Navy ordered to privatize barracks housing: armed forces rethink communal living setup: the Navy is leading the charge in the redevelopment and privatization of housing for unmarried service men and women. while privatization is underway for family military housing, several major issues remain with regard to construction and rehabilitation of barracks housing.

Navy veterans, at least those who started at the bottom of the pay scale, will remember barracks housing. Cramped quarters and the gang latrine were just some of the memorable qualities of communal military living.

That is changing as the Navy and the other branches of the armed forces rethink their housing for unmarried service members. For today's servicemen and women, latrines and shared living space are out; semi-private bathrooms and bedrooms are in. And so is the private multifamily housing industry.

Like the military's privatization initiative in which private developers and management companies are constructing, redeveloping and managing family housing (see the January/ February 2003 issue of UNITS), the Navy will be the first of the armed services to turn housing for unmarried service members over to private industry.

By early 2004, the Navy plans to release a request for qualifications (RFQ) to construct and renovate housing for single sailors at Norfolk Naval Base, Hampton Roads, Va., the first of three pilot privatization projects. The other two, still in the formative stage, are at the Naval Base in San Diego, Calif., and the Marine Corps Base, Camp Pendleton, Calif.

Following the release of the RFQ, the Navy will select up to four offers to submit detailed technical and financial proposals, of which one will be selected to enter into exclusive negotiations. Upon the successful resolution of those negotiations, one offer will partner with the Navy to carry out the first unaccompanied (unmarried) housing privatization project.

The Rationale to Privatize

Barracks quarters no matter how tight, claustrophobic and bereft of privacy--is required living space for an estimated 200,000 enlisted service people throughout all service branches, including 18,000 Navy sailors allotted 6-by-3-foot bunk space aboard ship where they also live while in their home port.

Traditionally, for those who live on land, two enlistees share a furnished single room and communal bath and shower facilities. For the most part, barracks housing throughout the services is old, rundown and otherwise fails to meet contemporary U.S. Department of Defense (DoD) standards for size, privacy and other amenities, according to military sources.

According to a report released by the General Accounting Office (GAO) in June, Military Housing: Opportunities That Should Be Explored to Improve Housing and Reduce Costs for Unmarried Junior Servicemembers, the services plan to spend approximately $6 billion over the next several years to eliminate existing barracks and the Navy has an additional plan to provide barracks for about 18,000 sailors living aboard ships even when in their home port.

In 1996, legislation was enacted at DoD's request to authorize private sector financing, ownership, operation and maintenance of military housing, including barracks.

The Office of the Under Secretary of Defense concurred with most of the draft report, said Joseph Sikes, Director of Competitive Sourcing and Privatization. "The department supports their efforts to study and use commercial and residential construction standards and use barracks privatization authorities to improve the living conditions for unaccompanied members as quickly as possible," Sikes said in a May letter to the GAO.

"We are looking at partners who will be able to both construct and manage," said Steve Keating, Director for Housing, Office of the Assistant Secretary of the Navy for Installations and Environment. In addition to construction of new housing, the Navy will also turn over existing barracks to the private sector to renovate and maintain.

"We also know that recreation and storage are valued amenities and we want to work with the private sector and tell them what we need," he said. On-base and off-base housing, the cost of land and the availability of government land will be among the considerations. At Hampton Roads, for instance, the Navy owns underutilized or vacant property that can be severed from the main installation, as well as barracks within the installation, Keating said.

"We want to get away from the traditional construction mindset as much as possible. Our vision is that people will live in barracks that are attractive and give them privacy. Many barracks now don't. We have four guys sharing a module and a bathroom. Others have gang heads. We want a better level of privacy and more contemporary amenities, realizing that the private sector must consider something that is marketable," Keating said, noting that the Navy does not intend to dictate design standards.

The operative word is "marketable," so the housing does not become obsolete if a base is closed or the military is downsized, which are two very real events. Ongoing is a base closure and realignment program that is shutting bases nationwide and conveying them to the private sector, and a current political environment in which there's dispute over the need for more troops.

Incentives

The same incentives used to privatize family housing will be used to turn barracks housing over to private industry. The Military Housing Privatization Initiative, authorized in 1996, provided new authorities that, among others, allows DoD to enter into 30-to-50-year contracts that offer such market-based perks as leasing or conveying government owned land, creating limiting partnerships, guaranteeing occupancy rates and rent payments, offering developers direct loans and loan guarantees, equity investment and performance rewards. The military branches operate independently of each other so there is no formula for developing a partnership program.

While the Navy is the first to privatize barracks housing, the other services are in various stages of doing the same.

The Army

"We are looking at and have identified potential sites where we might go first," said George McKinnie, chief of Army housing, "but we've ceased at this juncture. I think we would be amenable once other privatization efforts are more under control and we can see the Navy's program."

The hold is the result of a political environment in which such basics as whether the military has enough personnel and where they should be deployed are key factors affecting the Army's decision about housing.

The Army, said McKinnie, is in the throes of re-stationing troops and restructuring. "The entire program is in flux and we aren't sure where soldiers will be, but we've been told they won't be where they are. It all filters down to barracks housing," he said.

According to Suzanne Harrison, unaccompanied housing team chief, "military cultural issues" and how projects are scored are just two of the issues that must be resolved as the program moves forward.

In 1997, DoD and the Office of Management and Budget agreed to set guidelines that would be used for scoring privatization projects, but DoD has provided limited centralized direction. According to the GAO report, the primary problem with privatizing barracks is the mandatory assignment policy for unmarried junior enlisted service members and whether this policy implies that DoD would provide an occupancy guarantee to developers. While the potentially high amount of appropriated funds needed to secure contracts appears to be the most significant challenge to barracks privatization, it is not the only one. Barracks location, deployments and funding for housing allowances are others.

The Air Force

In August 2002, the Air Force assembled a team to explore barracks privatization and identified Elmendorf Air Force Base in Alaska, where family housing privatization is underway, as a potential candidate.

Like the Army, though, the Air Force has adopted a wait-and-see approach as it monitors the success of the Navy's pilot sites.

The Challenges

Representatives of the military agree that barracks privatization presents many new challenges. According to the GAO report, they include the potentially higher amount of appropriated funds needed to secure a privatization contract, differences in where private developers and the military want the barracks located, impacts from unit deployments and the availability of funds for housing allowances, other issues, such as antiterrorism and what it means to construction techniques, particularly in light of cur rent events, are yet to be resolved.

The report recommended that a coordinated effort be made to explore the cost-effectiveness of barracks privatization and that DoD undertake engineering studies to resolve questions about the use of residential construction practices and issue guidance to direct the use of required existing barracks.

Residential construction practices present a way for the military to cut costs but DoD policies generally required that traditional barracks use commercial construction--steel frame, concrete and cement block--while similar private sector multihousing uses wood frame.

An Army analysis, according to the GAO report, found that using residential construction practices could reduce costs by more than 23 percent but DoD's concern about durability and unanswered questions about the ability of wood-frame barracks to meet antiterrorism force protection requirements remain.

Background

While each of the services has considered the privatization of barracks housing, DoD has concentrated on family housing privatization. Recently, though, each of the services has given increased attention to developing project proposals for housing unmarried junior service members and among them the U.S. Navy has been the most aggressive.

With Congress' passage of the Bob Stump National Defense Authorization Act of 2003, the Department of the Navy was given the authority to develop three pilot barracks privatization projects. The process is a lengthy one, but there appears to be strong support for improving military housing, Keating said. The process involves notifications and approvals from the Office of the Secretary of Defense, the Office of Management and Budget and Congress. The public process will start with the early 2004 release of a request for qualifications.

The GAO report found that DoD could reduce construction costs significantly if residential construction practices are used, including wood framing, instead of what is traditional for the military--steel frame, concrete and cement block--but questioned the long-term durability. The issue is further complicated by concerns over protection against terrorism. Although the Army and Navy have undertaken three pilot military construction projects, the jury is still out on the durability of wood frame barracks to meet antiterrorism force protection requirements.

Beyond that, another issue that was raised was the lack of use of existing barracks space.