oversight

Better Cost Accounting Needed for Operation and Maintenance of Military Family Housing

Published by the Government Accountability Office on 1971-07-02.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

REPORT T




Better Cost Accounting Needed
For Operation And Maintenance
Of Military Family Housing   B-159797




Department   of Defense




BY THE COM?TROLLER GENERAL
OF THE UNITED STATES
                  CQMPTROLLER     GEt-dERAL     OF      THE    UNITED   STATES
                                WASHINGTON.      D.C.     20548




    B-159797




    To the President   of the Senate and the
    Speaker  of the House of Representatives

              This is our report   on better    cost accounting    needed
    for   operation   and maintenance      of military   family  housing.
    Our    review   was made pursuant       to the Budget and Account-
    ing   Act, l9Zl (31 U.S.C. 53), and the Accounting          and Audit-
    ing   Act of 1950 (31 U.S.C. 67).

           Copies of this report  are being sent to the Director,
    Office of Management     and Budget;  the Secretary of Defense;
    and the Secretaries   of the Army,   Navy, and Air Force.




                                              Comptroller               General
                                              of the United             States




------                  50TH ANNIVERSARY                      1921- 1971 -p
I

I
I     COMCTROLLERGENERAL'S                          BETTER COST ACCOUNTING NEEDED FOR OPERATION
I   . REPORTTO THE CONGRESS                         AND MAINTENANCE OF MILITARY FAMILY HOUSING
I
                                                    Department of Defense B-159797
I


     DIGEST
     ------

1
I
     WHYTHE REVIEW WASMADE
I
I             Coincidental      with congressional         interest   in improving    fiscal  management
I
I             of military     family housing,        the Department      of Defense (DOD) in 1962 de-
I             velbped cost accounting          procedures       for operation   and maintenance   of such
I             facilities.       DOD has about 364,000 units acquired             at a cost of about
I
I             $3.'5 billion.       Appropriations       for operation      and maintenance   were almost
I             $400 million      in fiscal     year 1970.        (See pp. 3 to 5 and 11.)      The General
I
I             Accounting     Office    (GAO) wanted to know whether DOD was meeting its ob-
I             jectives     in accumulating       cost data for effective        management of the hous-
I
I              ing and to identify        areas in need of improvement.


     FINDINGS AND CONCLUSIONS
              DOD's method of cost accumulation        lumps together     housing units that are
              widely dissimilar     in age, size, type of construction,         and condition.
              Operation    and maintenance   cost figures   are distorted      by averaging    out
              the differences.       (See pp. 6 and 8.)

               Costs recorded for operation    and maintenance    of family    housing at the
               14 Army, Navy, and Air Force installations      included     in this review were
               inaccurate   and incomplete  in a number of cases.       (See p. 15.)

               Little    or no use was being made of the collected             data   at most installa-
               tions    covered in the review.  (See p, 11.)

               Many housing units,   according    to DOD, are no longer economical   to oper-
               ate and maintain.    Included are the large and old structures      assigned
               to flag,  general,  and senior-grade    officers.   (See p. 22.)

I
I
     RECOI@'dENDATIONS
                    OR SUGGESTIONS
               The Secretary      of Defense   should
I                   --consider    establishing,       for cost accounting    purposes,   new categories
I
I                      of housing--taking        into account age, size,     type of construction,      and
I                      condition    of units--to      provide data that is    more nearly comparable
I                      and more useful for cost management and for             reference  in setting
I
I                      standards    in the future       (see p0 10);                            .
I
I
I
     TearSheet .-




I
                                                        1
       --issue    more comprehensive   directions      to ensure greater   uniformity
           in recording  and reporting    of costs     of operation   and maintenance         of'
          family      housing   throughout   the armed services   (see p. 20); and

       --provide    the Congress,  in DOD's annual construction      authorization
          requests3    with a plan for the phased, orderly    replacement      of family
          housing units no longer economical     to operate and maintain         (see
          p. 28).


AGENCY ACTIONS AND UNRESOLVED ISSUES

     DOD agreed that revising       housing categories,      to make possible  more mean-
     ingful     comparison of data, would be useful.         DOD said, however, that es-
     tablishing     a larger number of categories       would increase  the work load
     and would not offer     benefits    commensurate with the additional      cost.
     (See p. 13.)

     DOD had not determined    the cost of operating     the present cost accounting
     system nor the additional    cost of an expanded system.         GAO recommends
     that DOD do so.    If  DOD's study  shows   that an   expanded   cost accounting
     system would not be economically     feasible,   GAO recommends that the pres-
     ent system, which is of limited    usefulness,    be simplified.       (See p. 14.)

     DOD agreed that more definitive      instructions      should be issued to ensure
     greater   uniformity   in cost accounting     for family    housing and stated that
     new instructions     were being prepared.       GAO plans to make a follow-up    re-
     view to determine     whether the new instructions       serve their  purpose.   (See
     P* 23.)

     DOD agreed that there should be a plan             for replacement  of uneconomical
     family   housing units and said that,   as         soon as more urgent priorities
     were met, a request would be presented             to the Congress for authorization
     to replace uneconomical   housing.    (See         p. '28.)


MATTERS FOR CONSIDERATION BY COJJGRESS

     In view of the indefinite    nature of DOD's intent   to present a plan for
     replacement  of uneconomical    housing, the Congress may wish to consider

       --requesting       DOD to present     an inventory   of uneconomical    housing
          and

       --the merits of authorizing      current        expenditures    for replacement   of
           uneconomical  quarters   to achieve       future    savings in operation    and
          maintenance   costs.    (See p. 29.)




                                              2
                        Contents

                                                           Page
DIGEST                                                       1
CHAPTER

   1      INTRODUCTION                                       3

   2      NONCOMPARABILITYOF REPORTEDCOSTS FOR MAN-
          AGEMENTPURPOSES                                    6
             Averaging operation   and maintenance cost
               of unli'ke units results  in noncompar-
               able data                                    6
             Conclusions                                    8
             Agency comments and GAO evaluation            10
             Recommendations                               14

          INACCURATEAND INCOMPLETECOSTS RECORDEDIN
          ACCOUNTINGRECORDS                                15
              Questionable validity   of reported costs    17
              Unrecorded indirect   salary costs           18
              Conclusions                                  20
              Agency comments and GAO evaluation           20

          NEED TO PHASE OUT UNECONOMICAL    FAMILY HOUS-
          ING UNITS                                         22
              Representational  quarters                    24
              High-cost units in inventory                  24
              No action taken to phase out high-cost
                quarters                                    27
              Conclusions                                   27
              Agency comments and GAO evaluation            28
              The Congress may wish to consider re-
                questing and evaluating    a DOD inven-
                 tory of uneconomical housing               29

          SCOPEOF REVIEW                                    30

APPENDIX
    I    Examples of deficiencies   found at selected
           installations                                    33
APPENDIX

   II      Examples of high operation  and maintenance
             costs for flag- and general-officer   quar-
             ters taken from reports for fiscal   years
             1968 and 1969                                        41

 III       Examples of flag- and general-officer    quar-
             ters constructed   in DOD since fiscal  year
             1962 showing construction    costs and opera-
             tion and maintenance costs for fiscal    years
             1968 and 1969 where available                        44

   IV      Hypothetical    economic analysis   involving   re-
             placement of Quarters 1 at Pensacola,
             Florida,   versus retaining    the quarters   over
             a 25-year period                                     45
           Agency comments and GAO evaluation                     46
       V   Letter dated October 13, 1970, from the As-
             sistant  Secretary of Defense (Comptroller)
             to GAO                                               50
  VI       Principal   officials  of the Department of De-
              fense and the military    departments respon-
              sible for administration    of activities  dis-
              cussed in this report                               55
COMP.TROLLERGENCRAL'S                    BETTER COST ACCOUNTING NEEDED FOR OPERATION
REPORT 7'0 THE CONGRESS                  AND MAINTENANCE OF MILITARY FAMILY HOUSING
                                         Department of Defense B-159797


DIGEST
_-----

WHY THE REVIEW WAS MADE

     Coincidental      with congressional         interest   in improving    fiscal  management
     of military     family    housing,     the Department      of Defense (DOD) in 1962 de-
     veloped cost accounting           procedures      for operation   and maintenance   of sue+
     facilities.       DOD has about 364,000 units acquired             at a cost of about
     $3.5 billion.        Appropriations       for operation      and maintenance   were almost
     $400 million      in fiscal     year 1970.        (See pp* 3 to 5 and 11.)      The General
     Accounting     Office    (GAO) wanted to know whether DOD was meeting its ob-
     jectives     in accumulating       cost data for effective        management of the hous-
      ing and to identify        areas in need of improvement.


FINDINGS AND CONCLUSIONS

     DOD's method of cost accumulation        lumps together    housing units    that are
     widely dissimilar     in age, size, type of construction,        and condition.
     Operation    and maintenance   cost figures   are distorted     by averaging    out
     the differences.       (See pp. 6 and 8.)

     Costs recorded   for operation    and maintenance    of family    housing at the
     14 Army, Navy, and Air Force installations        included     in this review were
     inaccurate   and incomplete    in a number of cases.       (See p. 15.)

     Little    or no use was being made of the collected           data   at most installa-
     tions    covered in the review.  (See p. 11.)

     Many housing units,   according    to DOD, are no longer economical   to oper-
     ate and maintain.    Included   are the large and old structures    assigned
     to flag,  general>  and senior-grade    officers.   (See p. 22.)


RECOMMENDATIONSOR SUGGESTIONS

     The Secretary     of Defense    should

         --consider    establishing,       for cost accounting  purposes4   new categories
            of housing--taking        into account age, size,   type of construction,      and
            condition    of units--to      provide  data that is more nearly comparable
            and more useful      for cost management and for reference       in setting
            standards    in the future       (see p, 10);
       --issue    more comprehensive    directions  to ensure greater   uniformity
           in recording   and reporting    of costs of operation   and maintenance            of
           family  housing throughout    the armed services    (see p* 20); and

       --provide    the Congress, in DOD's annual construction      authorization
          requests,    with a plan for the phased, orderly   replacement      of family
          housing units no longer economical     to operate and maintain        (see
          p. 28).


AGENCY ACTIONS AND UNRESOLVEDISSUES

     DOD agreed that revising       housing categories,      to make possible  more mean-
     ingful     comparison of data, would be useful.         DOD said, however, that es-
     tablishing     a larger number of categories       would increase   the work load
     and would not offer     benefits    commensurate with the additional      cost.
     (See p. 13.)

     DOD had not determined    the cost of operating   the present cost accounting
     system nor the additional    cost of an expanded system.        GAO recommends
     that DOD do so.    If DOD's study shows that an expanded cost accounting
     system would not be economically    feasible,   GAO recommends that the pres-
     ent system, which is of limited    usefulness,   be simplified.       (See p0 14.)

     DOD agreed that more definitive      instructions      should be issued to ensure
     greater   uniformity   in cost accounting     for family housing and stated that
     new instructions     were being prepared.       GAO plans to make a follow-up   re-
     view to determine     whether the new instructions       serve their purpose.   (See
     P. 20.)

    DOD agreed that there should be a plan             for replacement  of uneconomical
    family housing units and said that,   as           soon as more urgent priorities
    were met, a request would be presented             to the Congress for authorization
    to replace uneconomical  housing.   (See           p. 28.)


MATTERS FOR CONSIDERATION BY CONGRESS

    In view of the indefinite    nature of DOD's intent   to present a plan for
    replacement  of uneconomical    housing, the Congress may wish to consider

       --requesting    DOD to present      an inventory     of uneconomical    housing
          and

       --the merits     of authorizing     current     expenditures    for replacement   of
           uneconomical   quarters     to achieve    future    savings in operation    and
          maintenance    costs.     (See p. 29.)
                              CHAPTER1

                            IM'SaODUCTIQN

        Prior to fiscal    year 1963, family housing of the Depart-
ment of Defense was managed on a decentralized            basis.    Each
military     department managed its own housing program and fi-
nanced its program from the applicable          portions   of appro-
priations     for military    construction,  military    personnel,   re-
search, development,       test and evaluation,      and operation   and
maintenance.

       During consideration     of the fiscal     year 1963 family
housing programp the Congress directed           attention    to the need
for establishing      management procedures which would more ade-
quately and completely       consolidate   all costs associated      with
the family housing program.          This philosophy     coincided with
DQD"s desire to simplify       accounts and improve management of
the program,      In addition,   both parties were interested        in
correcting    instances of mismanagement on the part of the
services.

      Therefore,  the Congress made provision   for the establish-
ment of a DOD management account.     This account was autho-
rized by title   V, section 501, Public Law 87-554, enacted on
July 27, 1962,

      "For    the purpose of providing  improved management
      and    administration  of funds appropriated or other-
      wise    made available  to the Department of Defense
      for    family housing programs ***c.rr

        To prescribe    the basic policies   for the operation      of
the management accountp the Secretary of Defense issued DOD
Directive     7150.4, dated November 8, 1962, entitled        !'Financing
the Department of Defense Family Housing Program,"              This di-
rective    established     accounts designed to facilitate      the ef-
fective    administration     of the DOD family housing program and
provided for a uniform account structure          for use by all DOD
components.       One of the major functional     categories    estab-
lished was for the B'operation and maintenance"           account.
Other major categories        pertain  to DPconstruction'V and "debt
payment.sP


                                    3
        On October     20, 1969, DOD Directive     7150.4 was reissued,'
Pertinent    financial     management procedures     in the previous
version    were incorporated,       with additions   and modifications,
into DOD Instruction        7150.6,    also dated October  20, 1969.

        DOD Instruction       7220.16,     dated May 18, 1964, entitled
"Cost Accounting        and Reporting        for Operation       and Maintenance
of Military      Family Housing,"        formalized       previously      prescribed
detailed     accounting     procedures       for recording       operation      and
maintenance      costs of military         family     housing    and provided       a
chart of accounts        for accumulating           cost data at installation
level.      The detailed      accounting       procedures     provided     that
separate     cost data be accumulated             for five categories         of
housing:      (1) encumbered housing, 1 (2) appropriated-fund
housing,     1950 and after,       (3) leased housing,           (4) substandard
housing,     and (5) other public          quarters.

       These accounts       were established         as the result    of a DOD
family    housing    task force    report    on uniform      cost criteria,
The task force was assigned           responsibility       for developing
cost criteria       which would show the cost of operating               and
maintaining      all military    family    housing.

      In its report   the task force    outlined    the objectives                  to
be derived   from adoption   of uniform    cost criteria.

       !ll.   A cost system based upon uniform       Operation      and
              Maintenance    of family  housing  cost criteria       which,
              within   the limitation   of its usefulness,     will     pro-
              vide a valid    basis for comparison.
                -
1
 Privately     financed;      i.e.,   mortgaged--principally          Capehart
 and Wherry housing.            Capehart    housing     was constructed       un-
 der Public      Law 345, 84th Congress,           on Government       land by
 private    contractors,          The housing     was financed      by lOO-
 percent    Federal      Housing Administration-insured             mortgages
 which were assumed by the military                upon completion        of con-
 struction.       Wherry housing       was generally         built  on Govern-
 ment property       leased to sponsors.         The housing       was insured
 by the Federal        Housing Administration           and rented    to mili-
 tary tenants.         These projects      were subsequently         acquired
 by DOD and designated           as public    quarters.

                                          4
     "2. A cost system which will be responsive    to the pro-
         duction of significant  and timely data, with a capa-
         bility  for breakout of summary data (flexibility).

     "3. A cost system which will record and produce       a re-
         port on the total costs incurred.

     "4. A cost system based upon actual costs incurred     in-
         cluding certain    cost factors which can be economi-
         cally and feasibly     collected only on the basis of
         engineering  analysis,

     "5. A cost system based upon the foregoing   objectives
         which will minimize the revision  of existing    cost
         and maintenance management systems."

      The accounts subsequently   established    were designed to
provide the basis for development of cost data useful in
the effective  management of family housing at all manage-
ment levels.    DOD intended that the accounting     system should
also provide cost data for use in cost control,       for making
cost comparisons among the services,      and for the development
of statistical   norms which could later be used to develop
standards.
      DOD has an inventory     of about 364,000 family housing
units acquired at a cost of about $3.5 billion.          DOD re-
ceived an appropriation     of about $397 millronl(’ for the mainte-
nance and operation     of these housing units during fiscal
year 1970. (This appropriation       covered also the operation      -
of several thousand housing units leased by DOD>. In fiscal
year 1971 the operation     and maintenance appropriation     was
about $424 million.




                                 5
                                  CHAPTER2

                   NONCOMPARABILITY
                                  OF REPORTEDCOSTS

                            FOR MANAGEHENT
                                         PURPOSES

       The cost accounting       and reporting       requirements        for fam-
ily housing      operation   and maintenance       provide    that      cost data
be accumulated       in the five   categories      mentioned      in    chapter     1.
Within   each of these categories,there            are significant          differ-
ences in such factors        as (1) age and size of units,                (2)   type
of construction,        and (3) climatic     conditions.        No     recognition
is given to these differences           in accumulating       and      reporting
housing   costs.

       Consequently,      the comparison   of costs for operation         and
maintenance    of family      housing  among the installations       within
each military      department     and among the military      departments
is of very limited       value,

AVERAGING OPERATION AND MAINTENANCE COST OF
UNLIKE UNITS RESULTS IN NONCOMPARABLE
                                   DATA

       Costs are collected     within the present        categories    of
housing without further      subdivision     as to age9 size, type of
construction,    and condition     of the buildings,         The housing
units are of such widely divergent          age9 size9 condition,         and
location    that average unit costs are almost meaningless and
useless for purposes of evaluation          and comparison.         The fol-
lowing examples illustrate        some of the variables        within the
housing categories:      encumbered housing; appropriated-fund
housing, 1950 and after;       other public    quarters;      and substan-
dard housing; at two of the installations           we reviewed.
Encumbered        housing

      At Westover    Air Force Base, Massachusetts,    there are
1,557 dwelling    units  under the encumbered-housing      category,
comprising   1,067 Wherry units   about 17 years old, 310 Cape-
hart units   about 9 years old, and 180 Capehart      units    about
7 years    old.

        The housing    units    in this category    have different   con-
struction    characteristics.          For example,  the Wherry units     are
                                         6
all one-story,  slab-on-grade     construction    with radiant-
heating piping buried in the slab-on-grade          floors.    The pip-
ing is failing  and cannot be repaired because of its location
within the slab, thus conversion       to another type of heating
system is necessary,     Roofing on the Wherry units has devel-
oped leaks and reroofing     is required.      The units contain a
type of wood siding which will not "breathe"           and painting
problems have been created.      The 310 Capehart units have wood
shingle siding which will "breathe,lq        and thus avoid the paint-
ing problems identified    with the Wherry units.

       Because of the differences    in age, type of construction,
and condition    of these three groups of housing, we made a
test of sample units in each class, selected on a stratified
random-sampling    basis, to estimate the approximate degree of
difference    in maintenance costs.    We found that it was not
feasible   to establish   actual expenditures    on individual  dwell-
ings or like types of units because detailed        records had been
destroyed and summary records contained       total costs for all
units in the encumbered-housing     category,

       We found, however, that about May and June 1968 inspec-
tions at Westover had been made of the exteriors      and some
interiors    and that maintenance requirements  for fiscal   year
1969 had been scheduled in detail     including the estimated
costs.    As the scheduled work appeared to be valid and rea-
sonable, we utilized    this data in our test, the results    of
which are set forth below.

                                                  Average estimated
                                                    unit cost of
                                                 needed maintenance
       Wherry                                          $1,575
       First Capehart                                      585
       Second Capehart                                     199
       Note:   Average for   entire       test    sample is $1,234.

      These figures illustrate the wide divergence  in the es-
timated maintenance costs of housing units in a particular
category of housing which are distorted   through averaging.



                                      7
   Other public      quarters;
   appropriated-fund        housing,     1950 and after;
   and substandard       housing

          At the Naval Air Station,            Pensacola,     Florida,      we found
   that the other-public-quarters              category    contained      119 units
   which were built       prior     to 1950, and these units           varied    con-
   siderably     as to type of construction,            age, size,       number of
   units    per building,      original     cost,   and number of bedrooms.
   Seventeen     of the units       were built     between the years 1840 and
   1900, 16 were built         between 1900 and 1911, and 86 were built
   between 1911 and 1950.            Some of the structures           are of frame
   construction,       and others       are of brick    construction.

          The category--appropriated-fund               housing,   1950 and after--
   contained    279 units    of which 250 were built             in 1968, 25 were
   built   in 1956, and 4 were converted              to public    quarters      in
   1950.     The four converted        quarters     are in buildings        originally
   built   in 3.845 and 1917.         The substandard-housing          category
   contained    278 inadequate        public    quarters     of which 198 were
   built   in 1941 and 1942 and 80 were built                 in 1944.

           Since operation        and maintenance     cost data are being ac-
   cumulated       and reported      upon by broad categories     of housing
   rather     than by individual         units   or by more homogeneous cate-
   gories,      no identification        is possible   of family  housing
   units    that incur       excessive     costs except general-    and flag-
   officer      quarters     for which costs are presently       accumulated
   and reported         upon on an individual-unit        basis.  Consequently,
   little     effective      use can be made of the information         in its
   present      form.

   CONCLUSIONS

         In our opinion       the accumulating     and reporting          of opera-
   tion and maintenance         costs under five     categories       of housing,
  as at present,      lumps together      widely   dissimilar        units   vary-
  ing in age, size,       type of construction,         condition,        and loca-
  tion and distorts       these costs by averaging          out the differ-
  ences.     This averaging       out,  in effect,    renders      the costs
  almost meaningless        and useless    for purposes       of valid      evalua-
, tion   and  comparison.



                                            8
       We believe that meaningful comparative             analyses could
be made if DOD, in addition          to providing     for more uniform
accumulating       and recording    of operation    and maintenance costs
as discussed in chapter 3, were to provide also for a more
homogeneous categorization          of housing,     There should be a
close relationship        of operation   and maintenance costs for
similar     types of housing.       Such categorization        would provide
for more common relationships          among types of housing, would
provide cost data usable for identifying              inefficient    or un-
economical maintenance organizations,             and would facilitate
identification        of housing categories      or units no longer eco-
nomically      feasible   to operate and maintain.          A more homoge-
neous categorization        of family housing would lend itself            to
more effective        management and the use of the principle           of
management-by-exception.
AGENCY COMPIENTS AND GAO EVALUATION

      We brought       our findings        to the attention        of the Secre-
tary of Defense in a draft              report   dated July 20, 1970.             We
suggested      that,to   provide      a more valid       basis for comparison
of operation        and maintenance        costs among the various            DOD
components,       the Secretary       of Defense consider          providing      a
more homogeneous        categorization         of family     housing     for ac-
cumulating       and reporting      operation     and maintenance          cost
data.      Such categorization          should take into account             age,
size,    type of construction,            and condition      of units.

               In commenting       on our suggestion,          DOD stated
       that the task force which developed                  the cost cri-
       teria     for family      housing    had recognized        that a
       capability       to compare similar          housing    units    would
       be quite      useful.      The task force knew, however,
       that reporting         for such a complex categorization
       would be voluminous           and costly       and would involve
       numerous recordations,            surmnarizations,        and re-
       ports.       The task force       thereforerecommended           adop-
       tion of the present           summary categories.            These
       categories      provide     data to the Office          of the Sec-
       retary     of Defense and DOD component headquarters
       that are meaningful           and useful       for management and
       budgeting.        Comparisons       and evaluations        are made
       that identify         areas requiring        further    examination.

        We agree that the present                categorization         has some use,
especially        in budgeting.          It is certainly         an improvement
over the previous            system which did not provide                for readily
identifying         the total      cost of operating           and maintaining
family      housing.       The summary data, however,               has limited      use-
fulness      for making valid           comparisons       because it is too broad
to be really          meaningful.        We believe       that more meaningful
categorization           is required       for effective        cost control       and
for provision          of valid      standards      for comparative         purposes
which would lead to eventual                  cost reduction.          Cost control
and the provision           of standards         are stated      objectives      of the
DOD cost accounting             system.

             DOD said that,    at the installation  level,
       the differences    in houses are known specifically
       and are considered    in work plans for operation

                                           10
       and maintenance.           At the next higher        level,   where
       comparisons    between installations           are useful,       of-
       ficials   arefamiliarwith           their installations        and
       are able to evaluate          the summary data provided.
       At the higher       levels    the summary data serves well
       since no installation-by-installation                  review  is
       required    or necessary.

       The scope of the assignment      provided     to the task force
which developed    the cost criteria      for family    housing   was
the establishment      of operation   and maintenance      cost criteria
which would provide       the basis for development       of cost data
useful   in the effective     management of family      housing   at all
management levels.

        DOD Instruction     7220.16,  dated May 18, 1964, which
formalized     the accounting     and reporting procedures    for op-
eration    and maintenance     costs of family  housing,   states
that

       "The detail   cost accounts      are designed    for use by
       management at both installation,           and service  or
       agency headquarters      level   for cost analysis     and
       for development     of standards     or norms, and for
       use at secretarial     levels    for special    cost studies
       as necessary    and upon request.      ***I

        During our review          we attempted       to ascertain       the extent
to which the data developed                by the cost accounting            system
were used at various            levels     of command.       We found little          or
no use being made of the data at most of the installations
covered      in our review.          During     a survey completed         in June
1970 on family         housing     in the Panama Canal Zone, we were
advised     by Army officials           that cost data on family             housing
as presently         accumulated       were not used to any significant
degree at the local           level.       Army officials       advised      us also
that the Army Housing             Branch in the Canal Zone was starting
a manual system for recording                 maintenance,      repair,      and con-
struction       costs for each building             in the family       housing      in-
ventory,       by location.        The new system will          show for each
building       all maintenance,         repair,     and construction         work
performed       monthly,     annually,       and on a lo-year-cumulative
cost basis,        as well     as the cost limit          for the lo-year        pe-
riod.     The new system will             show also the long-range            main-
tenance plan.
       An Army hausing        official        in the Canal Zone advised           us       '
that this       system was considered            to be necessary       because the
cost system then in effect              did not provide         data that could
be used to manage housing              effectively.        The official       be-
lieves     that the planned         new system will        give management a
better     basis for programming            annual work in terms of funds
and manpower,        planning     long-range        improvement     programs,     and
evaluating       whether    houses (buildings)           should or should not
be replaced.

       We noted instances          where intermediate          commands of LX)D
components     had transmitted        consolidated        family      housing
cost reports      to installations        within    their      jurisdiction
with instructions       to make comparisons           of their        costs with
those of other      bases.       These comparisons          are apparently       in-
tended to help in determining             where corrective            actions  are
required   or management improvement              is needed.

        Management officials              at installation         level    indicated
to us that there were wide variations                         in costs reported       by
various     installations         within       the command.         These, however,
could not be readily             analyzed        because of the lack of knowl-
edge of housing           characteristics           that could      effect    differ-
ences in unit          costs at various           installations.         We believe
that,    under the present             system,      such comparisons         have lim-
ited value for the reasons                 cited.        Under an expanded sys-
tem, however,          such comparisons           could be very useful.

         We were informed       at one intermediate             command that the
cost reports       produced     at installations           were of value be-
cause they were the only means of control                      over the subordi-
nate installations         within    the command.           Although   this    in-
termediate      command relies       on the present           cost data for cost
control,     the shortcomings        of the cost accounting             system
cited     in our report,      in our opinion,          dilute     the command's
control     over its subordinate          installations.

        In another      case, a DOD component had initiated          efforts
to improve management control             over costs of operating       and
maintaining      family     housing.    At the time of our fieldwork
in November 1969, attempts           were being made to establish
more realistic       unit    cost targets     for comparative    analysis.
These targets      were intended      to e.2phasize   what costs should
be rather     than to continue       an unquestioned     acceptance     of

                                           12
recorded costs.    The objective was to improve management of
resources and reduce annual expenditures    for operating and
maintaining  family housing.

       The unit cost targets established   are based on world-
wide summary data, however, and are distorted       through the
averaging effect cited in our report.      Differences    due to
varying age, size,type    of construction,  condition,    and geo-
graphical   liocation of units are, in our opinion,     averaged
out through use of such summary data.

        The situations    discussed above are cited to illustrate
that DOD components are attempting          to achieve a greater de-
gree of control       over costs to improve management of resources.
Since a measure of time and effort          is already being devoted
to improving cost controls          by DOD components (see also the
attempt being made by the Navy to identify             when it is eco-
nomical to replace or continue to maintain family housing,
pa 270f this report),        we believe that the Office of the Sec-
retary of Defense should centrally          direct   and coordinate
these efforts       and should take the lead in establishing        stan-
dardsbasedon        a more homogeneous and more valid categoriza-
tion of housing.        We believe also that this would be benefi-
cial in identifying       indications    of excessive costs or ex-
cessive levels of maintenance and in focusing attention              on
inefficient     or uneconomical maintenance organizations.

           DOD has recognized that a capability       to com-
      pare similar housing units would be quite useful
      but has stated that providing       the larger number
      of categories   required would increase the work
      load and would not offer benefits       commensurate
      with the additional     cost required,

      We agree that, if the costs to expand the system out-
weigh the benefits     to be derived,   the system should not be
expanded.    We believe,    however, that the added benefits        from
an expanded categorization      should be obtainable       at an eco-
nomical cost.    Although DOD has indicated        that the additional
costs would outweigh the benefits,        it has not furnished      in-
formation  concerning    the possible   additional     cost required
nor concerning   the cost of maintaining       the existing    system,



                                    13
      We attempted to       obtain the costs of operating    the pres-
ent cost accounting        system to gauge the probable cost im-
pact of expansion of        the system. We found that DOD had not
determined the cost        of operating  the present system, but a
cognizant   DOD official       informed us that in his opinion the
cost would be minor.

RECOMMENDATIONS

       We recommend that the Secretary of Defense determine
the additional     cost of expanding the system of categoriza-
tion of family housing and measure it against the benefits
to be obtained.      The expansion would provide for a more
homogeneous categorization       of family housing for accumulat-
ing and reporting      operation  and maintenance cost data, tak-
ing into account size, age, type of construction,       and con-
dition   of units.

        If it is determined that expanding the present cost
accounting     system is not economically      feasible,     we then
recommend that consideration          be given to simplifying      it.
We believe that the summary data produced by the system has
limited    usefulness     for making valid comparisons.        Under such
circumstances,      it might be sufficient     to limit the categori-
zation,    by installation,      to public quarters,     inadequate or
substandard quarters,         and flag- or general-officer      quarters.




                                    14
                                CHAPTER3

                  INACCURATEAND INCOMRLETECOSTS

                  RECORDEDIN ACCOUNTINGRECORDS

       Our review at 14 selected Army, Navy, and Air Force
installations     showed that costs recorded in the accounting
records for the operation        and maintenance of family housing
were inaccurate     and incomplete in a number of cases.               The
deficiencies     stemmed principally       from (1) improper alloca-
tion of costs among housing accounts,            (2) failure      to in-
clude all applicable      costs in the family housing accounts,
(3) inappropriate     methods for determining         utility     usage,
and (4) errors in determining        utility     costs.       In our opin-
ion, more definitive      and comprehensive instructions            provid-
ing a greater degree of uniformity            would eliminate      many of
the deficiencies     we identified.

      During our review, we were unable to determine the to-
tal effect     of the observed deficiencies      because of the na-
ture of the items and the unavailability          of information    at
the installations.      Although many of these deficiencies         on
an individual-item     basis may not be considered material,
they tend, from a cumulative     standpoint,      to render invalid
any comparison among military      installations      and services.

       For example, at Fort Dix, New Jersey, we found that
the total reported operation       and maintenance costs for se-
lected accounts for family housing were understated          by about
$135,600, or about $60 per housing unit.          At McChord Air
Force Base, Washington, our analysis        of charges to the ad-
ministration      accounts for the various categories    of housing
disclosed     discrepancies   which had the following   estimated
effect    for the B-month period ended December 31, 1968.




                                      15
                                                     Administration     accounts
                                                                         Appropriated-     - Other
                               Encumbered            Substandard         f&d    housing     public
 Administration     costs        housing               housing          1950 and after     quarters

Total  costs reported:
    Overstated                      $3,797               $ 248                              $ 490
     Understated                                                             $2,265
Cost per unit:
    As reported                     $23.15               $19.30              $ 8.21         $33.13
    GAO estimated    cost            16.82                16.82               16.82          16.80



      We did not include        supply costs or unrecorded    Base
Civil  Engineer   administrative       employee costs in our esti-
mate because these costs were not segregated           and no reason-
able estimate   of the amount involved         could be made.

       Similarly,    at Fort Lewis,       Washington,       our review of
the allocation      of administration        costs to the selected
housing    accounts    disclosed     improper    allocation       of costs.
We found also an erroneous           charge for an employee's             salary.
These discrepancies         had the following        estimated     effect     on
the selected      administration      housing    accounts      for the
6-month period      ended December 31, 1968.

                                                        Administration
                                             ---_L-----__-_-----               accounts --_-
                                                                 Appropriated-
                                                                  fund housing           Other
                                             Encumbered              1950 and           public
 --Administration           costs                housing                after
                                                                       --              quarters

Total  costs    reported:
     Overstated                                 $7,593                                    $3,029
     Understated                                                      $10,210
Cost per unit:
    As reported                                 $40.61                $ 27.23             $45.72
    GAO estimated        cost                    36,39                  34.00              36.99

      We found discrepancies     in the utilities   accounts   at
McChord Air Force Base and Fort Lewis that had an effect           on
the reported   cost per unit    but to a much lesser    extent  than
that found in the administration       accounts.
QUESTIONABLEVALIDITY OF REPORTEDCOSTS

      Our test of the July 1, 1968, through December 31,
1968, charges to the selected administration,    utilities,
and maintenance summary cost accounts for encumbered hous-
ing, appropriated-fund   housing, substandard housing, and
other public quarters revealed numerous discrepancies.        The
nature of these discrepancies    is summarized in the follow-
ing schedule.

                                  Nature of Discrepancies at
                                   14 Selected Installations
                                                       Number of installations    at which
                                                               discrepancy occurred
                                                       &?c!i9!        Navy        Air Force
           Nature of discrepancy
Administration        account:
       Unrecorded indirect       salary costs           3            3                4
       Unrecorded direct salary costs                   1
       Misclassification       of costs                              i                1
       Keypunch costing errors                                                        2
       Improper or unrecorded vehicle-usage
          costs                                                      1                1
       Unrecorded material costs                                     1                2
       Improper allocation       of costs                            1                1
       Errors in computing civilian         and/or
          military    labor costs
       Unrecorded cost of telephone ser-
          vice and other costs
       Cost records for General-officer
          quarters not maintained or re-
          ported
Utilities       account:
       Questionable methods for determin-
          ing utility     usage                                      2
       Improper and/or inadequate deter-
          mination of utility      rates                             3
       Improper allocation       of costs                            1
       Errors in costing utility         charges                     3
Maintenance account:
       Unrecorded maintenance charges                                1
       Unrecorded and/or improper costing
          of vehicle     usage                                       2
       Costing errors                                   1            2                1
       Weak maintenance practices                                    2                1



       Following are selected                   examples of some OF the defi-
ciencies we found, identified                     with the specific installations
we visited.

                                                 17
UNRECORDED        INDIRECT      SALARY COSTS

         DOD Instruction         7220.16,    dated May 18, 1964, and the
corresponding      Army,        Navy,  and   Air Force regulations      state
that administrative             or administrative     services    costs in-
curred      for   family     housing   work        at   the   dnstallation          mainte-
nance offices   should be excluded       from family  housing                          costs
where the presence     of family   housing    does not result                          in an
"identifiable   increase    in work capability."

      Our review      disclosed     that generally       administrative
costs incurred       at the installationss         maintenance       offices
were not being charged to the family               housing    administration
account,      even though the personnel         involved    were spending
a significant      portion     of their    time on family       housing      work.

          For example,    at Homestead Air Force Base, Florida,                 we
identified       nine administrative         employees,       both military      and
civilian,      who spent from 50 to 100 percent                of their     time on
housing-related        work during      fiscal     year 1969 but charged no
time to family        housing.      We identified        three other      employees
who spent about 25 percent            of their       time on housing-related
work but charged no time to family                 housing.       In addition,
26 other      employees     spent up to 20 percent            of their    time in
housing      work.    The estimated       applicable       labor    cost for these
38 employees        was about $54,000 for fiscal              year 1969.

       At Fort Lewis we were advised        that five maintenance        of-
fice administrative      employees  spent at least       25 percent     of
their    time on family   housing  matters;     however,   no portion
of their      salary was charged to family      housing   during    the
period     covered by our review.

      At Fort Hamilton,       New York, our review           disclosed     that
a 19-percent   factor     was applied      to total     personnel      costs of
the Post Engineer's       administration        account    to arrive     at a
charge to family      housing    for indirect       administrative       labor
expenses.    For the 6-month period           ended December 31, 1968,
these charges    approximated        $40,000,    or about $27 a ,unit.
On April   1, 1969, the 19-percent           charge'was      terminated,
apparently   on the basis of DOD Instruction               7220.16.

      Discontinuance   of the charge for indirect                             administration
expenses is questionable,     inasmuch as several                            Post

                                              18
Engineer    employees      have informed us that they spend a major
portion    of their     time on family housing administrative  mat-
ters.

        At the Naval Station,    New York, we were advised by of-
ficials     that allocations  of Public Works administrative
labor costs to family housing accounts were made for its
Long Island Annex on the basis of estimates of time consumed
by several administrative       employees whose duties related
principally      to family housing.    No allocations of labor costs,
however, were made for the several administrative         employees
who were involved to some extent in family housing activi-
ties at the Naval Station in Brooklyn.
       The practices    followed by the various installations
indicated    a need for more specific          guidelines     and greater
uniformity    among the services in allocating             indirect   ad-
ministration     expenses.     In our opinion,        these types of costs
are a proper and directly         identifiable      charge for operating
and maintaining      family housing and should be charged to the
family housing account.          To clearly     provide for charging
such labor costs, we believe that the DOD Instruction                  and
related Army, Navy, and Air Force regulations                 covering in-
direct administrative        costs should be revised.

     Additional examples of the types          of discrepancies     we
found are shown in appendix I.




                                    19
CONCLUSIONS

         In our opinion    there   is a need to improve the effec-
tiveness     of the accounting       system for recording        and con-
trolling     the costs to operate        and maintain     family   housing
at the installations         we reviewed,     As illustrated       by the
foregoing      examples and the examples shown in appendix               I,
the cost accounting        system prescribed      for recording       and re-
porting     operation    and maintenance     costs does not provide
accurate,      complete,   and reliable     cost information       for man-
agement purposes.

         Although      comparisons        are being made by management at
various       levels,     including       DOD, the usefulness       of such com-
parisons        is adversely       affected     by differences      among DQD in-
stallations          in accumulating         and recording     cost data.    We
believe       that more meaningful            comparisons     could be made if
DOD were to provide              a larger     measure of uniformity       in its
controlling         regulations.

       In our opinion    costs of operating      and maintaining      fam-
 ily housing, should be accumulated       and recorded      at each lo-
cation   by ,using the same principles,       procedures,     and inter-
nal controls,      This would ens'ure that the costs for mainte-
nance and operation      recorded   for a particular      type or cate-
gory of housing     at one location     would contain     essentially
the same cost factors       as those recorded     at other locations
and would provide      a basis for meaningful       comparisons.

AGENCY COMMENTS AND GAO EVALUATION

      In our draft     report   of July 20, 1970, we suggested      that
the Secretary      of Defense issue more comprehensive     and defin-
itive  directions     designed   to avoid the more salient   varia-
tions   in recording     and reporting   of operation and mainte-
nance cost data among DOD installations.

              In commenting        on our suggestion,          DOD agreed that
      their     instructions       could be more definitive           and that a
      working      group was in the process            of developing     recom-
      mendations        to clarify     current    instructions      to ensure
      more uniform         implementation      and interpretation,



                                       20
       The actions    being taken by DOD appear to be responsive
to the intent of      our suggestion.    As we program future work
in this area, we      intend to review the clarifications      made
and the application       of the revised instructions     to determine
whether they will      result   in more uniform implementation     and
interpretation.

     We suggested also in our draft report that the internal
audit efforts   of the military  services emphasize coverage of
this area in their regularly    scheduled audits of family hous-
ing activities.

              In commenting on this suggestion,    DOD stated that
     internal     audit coverage had been provided,    consistent
     with the significance       of an operation and overall    audit
     priorities.       Pursuant to this policy,  family housing
     operations     were audited during comprehensive installa-
     tion audits.       This coverage will be continued in the
     future and will continue to emphasize adherence to the
     requirements      of DOD issuances.

      DOD's intent to continue audit coverage of this area
in the future and to emphasize adherence to the requirements
of DOD issuances appears to be responsive   to our suggestion.




                                   21
                               CHAPTER4

                 NEED TO PHASE OUT UNECONOMICAL

                        FAMILY HOUSINGUNITS

       The DOD inventory   of family housing contains many units
which, according to DOD, are no longer economical to operate
and maintain.     A substantial    portion    of these high-cost
quarters are assigned to flag and general officers            or to
senior-grade   officers,   such as Navy captains or Army, Air
Force, and Marine Corps colonels.          We were informed that
quarters assigned to these officers         were generally    quite
large and quite old.      Information     provided by DOD indicated
that many of these quarters were built          50 to 75 years ago.
Historically,   operation    and maintenance costs for these
quarters have been high,

      As mentioned on page 8 of this report,            operation    and
maintenance cost data are accumulated and reported upon by
broad categories     of housing rather than by individual            units
or more homdgeneous categories.           Consequently,    except    for
general- and flag-officer       quarters,    for which costs are
presently  accumulated and reported on an individual-unit
basis, no identification      is possible of family housing units,
such as those designated      for senior-grade-officer          occupancy,
that incur high costs.

      We understand that there are many larger quarters in
DOD designated for occupancy by officers     of less than
general- and flag-officer     grade. For example, the following
schedule shows the approximate number of larger quarters by
designated    grade level within the Department of the Army.
These units are considered to be "oversize"     units and are
SQ classified    when they exceed by 40 percent or more the
maximum net square foot allowance by grade for new construc-
tion as covered by public law,

              Colonel                                   630
              Field-grade  officer                      940
              Company-grade officer                     120
              Noncommissioned officer                   250



                                    22
       The high cost of maintaining    and operating many of the
904 flag- and general-officer     quarters comprising the fiscal
year 1968 DOD inventory     of such quarters  is shown in the
following    schedule of reported operation   and maintenance
costs.

               Cost range                    Total    units

           $      0   to $ 1,000                     123
             1,000    to   5,000                     587
             5,000    to 10,000                      133
            10,000    to 15,000                       36
            15,000    to 20,000                       11
               Over       20,000                     14


       The operation     and maintenance costs recorded for these
quarters are the same types as those recorded for all cate-
gories of DOD housing and include costs for such items as
administration;      services;     utilities; furniture     and furnish-
ings ; repairs    and maintenance of dwellings         and other sur-
rounding real property         (landscaping);   and alterations     and
additions.




                                   23
     REPRESENTATIONALQUAiRTERS

             About 65 of the general- and flag-officer                  quarters in
     the DOD inventory         are considered "'representational             quarters."
     Representational        quarters are occupied by a general or flag
     officer    or civilian      official     holding a. position        designated
     as a "military       representational        position."        The public re-
     lations    responsibilities          of these individuals        require them
     to represent     the United States in official                and social enter-
     tainment activities.           We believe that, because of the unique
     responsibilities        of the occupants,        these quarters,        along
     with certain     others having historical             significance,      should
     be considered      separately        in any plan to phase out quarters
     whichare unduly costly to maintain.

     HIGPI-COSTUJKITS IN INVENTORY

            Examples of high-cost         units    in the DOD inventory         fol-
     low.

            At the Naval Air Station,  Pensacola, Public Works Cen-
     ter officials   estimated the cost of improvements, mainte-
     nance, and repairs on individual    family housing units for
     fiscal   years 1964 through 1968.

           We found that 17 of these units built  prior to 1900
     had estimated costs of operation  and maintenance ranging
     from about $3,000 to about $72,800 during fiscal   years 1964
     through 1968; nine of the 17 units had estimated costs rang-
     ing from about $11,900 to about $24,400 during the same 5-
     year period.
            For three of these units,  we were able to obtain the
     actual operation   and maintenance costs for fiscal   years
     1968 and 1969. We substituted     the actual cost for fiscal
     year 1968 for the estimated cost for that year and added
.”   the actual cost for 1969. Thus, the total estimated and
     reported costs for these three units for the g-year period,
     fiscal   years 1964 through 1969, are as follows:




                                            24
                        Estimated                        Reportedwm        -
           Fiscal    Fiscal       Fiscal        Fiscal   Fiscal     Fiscal
Quarters    year      year         year          year     year       year
   &*       1964      1965         1966          1967     1968       --1969     Total

     1     $5,465   $18,036     $15,033         $6,895   $27,375    $14,852    $87,656
     4      9,660     1,375       5,657          3,818     3,934     11,996     36,440
     5      2,738     4,463       1,452          2,174     1,731      2,136     14,694


      Presently, the legal cost limitation      for construction
of new family housing in the contiguous       United States is
an average of $23,000 a unit and no single unit may exceed
a cost of $40,000.     The operation   and maintenance costs for
a number of the 17 units at Pensacola seem disproportion-
ately high in relation    to allowable   replacement costs.

        We found that an economic study of a dwelling unit in
the Panama Canal Zone had been made and had showed that
costs for a lo-year period for operation,          maintenance,    and
alterations     were estimated to be $62,990.       The fiscal    year
1968 cost report for this dwelling          showed that operation
and maintenance expenditures         for this unit exceeded $24,000
for the fiscal     year.   In fiscal    year 1969 about $11,500 was
spent to operate and maintain this unit.           We found yet an-
other dwelling unit in the Canal Zone for which expendi-
tures of $6,932 and $31,483 were made for fiscal           years 1968
and 1969, respectively,       a total of $38,415.

       Examples of other general- and flag-officer   quarters
incurring   high operation and maintenance costs in the Army,
Navy, and Air Force are shown in appendix II.      As shown in
the appendix, many of the quarters exceeded $10,000 in op-
eration and maintenance costs for the 2-year period,      fiscal
years 1968 and 1969. A number of these quarters      contain
more than 5,000 square feet in space and some more than
10,000 square feet.

      Appendix III shows, by comparison,       the approximately
43 general-   and flag-officer    quarters  constructed   for DOD
since fiscal   year 1962. Construction      costs for these units
ranged from about $19,890 to about $35,000 a unit.           Square
footage constructed     for the quarters   ranged from 1,806 to
2,310 square feet.      We found that the operation     and mainte-
nance costs incurred      on 20 of these units for the fiscal
years1968 and 1969 ranged from $1,227 to $3,648 and the

                                           25
average operation  and maintenance cost on these units was
about $2,284 a unit for the 2-year period, or about $1,031
a unit in fiscal  year 1968 and about $1,252 a unit in fis-
cal year 1969.

      Operation and maintenance costs for fiscal years 1968
and 1969 were not reported on 23 of the units as the units
were not completed and occupied until    a later period.   Four
units for the Navy were under construction     in Hawaii at a
cost of about $39,688 each.    One unit for the Navy was ap-
proved for construction   in California;  however, the con-
tract for construction   had not been awarded as of March 31,
1970.

       To illustrate      the possible     satings through replacement
of old, high-cost       quarters,    we made an analysis          of replace-
ment cost versus continued operation               and maintenance of
Quarters 1 at the Naval Air Station,               Pensacola,       (See app.
IV.)    The analysis      indicated   that, over a period of 25 years,
continued use of Quarters 1 would cost about 135 percent
more than it would cost to demolish the old quarters and
construct     new quarters.       The illustration      utilizes      the
present-value      technique of economic analysis             (discounting)
currently     specified     for use within DOD,




                                    26
NO ACTION TAKEN TO PHASE OUT HIGH-COST QUARTERS

      Our review disclosed       virtually     no action by DOD to
phase out such quarters.         In the fiscal      year 1966 military
construction    authorization      request,    DOD requested authori-
zation to construct       two dwelling units at a cost of
$100,000 each.      These units would serve as representational
quarters    and replace,     in effect,    existing   quarters occupied
by high-ranking     officers    at two installations.         This re-
quest was not acted upon favorably            by the Congress.

       In the fiscal    year 1970 military    construction      authori-
zation request,      DOD asked for authorization      to replace in-
adequate Wherry housing at the Naval Station,            Key West,
Florida.    However, these units,      which can no longer be eco-
nomically    maintained or brought to standards of adequacy,
are not really comparable to the high-cost,           oversize dwell-
ing units in the DOD housing inventory.          Construction       of 200
new housing units was authorized        for the Naval Station,         Key
West.    We  are  not  aware  of any other  requests     to  the  Congress
by DOD for replacement of uneconomical units.

      We discussed with DOD officials    what plans, if any,
they had for orderly   replacement of high-cost    family housing.
We were informed that the Department was aware of the high-
cost units in the inventory    but that current replacement of
these units must be deferred due to higher priority       require-
ments such as construction    of new housing.    We were informed
that, when conditions    became more favorable,   the Department
hoped to implement a program of improvement and replacement.

      We noted that the Department of the Navy had           a family
housing modernization    and replacement study under         way which
would identify   the point in time when it was more          economical
to modernize or replace a family housing unit than            to con-
tinue routine maintenance of it.

CONCLUSIONS

        In our opinion,  high-cost    quarters which are needed but
are no longer economical to operate and maintain should be
replaced.     A concerted effort     should be made by DOD to
identify    dwelling units no longer economical to operate and
maintain for presentation       to the Congress as candidates  for
replacement.
                                    27
        We believe      that the Congress should be made aware of
the extent      to which quarters          uneconomical       to operate      exist
in DOD. This would enable the Congress                      to evaluate     the con-
tinuing     need for these uneconomical              dwelling    units;     to con-
sider    the feasibility         of replacing      the units      in relation       to
competing      DOD requirements,         including     the requirement         for
construction       of new housing;         and to consider       the potential
savings      in future     operation     and maintenance        costs which
would accrue through           replacement.

AGENCY COMMENTS AND GAO EVALUATION'

       In our draft    report      dated July 20, 1970, we suggested
that the Secretary       of Defense provide         the Congress,     in the
annual construction        authorization      requests,   with a plan for
the phased,    orderly     replacement      of family   housing   units    no
longer   economical    to operate        and maintain.

               In commenting    on the above suggestion,              DOD agreed
       that there      should be a phased plan for the orderly                 re-
       placement     of family    housing       units   no longer     economical
       to operate      and maintain.         DOD indicated      that,    as soon
       as their    more urgent      priorities        were met, a specific
       request    would be presented           to Congress    for authoriza-
       tion    and funds to replace          uneconomical     housing.

        DOD recognizes     that a plan for orderly      replacement    of
uneconomical       housing   units should be undertaken.         They have
indicated,       however,  that more urgent  priorities       must be
filled     before   such a plan can be implemented.          Thus, presen-
tation     of such a plan would remain until         some indefinite
future     period,

      We believe   that,     even though more urgent    priorities
must be met before      replacement    of uneconomical   housing    can
be undertaken,   the Congress       should be made aware of the ex-
tent of the inventory        of such housing   in DOD. This would
enable the Congress       to consider    the merits  of authorizing


1
 Specific      points   raised     by DOD in connection  with our hypo-
  thetical     economic     analysis   appearing  in app. IV are dealt
 with in     that appendix.


                                         28
current expenditures to achieve future savings in operation
and maintenance costs and to evaluate the need for replacing
uneconomical housing in relation  to the other urgent priori-
ties mentioned by DOD.

THE CONGRESSMAY WISH TO CONSIDER
REQUESTINGAND EVALUATING A DOD INVENTORY
OF UNECONOMICALHOUSING

       In view of the indefinite  nature of the DOD intention
for presenting   a plan for replacement of uneconomical hous-
ing, the Congress may wish to consider requesting     DOD to
present an inventory    of uneconomical housing.   Such informa-
tion would enable the Congress to determine the extent and
nature of uneconomical housing and to evaluate and consider
a program for replacement of the housing in relation      to the
other urgent priorities    which DOD considered  to be of
greater importance.




                               29
APPENDIXES




  31
                                                                    APPENDIX I

                   EXAMPLESOF DEFICIENCIES FOUND

                        AT SELECTED INSTALLATIONS

Unrecorded     direct   salary     costs
        At Fort Dix, New Jersey, the family housing                 administra-
tion account was understated      by about $9,232 for               the 6-month
period ended June 30, 1969, because the salaries                    of three
civilian    employees assigned to the Family Housing                 Division
were not charged to the account.        These salaries              were being
absorbed by the Billeting     Division.

        The Billeting   Division    during this period was authorized
a complement of five civilian         personnel whereas the Family
Housing Division      was authorized     nine civilian      personnel.    We
found that, despite the authorizations             established,    12 of
the 14 civilians      were actually     assigned to the Family Housing
Division    and two to the Billeting        Division.      The three civil-
ians in excess of authorization          in the Family Housing Divi-
sion were not charged to this Division             although actually     em-
ployed by the Division.

Improper     or unrecorded       vehicle-usage     costs
       DOD Instruction    7220.16, dated May 18, 1964, requires
vehicle-usage     charges to be computed on the basis of actual
usage and cost or on the basis of equipment rental rates
furnished    in the instruction.    At the Naval Air Station,
Whidbey Island, Washington, however, vehicle-usage       charges
were made to the accounts based on the estimated usage and,
in some cases, the estimated hourly rental rate.1        At Home-
stead Air Force Base, Florida,      the housing office  had two
vehicles    assigned on a full-time    basis, but only one of the
vehicles was being charged to the family housing accounts.

       We were unable to determine the actual effect of these
items on the account because no records were maintained    for
vehicle usage.


1This was not the equipment-rental               rate   furnished    in DOD In-
 struction 7220.16.

                                           33
A?PE!XlDIXI

Unrecorded     material   costs

      Office supplies used in the family housing offices   at
two Air Force bases and a Naval Air Station were not being
charged to the family housing accounts.    Installation  per-
sonnel were unable to furnish us an estimate of the dollar
amount of supplies used because no usage or cost records
were being maintained  for this item.

Improper     allocation   of costs

       The administrative     costs charged to each category of
housing at six installations--4         Army, 1 Navy, and I Air
Force --were incorrect      because of the improper allocation       of
the administration      cost among the five housing categories.
Although these improper allocations          had no effect on the
total administration      cost reported,     they did have an effect
on the administration       cost per unit for each category of
housing.     The misallocations     occurred primarily     for one of
the following    reasons:     (1) failure    to include all appli-
cable units in the percentage computations,            (2) errors in
computing the percentage,        or (3) failure    to use a percentage
allocation.1

      For example, at Fort Lewis, Washington, the administra-
tion costs were to be allocated    to the accounts pertaining
to each category of housing on the basis of the number of
housing units in each category,,    We found that predetermined
percentages for this allocation    were incorrectly    computed.
We found also that the administration     costs actually    being
accumulated in the individual    accounts agreed with neither
the incorrect  nor with the correct predetermined      percentage.

      At McChord Air Force Base, Washington, the administra-
tion costs were being allocated  to the accounts pertaining
to each category of housing on the basis of each administra-
tive employee's estimate of where he spent his time rather
than on the basis of the number of units in each category of
housing.

1DOD Instruction      7220,16 provides that generally  accepted
 overhead allocation       procedures may be used for costing su-
 pervisory,    clerical,    and other indirect costs to family
 housing.
                                    34
                                                         APPENDIX I

      At the Naval Station,    Key West, Florida,    administrative
labor costs were improperly     allocated  to the accounts for
the various housing categories      because previously    established
percentages were not adjusted to encompass additional          hous-
ing units included in the housing inventory       about September
1968. This discrepancy      did not affect the total housing
cost but did affect   the cost for administrative      labor
charged to each housing category,

Questionable    methods for
determining    utility usage
      DOD Instruction    7220.16 also requires    that the quanti-
ties of utilities     consumed shall be determined by meter
readings where meters are available      or by engineering    anal-
ysis based on sampling where it is not economically        feasible
to install    and use meters.    During our review we noted, how-
ever p that in several instances utility      usage was being de-
termined in questionable      ways.
      At McChord Air Force Base, electricity    costs for 243
of the 993 family housing units were determined by using
the estimated consumption rates specified    for a particular
type of floor plan in a rescinded Air Force Regulation.       We
were advised that no test metering had been done nor were
any engineering  estimates prepared to check on the amounts
being prorated although the Budget Officer     at the Base Civil
Engineer office  felt that the current allocation     was too
low.

       At Fort Lewis, electricity    consumption was determined
on the basis of the ratio of family housing population         to
total installation    population,    This method of allocation
was based on Continental      Army Command Regulation  210-2,
dated 12 June 1963, which had been rescinded on January 1,
1969. This method was used also for determining        the water
and sewage volumes for all family housing units at Fort
Lewis.
      We found that the cost     of electricity   was understated
by approximately   $1,700 and    the cost of water and sewage was
overstated   by approximately    $5,000 for the first   6 months
of fiscal  year 1969, because      the population  and cost figures


                                  35
APPENDIX I

used in the formula    for          allocating      these    utilities     to    family
housing were improperly             computed.

        At the Naval Air Station,        Whidbey Island,    electricity
usage for 43 family       housing   units    was based on the average
household     consumption    for the Seattle     area.   The water usage
rate for 286 family       housing   ,units was based on the number of
individuals      in the units    and the estimated     occupant      usage
rate,
        At the Naval Station,           New York, we found that the Sta-
tion's     Mitchell      Field,    Long Island,       family housing   (111 units
of other      public     quarters)     and other Navy structures        occupy
areas contiguous          to Nassau County Community College            facili-
ties.      The utilities        used by the Navy at Mitchell         Field      are
controlled      by Nassau County.           There are no Navy utility           me-
ters,      Nassau County purchases           electricity     and gas utilities
on a bulk basis and resells              them to the Navy.

        We noted that the Naval Station    was billed   for electric-
ity and gas by Nassau County on the basis of estimated
fixed-average       consumption data for each housing   unit.   The
engineering      basis for determination  of the estimated    con-
sumption     data was not available,

        Our review      revealed         that the utility        charges were highly
questionable       because of the Collnty's              policy    of billing       the
Navy at higher        tariff       rates     geared to individual           housing
unit    consumption       rather       than on the basis of consolidated
usage of all Naval facilities.                    Nassau County receives            the
benefit     from the utility             company of low tariff          rates based
on total      consumption        for the entire        complex to which the
Navy, by operation           of its facilities,           contributes.          The
County,     however,     does not pass along these lower rate sav-
ings to the Navy on a prorata                  or conjunctive        basis.

       In view of the        economies     that might be effected,                the
Navy should     initiate      negotiations      with Nassau County              for more
equitable    rates.

         At Mitchell      Manor, Long Island,      the Navy!s 511 encum-
bered family        housing   units   are directly     serviced   with elec-
tricity     and gas by the uLility        company,,     There are eight
electricity      meters and 41 gas meters serving             the entire  fam-
ily housing      complex.       Since each meter is billed        by the

                                          36
                                                               APPENDIX I

utility     company as a separate account and since the rates
are decreased with increased consumption,               it appears that
the Navy might be able to realize           significant     savings by
negotiating     rates based on total combined usage for the en-
tire complex.       An alternative     could be to study the economic
feasibility     of converting      from multiple     meters to individual
master meters for electricity          and gas.

        Preliminary     estimates    indicated  that annual savings of
approximately       $37,000 might be realized       by the use of con-
junctive     and single-meter      billings.    Installation    officials
agreed with our views and informed us that their engineering
support organization,         Eastern Division,     Naval Facilities      En-
gineering      Command, would be requested to study the matters
and to enter into negotiation            with Nassau County and the
utility     company to effect more favorable          charges to the Gov-
ernment.




                                     37
    APPENDIX I


    Improper     and/or    inadequate
    determination       of utility    rates

            At Westover       Air Force Base, Massachusetts,                   we found
    that the rates         for charging        sewage costs to family              housing
    were not adjusted            annually     as provided.for          in Air Force
    Manual 170-5,        section        4-4 f (1).     The manual states            that,
    at the beginning          of each fiscal        year,     rates      for base-
    generated    utilities         will    be determined        on the basis of the
    pertinent    utility        cost accounts,minus           military       labor    costs9
    for the previous          fiscal      year as applied         to units      produced
    or processed.

           Qur review of the sewage rates used at Westover               in
    charging    sewage costs to military    family      housing     showed that
    the rate of 6.11 cents per thousand         gallons     was established
    on the basis of costs and quantity        processed       during   fiscal
    year 1966.      This rate was properly    used in making sewage
    charges   for fiscal    year 1967; however,      no recomputation         of
    the rate was made for use in fiscal        years 1968 and 1969 and
    the 1967 rate was used in computing         the charges for these
    2 years.

I          We found that,        if the sewage cost rate had been prop-
    erly   computed at June 30, 1968, and used to cost sewage for
    fiscal   year 1969, the rate would have been 10.91 cents per
    thousand    gallons      and the amount charged   to family housing
    for the first       half   of the fiscal  year would have been
    $8,372 rather       than the $4,689 actually    charged.

           We were informed   by personnel  of the Base Civil   En-
    gineer   office  at Westover  that charges   for sewage for fiscal
    year 1970 would be made at a rate computed in accordance
    with the Air Force Manual.

           At the Air Force Academy, Colorado,            we found that
    charges   for the installation's        sewage plant       were based on
    60 hours of plant      operation    labor    a month.      This charge,
    which was said to have been unchanged             for the last      4 or
    5 years,    was based on a study made several            years ago of
    family   housing   usage in relation      to total      base usage.      This
    method has not been in conformance            with the prescribed
    method since at least        December 1966.       Further,     there has
    been a substantial      increase    in total     base usage of the sewage

                                                38
                                                         APPENDIX I


plant  as a result   of a $40 million     expansion of facilities
within the last 5 years.      An official     in the Base Civil
Engineer office    agreed that family housing now bears an ex-
cessive share of the sewage plant costs.
Errors   in costing   utility   charges

       At Homestead Air Force Base, Florida,    we found that
improper costing of purchased electricity      resulted    in over-
stating   the charge to family housing by about $4,046 as of
December 31, 1968.     Improper costing included     (1) clerical
errors in computing the electrical     billing  for housing and
(2) failure   of the Cost Accounting Section to process
credits   to the housing accounts.
     Electricity  was charged to unmetered housing on the
basis of a percentage factor computed by relating      the me-
tered to the unmetered units.   An incorrect    factor was be-
ing used which tended to understate   the electrical     billings
for housing.

       In January 1969 the local power and light company issued
credits   for electrical    billings   for the months of November
and December 1968, and January 1969. Housing was supposed
to be credited    in the same proportion         as it had been pre-
viously charged for the electrical         billings     involving   these
months.     The documents for processing         the credits    to housing
were available,     but personnel    in the Cost Accounting Section
could not explain why they had not processed the credits                at
any time during fiscal      year 1969.

      At Fort Dix, New Jersey, our-review     of heating fuel oil
costs for the month of December 1968 disclosed        that the
family housing account was overstated      by about $300. This
overstatement   was the result of charging the accounts with
the cost of fuel oil delivered     to other than family housing.
Conversely,   due to an oversight   on the part of the Post En-
gineer,   the costs of electricity   were understated     by about
$200 for the year.
       Although these incorrect  charges involve only nominal
amounts, we believe that they indicate     the need for better
controls    over this major cost category   (utilities)   which
represents    about one third of the total costs incurred      to
operate the family housing program during fiscal        year 1969.
                                39
APPENDIX I


TJnrecorded    maintenance     charges

       At the Naval Station,     Key West, Florida,         we found that
labor costs for various      supervisory      maintenance       personnel,
whose duties   included    a significant      amount of work on family
housing,   were not charged to the housing            accounts.         Each of
the 10 persons    involved   estimated     that from 5 to 100 per-
cent of his time was devoted          to housing-related        activities,

          One supervisor,     at a salary    of about $10,000 a year,
was assigned        full  time to a maintenance      service   center    which
operated      exclusively     for family    housing.   None of the labor
costs for this position,          however,    were charged to housing
in fiscal      year 1969.      We discussed     this matter with housing
officials      and were advised      on August 4, 1969, that this
procedure      had been changed and that the supervisor's             time
was now being charged entirely            to family   housing.

        We found that three other            individuals     spent from 50 to
70 percent       of their     time on housing;        that one individual
spent about 45 percent            of his time on housing;           and that a
fifth    individual       spent about 25 percent          of his time on hous-
ing.     Since these individuals            spent a significant        amount of
their    time on work related          to housing,       we believe    that a
proportionate       amount of their        labor     cost should be charged
to the family       housing      accounts.
                                                                                         APPENDIX II

                              EXAMPLES OF HIGH OPERATION AND MAINTENANCE
                 COSTS FOR FLAG- AND GENERAL-OFFICER QUARTERS TAKEN FROM REPORTS FOR
                                        FISCAL YEARS 1968 AND 1969


                                            DEPARTMENT OF THE ARMY
                                               Fiscal           Fiscal           Total
                                                year             year       fiscal     years      Reported
                                                1968              1969
                                                                 ---      1966 and 1969        square feet-
FOR1 McNAIR,   WASHINGTON, D.C.:
    Quarters      2A                           $ 9,441         $10,774        $20,215               6,758
       II         4A                            13,466          13,168         26,634               6,758
       If         5A                             7,884           6,697         14,581               6,758
       II        10A                             7,296           8,977         16,273               6,758
       I,        11A                             8,186           6,574         14,760               6,758
       (1        12A                             9,880          10,381         20,261               6,758
       88        13A                             8,842          15,097         23,939               6.758
       II        14A                             9,035          12,991         22,026               6,750
       ,1        15A                             a,748          11,782         20,530               6,758

FORT MYER, VA.:
    Quarters     5                               7,158           4,763          11,921              4,481
       ,v        8                              15,861           3,543          19,404              5,222
       II       11A                              6,073           7,390          13,463              3,244
       II       15B                              1,984          13,268          15,252              3,794
       ,I       23A                              6,038           6,285          12,323              2,945
       II       27B                              4,831          11,749          16,580              4,200

FORT MONROE,   VA.:
    Quarters      1                              7,892           4,337          12,229              6,470
       8,       118                              4,716          13,138          17,854              7,640
       11       120                              1,432          11,521          12,953              4,250
       11       141                              9,768           7,887          17,655              4,930

FORT SAM HOUSTON, TEX.:
    Quarters    2                               10,725           3,754          14,479              2,037
       11       6                                4,051           8,744          12,795              5,198
       II      11                                7,619           4,843          12,462              2,037

FORT SHERIDAN, ILL.:
    Quarters   54                                6,747           4,934          11,681              5,856
       I,        9                               4,665          18,729          23,394             10,716

PRESIDIO OF SAN FRANCISCO, CALIF.:
    Quarters     1                              14,997            2,170         17,167              4,306
        11   1332                                7,714            3,163         10,877              4,306
        II   1337                               11,164            3,238         14,402              4,218

FORT BENNING, GA.:
    Quarters  100                                 4,564           4,811           9,375             7,067

FORT STEWART, GA.:
    Quarters 1401                                 9,521           4,912          14,433             6,530

FORT LEAVENWORTH, KANS.:
    Quarters 605 Scott                            6,130           5,907          12,037             7,342

FORT CARSON, COLO.:
    Quarters 2302                                 4,009           4,514           8,523              2,985

FORT LEWIS, WASH.:
    Quarters    1                                 7,554           3,996          11,550              3,190

FORT ORD, CALIF.:
    Quarters   327                                4,198           5,776           9,974              4,964

ROCK ISLAND,    ILL.:
   Quarters             1                         5,104           8,686          13,790             19,100

 FITZSIMONS GEUERAL HOSPlTAL,      COLO.:
      Quarters   1                                1,829           8,690          10,519              4.319



                                                          41
APPENDIX II

                                                                  DEPARTMEN   OF TIIE NAVY

                                                                        FlSC2.1                        Total
                                                                         year                      Fiscal    years      Reported
                                                                          1960
                                                                         --.                      1968 and 1965      square    feet

NAVAL SHIPYARD, BOSTON, MASS.'
    Quriers    G                                                       $11,986                        $16,217            10,4OC

PUBLIC WORvS CENTER, NEWPOR'I, R.I.:
     quarters  A                                                          5,475          7,874         13,349             6,400
          ,I  AA(b)                                                      13,652          7,813         21,465             6,000
         $1   PA-1                                                        8,972          1,820*        10.792             6,300

PORTSMOUTH NAVAL SHIPYARD,         h.H.:
    Quarters  A                                                           3,352          7,861         11.213             8,700

NAVAL STATION,     bROOKLYN,    N.Y.:
    Quarters     A                                                       13,487         19,317         32,804             9,700
        I,       c                                                        5,586         10,256         15,842             8,200
        ,!       I                                                        2,944          9,259         12,203             6,000
        II       R-l                                                      7,618          6,658         14,276             7,500

SUBMARINE BASE, NEW LOhMIN,         CONN.:
    QJarters   c                                                          6,985          6,012         12,997             4.000

NAVAL SHIPYARD, PHILADELPHIA,              PA.:
    Quarter;   M                                                          3,741         NJ,501         14.242             4,400

PUBLIC WORKS CENTER, NORFOLK,              VA.:
     Quarters A-39 Jamestown                                              8,802          1,945         10,747             4,000
         I3   F-2       "                                                 3,453          8,607         12,060             7,000
         ,I   F-32      "                                                32,637          7,771         40,408            12,000
         11   G-8       "                                                 9,690          3,423         13,113             7,000
         91   G-30      "                                                18,988         15,133         34,121            16,000
         !I   G-31W     "                                                 9,132          2,844         11,976             6,000
         0    H-27      "                                                 8,892          3,736         12,628             5,000
         (4   NH-A      "                                                11,821          2,191         14,012             3,000
         !!   M-3       'I                                                6,066         16,616         23,482             7,000
         18   M-5       "                                                 5,110         15,840         20,950             9,000
         I,   M-6       II                                                8,978          5,096         14,074             7,000

NAVAL AMPHIbIOUS MASE, LITTLE              CREEK, VA.:
    Qxarters   D-l                                                        6,446          8,068         14.514             3,100

MARINE CORPS AIR STATION,        CHERRY POINT,
  N.C.:
     Quarters  317                                                        5,325          6,557         11,882             3,100
         II    318                                                        5,484          4,952         10,436             3,400

NAVAL STATION, KEY WEST, FLA.:
    Quarters  A                                                           8,912         17,327         26,239             8.200

NAVAL STATION, CHARLESTON,         S.C.:
    quarters   A                                                         13,962         13,254         27,216             7,400
        11     G                                                          2,113         10,926         13,039             6,500
        11     i!                                                         8,298          5,801         14,099             3,100

NAVAL AIR STATION,     CORPUS CHRISTI,             TEK.:
    Quarters  A                                                           4,414         12,841         17,255             5,500

NAVAL AIR STATION,    MEMPHIS,      TENN.:
    Quarters   551                                                        9,307          3,058         12,365             4,000

HEADQUARTERS, NAVAL SUPPORT ACTIVITY,                     NEW
  ORLEANS, LA.:
    Quarters    A                                                         7,178         12,178         19,356             6,500
PUBLIC WORKS CENTER, GREAT LAKES,                 ILL.:
     Quarters AA                                                        12,985          17,074         30,059             7,500
PLtBLIC WORKS CENTER, NAVAL TRAINING                 CENTER,
   SAA DIEGO , CALIF.:
     Quarters   A                                                         4,364        10,452         14,816              5,600
NAVAL SECURITY STATION,        WASHINGTON,           D.C.:
    Quarters  A                                                           9,473          4,039        13,512              5.300
NAVAL STATION, WAShINCTOh, D.C.:
    Quarters   B Potomac Annex                                          12,319          5,311         17,630              5,200
        ,\     c     !I      I4                                          4,187         13,404         17,591              5,200
        4,    A Nay     Iard                                             5,809         16,945         22,754             10.300
NAVAL AIR TEST CENTER,     PATUXMi           RIVER,        MD.:
    Quarter?  A                                                           5.376          9.833        15,209              7,000




                                                                              42
                                                                      APPENDIX II


                          DEPARTMENT
                                   OF THE AIR FORCE

                                                                      Total
                                                                    fiscal
                                               Fiscal    Fiscal       years   Reported
                                                year      year     1968 and    square
                                                1968      1969        1969      feet

MCCLELLAN AIR FORCE BASE, CALIF.:
    Quarters 100                              $10,143    $1,632    $11,775      3,781

ROBINS AIR FORCE BASE, GA.:
    Quarters 400                                2,721     4,986      7,707      3,499

WRIGHT-PATTERSON AIR FORCE BASE, OHIO:
    Quarters A                                 24,854     1,956     26,810      5,403
         II  K                                     900    7,696      8,686      3,923
PATRICK AIR FORCE BASE, FLA.:
    Quarters 3573                               6,008     5,414     11,422      3,573
KEESLER AIR FORCE BASE, MISS.:
    Quarters 6801                               5,314     1,739      7,053      4,232
LOWRY AIR FORCE BASE, COLO.:
   Quarters  251                                6,547        787     7,334      3,475
RANDOLPH AIR FORCE BASE, TEX.:
   Quarters  300                                5,275     3,095      8,370      6,102
ANDREWS AIR FORCE BASE, MD.:
    Quarters (G)1318-1                          5,034     2,134      7,168       2,357
         Ii  (~11318-2                          1,751     5,497      7,248       2,358
         I!  (~)1508                            3,122     4,493      7,615       3,019
         II  (N)1966                            3,885     4,748      8,633       5,298
BOLLING AIR FORCE BASE, WASHINGTON, D.C.:
    Quarters F                                  3,501      4,457     7,958       2,406
         II  G                                  1,968      5,334     7,302       2.406
         II  H                                  3,997      5,368     9,365       2,406
         II  I                                  4,725      4,977     9,702       2,406
         II  J                                   1,971     5,122     7,093       2,406
         1,  L                                   4,435     3,098     7,533       2,406
         II  M                                   5,062     5,866    10,928       2,406
HICKAM AIR FORCE BASE, HAWAII:
    Quarters (D) Bldg. 550                       6,161     1,365     7,526       2,569
         1,  (A) Bldg. 656                       6,535     8,670    15,205       4,905

OFFUTT AIR FORCE BASE, NEB.:
    Quarters 12                                  3,475     3,883     7,358       5,319
         II  16                                  3,395     4,645     8,040       7,312

MacDILL AIR FORCE BASE, FLA.:
    Quarters 402                                 1,990     5,076     7,066       3,286
         II  405                                   717                           3,286
         I,                                                8,888     9,605
              406                              18,306      3,966    22,272       2,944



                                         43
 APPENDIX III


                                                EXAMPLES OF FLAG- AND GENFRAL-OFFICER                    QUARTERS

                                                    CONSTRUCTED IN DOD SINCE FISCAL YEAR 1962

                                         SHOWXG CONSTRUCTION COSTS AND OPERATION AX'D MAINTWANCE

                                             COSlS FOR IISCAL   YEARS 1468 AND 1969 WHERE AVAILABLE


                                                                             Oueration          and
                                                                           maihtenance costs
                                                                 Fiscal      Fiscal                Total.       Fiscal    year   Approximate
                                                                   year       year          fiscal     years    construction     construction   Square
                                                                  -1968       1969          1968 and 1969          program             cost     footage
ARMY:
    Fort   Jackson,           S.C.:
          Quarters           3606                               S 838        $2,810             $3,648               1965           $21,890      2,310
               9,            3612                                1,955           990             2,945               1965            19,890      2,100
     Fort Buckner,            Okinawa:
          Quarters           4261                                 1,890          739              2,629              1965            27,222      2,100
               ,I            4265                                 1,490       1,564               3,054              1965            27,222      2,100

NAVY:
    Naval    Station,    Newport,   R.I.:
          Quarters    K (Bldg.    1000)                                     Not available                            1968            34,879      2,050
     Naval   Complex, Long Beach, Calif.:
          Quarters    1037                                        1,842          979              2,821              1965            26,844      2,100
                      1038
                        II
                                                                     697      2,705               3,402              1965            26,844      2,310
     OKinawa (Commanding Officer,         Fleet       Air
       Wing) :
          Qtlarters   7202                                                  Not avallable                            1963           27,512       2,100

AIR FORCE:
    Dover Air Force Base, Del.:
            Qxrters          999                                            Not     available                        1968           34,989       2.050
    Bergstrom          Air Force Base, Tex.:
           Quarters       4412                                                     48            48                  1968           35,000      2,050
                    II    4414                                                     79            79                  1968           35,000      2,050
                    II    4416                                                     Not available                     1968           35,000      2,050
    Reese      Air Force Base, Tex.:
           Quarters        1111                                             Not available                            1968           34,863      2,050
    Andrew         Air Force Base, Md.:
           Quarters       4776                                              Not    available                        1966            27,684      2,025
                   II
                          4778                                                      do.                             1966            27,884      2,025
                   II     4780                                                      do.                             1966            27,884      2,025
                   II     4782                                                      do.                             1966
                   II
                                                                                                                                    27,884      2,025
                          4784                                                      do.                             1966            27,804      2,025
    Nellis      Alr Force Base, Nev.:
           Quarters         650                                                   765                 765           1966            34,994      1,987
    Ent Air Force Base, Colo.:
           Quarters       7481                                              Not available                           1966            25,113      1,806
                   II     7483                                                        do.                           1966            25,113      1,806
                   II     7485                                                        do.                           1966            25,113      1,806
                   ,I     7487                                                        do.                           1966            25,113      1,806
    MacDill       An Force Base. Fla.:
           Qmrters          871                                     698      1.440               2.13R              1965            25,854      2,100
                  1,        872                                     804        '561              1;365              1965            25,854      2,100
                   II
                            873                                     429      1,283               1,712              1965            25,854      2,100
                   II
                            87Y                                  1,302           630             1.932              1965            25,854      2,100
                                                                            Not available                           1965            25,854      2,100
                                                                                   do.                              1965            25,854      2,100
                                                                                   do.                              1965            25,854      2,100
    Ent Air Force Base, Cola.:
           Chmrters    7108                                      1,138            986            2,124              1964            25,755      2,100
               II
                       7109                                         711           516            1,227              1964            25,755      2,100
    Arnold    Engineering      Development      Center,
       Tan.:
          Quarters     3051                                        901            515           1,416               1964            25,395      2,005
    Norton Air Force Base. Calif.:
          Quarters     A(FAC77)                                    655       1,246              1,901               1963           24,820       1,854
               ,*      b(FAC78)                                    568          979             1,547               1963           24,820       1,854
               II      C(FAC79)                                    342       1,298              1,640               1963
               11                                                                                                                  24,820       1,854
                       D(FAC80)                                 1,414                           1,414               1963           24,820       1,854
              II
                       E(FAC81)                                    558      1,860               2,418               1963           24,820       1,854
               1,     G(FAC83)                                  1,543          941              2,484               1963           24,820       1,854
               I,     H(FAC84)                                     621      1,732                                   1963
               9,                                                                               2,353                              24,820       1,854
                      I(FAC85)                                  1,653       1,279               2,932               1963           24,820       1,854
               II
                                                                           Not avallable                            1963           24,820       1,854
               I,                                                                 do.                               1963           24,820       1,854




                                                                           44
                                                                                  APPENDIX IV

                           HYPOTIBTICAL      ECONOMIC ANALYSIS   INVOLVING

                        REPLACEMENT OF QUARTERS 1 AT PENSACOLA, FLORIDA

                   VERSUS RETAINING THE QUARTERS OVER A 25-YEAR PERIOD


                                                              Discount         Dis-          Undis-
                                                               factor         counted       counted
                                                            (10 percent)       cost          cost

Construction  cost of new quarters,
  including  cost for demolition
  of old quarters                                 $40,000         1.000      $ 40,000      $ 40,000

Average recurring    annual oper-
  ation and maintenance     cost for
  new quarters    based on 25..year
  life  (notes 1 and 3)                             2,000         9.524        19,000         50,000

     Total   discounted   cost for
       new quarters     over 25-year
        life                                                                   59,000

     Total undiscounted         cost   for
       new quarters                                                                           90,000
Average recurring       annual operation
  and maintenance       cost of old
  quarters     assuming 25 years addi-
  tional   life    (notes 2 and 3)                 14,600         9.524       139,000       365,000

       As shown above the discounted    amounts in our analysis   indicate              that reten-
tion of the old quarters    over a period    of 25 years would cost about               135 percent
more ($139,000   - $59,000)  f ($59,000)   than it would cost to demolish                 the old
quarters   and construct  new quarters.
1 Conservatively   estimated      on the basis of a DOD memorandum showing acceptable
 cost ranges for operation         and maintenance   of family  housing    and upon the fact that
 the average cost of 20 units          of housing constructed   since fiscal    year 1962 had
 average operation      and maintenance     cost of $1,031 a unit     in fiscal  year 1968
 and $1,252 a unit      in fiscal    year 1969.    (See p. 26.)
2Average
           based upon operation    and maintenance   costs identified   with            Quarters         1
  in Pensacola   for fiscal  years 1964 through    1969.   (See p. 25.)

 It is recognized    that operation   and maintenance      costs are not constant      from
 year to year, but it is assumed that variations           would tend to level      out and
 that the magnitude     by which discounted   retention     costs exceed discounted        re-
 placement     costs would not be materially     affected.      The discount    factor   used
 in our illustration      assumes that these costs are incurred        continuously     through-
 out each year, that is, equal amounts daily.

Note:      Inflation      and other'factors     have been ignored  for purposes of this            il-
           lustration       as presumably   they would have a relatively    equal impact           on
           both the      old and the new quarters.




                                                     45
      AGENCYCOCKS        AND GAO EVALUATION
                                    --
             In ccmmenting an the foregoing Hypothetical    Economic
      Analysis,   DOD offered the following  items for consideration.
      The items are presented in the order      rovided by DOD, GAO
      comments pertinent     to each DOD comment, follow immediately
      thereafter.

            1, DOD stated that estimated demolition      costs of
               $15,000 should be included in the $40,000 con-
               struction    cost estimate for new quarters    since
               legally   the unit cost for construction    of new
.I.            family housing may not exceed $40,000, includ-
               ing site preparation     costs.
:i            The $15,000 demolition     cost was a conservative     estimate
.I    based upon the DOD request to improve certain general--officer
      quarters    in fiscal year 1970. This request estimated that
      demolition    costs would be about $15,000 a unit.         We had in-
      cluded the estimated demolition        cssts as a separate item of
       investment cost on the assumption that DODmight consider
       securing separate funding for demolition        costs involving     re-
      placement of certain     "prestige"    quarters.   However, since
      the DODmust live within the constraints          applied by the Con-
      gress and since the Congress may not accede to separate fund-
      ing, perhaps a more realistic        assumption would be to include
      demolition    costs in the $40,000 limitation,        Therefore,    we
      have revised our example to include the demolition           costs in
      the total investment cost of $409000.

            2. DOD said that the appropriate    discount factor
               for the base year should be 0.954 instead of
               1.000 because the DOD table of discount fac-
               tors was based on the assumption that costs
               were incurred continuously    each year,
             Using a discount factor of 0.9.54$ as suggested by DOD,
      would result    in discounting   for 6 months the initial    con-
      struction   costs of the new quarters,     This assumes that the
      quarters are occupied at the beginning of the year, but not
      constructed   until   the middle of the year.     We believe that
      such an assumption is unrealistic,       In our opinion,    a better
      approach is not to discount the initial       costs of


                                       46
                                                        APPENDIX IV

constmction,     Therefore, we have used a discount factor
of 1.000.    In any event? %he example is no% significantly
changed whe%her the discount factor used is 0.954 or 1.000.

     3. DOD said that the most sensitive        element in
        the economic analysis,was        the $14,600 average
        recurring      annual operation   and maintenance
        cost for Quarters 1 at Pensacola,          The Navy
        should be required to thoroughly        validate   and
        justify     this figure,     It appears unreasonable
        to expect annual operation        and maintenance
        cost of $14,600 for 25 years and a different
        estimate might be calculated        on %he basis of
        probability      factors and confidence    levels.

      The average cost used in our illustration    was based on
the estimated and actual costs incurred for the operation
and maintenance of Quarters lfor a period of 6 fiscal     years.
Depending on a number of variables,    the average cost couldp
over a 25-year period, either increase or decrease; however,
we believe this average to be representative     of the approxi-
mate costs which would be incurred if the building     is re-
tained over a 25-year period.

      Our review of the actual operation   and maintenance
costs reported for this unit for fiscal    years 1968 and 1969
showed the following   elements of cost comprising the bulk
of costs reported.                             !
                                         1968        1969
     Utilities cost                        $1,462       $1,671
     Grounds maintenance cost              $6,703       $2,796
     Dwelling maintenance cost            $18,266       $8,871
      The 1968 dwelling maintenance cost of $18,266 included
a project  for roof and structural    repairs of about $6,662,
and a project   for repairs and painting     of about $4,708.
The remaining costs were for routine maintenance.         The
$8,871 dwelling maintenance cost in 1969 included major reno-
vation costs due to a change of occupancy of the quarters
and also included repair of tornado damage.

      The 1969 grounds maintenance cost of $2,796 was shown
in the "other real property"   category on the 1969

                                 47
APPENDIX IV

consolidated     operation   and maintenance cost report and may
include minor amounts for such items as exterior           utilities,
The utilities     costs increased in 1969, apparently        due to
the installation      of air conditioning.      The construction      and
design costs for air-conditioning          these quarters amounted
to about $20,000 and are not included in the operation and
maintenance costs reported in 1968 or 1969.

      It appears to us, therefore,    that these costs are the
type of costs which, for the most part, could be anticipated
to recur on a cyclical  basis.     For this reason, we have used
the average cost of $14,600 in our illustration.

      4. DOD stated that questions should be raised
         about the true lleconomic life"      of 25 years for
         the existing    quarters at Pensacola.       DOD ques-
         tioned whether the operation and maintenance
         estimate included provision      for refurbishment
         and extraordinary     repairs which would extend
         the life of this unit to 25 years or longer.
         DOD stated that if it would be necessary to re-
         place the existing     unit before the end of 25
         years, assuming no extraordinary       repairs,   the
         alternatives    should be compared in terms of
         "uniform annual cost" instead of total present
         value cost.

       Information    available     to us indicated    that the opera-
tion and maintenance cost for the fiscal             years 1964 through
1967 included no major repair or replacement of equipment
for this quarters.        The fiscal    year 1968 cost included about
$6,662 for reroofing       and structural     repairs made in the
first   quarter of fiscal       year 1968 and $4,708 for major ex-
terior    repairs and maintenance painting         made in the second
quarter of fiscal      year 1968. In fiscal year 1969, mainte-
nance costs of $8,871 were incurred for this dwelling,              in-
cluding major renovation          costs for a change of occupancy and
including     costs for repair of tornado damage. We have as-
sumed that the expenditures          made would extend the dwelling
life for 25 years.              _               .,
     5. DOD said that the objective   of an analysis was
        to identify  the least costly alternative      and
        questioned whether all feasible   alternatives

                                   48
                                                           APPENDIX IV


         had been considered.      DOD said that, if the
         alternatives    of leasing comparable facilities
         or of providing    higher quarters allowances
         were practical,    they should be costed and in-
         cluded in the economic analysis.

       We agree that all feasible     alternatives     should be con-
sidered.     We did not consider in our analysis        the leasing of
comparable facilities      or the providing     of higher quarters
allowances since these alternatives         would involve substan-
tially   greater modifications    in the present method of pro-
viding family housing than would an increased replacement
program.

      6. DOD said that, for purposes of determining   the
         relative  priority of replacements justified
         solely on the basis of saving, a ratio of sav-
         ing to investment  (present value) could be com-
         puted.

     We agree.   We have no objection      to a priority      ranking
made on this basis.




                                  49
       APPENDIX V




     VP. C. M. Bailey
     Director, Defense      Division
     General Accounting      Office

     Dear Mr. Bailey:

           We have reviewed your draft report     on "Review of the Operation    and
     Mainten;tnce  Aspects of the Family Housing Management Account" transmitted
     by your July 20, 1970 letter      (OSD Case #31-‘c6). You offered  four main
     recommendations    or suggestions   based on the findings  of your review‘.
     Our comments on each of these fo3low:

           GAO: To -provide a more valid basis for comparison of operation         and
     maintenance   costs among the various Department of Defense Components, we
.:   recommend that the Secretary     of Defense consider the provision     of a more
     homogeneous categorization     of family housing for accumulating     and report-
     ing operation   and maintenance    cost data.  Such categorization    should take
     into account size, age, type of construction      and condition    of units.

            OSD: The Secretary            of Defense's      task force which developed the
     unifo=cost         crriteria     for Family Housing in February 1962, did consider
     the heterogeneous           conglomeration       of units in the Family Housing inventory
     ii, establishing        the currently        used categories.      They were aware that age,
     size, type of building,             construction      material,   geographic    location    and
     condition     all affect       operation      and maintenance     costs.     The task force also
     recognized     i.hat a capability          to compare a three-bedroom,         one and one-half
     bath, 1,000 to 1,080 square foot,                 frame construction,      row house, in the
     northeast,      built     in 1958 for enlisted         personnel   with any or all other units
     of the same cE,aractcristics             would be quite useful.          However, the task force
     ;;new that separate reporting              of such a complex categorization           to the
     echelons of review and command above the tnstallation                      would be very
     vo1uminous and costly.              The review effort        would involve    an enormous number
     01' recordations,         summarizations,        and reports.

            Rather than impose this enormous Thlorkload, the task force recommended
     adoption of summary categories         that would be useful        in the Office of the
     Secretary     of Defense for policy      guidance and in the DOD Component Headquarters
     for centralized      program management and budget formulation            and execution.
     Through the years these summary categories               have worked very w'ell.     They
     provide    data to OSD and DOD Component STeadquarters that are meaningful                and
     1xe13~1 for mmgernent       and budgeting.      (3 vqwri   sons and  evaluations   are
                                                                              APPENDIX V

currently    made and do detect       areas where more detailed          examination     is
warranted.

        A working group, consisting    of OSD and DOD Component personnel,              is
currently     working to improve cost accounting       for operation       and maintenance
of family housing by recommending measures to clarify              current    DOD In-
structions      in order to ensure more uniform implementation           and interpretation.
This DOD-wide group does not agree that the advantages of a more common
relationship      among types of housing would justify       the increased      cost and
effort     needed to provide data for a larger number of categories             based on
size, age, type of construction       and condition      of units.     While the group
has not yet completed its work, it currently           expects to recommend only a
few minor changes in categorization.       These changes are intended           to make
unit cost averages more consistent,       but the changes will         not be to the
extent advocated by the General Accounting          Office.

        In general,        at installation         level,   the differences     in houses are known
specifically         and considered         in work plans and the allocation          of resources
for operation          and maintenance.           At the next higher level,       where comparisons
between installations             are useful in approving work plans and in allocating
resources        for their    accomplishment,          reviewing    officials   are familiar    with
their     installations       and are able to evaluate            the data provided     by the
summary categories.             They would not fall into the traps pointed out by the
General Accounting           Office     illustrations.         At higher levels,    the summary
categories         serve the intended purpose well since no installation                    by
installation         review and approval is required              or necessary.

       Accordingly,   we believe we have, as you recommended, considered
providing     for more homogeneous categorization       of housing.     We conclude,
however, that the larger       number of categories    required    would not offer
benefits    commensurate with the additional       cost required.

        GAO: To provide for a greater         degree of uniformity        in the accumulation,
recorzg      and reporting      of operation   and maintenance        cost data, we recommend
that the Secretary       of Defense issue more comprehensive            and definitive
directions      designed to avoid the more salient         variations      currently    existing
among installations        in the Department    of Defense (costs of operating             and
maintaining       family housing should be accumulated         and recorded at each
location    utilizing    the same principles,      procedures,      and internal      controls).

        OSD: We agree that our Instructions              can be more definitive       and, as
mentioned above, a working group is currently                 in the process of developing
recommendations      to clarify    current     DOD Instructions       in order to ensure
more uniform implementation          and interpretation.         The need for the group's
effort    arose from a recognition         that discrepancies        and inaccuracies     occurred.
Admittedly,     the usefulness      of cost data is affected          by these discrepancies
and more meaningful        comparisons would be possible           from more uniform      inter-
pretation     and application     of the cost accounting         system.     However, the
comparisons     that are made are useful         and they serve to uncover discrepancies.
          It. mus:    also be recognized          that,    for efficiency        ill operationsJ
Tamily housing costs in many cases are initially                          financed     from ,appro-
p-f*i:il. -ion, available       for service or agency operation                and maintenance         othel~
 L&n family housing or from industrial                       funds, with such costs s~iasec~ucntly
being rcimbl:rsed          with family housing funds.                There <are inherent        differences
 in the accounting          sysLems for the activities               operating      under the different
funding        arrangements.        An activity        operating     under the industrial          fund has
a commercial-type           accounting        system which provides          for the application           of
all overhead to work performed.                    Many of the actisities            operating     under
appropr.ations           do not have such a system.               Since, at present,         it is
impractical         to install      the same type of accounting              system at all DOD
activities,         the inherent       differences       in these systems must be recognized
and a certain          amcunt of non-uniformity              accept.ed to obtain the optimum
systems.          In an effort      to provide uniformity,            the instructions         on family
housing pro-Jide that administrative                    overhead will be charged on an
 incremental        basis:    i.e.,    family housing will be charged only for adminis-
trative       overhead which would not have been incurred                      if family housing were
not serriced          by the activity.          One of the main tasks of tne working group
is to clarify          language in this area.

        Upon complete implementation      of DnDI 7220.27,    "Accounting  for Accrued
Zxpenditures    and Revenues," by all appropriations         and funds ol' the Depart-
relent of Defense, more uniform treatment        of family housing costs will be
practicablcLc:    In the meantime, clarification       of the language used in DOD
Tnstructions    recognizing   differences    in funding and accounting     for the
organizations     supporting  family housing will be pursued.

        GAO: We also recormnend that the internal    audit efforts                       of the military
services    emphasize coverage of this area in their     regularly                      scheduled audits
<>f' family housing activities.

       OSD: The myriad operations             of the Dep:at,ment of Defense nre provided
inter=      audit coverage consistent             wi.th the significance       of the operation
and overall     audit priorities.          Pmsuant to this policy,           f<amily housing
operations    and the related         accounting       flxlctions   are audited in the performance
OS comprehensive      installation        audits.        'B-is audit coverage w'ill be continued
in the future     and will      continue to cmphaeizc- ar?herence t,o the requirements
of DOD issuances.

        GAO: We recommend that the Secretary           of Defense provide the Congress,
in an&l       ilonstruction     authorization requi-sts,   with a -phased plan for the
orderly    replacement      of family hous-ing units no longer economical 'LO operate
and maintain.         This woilld cnabie ?hc Con,yress to consider the merits      of



                                                     52
                                                                          APPENDIX V

authorizing   current   expenditures    to achir-ve   future   savings    ' operr:5ion
                                                                         In              CInd
maintenance   costs.

       OSD: We agree that there should be a phased plan for the orderly
replacement    of family housing units no longer economical to operate and
maintain.     However, DOD is faced with a'continuing       and substantial deficit
in housing requirements.      Many of our military    families   arc unable to live
together    in adequate houses.   Further, we need to keep our representational
quarters    even though some may be uneconomical    to maintain.

       We have recognized         these problems and have established     a system to
specifically      identify     the costs of those units with high operation       and
maintenance     costs.      This aids us in reducing these costs and in making
economic analyses to support eventual replacement.               As soon as our more
urgent priorities         are met, a specific     request will be presented   to Congress
for authorization         and funds to construct;     housing to replace uneconomic
housing.

Other   Comment

      The statement   in Chapter 1, Introduction,       on page 5, that DOD received
an appropriation    of about $357 million    for G&M of Family Housing in FY 1370
may be misleading.      This amount apparently    includes   the leasing program.
Funds appropriated    for 08&l of the inventory     of approximately    364,000 dwelling
units amounted to about $373 million.

      We appreciate     the thoroughness    and objectivity      of the review evidenced
by your draft    report    and the Military   Departments    will   take action to correct
the- causes of the specific       errors you cited.      With regard to your economic
analysis,   some technical     comments are enclosed that you may wish to consider.

                                              Sincerely,




                                             Robert C. Moot
                                 Assistant     Secretary of Defense
Enclosure




                                             53
 APPENDIX V




        1.  S?ction jo2 .b . or" thi Militar,jJ Authorization      Act of Y;170 provides
tt-laiz the single unit cost for construction       of new family housing may not
exceed $40,000 includin g site preparation         costs.     Therefore,  total project
costs are overstated     by $15.000 since the demolition          costs of $15,000
should be included     in the $~+O,OCO construction       cost estimate for new
quarters.

        2. The appropriate  discount  factor for the base year should be .954
in accordance wi-th DoDI 7041.3 instead of 1.000.     The table of discount
factors    is based on the assumption that costs are incurred   continuously
each yesr.

       3. The most sensitive        element in the economic analysis     is the $14,600
average recurring    annual Q&M cost for Quarters        1 at Pensacola,   Florida.
This amount needs to be thoroughly          validated  and justified.    On the surface
it would appear unreasonable          to expect annual O&M costs of $14,600 for 25
years.   A different    estimate might be calculated       based on probability
i'actors and confidence     levels.

       4.   Questions    should be raised about the true Heconomic life"           of
25 years for the existing       dwelling   unit.     Dozs the O&M estimate     include
provision    for refurbishment     and extraordinary     repairs   which would extend
the economic life       of this unit to 25 years or longer?          If it would be
nEcess3ry to replace the existing         unit before    the   end of  25 years assuming
no extraordinary      repairs,  the alternatives      should be compared in terms of
"uniform   annua-L rest" instead of total present value cost.

              It should be noted that the example assumes "equalbenefitsl'
(output).       That is , thI: Sitme Level of niilitary      effectiveness      will result
regardless      of whirh alternative      is selected.      The objective     in this case
1s T of course, to identify         the least costly alternative,          or the alternative
that minimizes       cost for a given level of benefits.             But, have all feasible
alt~:rnativee      been considered?     If the a,:Lternntives      of leasing comparable
facilities       or providing   higher quarters     allowances     are practical,    they
should SC costed and included in the economic analysis.
       r
       u.   For purposes of determining  thr         relative   priority   of replacements
justified    solely on the basis of savings,          a savings/investment      ratio
(present    value) could be computed.




Enclosure


                                            54
                                                  APPENDIX VI


                  PRINCIPAL OFFICIALS OF

                 THE DEPARTMENTOF DEFENSE

               AND THE MILITARY DEPARTMENTS
       RESPONSIBLEFOR ADMINISTRATION OF ACTIVITIES

                 DISCUSSED IN THIS REPORT


                                      Tenure of office
                                      From            To
                                                      -
                   DEPARTMENTOF DEFENSE
SECRETARYOF DEFENSE:
   Melvin R. Laird                 Jan.    1969   Present
   Clark M. Clifford               Mar.    1968   Jan.    1969
   Robert S. McNamara              Jan.    1961   Feb. 1968

DEPUTY SECRETARYOF DEFENSE:
   David M. Packard                Jan.    1969   Present
   Paul H. Nitze                   July    1967   Jan.    1969
   Cyrus R. Vance                  Jan.    1964   June 1967
   Roswell L. Gilpatric            Jan.    1961   Jan.    1964

ASSISTANT SECRETARYOF DEFENSE
  (COMPTROLLER):
    Robert C. Moot                 Aug.    1968   Present
    Robert N. Anthony              Sept.   1965   July    1968
    Charles J. Hitch               Feb.    1961   Aug. 1965
ASSISTANT SECRETARYOF DEFENSE
  (INSTALLATIONS AND LOGISTICS):                                  B
     Barry J. Shiliito             Jan.    1969   Present
     Thomas D. Morris              Sept.   1967   Jan.    1969
     Paul R. Ignatius              Dec.    1964   Aug. 1967
     Thomas D. Morris              Jan.    1961   Dec. 1964
DEPUTYASSISTANT SECRETARYOF DE-
  FENSE (FAMILY HOUSING):
    John J. Reed                   Feb.    1962   Mar.     1969


                              55
    APPENDIX VI

                                              Tenure of office
                                              From            -TQ
                       DEPARTMENTOF DEFENSE(continued)

    DEPUTYASSISTANT SECRETARYOF DE-
      FENSE (INSTALLATIONS AND HOUS-
      ING):
        Edward J. Sheridan              *aY      1969    Present


                      DEPARTMENTOF THE ARMY

    SECRETARYOF THE ARMY:
       Stanley R. Resor                 July     1965    Present
       Stephen Ailes                    Jan.     1964    July    1965
       Cyrus R. Vance                   July     1962    Jan.    1964
       Elvis J. Stahr, Jr.              Jan.     1961    June 1962

    ASSISTANT SECRETARYOF THE ARMY
      (INSTALLATIONS AND LOGISTICS):
         3. Ronald Fox                 June      1969    Present
        Vincent P. Huggard (acting)    Mar,      1969    June 1969
         Robert A. Brooks              Oct.      1965    Feb. 1969
        Daniel M. Luevano              July      1964    Oct.    1965
        A. Tyler Port (acting)         Mar.      1964    June 1964
        Paul R. Ignatius               May       1961    Feb. 1964
Q

                      DEPARTMENTOF THE NAVY
                      --
    SECRETARYOF THE NAVY:
       John H. Chaffee                 Jan.      1969    Present
       Paul R. Ignatius                Aug.      1967    Jan.    1969
       Paul H. Nitze                   NQV.      1963    July    1967
       Fred Korth                      Jan.      1962    Nov. 1963
       John B. Connally                Jan.      1961    Dec. 1961
    ASSISTANT SECRETARYOF THE NAVY
      (INSTALLATIONS AND LOGISTICS):
         Frank P. Sanders              Feb.     1969    Present
        Barry J. Shil lito             Apr.     1968    Jan.    1969
        Vacant                         Feb.     1968    Apr.    1968
        Graeme C. Bannerman            Feb.     1965    Feb. 1968
        Kenneth L. BeLieu              Feb.     1961    Feb. 1965
                                 54
                                                               APPENDIX VI


                                                  Tenure     of office
                                                  From                   To
                                                                         -

                        DEPARTMENT OF THE AIR FORCE

SECRETARY        OF THE AIR FORCE:
    Robert        C. Seamans, Jr.          Jan,       1969       Present
    Harold        Brown                    Oct.       1965       Jan.    1969
    Eugene        M. Zuckert               Jan.       1961       Sept. 1965

ASSISTANT SECRETARY OF THE AIR
  FORCE (INSTALLATIONS AND LOCIS-
  TICS):
     Phillip N. Whittaker                  Apr.       1969       Present
     Robert H. Charles                     Nov.       1963       Apr.    1969
     Vacant                                Oct.       1963       Nov.    1963
     Joseph S. Imirie                      Apr.       1961       Sept.   1963




U.S. GAO, Wash., D.C.