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Final Stretch of US Army Housing Privatization Begins

To say that combat-related military privatization has been controversial in recent years would be an understatement. But it would be a mistake to not draw a distinction between combat-related and non-combat-related contracting in the U.S military. On the non-combat side (things like housing, base development, etc.), every branch has some really interesting public-private partnerships underway, and the scale of some of them is simply staggering. Witness the Residential Communities Initiative:

The final partners have been chosen to team up with the Army in its housing privatization venture.

The partners will work with the Army to privatize housing, under the Residential Communities Initiative, at seven more installations. Those installations include Fort Sill, Okla.; Fort Wainwright, Alaska; Fort Greely, Alaska; Fort Huachuca, Ariz.; Yuma Proving Ground, Ariz.; Aberdeen Proving Ground, Md. and Fort Richardson, Alaska. [. . .]

RCI is the Army's program to privatize housing across the continental United States. By 2020, as many as 89,000 new or renovated homes will be made available to Soldiers through the RCI's housing portfolio. The RCI private sector partners will collect rent from the Soldiers who will live in them and provide the maintenance services for the homes and yards.

"When the smoke settles, it'll be around 97 percent of Army's housing around the United States that is privatized," said Geoffrey G. Prosch, principal deputy assistant secretary of the Army for installations and environment, adding that the Army has already transferred to RCI partners housing operations at 38 installations. [. . .]

"This record of success is a model for the military and one that has resulted in Soldiers and their families receiving new homes sooner rather than later," Prosch said. [. . .]

Prosch commented, "When I came onboard with the Army, the service had between a $6 and $7 billion dollar backlog of unfinanced requirements for maintaining military family housing. Now the Army's portfolio of homes, one of the largest in the nation, is on track to being first rate -- and the Army accomplished it through privatization at a fraction of the cost of what it would have taken in MILCON dollars."

"The Army has contributed a little less than a billion dollars in equity to our development partners," he said. "And in return we've received over 10 billion dollars in initial development scope. That's an 11-to-one ratio. That's phenomenal in the construction industry. And it's allowed us, at all these 45 installations at the same time, to move out simultaneously and rapidly recapitalize our housing."

RCI is beneficial for both Soldiers and the Army. For Soldiers it means their homes will be better maintained by a private contractor that is competing with the rest of the private sector for their dollars. For the Army, it is means fewer MILCON dollars must be requested, and also means an indirect boost in mission readiness.

We've suggested the military housing privatization program as a model for university housing in this 2007 Reason study. The underlying idea is the same--whether military branch or university, their core missions are defense and education, respectively, not real estate. The DOD wisely recognized years ago that being a landlord and developer just wasn't a core competency of the military branches, hence the privatization program.

More on military housing privatization here.

» Reason's Privatization Research and Commentary

Leonard Gilroy is Director of Government Reform


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