House panel ponders military housing privatization

Privatization may not be the best way to solve the military's housing headaches, lawmakers said Tuesday.

Rep. Joel Hefley, R-Colo., said he is not convinced that DoD's efforts to renovate or replace aging military housing units by privatizing construction have been effective.

"I continue to remain deeply concerned about the rush of the military departments, particularly the Department of the Army and the Department of the Navy, to place all hopes for recapitalizing and improving military family housing on privatization without being certain that it will work in all locations," Hefley said Tuesday at a hearing of the House Armed Services Subcommittee on Military Installations and Facilities.

Congress enacted the military housing privatization initiative in 1996 in an effort to solve DoD's housing problems. Two-thirds of DoD's 300,000-plus houses are in need of extensive renovation or complete replacement, said Randall A. Yim, acting deputy undersecretary of Defense for installations, at the hearing.

DoD has been trying out privatized construction under a five-year test period, which expires on Feb. 10, 2001.

Results of the testing phase have been positive, Yim said. Two Navy housing projects completed in 1997 saved DoD three to four times the amount of money the same projects would have cost had they not been privatized, he testified. Similarly, an Air Force housing projec that would have cost $49.9 million under traditional military construction procedures will cost $6.3 million under the privatized system.

Still, committee members had doubts about the long-term viability of privatized military housing. The quoted savings estimates sound "too good to be true," said Rep. Gene Taylor, D-Miss.

One concern is that the military will lose control of rental prices under private contracts. Private contractors may raise rents too high for some military families, lawmakers said.

Nevertheless, Yim said privatizing military housing is simply "an exercise of good common business sense."

"There is no need for the department to continue duplicating the expertise and efforts that the private sector is so willing and able to provide," he said.