More Trouble on the Home Front

When the Pentagon privatized military housing, they thought they struck a bargain — but military families have paid the true cost.

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Nightmare Homes

In the mid-1990s, the Pentagon faced a serious maintenance backlog for military housing. Estimates placed the cost and time of addressing the backlog at $20 billion and up to 30 years. But under the Military Housing Privatization Initiative (MHPI), the Department of Defense (DOD) was able to outsource the management of some on-base housing to private developers, who would invest capital and resources to fix up the homes. They would thereafter take over maintenance and operation of the housing inventory, while the Pentagon retained ownership of the land.

Now, almost three decades later, 99% of military family housing in the U.S. is owned and operated by private companies. And though the public-private partnership may have saved the Pentagon money at the time, military families have paid the price in the long run. The contracts that solidified this partnership, including those published in POGO’s investigation, reveal the bigger picture.

In a previous edition of this newsletter, POGO Investigator René Kladzyk explained the poor housing conditions — including asbestos, lead paint, leaking sewage, and pest infestations — that some military families have had to endure, with few avenues for recourse due to seemingly apathetic landlords and a rigged oversight process. Today, René is back to share the key findings of her new investigation into the contracts between the Pentagon and these private companies that enabled these problems.

The writing was on the wall The arrangement was lopsided from the start. By entering this partnership, housing developers stood to gain a steady flow of tenants who cannot withhold rent (as rent on-base is often deducted automatically from service members’ basic allowance). In turn, they would have to maintain houses that are competitive with the local market. “But that was a false premise,” René explained to me. “There’s often no real competition or incentive to maintain good homes because many service members can’t afford to live off-base anyway.”

The contracts essentially set the dynamic in stone. “The government signed away a lot of their oversight authority in contracts that stretch for half a century,” René said. “The Pentagon entered into these contracts without realizing all the ways they tied its hands. Lawmakers have told me that they believe these contracts were naive on the government’s part.”

Devil’s bargain Through our research, POGO was able to obtain and publish several contracts between the Pentagon and these housing corporations.

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René pointed out three facets of these contracts that give private companies the upper hand:

  1. Ultra lengthy contract terms. In negotiations, these companies received contracts that would lock them in for decades — in many cases, 50 years. “Because these contracts predate the oversight provisions [which you can read about in a previous edition of the Bridge], compliance is voluntary,” René explained.
  2. Nearly impossible to cancel. Provisions in the agreements and the involvement of third-party financiers make it unclear — even to some congressional leaders — whether the Department of Defense can terminate the contracts with these companies. In her investigation, René highlights how one of the housing companies continued to engage in misconduct even after it pleaded guilty to a count of fraud against the United States.
  3. Little-known legalities. A legal concept called the “federal enclave doctrine” makes it so that many contemporary environmental, housing, and consumer protection laws don’t apply on military bases. Basically, in these federally owned lands, the laws are stuck in whatever year the land was ceded to the government. “One of the military housing attorneys I talked to said that this doctrine was used as a defense in nearly every military housing case he’d seen, with companies arguing that they don’t have to follow some present-day laws,” René told me. “This includes trying to avoid laws preventing ‘deceptive practices’ like lying to tenants about housing conditions or the status of repairs.”

What makes it all even worse is the sheer volume of contracts. René laid out the numbers for me: “You have 14 military housing companies who own a total of 78 housing projects. Each of those projects has its own set of legal agreements, and each of those can be hundreds of pages long. And because of the federal enclave doctrine, you’re dealing with different sets of tenants’ law even within a single military base. So, for a service member to try to make sense of what their actual tenant rights are, it’s just an overwhelming gauntlet.”

The fight for tenants’ rights Safe housing is a basic need. And with service members dedicating their lives to this country, the government should ensure that need is met.

But problems persist despite efforts to improve oversight, in large part because of these iron-clad contracts. But there are other ways the Pentagon and Congress can claw back their power from these companies. One solution, René told me, was explained to her by military housing case litigator Ryan Reed. René said, “A potential solution would be if Congress passed a law to make present-day state and local environmental, housing, and consumer protection law applicable on military bases, as workaround to the federal enclave doctrine. There’s already an exception for criminal law, so it’s feasible that the government can do more to protect these families’ rights.”

Read René’s new investigation on and Mother Jones now.

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