Military Housing Privatization: DOD Should Improve Oversight of Property Insurance and Natural Disaster Recovery

Natural disasters, such as hurricanes and wind and hail storms, have caused millions of dollars in damage to privatized housing at military installations across the United States. GAO has also identified fiscal exposure to climate risks as a High Risk area. Since the mid-1990s, DOD has worked with private developers to construct, maintain, and repair housing at U.S. military installations through partnerships known as privatized housing projects. Damage from natural disasters has raised questions about the financial viability of the affected projects, the insurance they carry, and their funding structure. The National Defense Authorization Act for Fiscal Year 2020 included a provision that GAO review privatized housing projects affected by natural disasters from December 20, 2016, to December 20, 2019. This report (1) describes how the insurance carried by three privatized housing projects affected their financial viability after natural disasters, and (2) assesses, among other things, the extent to which the military departments and OSD exercised oversight of the projects' property insurance coverage. GAO analyzed damage and financial data on three selected projects; reviewed guidance and insurance documents; and interviewed DOD officials and private developer representatives.