How much will privatization save DoD?
Given that the money saved by the government avoiding the long-term operation and maintenance costs is offset by paying service members their housing allowance, government dollar savings over the long-term are estimated to be about 10 percent of total costs over the 50 year life of the project. However, another measure used to estimate the potential benefit privatization offers, over budgeting and project execution with traditional Military Construction funding, is leverage. DoD policy requires a minimum leverage of 3 to 1 for a privatization project to be considered. This means that a privatized project must generate at least $3 of housing development for every $1 appropriated by Congress to support the project. The leverage ratio is calculated by dividing the estimated cost of a project under Military Construction by the project’s total budget score (appropriated dollars needed to support a project at the time of obligation). For the program as a whole, the leverage has consistently
