
suitable housing because DOD does not have a formalized information-
sharing process to store and share this information. Without such a
process, DOD cannot ensure that installations that are currently
facing housing challenges or may encounter such challenges in the
future have access to the necessary information on what tools have
worked elsewhere to best position installations to mitigate or solve
the challenges. While information shared through informal networks is
useful to those who receive the information, there is no assurance
that information shared and learned through these communications can
be of use to others if the information is not stored and available for
others to readily access.
We identified instances where installation housing officials were
generally unaware of some tools available to address housing
challenges. For example, of the five growth installations we spoke to,
three installations were unaware of the authority DOD previously had
to prescribe temporary increases in housing allowance rates in areas
that are experiencing a sudden increase in the number of service
members assigned to the installation. Officials at one installation in
an area with low vacancy rates noted that the installation did not
become aware of the authority until after it expired and noted that an
increase in the housing allowance rates would have increased service
members' ability to obtain housing. In addition, officials we
interviewed at another installation were not aware of the Rental
Partnership program. We also found an instance where officials at one
installation said it would be helpful to have information from other
installations implementing the domestic leasing program to get the
program started at their installation.
Conclusions:
DOD spends billions of dollars each year to pay the housing allowance
to over a million service members so that they can obtain housing for
themselves and their families. DOD's housing allowance rate-setting
process is generally viewed as effective and DOD has made improvements
to the process over the past decade. Nevertheless, there are
opportunities for DOD to further enhance its rate-setting process and
improve the accuracy of the housing allowance rates. Accurate housing
allowance rates are critical to meeting DOD's goals for the housing
allowance program. Rates that are lower than the average housing costs
in the community limit service members' ability to obtain adequate
housing in the community, while rates that are higher than the average
housing costs risk DOD spending more money than needed for the
allowance. Providing additional information to installation officials
about the costs that comprise the housing allowance rate--rent,
utilities, and renter's insurance--would enable those officials to
help review the accuracy of the local market-based rates, given their
expertise in the local housing area. Similarly, if DOD provided such
information to service members, it could help them to make more
informed decisions about their housing choices. Additionally,
analyzing the benefits and drawbacks of revising the definition of
"available" rental properties for data collection--and revising the
definition, as needed--could enable DOD to increase the sample of
adequate and appropriate properties used to determine the median
rental cost in an area, potentially improving the accuracy of the
housing allowance rates. Furthermore, until DOD develops a process
that results in more accurate estimates of the total costs of the
housing allowance, DOD may continue to shift funds from other
programs, potentially affecting the success of the other programs and
limiting the ability of key decision makers in Congress and DOD to
make more informed funding decisions, which is particularly critical
in the current fiscal environment.
Population increases and other factors have increased the demand for
housing on and near installations, leading some service members to
encounter challenges obtaining off-base housing near some
installations. DOD officials expect the problem to worsen in the near
future as some initiatives, such as BRAC, are completed and as service
members return home from overseas deployments. Installations have used
a number of tools to help service members find housing, either in the
community or on the installation. However, until DOD institutes a more
widespread communications process that allows sharing of these tools
across military installations and services, DOD cannot ensure that all
installation officials will have access to valuable information on
addressing housing challenges due to growth or other causes--both now
and in the future--that could help improve the quality of life for
service members and their families.
Recommendations for Executive Action:
We recommend that the Secretary of Defense take the following four
actions:
* To enhance the transparency of the housing allowance rates, direct
the Director of the Defense Travel Management Office to revise
policies to provide information on the three costs that comprise the
housing allowance rate (rent, utilities, and renter's insurance) by
geographic area and housing profile to installation housing officials
to better ensure local-market-based accuracy and to service members to
increase understanding of the rate when selecting housing.
* To enhance the accuracy of the housing allowance rates, direct the
Director of the Defense Travel Management Office to more fully assess
the benefits and drawbacks of revising the definition of "available"
rental properties used for data collection purposes, either for all
military housing areas or only those military housing areas that meet
a certain low vacancy threshold.
* To promote more accurate budgeting by DOD, direct the Under
Secretary of Defense (Comptroller) and the military services to more
fully identify the causes of inaccurate cost estimates for the Basic
Allowance for Housing program and develop and implement procedures to
improve these estimates. At a minimum, these procedures should include
processes to more accurately estimate the number of service members
who will receive the allowance.
* To ensure that current or future growth installations that
experience housing challenges have access to information on tools to
address these challenges, direct the Under Secretary of Defense
(Acquisition, Technology and Logistics) and the Office of the Deputy
Assistant Secretary of Defense (Installations and Environment) to
develop a communications process so that installations can more
routinely share best practices and their use of tools and mechanisms
to address housing challenges.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, DOD generally concurred
with all four of our recommendations. DOD's response to our
recommendations is printed in its entirety in appendix III. DOD also
provided technical comments, which we incorporated, as appropriate.
The Department of Homeland Security reviewed a draft of this report
and did not have comments.
DOD partially concurred with our recommendation to provide service
members with information on the three elements that comprise the
allowance (rent, utilities, and renter's insurance). In its response,
DOD said that it will provide the cost elements as a percentage range
of total costs across all profiles by 2012. We believe that this meets
the intent of our recommendation.
DOD concurred with our second recommendation to assess the benefits
and drawbacks of revising the definition of "available" rental
properties used for data collection purposes. DOD said that it has
already done so and plans to expand the definition of available
properties to include those properties that will be available at a
future date.
DOD concurred with our third recommendation to identify the cause of
inaccurate cost estimates of the allowance program and improve
procedures to address this problem. DOD plans to establish a working
group, led by the Office of the Under Secretary of Defense
(Comptroller), to better understand how the services budget for the
housing allowance and document and share best practices for estimating
the amount needed to pay the allowance.
DOD concurred with our fourth recommendation to develop a
communications process to share best practices among the installations
and plans to use the Office of the Secretary of Defense's Housing
Policy Panel and other resources to share information on tools to
address housing challenges.
We are sending copies of this report to the appropriate congressional
committees. We are also sending copies to the Secretary of Defense;
the Under Secretary of Defense (Comptroller); the Under Secretary of
Defense (Acquisition, Technology and Logistics); the Secretaries of
the Army, Navy, and Air Force; the Commandant of the Marine Corps; the
Secretary of Homeland Security; and the Commandant of the Coast Guard.
This report will also be available at no charge on our Web site at
[hyperlink, http://www.gao.gov]. Should you or your staff have any
questions concerning this report, please contact me at (202) 512-4523
or leporeb@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. Key contributors are listed in appendix IV.
Signed by:
Brian J. Lepore:
Director, Defense Capabilities and Management:
List of Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Daniel Inouye:
Chairman:
The Honorable Thad Cochran:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Howard P. McKeon:
Chairman:
The Honorable Adam Smith:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable C.W. "Bill" Young:
Chairman:
The Honorable Norman D. Dicks:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
To determine whether the Department of Defense (DOD) could enhance its
housing allowance rate-setting process, we reviewed reports about
DOD's process, including DOD's 2010 report to Congress,[Footnote 33]
and laws and guidance governing the program. Additionally, we spoke
with officials responsible for overseeing the rate-setting process in
the Defense Travel Management Office; housing officials in the
Directorate of Housing and Competitive Sourcing within the Office of
the Under Secretary of Defense (Acquisition, Technology and
Logistics); a budget official in the Office of the Under Secretary of
Defense (Comptroller); and military compensation and budget officials
responsible for housing allowances from the Army, Navy, Marine Corps,
and Air Force. We also met with representatives from the Coast Guard
to discuss their role in the process for setting basic housing
allowances. Furthermore, we contacted installation housing officials
from Fort Riley, Kansas; Cannon Air Force Base, New Mexico; Fort Drum,
New York; Camp Lejeune, North Carolina; and Fort Bliss, Texas, to
discuss how they collect and submit housing cost data that feed into
DOD's rate-setting process. Our rationale for selecting these
installations is discussed below. Additionally, we spoke with a
representative from DOD's contractor for the data collection efforts.
We discussed the technical aspects of a draft of this report with a
representative for the contractor.
To help ensure that we identified a wide range of potential
enhancements to DOD's current rate-setting process, we also spoke with
representatives from six other organizations: the Center for Naval
Analyses, the Lewin Group, the RAND Corporation, the Fleet Reserve
Association, the Military Officers Association of America, and the
National Military Family Association. We selected these organizations
because representatives have knowledge about military compensation
generally or the Basic Allowance for Housing program specifically, as
shown in published reports or through testifying before Congress and
the three associations represent interests of military service members
and their families. In addition to publishing other work on military
compensation, the Lewin Group performed the research on which DOD
based its 2010 report to Congress on housing standards and the
allowance rate-setting process. We considered a number of potential
enhancements to DOD's current rate-setting process and performed
further analyses to determine the benefits and drawbacks of each,
including potential financial savings or costs.
Through the additional analyses of each of the enhancements, we
determined whether the alternative was viable and could enhance DOD's
rate-setting process without significantly increasing program costs.
For example, with regard to the enhancement of providing more
information to service members about the three costs that comprise the
housing allowance rate, we obtained and analyzed data from the Defense
Travel Management Office on the three costs that comprise the rate for
the six housing profiles in each of the 364 military housing areas. We
assessed the reliability of the data by performing electronic testing
for obvious errors in the accuracy and completeness of the data and
reviewing documentation on how the data are collected and determined
that the data were sufficiently reliable for our purposes.
Additionally, we discussed the enhancement with officials from the
Defense Travel Management Office, the service Basic Allowance for
Housing representatives, and five selected installations. Similarly,
with regard to DOD's process to budget for the housing allowance, we
analyzed budget justification data for the Army, Navy, Marine Corps,
and Air Force for personnel receiving the housing allowance at the
"with" and "without" dependents rates by comparing the amount DOD
estimated to the amount obligated. We reviewed the annual budget,
supplemental requests, and funding for housing allowances requested in
support of Overseas Contingency Operations. We could not compare DOD's
estimates to its actual obligations for the housing allowance prior to
2006, as the supplemental budget requests prior to 2006 did not
provide sufficient detail for us to determine the amount estimated for
the housing allowance and neither the Office of the Under Secretary of
Defense (Comptroller) or the military services could provide this
information. The Coast Guard's budget justification documents to
Congress are not in enough detail compared to similar budget
justification documents to Congress from the other military services
so we could not perform a thorough analysis of the Coast Guard's cost
estimates; however, Coast Guard officials provided similar information
that allowed us to compare the Coast Guard's overall estimates to
obligations.
To determine whether service members relocating to installations that
DOD projects to experience significant growth have encountered
challenges in obtaining off-base housing and the extent to which DOD
is using and sharing information on tools to address these challenges,
we reviewed and analyzed applicable documentation and interviewed
knowledgeable officials. Specifically, we analyzed data from the
Housing Requirement and Market Analyses for the 26 growth
installations to determine DOD's housing deficit projections at these
installations. While we recognize that there are some shortcomings of
the data, including concerns raised by installation housing officials
about the process to develop the analyses and the accuracy of the
results, we used the data to provide context on projected housing
deficits and determined that the data were sufficiently reliable for
this purpose. To better understand the tools available to address
housing challenges, we reviewed the relevant legislation; DOD's Joint
Federal Travel Regulations; service-level policies and other
documentation on tools; and past GAO reports that discuss military
housing privatization, the Domestic Leasing Program, and Section 801
housing.[Footnote 34] Additionally, we interviewed housing officials
in the Directorate of Housing and Competitive Sourcing within the
Office of the Under Secretary of Defense (Acquisition, Technology and
Logistics); the Army, Navy, Marine Corps, Air Force, and Coast Guard
headquarters; and five domestic military installations--Fort Riley,
Kansas; Cannon Air Force Base, New Mexico; Fort Drum, New York; Camp
Lejeune, North Carolina; and Fort Bliss, Texas--to obtain information
on whether service members have encountered challenges in obtaining
housing, tools the installations are using to address these
challenges, and processes for sharing information on the tools. Our
rationale for selecting these installations is discussed below. To
better understand the housing issues in the communities, we
interviewed officials who work with growth communities in DOD's Office
of Economic Adjustment and contacted community organization
representatives in each of the communities near the 26 growth
installations identified by the Office of Economic Adjustment.
To obtain installation officials' perspectives on both DOD's rate-
setting process and housing challenges and tools, we interviewed
housing officials from a nonprobability sample of five domestic
military installations: Fort Riley, Cannon Air Force Base, Fort Drum,
Camp Lejeune, and Fort Bliss. We selected installations that met
criteria that address both of these issues. Specifically, we began our
selection with DOD's list of 26 significantly impacted growth
installations. We narrowed the list to the five we selected to obtain
a sample of installations with a range of the following
characteristics: communities that had identified housing as a
challenge in the growth profiles published by the Office of Economic
Adjustment, installations with different geographic and population
concentrations, installations from different military services, and
installations with officials that the Defense Travel Management Office
identified as particularly knowledgeable about the housing allowance
rate-setting process. Not all installations met all of the criteria.
Our selection of three Army installations reflects that the majority
of significantly impacted growth installations are Army installations.
Because we selected a nonprobability sample of installations, the
information obtained from interviews with officials from these five
installations cannot be generalized to other installations.
We conducted this performance audit from August 2010 through May 2011,
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Summary of DOD's Process to Set Housing Allowance Rates:
By law, housing allowance rates are to be based on the costs of
adequate housing for civilians with comparable income levels in the
same areas.[Footnote 35] To do this, the Department of Defense (DOD)
identified six housing profiles, ranging from a one-bedroom apartment
to a four-bedroom single-family detached house and identified a pay
grade for each profile--also referred to as an anchor--that matches
the type of housing normally occupied by civilians with comparable
incomes. Using the housing profiles and the local costs of each
profile in the geographic areas of the country, DOD establishes the
allowance rates each year.
DOD established separate housing profiles for members with and without
dependents and established a method to ensure that allowance rates
would increase with each pay grade.[Footnote 36] For example, the one-
bedroom apartment profile corresponds to an E-4 without dependents and
the four bedroom single family home profile corresponds to an O-5 with
dependents. DOD sets the housing allowance rates for pay grades that
are not anchors based on the last anchor plus a percentage of the
difference between the last anchor and the next anchor. For example,
an E-7 with dependents receives the same rate as an E-6--the anchor
for a three-bedroom townhouse--plus 36 percent of the difference
between the anchor for a three-bedroom townhouse and three-bedroom
single-family detached house. Table 1 and table 2 show the housing
profiles for each pay grade and the method DOD uses to calculate the
allowance rates for service members with dependents and without
dependents, respectively.
Table 1: 2011 National Average Monthly Housing Allowance for Service
Members with Dependents, by Pay Grade:
Pay grade: E-1;
Housing profile: 2-bedroom apartment;
Allowance rate calculation[A]: Midpoint of 2-bedroom apartment and 2-
bedroom townhouse;
2011 national average monthly housing allowance: $1,124.
Pay grade: E-2;
Housing profile: 2-bedroom apartment;
Allowance rate calculation[A]: Midpoint of 2-bedroom apartment and 2-
bedroom townhouse;
2011 national average monthly housing allowance: $1,124.
Pay grade: E-3;
Housing profile: 2-bedroom apartment;
Allowance rate calculation[A]: Midpoint of 2-bedroom apartment and 2-
bedroom townhouse;
2011 national average monthly housing allowance: $1,124.
Pay grade: E-4;
Housing profile: 2-bedroom apartment;
Allowance rate calculation[A]: Midpoint of 2-bedroom apartment and 2-
bedroom townhouse;
2011 national average monthly housing allowance: $1,124.
Pay grade: E-5;
Housing profile: 2-bedroom townhouse;
Allowance rate calculation[A]: Anchor;
2011 national average monthly housing allowance: $1,221.
Pay grade: O-1;
Housing profile: 2-bedroom townhouse;
Allowance rate calculation[A]: 11%;
2011 national average monthly housing allowance: $1,244.
Pay grade: O-2;
Housing profile: 2-bedroom townhouse;
Allowance rate calculation[A]: 98%;
2011 national average monthly housing allowance: $1,423.
Pay grade: E-6;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: Anchor;
2011 national average monthly housing allowance: $1,427.
Pay grade: W-1;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: 1%;
2011 national average monthly housing allowance: $1,431.
Pay grade: E-7;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: 36%;
2011 national average monthly housing allowance: $1,494.
Pay grade: O-1E;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: 44%;
2011 national average monthly housing allowance: $1,510.
Pay grade: W-2;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: 52%;
2011 national average monthly housing allowance: $1,525.
Pay grade: E-8;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: 75%;
2011 national average monthly housing allowance: $1,568.
Pay grade: O-2E;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: 93%;
2011 national average monthly housing allowance: $1,601.
Pay grade: O-3;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: 98%;
2011 national average monthly housing allowance: $1,611.
Pay grade: W-3;
Housing profile: 3-bedroom single family house;
Allowance rate calculation[A]: Anchor;
2011 national average monthly housing allowance: $1,615.
Pay grade: E-9;
Housing profile: 3-bedroom single family house;
Allowance rate calculation[A]: 16%;
2011 national average monthly housing allowance: $1,679.
Pay grade: W-4;
Housing profile: 3-bedroom single family house;
Allowance rate calculation[A]: 22%;
2011 national average monthly housing allowance: $1,704.
Pay grade: O-3E;
Housing profile: 3-bedroom single family house;
Allowance rate calculation[A]: 26%;
2011 national average monthly housing allowance: $1,720.
Pay grade: W-5;
Housing profile: 3-bedroom single family house;
Allowance rate calculation[A]: 48%;
2011 national average monthly housing allowance: $1,809.
Pay grade: O-4;
Housing profile: 3-bedroom single family house;
Allowance rate calculation[A]: 58%;
2011 national average monthly housing allowance: $1,849.
Pay grade: O-5;
Housing profile: 4-bedroom single family house;
Allowance rate calculation[A]: Anchor;
2011 national average monthly housing allowance: $2,019.
Pay grade: O-6;
Housing profile: 4-bedroom single family house;
Allowance rate calculation[A]: 1%;
2011 national average monthly housing allowance: $2,039.
Pay grade: O-7;
Housing profile: 4-bedroom single family house;
Allowance rate calculation[A]: 2%;
2011 national average monthly housing allowance: $2,059.
Pay grade: O-8;
Housing profile: 4-bedroom single family house;
Allowance rate calculation[A]: Same as O-7;
2011 national average monthly housing allowance: $2,059.
Pay grade: O-9;
Housing profile: 4-bedroom single family house;
Allowance rate calculation[A]: Same as O-7;
2011 national average monthly housing allowance: $2,059.
Pay grade: O-10;
Housing profile: 4-bedroom single family house;
Allowance rate calculation[A]: Same as O-7;
2011 national average monthly housing allowance: $2,059.
Source: DOD and GAO analysis of DOD data.
[A] Allowance rate is the anchor rate plus this percentage of the
difference with the next highest anchor rate.
[End of table]
Table 2: 2011 National Average Monthly Housing Allowance for Service
Members without Dependents, by Pay Grade:
Pay grade: E-1;
Housing profile: 1-bedroom apartment;
Allowance rate calculation[A]: Same as E-4;
2011 national average monthly housing allowance: $865.
Pay grade: E-2;
Housing profile: 1-bedroom apartment;
Allowance rate calculation[A]: Same as E-4;
2011 national average monthly housing allowance: $865.
Pay grade: E-3;
Housing profile: 1-bedroom apartment;
Allowance rate calculation[A]: Same as E-4;
2011 national average monthly housing allowance: $865.
Pay grade: E-4;
Housing profile: 1-bedroom apartment;
Allowance rate calculation[A]: Anchor;
2011 national average monthly housing allowance: $865.
Pay grade: E-5;
Housing profile: 1-bedroom apartment;
Allowance rate calculation[A]: 67%;
2011 national average monthly housing allowance: $978.
Pay grade: O-1;
Housing profile: 2-bedroom apartment;
Allowance rate calculation[A]: Anchor;
2011 national average monthly housing allowance: $1,033.
Pay grade: E-6;
Housing profile: 2-bedroom apartment;
Allowance rate calculation[A]: 7%;
2011 national average monthly housing allowance: $1,097.
Pay grade: W-1;
Housing profile: 2-bedroom apartment;
Allowance rate calculation[A]: 31%;
2011 national average monthly housing allowance: $1,117.
Pay grade: E-7;
Housing profile: 2-bedroom apartment;
Allowance rate calculation[A]: 53%;
2011 national average monthly housing allowance: $1,157.
Pay grade: O-2;
Housing profile: 2-bedroom apartment;
Allowance rate calculation[A]: 83%;
2011 national average monthly housing allowance: $1,194.
Pay grade: O-1E;
Housing profile: 2-bedroom townhouse;
Allowance rate calculation[A]: Anchor;
2011 national average monthly housing allowance: $1,222.
Pay grade: W-2;
Housing profile: 2-bedroom townhouse;
Allowance rate calculation[A]: 19%;
2011 national average monthly housing allowance: $1,257.
Pay grade: E-8;
Housing profile: 2-bedroom townhouse;
Allowance rate calculation[A]: 20%;
2011 national average monthly housing allowance: $1,264.
Pay grade: O-2E;
Housing profile: 2-bedroom townhouse;
Allowance rate calculation[A]: 44%;
2011 national average monthly housing allowance: $1,312.
Pay grade: E-9;
Housing profile: 2-bedroom townhouse;
Allowance rate calculation[A]: 51%;
2011 national average monthly housing allowance: $1,333.
Pay grade: W-3;
Housing profile: 2-bedroom townhouse;
Allowance rate calculation[A]: 54%;
2011 national average monthly housing allowance: $1,339.
Pay grade: O-3;
Housing profile: 2-bedroom townhouse;
Allowance rate calculation[A]: 64%;
2011 national average monthly housing allowance: $1,357.
Pay grade: O-3E;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: Anchor;
2011 national average monthly housing allowance: $1,429.
Pay grade: W-4;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: 9%;
2011 national average monthly housing allowance: $1,445.
Pay grade: O-4;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: 40%;
2011 national average monthly housing allowance: $1,504.
Pay grade: W-5;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: 45%;
2011 national average monthly housing allowance: $1,513.
Pay grade: O-5;
Housing profile: 3-bedroom townhouse;
Allowance rate calculation[A]: 63%;
2011 national average monthly housing allowance: $1,574.
Pay grade: O-6;
Housing profile: 3-bedroom single family house;
Allowance rate calculation[A]: Anchor;
2011 national average monthly housing allowance: $1,630.
Pay grade: O-7;
Housing profile: 3-bedroom single family house;
Allowance rate calculation[A]: 2%;
2011 national average monthly housing allowance: $1,660.
Pay grade: O-8;
Housing profile: 3-bedroom single family house;
Allowance rate calculation[A]: Same as O-7;
2011 national average monthly housing allowance: $1,660.
Pay grade: O-9;
Housing profile: 3-bedroom single family house;
Allowance rate calculation[A]: Same as O-7;
2011 national average monthly housing allowance: $1,660.
Pay grade: O-10;
Housing profile: 3-bedroom single family house;
Allowance rate calculation[A]: Same as O-7;
2011 national average monthly housing allowance: $1,660.
Source: DOD and GAO analysis of DOD data.
[A] Allowance rate is the anchor rate plus this percentage of the
difference with the next highest anchor rate.
[End of table]
DOD calculates nearly 20,000 separate allowance rates each year:
* for each of the 27 military pay grades, ranging from E-1 (junior
enlisted) to O-10 (general or flag officer);
* for personnel with and without dependents (spouse, children, or
other dependents); and:
* in each of the 364 DOD-established military housing areas.[Footnote
37]
The housing allowance is intended to cover the average costs of rent,
utilities, and renter's insurance in private sector housing. Rent, as
the largest of these three expenses, is the focus of most data
collection efforts during DOD's annual rate-setting process. DOD
personnel in installation housing offices and DOD's housing allowance
contractor collect rental information for the six housing profiles in
spring and summer, when the rental market is most active and when most
service members traditionally relocate to new installations. Starting
in January of each year, the contractor provides training and guidance
to installation officials who will be collecting rental data.
Installation officials, who are generally familiar with local housing
markets, then begin collecting rental information on the six housing
profiles and send this information to the contractor in three
submissions in May, June, and July. The units selected for inclusion
in the sample must be both available, meaning they must be currently
available to rent or were available on the market within 4 to 6 weeks
prior to the data submission,[Footnote 38] and adequate. While the
data collection guidance does not define adequate, it does provide a
list of examples of inadequate types of housing, including mobile
homes, efficiency apartments, weekly or seasonal rentals, and housing
that is in poor physical condition, extremely expensive, or located in
high-crime areas. Although there are guidelines for housing that is
inadequate, service members ultimately choose what type of housing and
where they want to live. While a degree of subjectivity is involved in
determining whether a property is adequate since the quality of
housing varies across areas, the installation officials with whom we
spoke said that they inspect housing units before they are included in
the rental data submission to help ensure that they are suitable for
military personnel. Installation officials also submit census tracts
that are in high-crime or otherwise unsuitable areas so that units in
these areas are not included in the rental data sample. All units
included in the sample must also fall within the established military
housing area.
Simultaneously, the contractor also collects rental data for the six
housing profiles within the housing areas by using local newspaper
classified advertisements, rental listings, and consultations with
real estate professionals. DOD's goal is for installations to collect
about 60 percent of rental data while the contractor collects about 40
percent, but this varies between installations and housing areas. The
contractor establishes target sample sizes for each housing profile in
each housing area. Sample sizes can range from several hundred units
per housing profile where there is a large inventory of available
housing to as few as five where certain types of housing are not as
readily available. Each of the services can request site visits each
year, during which officials from the Defense Travel Management Office
and the military service and a representative from the contractor
discuss the rate-setting process with installation officials. Also,
they view a sample of the available housing stock to better ensure
that housing allowance rates are accurate for the area, educate
installation officials on the process, and answer questions from
installation officials.
Data collection on rental units stops in August to give the contractor
adequate time to analyze the data and finalize calculations of the
median monthly rent for each housing profile in each housing area. For
quality assurance purposes, the contactor reviews submitted data and
eliminates data errors, any duplicate units submitted, and extreme
rent outliers. For example, installation officials and the contractor
collected a total of nearly 60,000 data points in 2010, but about
12,800 were excluded as part of the quality control process. The
contractor also calculates the average utility costs for each housing
profile by analyzing data collected annually by the U.S. Census
Bureau's American Community Survey. Utilities factored in the
calculation include electricity, gas, oil, water, and sewage. The
third cost element of the housing allowance is renter's insurance; the
contractor calculates average renter's insurance premiums based on
rates from leading insurance carriers.
In early September, the contractor sends the median rental costs and
the average costs for utilities and renter's insurance to the Defense
Travel Management Office, which calculates housing allowance rates for
each pay grade in each of the housing areas, and for personnel with
and without dependents. The Defense Travel Management Office also
reviews the information and rate calculations and makes adjustments,
as appropriate. For example, if rates are 10 percent above or below
the previous year's rates, the data sample is reviewed with more
scrutiny to determine if it is representative of the rental market.
Housing allowance representatives in the compensation offices of each
of the services then review the rate calculations through October and
November. These representatives have an opportunity to discuss any
concerns with the Defense Travel Management Office. Following service
review, the rates are reviewed and approved by the Office of the
Deputy Under Secretary of Defense (Military Personnel Policy). The
approved rates are provided to the Defense Finance and Accounting
Service and DOD begins paying the new housing allowance rates on
January 1. Once approved, the Defense Travel Management Office posts
the housing allowance rates on its Web site and the rates are
available for service members, as well as the public, to view.
[End of section]
Appendix III: Comments from the Department of Defense:
Under Secretary Of Defense:
Personnel And Readiness:
4000 Defense Pentagon:
Washington, D.C. 20301-4000:
May 2, 2011:
Mr. Brian J. Lepore:
Director, Defense Capabilities and Management:
U. S. Government Accountability Office:
441 G Street, N.W.
Washington. DC 20548:
Dear Mr. Lepore:
This letter is the Department of Defense (DoD) response to the
Government Accountability Office (GAO) draft report GAO-11-462,
"Military Housing: Enhancements Needed to Housing Allowance Process
and Information Sharing Among Services" dated May 2011 (GAO Review
Code 351532). Detailed comments on the report recommendations are
enclosed.
The Department partially concurs with the first of the four GAO
recommendations put forth in the draft report and concurs with the
remaining three. Although DoD agrees with GAO's intent, and will share
more information on the cost elements that make up the Basic Allowance
for Housing (BAH), we must take care how the information is provided
so that it is not misleading to installation officials and Service
members. Accordingly, we will meet GAO's intent by providing housing
cost element information as a percentage range of total housing costs
across all profiles. DoD has evaluated the window of availability for
rental properties and will make changes to data collection guidance to
expand this window. The Services are working to improve their BAH
budget estimations, and the Office of the Under Secretary of Defense
(Comptroller) will lead a working group to foster sharing of
methodologies amongst the Services. We will use available tools to
enhance communication of housing best practices among installations.
The Department appreciates the opportunity to comment. For questions
concerning this report, please contact Cheryl Anne Woehr, Defense
Travel Management Office, at (703) 696-7522 or
cherylarme.woehr@dnno.pentagon.mil.
Sincerely,
Signed by:
Clifford L. Stanley:
Enclosure: As stated.
[End of letter]
GAO DRAFT REPORT DATED MARCH 31, 2011:
GA041-462 (GAO CODE 351532):
"Military Housing: Enhancements Needed To Housing Allowance
Process And Information Sharing Among Services"
Department Of Defense Comments To The GAO Recommendations:
Recommendation 1: The Government Accountability Office (GAO)
recommends that the Secretary of Defense direct the Director of the
Defense Travel Management Office (DTMO) to revise policies to provide
information on the three costs that comprise the housing allowance
rate (rental, utilities, and renter's insurance) by geographic area
and housing profile to installation housing officials to better ensure
local market-based accuracy and to Service members to increase
understanding of the rate when selecting housing. (See page 30/GAO Draft
Report.)
DoD Response: Partially Concur. Basic Allowance for Housing (BAH) is a
comprehensive allowance, specifically designed to cover local housing
costs as a whole, not different allowances for individual cost
elements. Housing allowances are set based on distinctive housing
profiles for each pay grade, but Service members are always free to
make housing choices that meet their individual needs. Expressing the
allowance in terms of its specific cost elements will add a level of
complexity that may be confusing to Service members and lead to
misinterpretation. BAH rates are set based on median rent and average
utility and insurance costs, so we expect many Service members to
experience housing costs that exceed their BAH rate. However, members
may view individual components as the maximum they can spend. Utility
costs, specifically, vary greatly with individual usage. A member's
actual expenses may be higher or lower based on choice of housing and
where they live.
DoD will reconcile this position with the GAO recommendation by
providing housing cost element information as a percentage range of
total housing costs across all profiles. This additional information
will assist Service members to make educated housing choices. Specific
geographic regions will be established based on housing cost
similarities. This cost breakout will be published with the 2012 BAH
rates.
Recommendation 2: The GAO recommends that the Secretary of Defense
direct the Director of DTMO to more fully assess the benefits and
drawbacks of revising the definition of "available" rental properties
used for data collection purposes, either for all military housing
areas or only those military housing areas that meet a certain low
vacancy threshold. (See page 30/GAO Draft Report.)
DoD Response: Concur. DTMO has reviewed the current definition of
"available." Under this definition, properties can be used that are
available at the time of data collection. or that were available in
the preceding 4-6 weeks. This allows a window of 16 weeks (4 months)
for a property to be available, which we believe is sufficient to
obtain a representative sample of housing costs in the local area. In
our experience, expanding the window of time with an earlier starting
date does not result in a substantial number of additional properties.
To expand the available window forward. and to address the underlying
concern from housing offices that many of the most desirable
properties are never vacant. DTMO will direct the data collection
contractor to accept properties advertised for rent even if they will
not be available for occupancy until a future date. DTMO will also
direct the data collection contractor to include this expanded
definition of available in the data collection process guide for
housing offices and in training workshops.
Recommendation 3: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense (Comptroller) and the military
Services to more fully identify the causes of inaccurate cost
estimates for the BAH program and develop and implement procedures to
improve these estimates. At a minimum, these procedures should include
processes to more accurately estimate the number of Service members
who will receive the allowance. (See page 30/GAO Draft Report.)
DoD Response: Concur. The Office of the Under Secretary of Defense
(Comptroller) will lead a working group of Service representatives to
better understand how the Services develop BAH budget estimates with
the intent of documenting best estimating practices and sharing ideas
amongst the Services.
Recommendation 4: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense (Acquisition, Technology and
Logistics (AT&L)) and the Office of the Deputy Assistant Secretary of
Defense (Installations and Environment) to develop a communications
process so that installations can more routinely share best practices
and their use of tools and mechanisms to address housing-related
challenges. (See page 31/GAO Draft Report.)
DoD Response: Concur. While providing guidance on housing operations
is part of the AT&L mission; communicating with and training members
on available housing tools is a responsibility of the military
Services. To satisfy the recommendation, we will use the OSD Housing
Policy Panel to disseminate information on the available tools to the
housing leaders of the Services. The Services may be able to use
another available tool, the Professional Housing Management
Association's annual Professional Development Seminar to further
provide information to its housing management teams.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Brian J. Lepore, (202) 512-4523 or leporeb@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, Laura Talbott, Assistant
Director; Steven Banovac; Hilary Benedict; Joel Grossman; Brandon
Jones; Ron La Due Lake; Charles Perdue; Richard Powelson; and Michael
Willems made key contributions to this report.
[End of section]
Footnotes:
[1] DOD provides service members with other types of housing
allowances depending on varying circumstances, like the Overseas
Housing Allowance, the Basic Allowance for Housing differential for
service members paying child support, and the partial Basic Allowance
for Housing for unaccompanied service members living in government-
owned housing. This report addresses DOD's process to set the Basic
Allowance for Housing for service members with and without dependents
living in the United States, which comprised more than 90 percent of
annual housing allowances paid to military personnel in 2010.
Throughout this report, references to the Basic Allowance for Housing
or housing allowance include only service members receiving the
allowance at the "with" and "without" dependents rates within the
United States, unless otherwise noted.
[2] DOD provides active duty personnel with a comprehensive
compensation package that includes a mix of cash, such as basic pay;
noncash benefits, such as health care; and deferred compensation, such
as retirement pension. Service members, including eligible reserve
personnel serving on active duty, receive the basic allowance for
housing as a cash payment every month while on active duty. For more
information on service members' compensation, see GAO, Military
Personnel: Military and Civilian Pay Comparisons Present Challenges
and Are One of Many Tools in Assessing Compensation, [hyperlink,
http://www.gao.gov/products/GAO-10-561R] (Washington, D.C.: April 1,
2010).
[3] Pub. L. No. 111-84, § 605.
[4] DOD, Report on Housing Standards and Housing Surveys Used to
Determine Basic Allowance for Housing (Washington, D.C.: June 18,
2010).
[5] S. Rep. No. 111-201 at 145 (2010).
[6] For example, certain personnel who are assigned to government-
owned quarters may not be eligible to receive the basic allowance for
housing.
[7] National Defense Authorization Act for Fiscal Year 1998, Pub. L.
No. 105-85, § 603 (1997), codified as amended at 37 U.S.C. § 403.
[8] From 1949 to 1981, members of the uniformed services received the
Basic Allowance for Quarters, which varied by a service member's
dependency status but did not vary by geographic location. In 1981,
the Basic Allowance for Quarters was supplemented by the Variable
Housing Allowance, which was location specific and intended to capture
the variation in housing costs across the country.
[9] 37 U.S.C. § 403(b)(2).
[10] DOD's Office of Economic Adjustment designated 24 communities
surrounding 26 military installations as "growth communities" eligible
for assistance. One community in North Carolina was in close proximity
to three Marine Corps installations. For the purposes of this report,
we describe the growth by installation name rather than by the
community name and refer to these installations generally as "growth
installations." Significant growth refers to the establishment or
expansion involving the assignment of more than 2,000 direct military,
civilian, and contractor DOD personnel to an installation or more
military, civilian, and contractor personnel than the number equal to
10 percent of the number of persons employed in counties or
independent municipalities within 15 miles of the installation,
whichever is lesser.
[11] GAO, Defense Infrastructure: High-Level Federal Interagency
Coordination Is Warranted to Address Transportation Needs beyond the
Scope of the Defense Access Roads Program, [hyperlink,
http://www.gao.gov/products/GAO-11-165] (Washington, D.C.: January 26,
2011); Military Base Realignments and Closures: Transportation Impact
of Personnel Increases Will Be Significant, but Long-Term Costs Are
Uncertain and Direct Federal Support Is Limited, [hyperlink,
http://www.gao.gov/products/GAO-09-750] (Washington, D.C.: September
9, 2009); and Defense Infrastructure: High-Level Leadership Needed to
Help Communities Address Challenge Caused by DOD-Related Growth,
[hyperlink, http://www.gao.gov/products/GAO-08-665] (Washington, D.C.:
June 17, 2008).
[12] [hyperlink, http://www.gao.gov/products/GAO-08-665].
[13] Pub. L. No. 111-84, § 605 (2009).
[14] DOD, Report on Housing Standards and Housing Surveys Used to
Determine Basic Allowance for Housing (Washington, D.C.: June 18,
2010).
[15] DOD, Report on Housing Standards and Housing Surveys Used to
Determine Basic Allowance for Housing (Washington, D.C.: June 18,
2010).
[16] DOD, Report on Housing Standards and Housing Surveys Used to
Determine Basic Allowance for Housing (Washington, D.C.: June 18,
2010).
[17] GAO, DOD Personnel: Improvements Made to Housing Allowance Rate-
Setting Process, [hyperlink, http://www.gao.gov/products/GAO-01-508]
(Washington, D.C.: April 16, 2001).
[18] 37 U.S.C. § 403(b)(7). At the time of our report, the House Armed
Services Committee was considering a proposal to reinstate this
authority.
[19] GAO, Military Personnel: DOD Needs to Improve the Transparency
and Reassess the Reasonableness, Appropriateness, Affordability, and
Sustainability of Its Military Compensation System, GAO-05-798
(Washington, D.C.: July 19, 2005).
[20] Installation officials can submit data from large apartment or
townhouse rental complexes that may not have a unit currently
available since managers know what they would charge if a unit were
available.
[21] 37 U.S.C. § 403(b)(2).
[22] The Coast Guard's budget justification documentation does not
provide enough data to perform a similar analysis. However, based on
data provided by Coast Guard budget officials, the Coast Guard's cost
estimates have been within 5 percent of its obligations since 2006,
with estimates slightly exceeding obligations from 2006 through 2007
and slightly below obligations from 2008 through 2010. The Coast Guard
spent between about $530 million and $710 million each fiscal year
from 2006 through 2010.
[23] DOD, Report of the Tenth Quadrennial Review of Military
Compensation (Washington, D.C.: February 2008).
[24] GAO, Supplemental Appropriations: Opportunities Exist to Increase
Transparency and Provide Additional Controls, [hyperlink,
http://www.gao.gov/products/GAO-08-314] (Washington, D.C.: Jan. 31,
2008).
[25] DOD does not have current projections for three bases. The Air
Force has not yet conducted analyses at Joint Base Andrews Naval Air
Facility Washington, Maryland, or at Joint Base San Antonio, Texas.
Additionally, the Navy conducted an analysis for the entire National
Capital Region, rather than only for Naval Support Activity Bethesda.
[26] Congress enacted the Military Housing Privatization Initiative in
1996, which provided DOD with a variety of authorities that may be
used to obtain private sector financing and management to repair,
renovate, construct, and operate military family housing. National
Defense Authorization Act for Fiscal Year 1996, Pub. L. No. 104-106,
§§ 2801-2841 (1996), codified as amended at 10 U.S.C §§ 2871-2885.
[27] Section 801 Housing was authorized by the Military Construction
Authorization Act, 1984; Pub. L. No. 98-115, § 801 (1983).
[28] GAO, Military Housing: Installations Need to Share Information on
Their Section 801 On-Base Housing Contracts, [hyperlink,
http://www.gao.gov/products/GAO-11-60] (Washington, D.C: Oct. 28,
2010).
[29] The Housing and Economic Recovery Act, 2008, Pub. L. No. 110-289,
§3005.
[30] The Low Income Housing Tax Credit program was established to spur
the production of rental housing for lower income households at rents
they can afford. Tax credit housing units are financed in part by
investors who receive federal income tax credits. In exchange, the
housing units are restricted to households with incomes below certain
limits for a fixed number of years.
[31] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[32] DOD 4165.63-M, Housing Management Manual (October 28, 2010).
[33] DOD, Report on Housing Standards and Housing Surveys Used to
Determine Basic Allowance for Housing (Washington, D.C.: June 18,
2010).
[34] GAO, Military Housing: Management Issues Require Attention as the
Privatization Program Matures, [hyperlink,
http://www.gao.gov/products/GAO-06-438] (Washington, D.C.: April 28,
2006); Military Housing Privatization: DOD Faces Challenges Due to
Significant Growth at Some Installations and Recent Turmoil in the
Financial Markets, [hyperlink, http://www.gao.gov/products/GAO-09-352]
(Washington, D.C.: May 15, 2009); and Military Housing: Installations
Need to Share Information on Their Section 801 On-Base Housing
Contracts, [hyperlink, http://www.gao.gov/products/GAO-11-60]
(Washington, D.C: Oct. 28, 2010).
[35] 37 U.S.C. § 403(b)(2).
[36] Military pay grades range from E-1, the lowest enlisted rank, to
O-10, the highest officer rank. Pay grades beginning with "E" denote
enlisted personnel, those beginning with "W" denote warrant officers,
and those beginning with "O" denote officers.
[37] About 24,000 service members, or less than 2 percent of military
personnel eligible to receive the housing allowance, are stationed at
locations outside a military housing area, according to DOD. DOD
determines housing costs for these locations by using data published
annually by the Department of Housing and Urban Development, and bases
allowance rates on those at housing areas with similar rental costs.
[38] Installation officials can submit data from large apartment or
townhouse rental complexes that may not have a unit currently
available since managers know what they would charge if a unit were
available.
[End of section]
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