§2885 Oversight and accountability for privatization projects

Summary

Military departments must make rules to watch and manage privatized military housing during construction and renovation. The rules must require the installation asset manager to visit sites every month and send progress reports every three months to the assistant secretary for installations and environment of that department. The project team — like the asset manager, construction manager, developer, contractor, bondholder rep, and others — must meet to check that work, schedules, and lease deals are being followed. For new construction that is 90 days or more behind or seems to be failing, the assistant secretary for installations and environment must send a notice to the Assistant Secretary of Defense for Energy, Installations, and Environment, the department Secretary, the managing member, and the project trustee. Within 15 days after that notice, the Secretary or a representative must give the project owner, developer, or contractor a summary of the problems. If those parties cannot make progress within 60 days, the Secretary must tell the congressional defense committees by electronic notice and include a recommended fix. The rules must also make sure chosen owners, developers, or contractors have the right construction experience. They must have payment and performance bonds or similar financial protection for each work phase, and those bonds must be at least 50 percent of the value of the active phases before work starts. If a project defaults, the assistant secretary for installations and environment must report every 90 days to the congressional defense committees, by electronic notice, on talks to give the project to a new owner or contractor. The Secretary must keep records of all deficiency notices and action plans, and those records must be checked when departments look at past performance during bidding. After construction is done, the rules must review the project’s finances — including the debt-service coverage ratio and occupancy rates — and the backlog of repairs. If debt service coverage falls below 1.0 or occupancy stays under 75 percent for more than one year, the Secretary must require a plan to deal with the financial risk.