of the detailed criteria is attached as appendix A to this statement for your information. The Marine Corps has made a case study of this matter using an existing project at Camp Lejeune in North Carolina. They are prepared to make a special presentation to the committee on this particular subject. It should be recognized that not all of this type of housing is as good as this particular Marine Corps project. However, we feel that where we have projects that are as economically sound as the Lejeune project that it would be extremely detrimental to morale and financially imprudent to dispose of these units. We estimate that about 20,000 units for all services are in this category. We expect to meet the greater part of our foreign requirement through a revised rental guarantee program which is included in this year's legislative request. The current rental guarantee authority expired June 30, 1963. Under that authority we obtained 5,538 housing units in foreign countries. Our experience shows that the actual cost to the Government resulting from our liability under this program has been about $6.50 per unit per month through December 31, 1962. We are proposing a new rental guarantee authorization for use in foreign countries. The aggregate amount to be guaranteed during any fiscal year could not exceed an amount specified in the appropriation act. Such a program contemplates extending to foreign builders guarantees not in excess of 97 percent of anticipated rents, for a period not in excess of 10 years, in consideration for construction of housing in designated localities for occupancy by military families. We would further stipulate that the average guaranteed rental on a project would be limited to a maximum of $150 per unit per month. This program offers the most economical means for meeting our needs in certain foreign countries and produces controlled housing at no investment cost. If the level of occupancy is maintained the only cost to the Department of Defense will be the normal housing allowances paid to the military families. We also are proposing that the Congress repeal the existing authority allowing an increased maximum limitation on net floor areas in family housing outside the United States; experience has shown we can build adequate units without using this expanded authority. Also proposed is an amendment to the existing law to permit reimbursement to the Commodity Credit Corporation for foreign currencies used in constructing oversea family housing at a flat rate of $10 million per year. The existing law requires a complex procedure of computation and bookkeeping to determine the amount to be paid to Commodity Credit. We believe that this amendment will assist materially in simplifying administration of our funding program. With respect to the various existing cost limitations on military family housing, we have found that the limitations enacted by Congress last year are currently acceptable and we propose no change to these limitations this year. Appendix B to this statement shows the complete funding picture for all military family housing for fiscal year 1964. This year's program will require a total single appropriation of $734.4 million. This is the amount which requires authorization in accordance with section 507 of last year's Military Construction Authorization Act. In addition, anticipated reimbursements which we are authorized to use for housing purposes amounting to $5.2 million bring our total funding plan for fiscal year 1964 to $739.6 million. Copies of the detailed financial program summary are before you and will be discussed at the conclusion of the presentations. At that time, each line item on appendix B will be explained in detail. Because of the committee's special interest in the management of family housing, we would like now to mention some of our management controls and practices. Last year Congress authorized a military family housing management account. This account provides the mechanism to simplify the control and administration of the funds appropriated for this purpose. Funds for housing currently come from 16 different appropriation and fund sources, and are placed into the account for three major functions-construction, debt service, and operation and maintenance. These moneys are in turn allocated to the services and agencies to perform the job in the housing areas based upon development and justification of requirements for each of the categories. We have found the account to be an extremely effective management tool for the control of housing moneys. This year we are proposing to the Appropriations Committees a single appropriation for all costs of housing. This appropriation will be compatible with the total authorization for all family housing costs being sought from this committee. This will be a further simplification of the procedures for management of housing funds. Another important financial improvement is the uniform cost accounting system for operation and maintenance of family housing. This system was put into effect in July 1962. We are currently receiving our first full year of operation reports and although it is apparent that some refinements are required, we feel that the information gathered by the system constitutes a valuable improvement and provides the basis for better management by ourselves and the military departments. We have compared our actual cost data from the cost accounting reports for the first 6 months, fiscal year 1963, with our budget estimate for O. & M. for fiscal year 1964. Our actual average costs based upon all types of units, for the first 6 months of fiscal year 1963 came out to $369.60 per housing unit, or $61.60 per month. This represents 44 percent of our projected unit cost of $832 for the entire year. The second half of the fiscal year will average out to a slightly higher cost because of several factors, including the fact that there are more days of winter weather in the second half of the year, and that many of our maintenance and repair contracts normally are costed in the latter half of the year. In analyzing the first 6-month cost reports we have found that our budget estimates for O. & M. for fiscal year 1964 have been supported and validated. Also of interest is a new management reporting system for family housing which has been established to provide improved inventory, occupancy, and assignment reporting by the field level. Other areas in which we are working deal with the establishment of uniform standards throughout the military departments. First, we are attempting to clearly define those maintenance standards which will provide adequate living accommodations, protect the structures from deterioration, and at the same time assure economical O. & M. costs. Next, we feel that the Government's responsibility versus the tenant's responsibility for maintenance of family housing units must be more clearly defined. This is being done and applied on a uniform basis through the services. We also are working on the establishment of occupancy standards for the improved utilization of family housing units. We must think in businesslike terms, and set and measure our utilization against realistic standards similar to those used by large commercial project operators. In the area of improved design and construction practices, we are developing and compiling a design portfolio. In the past we have spent millions for design effort. We feel that we have now reached the point where housing design can be stabilized and the major effort in the future should be local site adaptation and utility support; this we believe will result in significant savings. However, this design stabilization does not mean that we are seeking a stereotyped house we intend to have variety within an area-but it does mean that we will settle upon certain styles and types. There is no valid reason, in our opinion, for housing units to differ markedly between the services within a given geographic area. Another area we are strongly emphasizing is the firm scheduling of award and completion dates for housing projects which have been authorized and funded. We accept our responsibility to quickly execute the authorizations given to us. We recognize that not only will earlier availability place military families in adequate quarters more quickly, but also that for every month which can be cut from construction leadtime we can save appreciable amounts in BAQ payments. We are monitoring this carefully during the execution phase of the 1963 program against the project schedules established by each military department. Our progress to date is favorable compared to previous years; as a matter of fact, this is the first time in recent years that our entire domestic and oversea program was placed under contract by such an early date. With the contract award of a 40-unit project by the end of this month, the entire fiscal year 1963 execution program will have been placed under contract. Our first award was made on January 9, 1963, 60 days after funds were made available to us; considering advertising and bid evaluation time, this is considered to be good. We think this progress is significant, but we are not satisfied and will take every step to expedite occupancy. In the execution of our construction program we are continuing to emphasize the maximum use of single-design responsibility, common siting, and Joint construction awards by the military departments. The concept of satisfying urgent housing requirements by providing "investment hedges" at those locations where long-range utilization cannot be accurately foreseen has been implemented. This is demonstrated by the construction of about 1,000 relocatable-type housing units at various Air Force installations as part of our fiscal year 1963 execution program. The relocatable unit was developed by the Air Force. It is not a trailer, but is a complete house which can be folded into a package which is capable of being transported over the highways. At the site, it is erected on preprepared foundations in less than a day and becomes an attractive living unit with a minimum of three bedrooms and one and one-half baths. Its advantage lies in its capability of being moved to another location at a minimum investment loss if a situation develops requiring this. In order to satisfy our urgent oversea housing construction requirements and at the same time minimize the gold flow effect, we conceived a concept called Project USAHOME. This is a plan of furnishing American manufactured componentized housing units for erection overseas. This is a realistic solution to the oversea housing construction problem. Manufacture of these housing units is currently underway. One further comment regarding our efforts in the design and construction of family housing should be made. As the largest single constructor of family housing and as the manager of the largest inventory of family housing, the Department of Defense has an opportnuity and a responsibility to seek and engage in those techniques that will procure the highest housing value obtainable at the lowest possible cost. Such attainment, while achieving optimum utilization of appropriated funds, should concurrently engender new productivity in the construction industry. In view of the foregoing, a Military Family Housing Design Advisory Council will be established. The Council will have the primary responsibility for selecting, monitoring, and coordinating the techniques, materials and/or equipment to be included in our construction program on an experimental basis. The Council will be comprised of Government and nonGovernment representatives. All data ensuing from the DOD family housing construction program developed either in-house or on an experimental basis in collaboration with industry will be appropriately publicized and made available to the public. In closing, we would like to say that there is no single solution, in our opinion, to the family housing problem of the military departments. All facets of the program, including increased community support, new construction, trailer courts, leasing, retention of permanent rentals, and utilization of rental guarantee housing, are needed to accomplish our mission of providing decent housing in order to retain well-qualified military personnel. We appreciate this opportunity to present to this committee our fiscal 1964 military family housing program. This is a joint effort between the Secretary of Defense's Office and the military departments to accomplish a desirable objective. APPENDIX A CRITERIA FOR RETENTION OF SUBSTANDARD HOUSING I. Applicability These criteria shall apply to all units in inventory except those which are fully adequate public quarters. II. Termination date Units which do not meet these criteria shall be improved, demolished, or otherwise disposed of by July 1, 1965. Units which meet the criteria shall be retained for the duration of the need or their economic life. III. Condition A. Units must be "decent, safe, and sanitary," and must conform to certain minimum standards listed in enclosure 1. B. Condition must be such that no improvements will be required, except minor improvements necessary to render the units safe, decent, and sanitary. A determination must be made that the units cannot be made adequate as public quarters for a reasonable expenditure of funds. C. Trailers will be considered suitable for continued occupancy only by lower pay grade personnel. IV. Costs and income A. Rents or adjusted BAQ forfeitures will be established on the basis of comparability with private housing as determined by commercial appraisals, in accordance with current instructions. B. Repairs and minor improvements, either initially or during the remaining life of the units, will be limited to those projects the cost of which is recaptured by the Government within a 2-year period. This is, rental income during the period must be sufficient to cover all O. & M. costs plus the cost of any repair or minor improvement project. C. The annual income received for each project must not be less than the annual cost of operation and maintenance (including military labor) as reflected in the family housing O. & M. cost accounting system. D. In the event that excessive vacancies should reduce project income below the level of O. & M. costs, either the entire project must be disposed of, or enough units must be closed to reduce the O. & M. costs to the actual income level. E. Average utility charges will be added to shelter rents (and included in O. & M. costs) to afford comparison with adjusted BAQ forfeitures. V. Requirements A. There must be a need for the units which cannot be met by locally available private housing. This need must be determined in accordance with current programing criteria. Under no circumstances will units be retained in order to provide a financial windfall to occupants, where adequate private housing is available at reasonable costs as prescribed in current criteria. Moreover, units will not be retained where inadequate, but comparable, private housing is available. B. The requirement must be: 1. For eligible personnel pending scheduled new construction replacements. 2. For eligible personnel in cases where replacements are precluded by the short-term or indefinite nature of the need. 3. For lower pay grade personnel. 4. For special transient use, such as for occupancy by personnel of ships undergoing overhaul. Units will not be retained for temporary occupancy by personnel seeking private housing or awaiting assignment to onpost quarters. 5. For nonkey but essential lower grade civilian employees at isolated installations. STANDARDS OF ADEQUACY 1. General.-Living units shall be reasonably safe with respect to structure, 'operation, access, and environment without hazard to life or health, and shall provide moderately comfortable living conditions. 2. Required spaces.-Living units shall provide the following separate areas and facilities within the house proper: (a) Private bathroom facilities to include one lavatory, one water closet, and one bathtub or stall shower. (b) Private area (s) for sleeping with access to exterior window (s) and natural ventilation, and capable of accommodating standard bed (s) and storage of clothing. (c) Food preparation area with sink and running water, and space for range, refrigerator, and food preparation. (d) Living area. (e) Dining area which may be included in living or food preparation areas. (f) Hot and cold water piped to required fixtures in bathrooms and food preparation areas. (g) Operable heating facilities where climate makes heating essential. (h) Safe electrical outlets and/or fixtures in each of the separate areas listed above. (i) A continuing supply of safe and potable water. APPENDIX B Total requested authorization (housing) application of funds, fiscal year 1964 [In thousands] Source by appropriation category: Construction: Army Navy Air Force_. Defense agencies----. Total, construction____ Operation and maintenance: Army-. Air Force__ Defense agencies Total Operation and Maintenance____ Total single appropriation__. Anticipated reimbursements_ Total available funds__ Application of funds: Construction of new housing (12,000 units) (table 1). Improve substandard units to adequate (table 6). Planning (table 8)- Rental guarantee payments (total 9) $57, 357 94, 679 97, 857 50 249, 943 188, 290 95, 981 197, 583 2,546 484, 400 734, 343 5, 236 739, 579 217,000 2, 543 2, 590 6, 810 10, 771 4, 520 3, 509 1,000 Operating expenses (table 10). 1, 200 Leasing (table 11) 174, 190 Maintenance of real property (table 12) 18, 559 Capehart debt payments (table 13). 124, 729 Wherry debt payments (table 14). 121, 127 Commodity credit debt payment (table 15) 36, 626 Servicemen's mortgage insurance (table 16) 10, 000 4, 405 This program provides for the support of the family housing program of the Department of Defense. |