La Teoría de las Expectativas de Vroom

A. INTRODUCTION

During Congressional testimony on 13 March 2002, Raymond F. DuBois, DUSD for Installations and Environment, explained the urgent need to improve militar y family housing conditions saying,

We’re competing with the private sector for the best young people in our country. We can’t simply count on their patriotism and their willingness to sacrifice alone. Sustaining the quality of life of our people is crucial to recruiting, crucial to retention, and especially crucial to our readiness to fight.

Clearly, quality of life and its connection to recruitment, retention and force readiness, and the effect housing conditions have on quality of life, are major conc erns within DoD. While most agree that adequate, affordable housing contributes to the betterment of service members, their families, and ultimately to DoD, many disagree on the best method to obtain and provide this housing to service members.

B. MILCON

1. Conclusions

Although MILCON has been the primary method of obtaining on -base MFH for over fifty years, its funding levels have consistently fallen short of DoD’s construction, renovation and operations needs, perpetuating the inadequate housing problem. Given current Federal budget pressures and those projected in the future, it is unlikely that MILCON will ever solve the MFH problem. However, Congress still views MILCON as the primary method for constructing, renovating and operating on -base housing, but is unlikely to fully relinquish the budgetary control associated with it.

2. Recommendations

Recognizing that Congress prefers MILCON to MHPI, DoD should continue using MILCON to the maximum practicable extent, while gradually decreasing its reliance on it. MILCON is best suited for planned renovations of existing on -base units or construction of new on-base units only when a weak or non-existent local housing market renders MHPI or private-sector housing unviable. DoD could reduce MILCON costs by building to commercial standards and using a private contractor to operate and

maintain its MILCON inventory using performance incentives based on military family satisfaction surveys.

C. BAH

1. Conclusions

Housing Allowances, specifically BAH rates, are the clearly the central variable in the demand/supply equation for housing service members and their families. Lower allowances, requiring significant out-of-pocket expenditures for those living off base, and free utilities on base caused the historically strong demand for on -base housing. By 2005, the BAH rate increase initiative will eliminate this variable and the associated cost disparity between private sector housing and MFH. While each installation’s local economy and private sector housing market is unique, higher BAH rates will decrease the demand and need for MFH by making rental and ownership in the local market more feasible for service families, and by attracting private housing investment from non - military individuals. However, increased availa bility and usage of private sector housing resulting from higher BAH rates may not materialize for several more years because of the culture of ‘government housing’ and historical presence of large MFH stocks.

BAH is also the single most important factor in MHPI deals for two reasons. First, it is not budget scored, thereby increasing the attractiveness of the Government’s funding profile for MHPI projects and making them more palatable for Congressional approval. Second, it provides most of the cash flow ing into an MHPI project. Increasing these cash inflows attracts more developers to MHPI projects, increasing competition and quality, and reducing costs. Increasing BAH rates also reduces the need for other forms of Governmental financial participation such as equity investments and direct loans that increase government risk and exposure to loses.

2. Recommendations

DoD should ensure the success of the BAH rate increase initiative to obtain and maintain BAH rates at 100% of total housing costs. Over tim e, BAH rate increases can be partially offset by cost savings resulting from a reduced reliance on and a partial divestiture of the more costly MHPI and MILCON programs.

Service components and individual installations must ensure that MHPI deals have adequate measures to ensure appropriate capture, use and control over excess cash inflows resulting from increasing BAH rates.

D. MHPI

1. Conclusions

MHPI provides a flexible, achievable and appropriate bridge between private sector housing and traditional MILCON housing. Although few MHPI projects are completed, little historical data is available for collection and analysis, and many control and evaluation processes are still under development and refinement, it seems that MHPI is meeting its objective of solving the military housing problem. MHPI’s most attractive feature is its ability to construct and renovate housing units significantly faster than traditional MILCON funded methods could. Projections indicate that MHPI costs about 10% less than traditional MFH funded by MILCON appropriations but is still more costly than private sector housing funded by housing allowances, and accurate long -term LCC estimates are fraught with interpretations and assumptions. MHPI projects also provide housing comparable to the local private housing market rather than the one-size-fits-all units typical of traditional MFH. Through HRSO oversight and inter -service cooperation, many lessons learned from earlier MHPI projects and lessons from the Wherry, Capehart and Section 801/802 programs have also been incorporated into the MHPI deals structures.

2. Recommendations

DoD should not base any project decisions on the anticipation that MHPI will be less costly than traditional MFH since cost growth is far more prevalent in Government operations than savings realizations.

DoD should use MHPI to bridge the gap between traditional MFH funded by MILCON and private sector housing funded by BAH. It is best suited for constructing and renovating units when sufficient MILCON funding is not available and should be targeted for installations in robust real estate markets that can absorb the MHPI units if the installation downsizes or closes.

E. BUDGET SCORING 1. Conclusions

Budget scoring has a significant impact on decisions surro unding the housing issue, especially those decisions concerning the use or non -use of the MHPI authorities and to what degree those authorities are used.

As more MHPI units become available and occupied by service families, budgetary requirements and cash flows will shift from the MILCON-O&M accounts to the Military Personnel (BAH) accounts which may cause increased Congressional interest in BAH, likely resulting in increased Congressional control and oversight since BAH is essentially an entitlement to all service members with dependants.

2. Recommendations

DoD and the services must continue to carefully evaluate and improve the MHPI project decision criterion to ensure that individual MHPI deals are not only affordable under budget scoring rules but are also financially sensible in the long term.

F. UTILITY SERVICES

1. Conclusions

Utilities are a significant cost component to providing MFH either through MILCON or MHPI, and have historically represented the out -of-pocket cost difference between private sector housing and MFH. Tenants tend to have little regard for conservation and consume more utilities when they are provided free of charge. Conversely, consumption decreases and conservation concerns increase when tenants pay their own utility costs. While the utility allowance method helps prevent excessive use, it does not promote true conservation because tenants do not financially benefit from extraordinary conservation efforts.

2. Recommendations

Tenants of both MHPI and traditional MFH should be directly financially responsible for their utility costs. While the allowance system is acceptable where individual unit metering is not available, direct payment to the utility provider is the preferred method where metering is available and should be incorp orated into all new and renovated units.

G. RETENTION 1. Conclusions

Initial survey results indicate tenants are happy with MHPI, seeing it as a vast improvement over the MILCON alternatives. Service members are also pleased with the BAH rate increases which broaden their housing choices. While difficult to measure or quantify, choice increases career satisfaction and retention. Whether it is a choice of duty station, military occupational specialty (MOS), reenlistment bonuses or housing, service members respond positively to choices.

Service members’ retention decisions are increasingly based on overall career satisfaction, including family members’ satisfaction with the prospects of a military spouse or parent. Since housing conditions are closely t ied to service member and family members’ satisfaction with a military lifestyle, improving housing through BAH and MHPI will inevitably lead to higher retention.

2. Recommendations

DoD should use the housing improvements as quality of life advertising mat erial for its recruitment and retention programs, reducing recruitment and retention costs and improving effectiveness resulting from increased force continuity.