Defense Infrastructure

The Department of Defense (DOD) operates nearly 70,000 lodging rooms, similar to hotel rooms, and spent nearly $1 billion in 2009 to operate them. In 2002, Congress provided authority to privatize lodging facilities. Army privatized lodging at 10 installations in August 2009 and plans to privatize its remaining domestic facilities in the future. The National Defense Authorization Act for Fiscal Year 2008 requires GAO to review lodging privatization and an Army report. This report addresses (1) the factors the military services considered in their decisions to privatize, (2) challenges in the Army's privatization efforts, (3) the effect of the economic downturn on the Army's privatization program, and (4) the extent to which an Army report required by the act, issued in March 2010, addresses the elements in the law. GAO reviewed documentation and interviewed officials from the Office of the Secretary of Defense, the military services, the developer for the Army's privatization project, and four Army installations where lodging was privatized. GAO recommends that the Army assess the costs and benefits of completing repairs to future facilities to be privatized, develop a transition plan, and clarify how it will incorporate lessons learned into future privatization efforts. In commenting on a draft of this report, DOD agreed with GAO's recommendations and plans to take actions to address them.