This affects all lodging on Navy and Marine Corps installations, both taxpayer-funded and lodging using non-appropriated funding. The current timeline would start the first phase of lodging privatization by December, 2020.
This is lodging for official travel for temporary duty as well as those on permanent change of station moves, and for others, when space is available.
In a Feb. 6 memo to the chief of naval operations and the Marine Corps commandant, Secretary of the Navy Richard Spencer cited the Navy’s savings of more than $8 billion in construction costs and another $5 billion over the 50-year life of the housing privatization effort.
“I am committed to realize similar successes by privatizing our lodging portfolio, both appropriated and non-appropriated, using competitive processes to create sustainable financial operations and improve the quality of these facilities,” Spencer wrote.
But some are questioning why the Navy is moving so quickly on this effort, especially given the recent concerns with privatized housing. “Why would we use that model to privatize lodging?” said one source who is familiar with lodging in the Defense Department, who asked not to be named.
There’s at least one other option to be considered, which is a combination of partial privatization, with the government still maintaining oversight, he said. “Then you don’t fall into the privatized housing trap. The government still maintains control.” Recent reports and testimony before Congress detailed military families’ problems with their housing and their frustrations in getting them fixed, partly because of lack of adequate government oversight.
“But the Secretary of the Navy is pushing this lodging privatization extremely hard,” the source said.
Spencer explained his intentions in the Feb. 6 memorandum to the chief of naval operations and the Marine Corps commandant.
“Reforming the department’s business practices and shedding non-core functions to focus resources on warfighting readiness is among my highest priorities,” Spencer wrote. He cited housing privatization as a “best practice toward this end.”
Spencer signed the memo a week before a Feb. 13 Senate hearing where military spouses testified about mold and other problems in their military housing, and their frustration in trying to get their privatized housing company to address the problems, as well as difficulties getting assistance from installation officials.
In addition, preliminary results of an online survey conducted by the Military Family Advisory Network, also released Feb. 13, showed that more than half of military families who responded to a survey about their privatized housing reported having a negative experience.
Since that hearing, the service secretaries and service chiefs have acknowledged there have been problems with privatized housing, including lack of adequate government oversight, and they have been fully engaged in finding out the scope of the problem, getting the issues addressed, and coming up with long-term solutions.
Spencer ordered that Navy and Marine Corps to press forward with the first step in privatizing lodging – identifying their lodging requirements by March 15. Navy officials will publish a Request for Interest by April 1.
An industry forum is reportedly scheduled for April 25.
This Navy lodging privatization effort follows a move by DoD officials which put the services on notice that they must stop using taxpayer dollars for anything related to lodging facilities by Oct. 1. This includes everything from maintenance and other operation support requirements, to repair and construction. Since they will rely on money generated by their nightly room fees to sustain these lodging operations, some of the service branches have been increasing their room fees.
The full concept for privatizing the lodges is scheduled to be approved by Spencer by June, and will then go to Defense Department officials, Office of Management and Budget, and to Congress.
The Army has privatized virtually all its lodging facilities in the continental U.S., Alaska, Hawaii and Puerto Rico, an effort that began in 2009. During a recent hearing before the Senate Armed Services Committee, Spencer also brought up that the Army has a “best practice with its outsourced lodging.”
However, when the Army began its lodging privatization, its facilities were in “really bad shape,” the source said. “The Navy’s lodging is in great shape.” The Air Force is reportedly not considering privatizing its lodging.
Through competition, the private company would be selected for taking over Navy lodging by February, 2020, and the first phase of lodging privatization would start in December 2020.