Overseas Housing: Review of DoD's Economic Analysis of Overseas Housing Costs.
GENERAL ACCOUNTING OFFICE WASHINGTON DC NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIV
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We reviewed three economic analyses made by the Army, the Navy, and the Air Force, to identify the most cost-effective alternative for satisfying military family housing requirements in Europe. The Navys analysis showed that leasing was the preferred alternative in Signonella, Italy the Army concluded that military construction was the only feasible alternative in Bad Kreuznach, Germany and the Air Force analysis indicated that a build-to-lease arrangement would be the most cost-effective alternative in Torrejon, Spain. We found the quality of these economic analyses to be poor because of the large variety of problems they contained, the high frequency of problem occurrence, and the effects of these problems on the major conclusions of the analyses. We believe that future economic analyses by DOD which involve the use of present-value analysis should discount only current dollar expenditures, and only with the average rate of interest yield on Treasury obligations which mature during the period of anticipated expenditures.
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