SEC. 2805. IMPROVED OVERSIGHT AND
ACCOUNTABILITY FOR MILITARY HOUSING PRIVATIZATION INITIATIVE
PROJECTS.
(a) Oversight and Accountability-
(1) IN
GENERAL- Subchapter IV of chapter 169 of title 10, United
States Code, is amended by adding at the end the following new
section:
`Sec.
2885. Oversight and accountability for privatization projects
`(a) Oversight and Accountability Measures- Each Secretary
concerned shall prescribe regulations to effectively oversee and
manage military housing privatization projects carried out under
this subchapter. The regulations shall include the following
requirements for each privatization project:
`(1)
The installation asset manager shall conduct monthly site
visits and provide quarterly reports on the progress of the
construction or renovation of the housing units. The reports
shall be submitted quarterly to the assistant secretary for
installations and environment of the respective military
department.
`(2) The installation asset manager, and, as applicable, the
resident construction manager, privatization asset manager,
bondholder representative, project owner, developer, general
contractor, and construction consultant for the project shall
conduct meetings to ensure that the construction or renovation
of the units meets performance and schedule requirements and
that appropriate operating and ground lease agreements are in
place and adhered to.
`(3) If a project is 90 days or more behind schedule or
otherwise appears to be substantially failing to adhere to the
obligations or milestones under the contract, the assistant
secretary for installations and environment of the respective
military department shall submit a notice of deficiency to the
Deputy Under Secretary of Defense (Installations and
Environment), the Secretary concerned, the managing member,
and the trustee for the project.
`(4)(A) Not later than 15 days after the submittal of a notice
of deficiency under paragraph (3), the Secretary concerned or
designated representative shall submit to the project owner,
developer, or general contractor responsible for the project a
summary of deficiencies related to the project.
`(B)
If the project owner, developer, or general contractor
responsible for the privatization project is unable, within 60
days after receiving a notice of deficiency under subparagraph
(A), to make progress on the issues outlined in such notice,
the Secretary concerned shall notify the congressional defense
committees of the status of the project, and shall provide a
recommended course of action to correct the problems.
`(b)
Required Qualifications- The Secretary concerned or designated
representative shall ensure that the project owner, developer,
or general contractor that is selected for each military housing
privatization initiative project has construction experience
commensurate with that required to complete the project.
`(c) Bonding Levels- The Secretary concerned shall ensure that
the project owner, developer, or general contractor responsible
for a military housing privatization initiative project has
sufficient payment and performance bonds or suitable instruments
in place for each phase of a construction or renovation portion
of the project to ensure successful completion of the work in
amounts as agreed to in the project's legal documents, but in no
case less than 50 percent of the total value of the active
phases of the project, prior to the commencement of work for
that phase.
`(d) Reporting of Efforts To Select Successor in Event of
Default- In the event a military housing privatization
initiative project enters into default, the assistant secretary
for installations and environment of the respective military
department shall submit a report to the congressional defense
committees every 90 days detailing the status of negotiations to
award the project to a new project owner, developer, or general
contractor.
`(e) Effect of Notices of Deficiency on Contractors and
Affiliated Entities- (1) The Secretary concerned shall keep a
record of all plans of action or notices of deficiency issued to
a project owner, developer, or general contractor under
subsection (a)(4), including the identity of each parent,
subsidiary, affiliate, or other controlling entity of such
owner, developer, or contractor.
`(2)
Each military department shall consult all records maintained
under paragraph (1) when reviewing the past performance of
owners, developers, and contractors in the bidding process for
a contract or other agreement for a military housing
privatization initiative project.'.
(2) CLERICAL AMENDMENT- The table of sections at the beginning
of such subchapter is amended by adding at the end the
following new item:
`2885. Oversight and accountability for privatization
projects.'.
(b)
Report for Identifying and Communicating Best Practices for
Transactions- Section 2884(b) of such title is amended by adding
at the end the following new paragraph:
`(7) A
report on best practices for the execution of housing
privatization initiatives, including--
`(A)
effective means to track and verify proper performance,
schedule, and cash flow;
`(B) means of overseeing the actions of bondholders to
properly monitor construction progress and construction
draws;
`(C) effective structuring of transactions to ensure the
United States Government has adequate abilities to oversee
project owner performance;
`(D) ensuring that notices to proceed on new work are not
issued until proper bonding is in place; and
`(E) such other topics that are identified as pertinent by
the Department of Defense.'.
(c)
Partnership With Eligible Entity Required- Section 2871(5) of
title 10, United States Code, is amended by inserting before the
period at the end the following: `that is prepared to enter into
a contract as a partner with the Secretary concerned for the
construction of military housing units and ancillary supporting
facilities'.
(d) Competitive Process for Conveyance or Lease of Property-
Section 2878 of such title is amended--
(1) by
redesignating subsections (c) and (d) as subsections (d) and
(e); respectively; and
(2) by inserting after subsection (b) the following new
subsection:
`(c) Competitive Process- The Secretary concerned shall ensure
that the time, method, and terms and conditions of the
reconveyance or lease of property or facilities under this
section from the eligible entity permit full and free
competition consistent with the value and nature of the
property or facilities involved.'.
(e)
Treatment of Acquired or Constructed Housing Units-
(1)
REPEAL OF SEPARATE ASSIGNMENT AUTHORITY- Section 2882 of such
title is amended to read as follows:
-`Sec. 2882. Effect of assignment of
members to housing units acquired or constructed under
alternative authority
`(a) Treatment as Quarters of the United States- Except as
provided in subsection (b), housing units acquired or
constructed under this subchapter shall be considered as
quarters of the United States or a housing facility under the
jurisdiction of a uniformed service for purposes of section 403
of title 37.
`(b) Availability of Basic Allowance for Housing- A member of
the armed forces who is assigned to a housing unit acquired or
constructed under this subchapter that is not owned or leased by
the United States shall be entitled to a basic allowance for
housing under section 403 of title 37.
`(c) Lease Payments Through Pay Allotments- The Secretary
concerned may require members of the armed forces who lease
housing in housing units acquired or constructed under this
subchapter to make lease payments for such housing pursuant to
allotments of the pay of such members under section 701 of title
37.'.
(2) CLERICAL AMENDMENT- The table of
sections at the beginning of subchapter IV of chapter 169 of
such title is amended by striking the item relating to section
2882 and inserting the following new item:
`2882. Effect of assignment of members to housing units
acquired or constructed under alternative authority.'.
(f) Annual Report on Maintenance and
Repair to Privatized General and Flag Officer Quarters- Section
2884(b) of such title, as amended by subsection (b), is further
amended by adding at the end the following new paragraph:
`(8) A report identifying each family housing unit acquired or
constructed under this subchapter that is used, or intended to
be used, as quarters for a general officer or flag officer and
for which the total operation, maintenance, and repair costs for
the unit exceeded $50,000. For each housing unit so identified,
the report shall also include the total of such operation,
maintenance, and repair costs.'. |
Improved oversight and accountability
for military housing privatization initiative projects (sec.
2803)
The committee recommends a provision that would require enhanced
oversight of, and reporting on, housing privatization projects.
The provision would require greater interaction among the
government and private entities involved in these projects,
establish minimum bonding levels, specify procedures to be used
in the case of significant schedule or performance deficiencies,
ensure that the Department of Defense maintains a database of
entities that achieve unsatisfactory performance ratings on such
projects, and require the Department to identify and establish
regulations to implement best practices for monitoring the
progress and performance of housing privatization projects.
The committee has long supported, and continues to support, the
military housing privatization program. The committee is
disappointed that privatization projects at Air Force
installations in Arkansas, Georgia, Florida, and Massachusetts
failed to meet schedule and other performance standards. However,
the committee notes that the problems with these projects, all of
which involved a single developer, do not and should not
overshadow the enormous successes achieved by the military
housing privatization initiative across the United States and
across all the military departments over the past decade.
Intrinsic to the very idea of privatization is a more `hands off'
approach by Congress and, to a lesser degree, by the Department
of Defense, than is normally the case with acquisition or
construction programs. The committee seeks to find an appropriate
balance that will enhance oversight of this program and reduce
the chance of the damaging failure of these projects being
repeated, while still preserving the essential structure and
benefits of the existing privatization program.
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