VA Health Care: Actions Needed to Ensure Provider Qualifications and Competence

Nearly 165,000 licensed health care providers, such as physicians and nurses, provide care in VHA's VA medical centers and outpatient facilities. Medical center staff must determine whether to hire and retain health care providers by reviewing and verifying information about their qualifications and practice history. The NPDB is a key source of information about a provider's clinical practice history.

Medical center staff must also investigate any concerns that arise about the clinical care their providers deliver. Depending on the findings from these reviews, medical centers may take an adverse privileging action against a provider. VA medical centers are required to report providers to the NPDB and state licensing boards under certain circumstances. Failing to adhere to these requirements can negatively affect patient safety.

This testimony is primarily based on GAO's 2019 and 2017 reports on VHA processes for reviewing and reporting quality and safety concerns about VA providers. It addresses VA medical centers' implementation and VHA's oversight of (1) reviews of adverse information about providers in the NPDB; (2) reviews of providers' clinical care after concerns are raised; and (3) reporting of providers to the NPDB and state licensing boards. For the 2019 report, GAO reviewed a nongeneralizable sample of 57 VA providers who had an NPDB report. For the 2017 report, GAO reviewed providers whose clinical care was reviewed after a concern was raised about that care at a nongeneralizable selection of five VA medical centers.

The Department of Veterans Affairs (VA) needs to take action to ensure its health care providers have the appropriate qualifications and clinical abilities to deliver high quality, safe care to veterans, as GAO recommended in its February 2019 and November 2017 reports. Specifically, GAO found the following:

VA medical centers took action against some providers who did not meet VA licensure requirements, but overlooked others . In its 2019 report, GAO found that some VA medical centers took administrative or disciplinary actions against these providers, such as removing them from employment, after becoming aware of disqualifying information in the National Practitioner Data Bank (NPDB). The NPDB is an electronic repository that contains information on providers who have been disciplined by a state licensing board, among other information. However, in some cases VA medical centers overlooked or were unaware of disqualifying information in the NPDB. For example, officials told GAO they inadvertently overlooked a disqualifying adverse action and hired a provider whose license had been revoked for patient neglect. GAO found three reasons for this inconsistency: lack of mandatory training for key staff, gaps in Veterans Health Administration (VHA) policies, and inadequate oversight.

Selected VA medical centers' reviews of providers' clinical care were not always documented . The five selected VA medical centers that GAO included in its 2017 report were required to review 148 providers' clinical care after concerns were raised about their care from October 2013 through March 2017. However, officials at these medical centers could not provide documentation to show that almost half of these reviews had been conducted. GAO found two reasons for inadequate documentation of these reviews: gaps in VHA policies and inadequate oversight of the reviews.

Selected VA medical centers did not report providers to the NPDB or to state licensing boards as required . The five selected VA medical centers that GAO included in its 2017 report had reported one of nine providers to the NPDB that they were required to report from October 2013 through March 2017. None of these providers were reported to state licensing boards, as required by VHA policy. These nine providers either had adverse privileging actions taken against them—actions that limit the care providers can deliver at a facility or prevent the providers from delivering care altogether—or resigned or retired while under investigation before such an action could be taken. GAO found two reasons providers were not reported: lack of awareness or understanding of VHA policies and inadequate oversight of this reporting.

GAO made 11 recommendations in its 2019 and 2017 reports to address the deficiencies identified. VA implemented two of these 11 recommendations, and provided action plans to address the other nine recommendations.

I am pleased to be here today to discuss our recent body of work on  provider qualifications and competence at the Department of Veterans  Affairs (VA). VA’s Veterans Health Administration (VHA) operates one of  the largest health care systems in the nation, and has approximately  165,000 licensed health care providers, such as physicians and nurses,  across its 172 VA medical centers and over 1,000 outpatient facilities.  Like other health care facilities, VA medical centers are responsible for  ensuring that their providers deliver safe care to patients. As part of this  responsibility, VA medical centers are required to determine whether  each provider has the appropriate professional qualifications and clinical  abilities to care for patients. During this process, known as credentialing,  VA medical center officials review and verify information about the  provider’s qualifications and practice history. Such information can  include the provider’s application for employment at VA, education, and  state licenses. VA providers are required to hold at least one active and  unrestricted medical license. If a provider has ever had a license revoked  for cause, or has voluntarily surrendered a license after being notified in  writing by the state of potential revocation of the license for cause, the  provider is not eligible for VA employment, unless the license is restored  to a full and unrestricted status.

As part of credentialing, VHA policy also requires VA medical centers to  review the National Practitioner Data Bank (NPDB) for any adverse  information about a provider. The NPDB is an electronic repository  administered by the U.S. Department of Health and Human Services that  collects and releases information on providers who either have been  disciplined by a state licensing board, professional society, or health care  entity, such as a hospital, or have been named in a medical malpractice  settlement or judgment. Consistent with industry standards, VHA policy  requires VA medical centers to query the NPDB and verify with the  appropriate state licensing boards that a provider’s medical licenses are  current and in good standing—unrestricted—before appointing a provider  to its medical staff. VHA policy also requires VA medical centers to query  the NPDB when licensed independent providers such as physicians— those who can independently provide medical care—renew their clinical  privileges. Additionally, VHA enrolls these licensed independent  providers in the NPDB continuous query, which alerts VHA if any entity  reports information on a provider to the NPDB. (See appendix I for  additional details on VHA’s credentialing, privileging, and monitoring  processes.)

The presence of information in the NPDB does not automatically  disqualify a provider from working at VA medical centers. Each VA  medical center has broad discretion in hiring providers, within parameters.  For example, a provider listed in the NPDB for a revoked license can be  employed by VA if the license has been restored. If the NPDB indicates  that a provider has had other state licensing board action, such as a  reprimand, VA medical center officials must review the information on a  case-by-case basis and document their review.

After a provider is hired, VA medical centers are also required to  investigate and, if warranted, address any concerns that may arise about  the provider’s clinical care. Concerns about a provider’s clinical care can  be raised for many reasons, ranging from a provider not adequately  documenting information about a patient’s visit to practicing in a manner  that is unsafe or inconsistent with industry standards of care. VA medical  centers may also become aware of a potential concern if the NPDB  includes new adverse information about an existing provider. If VA  medical centers fail to properly review and address concerns that have  been raised about a provider, veterans may be exposed to unsafe care  and potential harm.

Depending on the nature of the concern and the findings from their  review, VA medical center officials may take adverse privileging actions  against a provider that either limits the care the provider is allowed to  deliver at the facility or prevent the provider from delivering care  altogether. VA medical center officials are required to report independent  providers against whom they take adverse privileging actions to the  NPDB so that this information is available to other VA medical centers,  non-VA hospitals, and other health care facilities. VA medical center  officials are also required to report providers—both independent and  dependent—to state licensing boards when there are serious concerns  about providers’ clinical care. State licensing boards can then investigate  and determine if a provider’s conduct or ability to deliver care warrants  action against the provider’s medical license.

Over the past few months, the VA Office of Inspector General and the  media have reported on multiple cases of quality and safety concerns  regarding specific VA providers. The issues reported range from  providers lacking appropriate qualifications to poor performance and  provider misconduct. For example, the VA Office of Inspector General  reported in September 2019 that a VA medical center did not comply with  several VHA credentialing and privileging activities in hiring and reviewing  a surgeon. The Inspector General substantiated that the VA medical  center staff did not appropriately verify the provider’s credentials.  Additionally, despite ongoing concerns about the provider’s productivity,  competency, and technical skills, medical center leadership reappointed  the provider to the medical staff, which the VA Inspector General said  allowed the provider to continue performing surgical procedures without  the required training or competency to do so.

My testimony today summarizes key findings from our February 2019 and  November 2017 reports on the implementation and oversight of VHA  processes for reviewing and reporting quality and safety concerns about  VA providers. Accordingly, this testimony addresses  1.  VA medical centers’ reviews of adverse information about providers in  the NPDB and VHA’s oversight of these reviews;  2.  selected VA medical centers’ reviews of providers’ clinical care after  concerns are raised and VHA’s oversight of these reviews; and  3.  selected VA medical centers’ reporting of providers to the NPDB and  state licensing boards and VHA’s oversight of these processes.

In addition, I will highlight key actions that we recommended VA take,  including VA’s responses and the current status of those  recommendations.

For our 2019 report, we reviewed a nongeneralizable sample of 57 VA  providers, including physicians, nurses, dentists, physical therapists, and  social workers across all 18 Veterans Integrated Service Networks  (VISN). These 57 providers were listed in the NPDB for an adverse  action, such as a revoked or surrendered license, and were working at  VHA as of September 30, 2016. For each of the individuals in our  sample, we reviewed the VHA personnel and credentialing files, as well  as state licensing board documents. Further details on our scope and  methodology are included in our February 2019 report on credentialing  VA providers. For our 2017 report, we reviewed documentation and  interviewed medical center staff at a nongeneralizable selection of five VA  medical centers (across five different VISNs) to identify any independent  providers whose clinical care was reviewed after a concern was raised  about that care. For each identified provider, we reviewed  documentation and interviewed staff to determine whether the VA medical  center took an adverse privileging action against any of these identified  providers from October 2013 through the time we completed our site  visits in March 2017. Further details on our scope and methodology are  included in our November 2017 report. Finally, we obtained information  from VA officials in October 2019 on the status of their efforts to  implement the recommendations that we made in our 2019 and 2017  reports.

We conducted the work on which this statement is based 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.

VA Medical Centers Took Action against Some Selected Providers with Disqualifying Information in the NPDB but Overlooked Others

In our review of 57 providers selected for our February 2019 report, we  found that the responsible VA medical centers took action against some  providers with disqualifying information in the NPDB but overlooked  others. We found that VA medical centers took administrative or  disciplinary actions against some providers, such as removing them from  patient care, after becoming aware of adverse information in the NPDB.  However, many of these actions were taken following our review and a  VHA-wide licensure review, both of which occurred in 2018, rather than at  the time of the NPDB report. Specifically, the responsible VA medical  centers removed five providers who they determined did not meet VA  licensure requirements following our inquiries. For example, one of these  five providers had surrendered a license in 2014, while employed at VA,  but was not removed by the VA medical center until after our inquiries in  2018. Additionally, another provider was reported to the Drug  Enforcement Administration (DEA) by a VA medical center after we  inquired about the provider prescribing controlled substances without  appropriate registration.

We also found that VA medical centers hired or retained some of the 57  providers who they acknowledged had disqualifying adverse information  in the NPDB, which is inconsistent with VHA policy. Specifically, these  providers had licenses that were revoked or surrendered for cause, but  VA medical center officials overlooked or were unaware of this  information. However, none of these providers still worked at VHA at the  time we completed our review. For example, one VA medical center hired  a provider who had a state license revoked for patient neglect and  substandard care. VA medical center officials stated that they received  the NPDB report about the revoked license at the time the provider was  hired in 2014 but it was inadvertently overlooked by multiple staff. This  provider voluntarily resigned in 2017.

In our February 2019 report, we found that three factors were largely  responsible for inconsistent adherence to VHA policies that disqualify  providers from employment.

First, some medical center officials are not aware of key VHA policies,  such as the requirement that a provider who has had a license  revoked or surrendered for cause is ineligible for employment unless  the license is reinstated. For example, in the case of the provider who  surrendered a license in 2014, documentation shows that the medical  center staff became aware of the surrendered license in 2015, but  VHA staff stated that the removal was stalled due to confusion about  policies. This lack of awareness of key policies may be linked to a lack  of mandatory training for credentialing staff.

Second, gaps in VHA policy allow for inconsistent interpretation. For  example, VHA has not issued policies pertaining to employing  providers who have had their DEA registration for prescribing  controlled substances revoked or surrendered for cause. While the  DEA requires registrants, like VHA, to obtain a waiver before  employing such providers, VHA policy is silent on the requirement to  obtain a waiver; we found that VA medical center officials were  unclear on the DEA requirement and had hired providers without  obtaining the required DEA employment waiver. Further, we found  that two providers inappropriately prescribed controlled substances  without a DEA waiver.

Third, VHA’s oversight of VA medical centers’ reviews of adverse  information is inadequate. Under VHA policy, VISN officials are  responsible for reviewing providers with certain adverse licensure  actions. However, we found that this review was not always  conducted or documented. Further, although VHA-wide reviews of  provider licenses have been completed and have identified providers  with licensure issues, VHA officials indicated that these types of  reviews are not routinely conducted because they are labor intensive.

In our February 2019 report, we also found that some VA medical centers  had taken steps to improve the credentialing process and identify  providers who do not meet the licensure requirements. For example, one  medical center completed a periodic review of all licensed providers to  identify providers who may have had an expired licensure issue. Another  VA medical center updated its policies to require providers with adverse  actions to be reviewed by management. However, we found that VHA  does not routinely assemble and disseminate information about initiatives that medical centers have undertaken to improve the oversight of  providers.

In our February 2019 report, we concluded that without consistent  adherence to VHA employment policies and adequate oversight, VHA  lacks assurance that all VA providers have the appropriate professional  qualifications and clinical abilities to care for patients. To address these  shortcomings, in our February 2019 report we made seven  recommendations to VA. VA concurred with these recommendations.  Table 1 summarizes these recommendations and the steps VA has taken  to address them.

Selected VA Medical Centers’ Reviews of Providers’ Clinical Care Were Not Always Documented or Timely

As we reported in November 2017, we found that from October 2013  through March 2017, the five selected VA medical centers required  reviews of a total of 148 providers’ clinical care after concerns were  raised about their care. However, for almost half of these reviews, officials  at these medical centers could not provide documentation to show that  the reviews had been conducted. We found that all five VA medical  centers lacked at least some documentation of the reviews they told us  they conducted, and in some cases, we found that the required reviews  were not conducted at all. For example, we found that the medical  centers lacked documentation showing they conducted a prospective  review of 26 providers. Additionally, VA medical center officials confirmed  that they failed to conduct this required review for an additional 21  providers.

We also found that the five selected VA medical centers did not always  conduct reviews of providers’ clinical care in a timely manner. Specifically,  of the 148 providers, the VA medical centers did not initiate reviews of 16  providers for 3 or more months, and in some cases, for multiple years,  after concerns had been raised about the providers’ care. For three of  these 16 providers, additional concerns about the providers’ clinical care  were raised before the reviews began.

In our November 2017 report, we found that two factors were largely  responsible for the inadequate documentation and untimely provider  reviews.

First, VHA policy does not require VA medical centers to document all  types of reviews of providers’ clinical care, including retrospective  reviews, and VHA has not established a timeliness requirement for  initiating reviews of providers’ clinical care.

Second, VHA’s oversight of the reviews of providers’ clinical care is  inadequate. Under VHA policy, VISN officials are responsible for  overseeing the credentialing and privileging processes at their  respective VA medical centers. While reviews of providers’ clinical  care after concerns are raised are a component of credentialing and  privileging, we found that none of the VISN officials we spoke with  described any routine oversight of such reviews. This may be in part  because the standardized tool that VHA requires the VISNs to use  during their routine audits does not direct VISN officials to ensure that  all reviews of providers’ clinical care have been conducted and  documented. Further, some of the VISN officials we interviewed told  us they were not using the standardized audit tool as required.

In our November 2017 report, we concluded that without adequate  documentation and timely completion of reviews of providers’ clinical  care, VA medical center officials lack the information they need to make  decisions about providers’ privileges, including whether or not to take  adverse privileging actions against providers. Furthermore, because of its  inadequate oversight, VHA lacks reasonable assurance that VA medical  center officials are reviewing all providers about whom clinical care  concerns have been raised and are taking adverse privileging actions  against the providers when appropriate. To address these shortcomings  and improve VA medical center reviews of provider quality and safety  concerns, we made three recommendations to VA in our November 2017  report. VA concurred with these recommendations. Table 2 summarizes  these recommendations and the steps VA has taken to address them.

Selected VA Medical Centers Did Not Report All Providers to the NPDB or to State Licensing Boards as Required

In our November 2017 report, we found that from October 2013 through  March 2017, the five VA medical centers we reviewed had only reported  one of nine providers that should have been reported to the NPDB as  required by VHA policy. Furthermore, none of these nine providers were  reported to state licensing boards as required by VHA policy. These  nine providers either had adverse privileging actions taken against them  or resigned or retired while under investigation before an adverse  privileging action could be taken.

The VA medical centers documented that these nine providers had  significant clinical deficiencies that sometimes resulted in adverse  outcomes for veterans. For example, the documentation shows that one  provider’s surgical incompetence resulted in numerous repeat surgeries  for veterans. Similarly, the documentation shows that another provider’s  opportunity to improve had to be halted and the provider was removed  from providing care after only a week due to concerns that continuing the  review would potentially harm patients.

In addition to these nine providers, one VA medical center terminated the  services of four contract providers based on deficiencies in the providers’  clinical performance, but the facility did not follow any of the required  steps for reporting providers to the NPDB or relevant state licensing  boards. This is concerning, given that the VA medical center documented  that one of these providers was terminated for cause related to patient  abuse after only 2 weeks of work at the facility.

At the time of our review, two of the five VA medical centers we reviewed  each reported one provider to the state licensing boards for failing to meet  generally accepted standards of clinical practice to the point that it raised  concerns for the safety of veterans. However, we found that the medical  centers’ reporting to the state licensing boards took over 500 days to  complete in both cases, which was significantly longer than the 100 days  suggested in VHA policy.

Across the five VA medical centers, we found that providers were not  reported to the NPDB and state licensing boards as required for two  reasons.

First, VA medical center officials were generally not familiar with or  misinterpreted VHA policies related to NPDB and state licensing  board reporting. For example, at one VA medical center, we found  that officials failed to report six providers to the NPDB because they  were unaware that they were responsible for NPDB reporting. Officials  at two other VA medical centers incorrectly told us that VHA cannot  report contract providers to the NPDB.

Second, VHA policy does not require the VISNs to oversee whether  VA medical centers are reporting providers to the NPDB or state  licensing boards when warranted. We found, for example, that VISN  officials were unaware of situations in which VA medical center  officials failed to report providers to the NPDB.

As a result of VHA staff misinterpretation of VHA policy and insufficient  oversight, we concluded that VHA lacks reasonable assurance that all  providers who should be reported to the NPDB and state licensing boards  are reported. Consequently, the NPDB and state licensing boards in other  states where the providers we identified held licenses were not alerted to  concerns about the providers’ clinical practice. We reported that this could  allow a provider who delivered substandard care at one VA medical  center to obtain privileges at another VA medical center or at hospitals  outside of VA’s health care system. In our November 2017 report, we  noted several cases of this occurring among the providers who were not  reported to the NPDB or state licensing boards by the five VA medical  centers we reviewed. For example,

We found that two of the four contract providers whose contracts were  terminated for clinical deficiencies remained eligible to provide care to  veterans outside of that VA medical center. At the time of our review,  one of these providers held privileges at another VA medical center,  and another participated in the network of providers that can provide  care for veterans in the community.

We also found that a provider who was not reported as required to the  NPDB during the period we reviewed had their privileges revoked 2  years later by a non-VA hospital in the same city for the same reason  the provider was under investigation at the VA medical center.

Officials at this VA medical center did not report this provider following  a settlement agreement under which the provider agreed to resign. A  committee within the VA medical center had recommended that the  provider’s privileges be revoked prior to the agreement. There was no  documentation of the reasons why this provider was not reported to  the NPDB.

To improve VA medical centers’ reporting of providers to the NPDB and  state licensing boards and VHA oversight of these processes, we made  one recommendation in our November 2017 report. VA concurred with  this recommendation. Table 3 summarizes the recommendation and the  steps VA has taken to address it.

Chairman Pappas, Ranking Member Bergman, and Members of the  Subcommittee, this concludes my statement. I would be pleased to  respond to any questions that you may have at this time.

If you or your staff members have any questions concerning this  testimony, please contact me at (202) 512-7114 (silass@gao.gov).  Contact points for our Office of Congressional Relations and Public  Affairs may be found on the last page of this statement. Other individuals  who made key contributions to this testimony include Marcia A. Mann  (Assistant Director), Kaitlin M. McConnell (Analyst-in-Charge), Summar  C. Corley, Cathy Hamann, Jacquelyn Hamilton, and Vikki Porter. Other  contributors include David Bruno, Julia DiPonio, Ranya Elias, Kathryn A.  Larin, and Joy Myers.

Appendix I: Veterans Health Administration Credentialing, Privileging, and Monitoring Processes

According to Department of Veterans Affairs’ (VA) Veterans Health  Administration (VHA) policies, all licensed health care providers must be  credentialed before they are permitted to work. Credentialing is the  process of screening and evaluating qualifications and other credentials— including licensure, education, and relevant training—that is the first step  in the process of determining whether the provider has appropriate  clinical abilities and qualifications to provide medical services.  Credentialing processes and requirements differ for independent licensed  providers, such as doctors—who are permitted by law and the facility to  deliver patient care services independently, without supervision—and  dependent providers, such as nurses—who deliver patient care under the  supervision or direction of an independent provider. Additionally, VHA  policy states that only licensed independent providers may be granted  clinical privileges. Privileging is a process through which a provider is  permitted by a facility to independently provide medical or patient care  that is in alignment with the provider’s clinical competence. Figure 1  provides a summary of the VHA credentialing and privileging processes  for independent and dependent providers.

VHA facilities are also required to monitor providers’ licenses after they  are hired to ensure the licenses are current and review any licensure  actions, in accordance with VHA policy. Figure 2 provides a summary of  VHA’s processes for monitoring independent and dependent providers’  licenses.

Veterans Health Administration: Greater Focus on Credentialing Needed  to Prevent Disqualified Providers from Delivering Patient Care.  GAO-19-6. Washington, D.C.: February 28, 2019.

Department of Veterans Affairs: Actions Needed to Address Employee  Misconduct Process and Ensure Accountability. GAO-18-137.  Washington, D.C.: July 19, 2018.

VA Health Care: Improved Oversight Needed for Reviewing and  Reporting Providers for Quality and Safety Concerns. GAO-18-260T.  Washington, D.C.: November 29, 2017.

VA Health Care: Improved Policies and Oversight Needed for Reviewing  and Reporting Providers for Quality and Safety Concerns. GAO-18-63.  Washington, D.C.: November 15, 2017.

Veterans Health Care: Improved Oversight of Community Care  Physicians’ Credentials Needed. GAO-16-795. Washington, D.C.:  September 19, 2016.

VA Health Care: Improvements Needed in Processes Used to Address  Providers’ Actions That Contribute to Adverse Events. GAO-14-55.  Washington, D.C.: December 3, 2013.

Veterans Health Care: Veterans Health Administration Processes for  Responding to Reported Adverse Events, GAO-12-827R. Washington,  D.C.: August 24, 2012.

VA Health Care: Improved Oversight and Compliance Needed for  Physician Credentialing and Privileging Processes. GAO-10-26.  Washington, D.C.: January 6, 2010.

This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

VA requires that its medical centers review doctors’ qualifications and practice history before deciding whether to hire or retain them. However, we’ve found that some VA medical centers inadvertently overlooked information that would disqualify a doctor from being hired—such as having a revoked license.

If medical centers are concerned about or have disciplined a doctor, they are required to report to state licensing boards or a national database as appropriate. But some medical centers didn’t make these reports.

This testimony is based on reports with 11 recommendations, including that VA better oversee how its medical centers review doctors.


Military Housing Privatization: Preliminary Observations on DOD's Oversight of the Condition of Privatized Military Housing

In 1996, Congress enacted the Military Housing Privatization Initiative in response to DOD concerns about inadequate and poor quality housing for servicemembers. Today, private partners are responsible for the ownership, construction, renovation, maintenance, and repair of about 99 percent of housing units on military bases in the continental United States.

DOD's policy requires that the department ensure eligible personnel and their families have access to affordable, quality housing facilities. The Office of the Secretary of Defense is responsible for providing guidance and general procedures related to military housing privatization. The military departments are responsible for executing and managing privatized housing projects.

Drawing from ongoing work, GAO discusses (1) DOD's oversight of privatized military housing for servicemembers and their families, (2) efforts of the military departments to communicate their roles and responsibilities to servicemembers and their families, and (3) DOD and private partner development and implementation of initiatives to improve privatized housing.

GAO reviewed relevant policies, guidance, and legal documents; visited 10 installations; conducted 15 focus groups; analyzed maintenance work order data; and interviewed relevant DOD and private partner officials. GAO will continue its ongoing work and make recommendations as appropriate in the final report.

Each military department conducts a range of oversight activities—some more extensive than others—for its privatized housing projects, but these efforts have been limited in key areas. Specifically, based on GAO's ongoing work:

The Department of Defense (DOD) conducts oversight of the physical condition of housing, but some efforts have been limited in scope. Military departments have guidance for conducting oversight of the condition of privatized housing. This oversight generally consists of reviewing a sample of work order requests, visually inspecting housing during change of occupancy, and conducting other point in time assessments. However, GAO found that these efforts are limited in scope. For example, interior walk-throughs may have been limited to just a few homes at each installation.

DOD uses performance metrics to assess private partners, but metrics may not provide meaningful information on the condition of housing. The Office of the Secretary of Defense (OSD) has recently issued guidance to ensure consistency in the framework used to measure project performance. However, the specific indicators used to determine if the metrics are being met may not fully reflect private partner performance. For example, a common measure is how quickly the private partner responded to a work order, not whether the issue was actually addressed.

DOD and private partners collect maintenance data on homes, but these data are not captured reliably or consistently. DOD is expanding its use of work order data to monitor and track the condition of privatized housing. However, based on GAO's analysis of data provided by all 14 private partners, these data cannot reliably be used for ongoing monitoring of privatized housing because of data anomalies and inconsistent business practices in how these data are collected.

DOD provides reports to Congress on the status of privatized housing, but some data in these reports are unreliable and may be misleading. DOD provides periodic reports to Congress on the status of privatized housing, but reported results on resident satisfaction are unreliable due to variances in the data military departments provide to OSD and in how OSD has calculated and reported these data.

Military housing offices located at each installation are available to provide resources to servicemembers experiencing challenges with their privatized housing, but GAO's ongoing work showed these offices have not always effectively communicated this role to residents. For example, residents in GAO's focus groups noted confusion over the roles and responsibilities of these offices, and military housing officials have found that residents could not readily differentiate between military and private housing officials.

DOD, working with the private partners, has made progress in developing and implementing a series of initiatives. However, both DOD and private partner officials have noted several challenges that could affect implementation, including limitations to DOD's legal authority to unilaterally make changes to the terms of the projects and limited resources to implement increased oversight.

Thank you for the opportunity to be here today to discuss our preliminary  observations related to the condition of privatized military housing. In  1996, Congress enacted the Military Housing Privatization Initiative  (MHPI) in response to Department of Defense (DOD) concerns about the  effect of inadequate and poor quality housing on servicemembers and  their families. Since then, private-sector developers and property  management companies, hereafter referred to as private partners, have  assumed primary responsibility for military family housing in the United  States. They are currently responsible for the construction, renovation,  maintenance, and repair of about 99 percent of domestic military family  housing in the continental United States, Alaska, and Hawaii. Over the  last few years, reports of the presence of lead-based paint and other  hazards, such as mold and pest infestations, have raised questions about  DOD’s management and oversight of privatized housing.

My testimony today summarizes preliminary observations from our  ongoing review assessing (1) DOD’s oversight of privatized military  housing for servicemembers and their families, (2) efforts of the military  departments to communicate their roles and responsibilities to  servicemembers and their families, and (3) DOD and private partner  development and implementation of initiatives to improve privatized  housing.

For our ongoing work, we reviewed DOD policies and guidance related to  the administration of the MHPI program; analyzed available private  partner data on work orders from October 2016 through April 2019 from  each of the 79 MHPI family housing projects; visited a non-generalizable  sample of 10 installations selected to represent each of the military  departments, six private partners—including the five largest who own the  majority of privatized military housing—and geographic and climate  diversity; and conducted 15 focus groups with residents at the 10  installations we visited. We also reviewed a non-generalizable sample of  ground leases and other MHPI project documents, including leases and  project documents for the installations we visited, as well as a sample of  leases from other locations not included in our site visits. We reviewed  the implementation and results of various resident satisfaction surveys  conducted by the military departments and private partners. To  understand roles and responsibilities and the management of privatized  housing, we interviewed Office of the Secretary of Defense (OSD) and  military department officials, and contacted representatives from each of  the 14 private partners. We provided information in this statement to DOD  for technical comment and made changes where appropriate. We are  continuing our broader review of DOD’s efforts and plan to conclude that  work in early 2020.

We are conducting the work on which this statement is based 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.

DOD’s policy is to ensure that eligible personnel and their families have  access to affordable, quality housing facilities and services consistent  with grade and dependent status, and that the housing generally reflects  contemporary community living standards. From the inception of MHPI,  the military departments were provided with various authorities to obtain  private-sector financing and management to repair, renovate, construct,  and operate military housing in the United States and its territories.  Through these authorities, the military departments have entered into a  series of agreements with private partners to provide housing to  servicemembers and their families. The military departments have  flexibility in how they structure their privatized housing projects, but  typically the military departments lease land to private developers for 50- year terms and convey existing housing located on the leased land to the  developer for the duration of the lease. The developer then becomes  responsible for renovating and constructing new housing and for the daily  management of these housing units. At the end of fiscal year 2017, 14  private partners were responsible for 79 privatized military family housing  projects—34 for the Army, 32 for the Air Force, and 13 for the Navy and  Marine Corps—in the United States, each of which includes housing at  one or more military installation.

The Deputy Assistant Secretary of Defense for Facilities Management,  under the authority, direction, and control of the Assistant Secretary of  Defense for Sustainment, is responsible for all matters related to MHPI  and is the program manager for all DOD housing, whether DOD-owned,  DOD-leased, or privatized. In this capacity, the Deputy Assistant  Secretary is to provide both guidance and general procedures related to  military housing privatization, as well as required annual reports to  Congress on the status of privatized military housing projects. However,  it is the responsibility of the military departments to execute and manage  privatized housing projects, including conducting financial management  and monitoring their portfolio of projects. Each military department has  issued guidance that outlines its responsibilities for privatized housing,  such as which offices are responsible for overseeing privatized housing  projects.

We have previously reported on DOD’s privatized housing program.  Table 1 provides a summary of key findings and recommendations from  our prior reports and the implementation status of the recommendations.

DOD Conducts Some Oversight of the Condition of Privatized Housing, but Efforts Are Limited in Key Areas

Each military department conducts a range of oversight activities—some  more extensive than others—for its privatized housing projects. For  example, among other things, military departments review sample work  order requests and inspect housing during the change of occupancy  process. DOD guidance requires that the military departments ensure  eligible personnel have access to quality housing facilities and services  that generally reflect contemporary living standards. Further, DOD’s  housing manual states that because privatization creates a long-term  governmental interest in privatized housing, it is essential that projects be  attentively monitored. Through its guidance, DOD delegates oversight  responsibility of the individual privatized housing projects to each of the  military departments. In addition, according to documents we reviewed,  individual project business agreements set guidelines that convey the  management, operation, and maintenance duties to the private partner, with the caveat that the military departments still have the right to access  the premises or private partner records to ensure compliance with  applicable laws. We determined that OSD and the military departments’  oversight has been limited in key areas. Specifically, our ongoing review  showed (1) the scope of oversight of the physical condition of privatized  housing has been limited; (2) performance metrics focused on quality of  maintenance and resident satisfaction may not provide meaningful  information on the condition of privatized housing; (3) there is a lack of  reliable or consistent data on the condition of privatized housing; and (4)  past DOD reports to Congress on resident satisfaction are unreliable due  to inconsistent handling and calculation of the data, and therefore may be  misleading.

Military Departments Conduct Some Oversight of the Physical Condition of Privatized Housing, but Scope of Efforts Is Limited

DOD delegates oversight responsibilities of the individual privatized  housing projects to each of the military departments, and each military  department has subsequently issued guidance outlining oversight roles  and responsibilities. Military department oversight activities generally fall  into two categories—(1) daily oversight of management and operations  and (2) reviews of compliance with each project’s business agreements.

Daily oversight of management and operations. Daily oversight of a  project’s management and operations is to be conducted by each  installation’s military housing office. Military housing officials told us  activities to monitor the physical condition of housing units generally  include reviewing sample work order requests, following up with a sample  of residents to check on their experience with recently completed work,  and inspecting housing units during the change of occupancy process.  Based on our preliminary observations, the implementation and scope of  these activities varies and can be limited. For example, during our site  visits conducted from June through August 2019, we identified the  following installation-specific practices:

Military housing office officials at one Army installation told us that  they inspect 100 percent of housing units that have completed change  of occupancy maintenance. In contrast, officials from an Air Force  installation told us that they inspect 10 to 20 percent of housing units  that have completed change of occupancy maintenance.

Military housing officials at one Marine Corps installation told us that  for one of the two partners that own housing on the base, they had  access to only 3 percent of completed work order tickets from the  previous month, as reported to them by the private partner. Officials  from a Navy installation told us that they had access to the private  partner’s maintenance record system and would pull reports on new  resident housing occupants who had made 6 or more maintenance  calls in a 30-day period.

Military housing officials at half of the sites we visited stated that  staffing levels limited their ability to carry out oversight duties, such as  work order data analysis and housing inspections.

Reviews of compliance with each project’s business agreements.  Reviews of compliance with a project’s business agreements are a joint  effort between the local military housing office, the private partners,  military department installation commands, and other echelons of  command. These reviews can include neighborhood tours to view  project amenities such as community centers, playgrounds, and pools, all  of which are owned, maintained, and operated by the private partner  companies, as well as exteriors of housing units. However, our  preliminary work showed these reviews have been limited in the scope of  their assessment of the physical condition of the housing units, as interior  walk-throughs may have been limited to just a few housing units at each  installation.

According to military department officials, each department is currently  taking steps to revise guidance and standardize daily oversight activities  in an effort to provide consistent oversight across projects and  installations, and to increase the focus of oversight on the physical  condition of housing. The military departments are taking additional steps,  such as increasing staffing levels, improving training for military housing  office officials, and ensuring that housing officials have independent  access to data. However, each military department is working to  implement service-specific initiatives with only limited guidance from OSD  on the level of oversight expected of the services as it relates to the  condition of the housing. While existing OSD guidance provides  objectives to the military departments for oversight of the condition of  DOD-owned housing, guidance for privatized housing is focused on the  implementation of projects, construction of new housing units, and  financial management. The guidance does not include objectives for  monitoring the condition of privatized housing projects, such as objectives  focused on both ensuring the operation and maintenance of privatized  housing to standards that provide safe living conditions for  servicemembers and providing authorities to installation commanders to  oversee those standards. We will continue to assess any implications of  the lack of OSD guidance as part of our ongoing review.

DOD Uses Several Metrics to Monitor Private Partner Performance, but the Metrics May Not Provide Meaningful Information on the Condition of Privatized Housing

The military departments each use a range of project-specific  performance metrics to monitor private partner performance, but our  ongoing work showed that the metrics designed to focus on resident  satisfaction and on the quality of maintenance conducted on housing  units may not provide meaningful information or reflect the actual  condition of the housing units. Most but not all of the private partners are  eligible to receive performance incentive fees based on generally meeting  the performance metrics established in each individual project’s business  agreement. Private partner performance is measured through a variety  of metrics, such as resident satisfaction, maintenance management,  project safety, and financial management. To determine how well the  private partners are performing under the metrics, military housing office  officials told us that they rely on a range of specific indicators established  in the project business agreements. However, the indicators themselves  may not provide meaningful information on the private partner’s  performance in maintaining quality housing units. For example, our  preliminary work identified the following:

Maintenance management. One indicator of performance of  maintenance management that is regularly included in project  business agreements measures how often the property manager’s  response time to work orders meets required time frames established  in the project’s business agreements. While this indicator measures  the timeliness of the private partner’s response, it does not measure  or take into account the quality of the work that was conducted or  whether the resident’s issue was fully addressed. Some projects  include indicators that aim to more directly measure quality, such as  the number of work orders placed during the first 5 business days of  residency, which may indicate the extent to which change of  occupancy maintenance was completed.

Resident satisfaction. One example of an indicator of resident  satisfaction is whether a project has met the target occupancy rates  established in the business agreements. An OSD official we spoke  with and private partner officials told us they use occupancy as an  indicator of satisfaction based on the assumption that residents would  move if they were dissatisfied with their housing unit. However,  based on our focus groups, this may not be a reliable assumption.  Although most residents are not required to live in military housing,  residents in each of our 15 focus groups indicated a variety of reasons  for choosing to live in privatized housing, many of which did not have  to do with their satisfaction with the quality or condition of their homes.  For example, residents cited factors influencing their decision to live in  privatized housing, such as living in close proximity to military medical  or educational services for children or other family members who  receive benefits through the military’s Exceptional Family Member  Program, access to quality schools, and a lack of safe and  affordable housing in the surrounding community.

OSD and military department officials we spoke with recognized that the  current metrics do not consistently focus on or prioritize the private  partners’ performance with maintaining housing units and ensuring  resident satisfaction. In October 2019 OSD issued new guidance  standardizing the performance incentive fee framework across the military  departments. According to OSD and the private partners with whom we  spoke, this guidance was developed through a joint effort with the military  departments and the private partners; it provides a framework where the  metrics for resident satisfaction and maintenance management will  account for a majority of the fee, with project safety and financial  performance weighted less heavily. However, according to officials from  OSD and officials we spoke with from each of the military departments,  the specific indicators used to drive the metrics will need to be negotiated  with each of the private partners for each project. Performance indicators  designed to more directly measure the quality of maintenance conducted  on housing units and resident satisfaction will provide military  departments more transparency into private partner performance with  regard to these two important metrics—metrics that are often directly tied  to the performance incentive fees provided to the private partners.

DOD and Private Partners Collect Maintenance Data on Privatized Housing, but These Data Are Not Captured Reliably or Consistently for Use in the Ongoing Monitoring of Housing Units

The housing projects’ business agreements typically include a  requirement for the private partner to maintain a records management  system to record, among other things, maintenance work requested and  conducted on each housing unit. According to private partner officials,  each company uses commercial property management software  platforms that are used for activities such as initiating maintenance work  orders and dispatching maintenance technicians. Some private partner  officials also stated that data from the work order tracking systems were  intended to prioritize and triage maintenance work, not to monitor the  overall condition of privatized housing units. While data from these work  order tracking systems may be useful for point-in-time assessments of  work order volume at a given installation, military department officials told  us that efforts are underway to monitor work order data to increase the  military departments’ oversight and the accountability of the private  partners for providing quality housing. However, in our ongoing work we  observed that these data are not captured reliably or consistently for use  in the ongoing monitoring of the condition of privatized housing units.

We received and reviewed data from each of the 14 private partners’  work order tracking systems covering each of the 79 privatized family  housing projects. Based on our preliminary analysis of the initial data  provided by the private partners, we noted the following:

Data anomalies. We identified anomalies in work order data from  each of the 14 partners. For example, we identified instances of,  among other things, duplicate work orders, work orders with  completion dates prior to the dates that a resident had submitted the  work order, and work orders still listed as in-progress for more than 18  months.

Inconsistent use of terminology. Based on our preliminary review of  the data provided by the private partners and discussions with private  partner officials, we noted cases where work orders were  inconsistently entered into the work order tracking systems with  respect to two primary factors—(1) how the request is described by  the resident or interpreted by the official entering the data, which can  differ for each work order, and (2) the existing range of pre- established service category options in the private partner’s work  order tracking system, which differ among the partners.

Differing practices for opening and closing work orders. At some  installations we visited, private partners noted changes in practices for  opening and closing work orders, limiting the usefulness of the data in  monitoring the status of work orders over time and thus the condition  of privatized housing.

According to military department officials, efforts to review data from the  private partners’ work order tracking systems has increased, and military  department officials told us that they have found similar limitations.  However, there are no standard practices currently in place for assessing  the accuracy and reliability of the work order data or for setting standard  terminology and practices for opening and closing work orders.

DOD Provides Reports to Congress on Resident Satisfaction with Privatized Housing, but Data in These Reports Are Unreliable and May Be Misleading

DOD is statutorily required to provide reports to Congress that include,  among other things, information about military housing privatization  projects’ financial health and performance and backlog, if any, of  maintenance and repairs. These reports have included information on  resident satisfaction with privatized housing based on results of the  annual military department satisfaction surveys.

Based on our preliminary work, we have determined that information on  resident satisfaction in these reports to Congress on privatized housing  has been unreliable and may be misleading due to variances in the data  the military departments collect and provide to OSD and in OSD’s  calculation and presentation of these data. In May 2019, OSD issued its  report for fiscal year 2017, which stated that overall resident satisfaction  for calendar year 2017 was 87 percent. For OSD’s fiscal year 2017  report, the military departments provided data on resident satisfaction  based on information from the annual resident satisfaction surveys.  Specifically, OSD’s instructions to the military departments required the  military departments to report satisfaction based on resident responses to  the question that asks: “Would you recommend privatized housing,” with  results indicating how many tenants responded “yes,” “no,” or “don’t  know.”

However, the military departments’ approaches for collecting data in their  annual resident satisfaction surveys varies, which limits their ability to  assess whether residents would recommend privatized housing. Instead  of asking whether residents would recommend privatized housing, the  military departments’ annual resident satisfaction survey asks residents  the following: “How much do you agree or disagree with the following  statement, ‘I would recommend this community to others.’” A resident’s  satisfaction with his or her community and inclination to recommend it to  others may not be reflective of satisfaction with either the privatized  housing unit or privatized housing in general.

Residents are then provided the following response categories on a scale  of 5 to 0: (5) strongly agree, (4) agree, (3) neither agree nor disagree, (2)  disagree, (1) strongly disagree, and (0) not applicable, no opinion, don’t  know, or no answer. Through our analysis, we have identified variances  in the methods the military departments use to translate the residents’  responses into the “yes,” “no,” or “don’t know” categories. The variances  in how the military departments calculate “yes,” “no,” or “don’t know”  result in inconsistencies in how resident satisfaction is ultimately reported  to Congress. Specifically:

For the fiscal years 2015 through 2017 reports, Navy officials told us  that they counted responses reported in categories 5 and 4 as “yes,”  responses in categories 2 and 1 as “no,” and responses in categories  0 and 3 as “don’t know.”

For the same time period, Air Force officials told us that they counted  responses in categories 5, 4, and 3 as “yes,” responses in categories  2 and 1 as “no,” and responses in category 0 as “don’t know.”

The Army calculated responses differently for the fiscal years 2015, 2016,  and 2017 reports. Specifically:

For the fiscal year 2015 report, the Army counted responses in  categories 5, 4, and 3 as “yes,” responses in categories 2 and1 as  “no,” and responses in category 0 as “don’t know.”

For the fiscal year 2016 report, the Army counted responses in  categories 5 and 4 as “yes,” responses in categories 2, 1, and 0 as  “no,” and responses in category 3 as “don’t know.”

For the fiscal year 2017 report, the Army counted responses in  categories 5 and 4 as “yes,” responses in categories 2 and 1 as “no,”  and responses in categories 0 and 3 as “don’t know.”

In our ongoing work, we have also identified instances of errors and  inaccuracies in how OSD calculates these data and reports on resident  satisfaction to Congress. Specifically, we found missing data points and  incorrect formulas, among other errors, in OSD’s calculation of the data  submitted by the military departments for OSD’s fiscal year 2017 report to  Congress. For example:

The formula used by OSD to calculate overall resident satisfaction for  the fiscal year 2017 report did not include data for several projects,  including for four Army projects that, as of September 30, 2017,  accounted for over 18 percent of the Army’s total housing inventory.

Additionally, we identified that OSD did not include resident  satisfaction data for a Navy project in its fiscal year 2017 report to  Congress, even though when we reviewed the Navy’s submission to  OSD, we found that the Navy had included data for that project.

For one Air Force project, OSD reported identical resident satisfaction  data for the fiscal year 2015, 2016, and 2017 reports, despite the fact  that Air Force officials had noted in their submissions to OSD that the  resident satisfaction data were from the annual resident satisfaction  survey conducted in December 2013.

We also found that presentation of data in OSD’s report to Congress may  be misleading because OSD did not explain the methodology it used to  calculate the overall resident satisfaction percentage or include caveats to  explain limitations to the data presented. Specifically, OSD did not include  information on overall response rates to the annual satisfaction survey for  each military department, nor did it include response rates by project. Low  response rates can create the potential for bias in survey results. For  example, in the report for fiscal year 2017, OSD reported that 25 percent  of residents living in renovated housing units for one privatized housing  project were satisfied with their housing, but we found that only four  residents had provided responses to this question. Thus, only one  resident reported being satisfied. In addition, we found that OSD did not  provide an explanation in the report for why five projects were listed as  “not applicable.” According to OSD officials, this error was a quality  control issue that they plan to address.

According to OSD officials, OSD and the military departments are  reviewing the resident satisfaction survey questions and will be identifying  and implementing measures to ensure an accurate and reliable process  to compile, calculate, report and compare MHPI resident satisfaction by  military department and across DOD.

Military Housing Offices Have Not Effectively Communicated Their Role as a Resource for Servicemembers Experiencing Challenges with Privatized Housing

Military housing office officials located at each installation are available to  provide resources to servicemembers experiencing challenges with their  privatized housing, among other services, but these offices have not  always effectively communicated this role to residents of privatized  housing. The military housing office is to provide new residents with  information on their local housing options, to include referral services for  housing options. According to some military housing office officials, the  military housing office then works with the private partner to identify the  eligibility and type of home the servicemember qualifies for, if the resident  chooses to live in privatized housing. According to some residents we  spoke with in one of our focus groups, beyond this initial interaction,  military housing office officials generally do not interact with residents on  a regular basis. Additionally, residents who participated in our focus  groups noted they were sometimes confused about the military housing  offices’ roles and responsibilities with regard to the maintenance of their  home; there was a perception that the military housing office was not  working independently of the partner in the residents’ best interest; or  they did not know the military housing office existed.

The military department oversight agencies have acknowledged resident  confusion and a lack of awareness regarding the role of the military  housing offices as an issue. In May 2019, the Army Inspector General  reported to the Secretary of the Army that at 82 percent of Army  installations with privatized housing, residents did not know how to  escalate issues to either the private partner or the Army housing office.  Additionally, the Army Inspector General reported that installation  command teams and staff cited multiple circumstances where military  housing offices and tenant advocacy roles and responsibilities were  unclear. Further, some military housing office officials with whom we  spoke during our site visits acknowledged the gap in resident awareness  regarding the existence and purpose of the military housing office. Some  military housing officials also noted that some residents are unaware of  the difference between the military housing office and the private partner  office, due in part to their physical co-location and unclear building  signage.

Each military department has issued information that establishes that its  housing offices can assist in the resident dispute resolution process.  Specifically, if servicemembers are experiencing a dispute with a private  partner, military department guidance establishes varying roles for their  respective military housing office officials. For example, Army policy  states that each installation should have an official tasked with supporting  servicemembers regarding resident issues that cannot be resolved by the  private property manager. This individual is also responsible for resolving  every resident complaint and the military housing office, if required, can  request mediation by the garrison commander.

Despite this guidance, according to DOD officials, the military  departments had generally decreased their staffing and oversight of daily  privatized housing operations since the enactment of MHPI. For example,  Army officials we spoke with in January 2019 told us that they typically  filled 80 percent of available military housing office positions across their  installations. Additionally, officials stated that housing offices were  generally staffed with two or three officials responsible for assisting  servicemembers with housing needs both on the installation as well as in  the local community. Further, the officials told us that the team at one  Army installation was decreased from about 15 to 3 positions. According  to OSD officials, while housing offices should generally not require the  number of personnel that were necessary prior to privatization, reductions  following sequestration reduced housing staff below the level necessary  to fully perform required privatized housing oversight as it was originally  envisioned at the outset of the program.

OSD has recognized that the military departments’ communication with  residents about their role as a resource for them has been limited. In  February 2019, the Assistant Secretary of Defense for Sustainment  testified before Congress that a way forward in addressing resident  concerns would require focus in three key areas: communication,  engagement, and responsiveness. Some military housing office officials  told us they have taken steps to increase resident awareness, such as  increasing the advertising of the military housing office’s role and contact  information, conducting town hall meetings, and rebranding their military  housing offices to differentiate them from the private partners. For  example, a Marine Corps housing office official stated that the housing  office established a document, which is distributed to residents by the  private partner, informing residents of housing office contact information  and the service’s 3-step dispute resolution process, but efforts have not  been standardized across all projects.

DOD and Private Partners Are Implementing Initiatives to Improve Privatized Housing, but May Face Challenges

OSD, the military departments, and the private partners have identified  and begun collaborating on a series of initiatives aimed at improving  residents’ experiences with privatized housing, but our preliminary work  showed that these efforts face challenges. According to an OSD official, a  series of initiatives has been identified and are some are currently in  various phases of development and implementation. Tri-service working  groups, each chaired by a designated military department and comprising  officials and legal counsel from each military department as well as  private partner representatives, are leading efforts to develop and  implement the initiatives. In particular, DOD and the private partners are  collaborating on the following key initiatives:

Development of a Resident Bill of Rights. The Resident Bill of  Rights is to provide clarity to residents on their rights and  responsibilities while living in privatized military housing.

Development of a common tenant lease. The common lease  framework will be binding in all 50 states, but also include addendums  to capture state and local laws, as required. The common lease would  provide residents of privatized housing with similar terms in their  leases, regardless of where they are living and which private partner  owns their housing unit.

Establishment of a resident advocate position. The resident  advocate position, according to an OSD official, will be available to  provide independent advice, education, and support to residents.  However, an OSD official noted that the military departments have not  yet determined whether this individual would be active duty or civilian  and where the position would fall organizationally—specifically,  whether it would be part of the military housing office.

Development of a standardized adjudication process. The military  departments and private partners are developing a common dispute  resolution process that would apply to all projects. According to OSD,  this process would provide residents the right to have housing issues  heard and resolved by a neutral third party.

DOD and Congress are exploring additional initiatives and legislative  proposals. However, both DOD and private partner officials have noted  several challenges that could impact their ability to implement some of  these initiatives and legislative proposals. Key challenges include the  following:

The need to collaborate with and obtain input and agreement  from the large number of stakeholders involved in privatized  housing. Many of the initiatives aimed at improving privatized  housing require not only agreement between DOD and the private  housing partners, but may also require discussion with and approval  by the project bond holders. This requirement could limit the military  departments’ legal authority to unilaterally make changes to existing  business agreements. The private partners noted that the bond  holders may be reluctant to agree to changes to the business  agreements that could result in higher project costs.

Limited military department resources. The military departments  had reduced their involvement in daily privatized military housing  operations as part of the overall privatization effort. This included  reducing staffing levels at the installations. Each of the military  departments has plans to increase the military housing office staffing  at each installation to allow for enhanced oversight.

The potential for negative financial impacts to the projects that  may outweigh the intended benefits of the initiatives.  Representatives from many of the private partners we met with  expressed concern that some proposed initiatives may result in a  financial burden for their projects, such as legal fees associated with  the development of a common lease and the various addendums that  would be required; unanticipated costs of hiring outside third party  inspections; or the potential impact to project revenue that would  result from residents withholding rent. Some of the private partners  noted that the financial impact of unfunded requirements to projects  that are already experiencing financial distress could result in even  fewer funds available to reinvest in the physical condition of the  housing units.

In summary, while the privatization of military housing has resulted in  private partners assuming primary responsibility for military housing, DOD  maintains responsibility for overseeing privatized housing and ensuring  that eligible personnel and their families have access to affordable, quality  housing facilities and services. While DOD and the private partners have  taken steps to address concerns raised about their ability to adequately  maintain and oversee the condition of these housing units and provide  quality housing for servicemembers, the extent to which the efforts will be  sustained and result in improvements remains unclear. We are continuing  our broader review of DOD’s oversight of privatized housing, including the  issues addressed in this statement and will make recommendations as  appropriate in our final report, which we anticipate issuing in early 2020.

Chairman Inhofe, Ranking Member Reed, and Members of the  Committee, this concludes my prepared statement. I would be pleased to  respond to any questions you may have at this time.

If you or your staff members have any questions about this testimony,  please contact Elizabeth A. Field, Director, Defense Capabilities and  Management, at (202) 512-2775 or FieldE1@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this statement. GAO staff who made key contributions  to this testimony are Kristy Williams (Assistant Director), Tida Reveley  (Analyst in Charge), Austin Barvin, Ronnie Bergman, Vincent Buquicchio,  William Carpluk, Juliee Conde-Medina, Mae Jones, Jordan Mettica, Kelly  Rubin, Monica Savoy, and John Van Schaik.

This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

Private-sector developers and property management companies build, renovate, maintain, and repair about 99% of family housing at military bases in the United States.

However, with reports of hazards like mold, lead-based paint, and pest infestations, there are concerns about how well DOD monitors the condition of privatized military housing.

We testified about our preliminary observations from ongoing work in this area. Specifically, military departments are increasingly monitoring privatized housing conditions at their respective bases, but don’t have reliable or meaningful data or metrics that adequately reflect the condition of housing.