§2885 Oversight and Accountability for Privatization Projects

Summary

Require each military department to write rules to watch and manage privatized military housing while units are being built or fixed. The rules must make the installation asset manager visit the site every month and send progress reports every three months to the assistant secretary for installations and environment of that department. The rules must also require regular meetings with key people (such as construction managers, developers, owners, bondholder representatives, contractors, and consultants) to check schedule, quality, and lease rules. For new construction, if a project is 90 days or more behind or is clearly failing, the assistant secretary for installations and environment must send a notice of deficiency to the Assistant Secretary of Defense for Energy, Installations, and Environment, the military department Secretary, the managing member, and the project trustee. Within 15 days after that notice, the Secretary or a representative must send a summary of the problems to the project owner, developer, or general contractor. If they cannot show progress within 60 days, the Secretary must notify the congressional defense committees electronically under section 480 and recommend a fix. The rules must make sure selected owners, developers, or contractors have the right construction experience. They must have payment and performance bonds or similar instruments for each construction phase in amounts agreed in the project documents, but never less than 50 percent of the total value of the active phases before work starts. If a project defaults, the assistant secretary for installations and environment must report to the congressional defense committees every 90 days, electronically, on talks to transfer the project to a new owner or contractor. The military departments must keep records of all action plans and deficiency notices, including parent, subsidiary, affiliate, or controlling entities, and must check those records when reviewing bidders. After construction finishes, the rules must review the project’s finances (including debt-coverage ratio and occupancy rates) and the maintenance backlog. If debt service coverage drops below 1.0 or occupancy stays under 75 percent for more than one year, the Secretary must require a plan to fix the financial risk.