PAL © ® ™

Looking out for our Soldiers Well Being: A Brand New Report and Commentary
.....on the Privatization of Army Lodging:

We thought it was about time we provided a Re-Look at the Privatization of Army Lodging:
‘Privatization of Army Lodging: Like Wool Over the Eyes’
The Privatization of Army Lodging Office completed a report called a ‘Life Cycle Analysis’ which was titled: Privatization of Army Transient Housing. That report is contrary to the Government Accountability Office’s, GAO or investigative arm of congress, Report numbered GAO-07-0164. The GAO report was completed during the time the congress was led by the Republicans. It should be noted that Republicans are more likely to favor Privatization and Contracting initiatives. In our opinion privatizing and contracting government functions is for the most part simply a way to claim that the government has been made smaller. In some cases this is true, but when you privatize or contract a government function that is a breakeven business, you defeat the purpose and are simply moving the revenue generation to the private sector minimizing the economic principal of the Multiplier Effect on taxpayer money within the Department of Defense. This should lead one to wonder which report is biased and which is not. Further making it easy for one to wonder if some politically appointed person within Army Leadership is running their own pet project.
The Deputy Under Secretary of the Army for Privatization and Partnerships claim this Lodging Privatization Program will better the lives of our soldiers and lead to better retention and recruitment of soldiers. That office certainly is making a robust and loud claim. Why is it that the vast majority of issues raised during Army Family Action Planning conferences have things to do with entitlements and family support issues? In fact many of the issues have to do with soldiers’ personal check books, such as Basic Allowance for Housing, Life Insurance, and Rising Costs of Utilities? Not a single issue dealing with the QUALITY of temporary lodging appears to be addressed. In fact one of the issues addressed requested means to utilize Army Lodging by Partial Custody Single Soldiers at a reduced rate. That issue obviously points out the desire of soldiers to utilize Army Lodging as is, at lower costs and demonstrates that they do not want their costs increased as the Privatization and Partnership Scheme would have you believe. You can visit The Army Family Action Plan Home Page to learn more about the issues the Army Community feels are important to them.
The United States Legislature has also raised questions regarding the logic of privatizing Army Lodging. This is obvious as they required their investigative arm to answer key questions and entered more questions into section 355 of the NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL YEAR 2006. They ask several questions including, but not limited to:
1. The potential overall costs and benefits of privatization of Army lodging.
2. Whether privatization of Army lodging will result in significant cost increases to members of the Armed Forces or other eligible patrons or the loss of such lodging if it is determined that management of such lodging is not a profitable marketing venture.
3. The number of Army lodging personnel who would be impacted by privatization and the total personnel-related costs that could occur as a result of privatization.
The Privatization of Army Lodging Office’s report supposedly attempts to compare their plan against an identical government project that they made-up all by themselves. This is highly unusual, unfair and unethical, as they did not allow the employees of Army Lodging to develop their own ‘Most Efficient Organization.’ Instead, they created it for themselves within their own politically centered office. Their report fails to meet several basic facts of running a nonappropriated funded business. Foremost, they ignore the fact that a nonappropriated funded business is authorized to acquire loans and other commercially borrowed funds and is fully authorized to utilize outside developers. This fact alone proves that the Army can acquire the funding necessary to revitalize lodging just as fast as the private sector. Secondly they make a sleazy attempt at stating that under their plan the Private Partners, Actus Lend Lease (an Australian Company) and Intercontinental Hotels (an United Kingdom Company) , will pay for the costs of utilities, police and fire protection while attributing those costs against the current Army Lodging Program. That is clearly a ridiculous claim as any sensible business person realizes that any cost attributed to a business is simply passed on to the consumers of that business. These costs will easily be passed to the soldiers and other authorized users through higher rates to unofficial travelers and by petitioning the US General Services Administration to increase the areas’ Per Diem Rate. What if the government made it so that only the government office controlling Army Travel or Lodging could request an increase to Per Diem? Well then, the contractor simply requests that office to make the request. It is nothing more than political business as usual. Can you now see why we call that a sleazy claim?
As noted within the last paragraph the political office of the Privatization of Army Lodging program has already selected their private partners, Actus Lend Lease (an Australian Company) and Intercontinental Hotels (an United Kingdom Company) . Both of which are foreign companies, and as companies in general report only to their shareholders, they are not liable to anyone but themselves. Granted they are from ally countries and are our friends, but even ally’s are foreign, and as such, cannot be fully trusted. By selecting foreign corporations to run a vital logistical function of our armed services we have chosen to go the way of the ancient and defeated Greeks and Romans by hiring mercenaries to participate within our vital defense. You must understand that Army Lodging’s primary function is to provide lodging for the official travel mission of the United States Military, not simply the army nor the casual traveler. They provide lodging for military personnel in training and in transit. By doing this they are essentially providing safe and secure lodging for troops in transit, pre and post deployment and foreigners should not have such easy access to that data. Soldiers and families transferring to their next assignment stay within Army Lodging while awaiting permanent housing. Obviously the link within the logistics chain that Army Lodging plays is vital to force protection and should not be given to any corporation as that provides a weak link within the chain of security necessary to keep our soldiers and their families safe from those who want to do us harm.
The Privatization Office also seriously neglects to consider or publish that unofficial visitors will likely not stay with them at fair market value prices. The vast majority of unofficial travelers are frugal retirees and lower grade military personnel with families looking for ways to stretch their vacation dollar. Official travelers (soldiers) will not want to stay on base anymore than they already do. They want to go home after a hard days work and they want to relax away from their commanders, don’t you? They fail to capture this in their cost analysis nor their life cycle report. In fact the privatization office seems to state that all travelers will continue to stay on base, without backing it with any firm proven data or market research. Where is their market survey and model showing that travelers will want to stay on base at a higher rate?
Overall their program, their model and their assumptions remain grossly flawed and are potentially borderline purposefully negligent but simply political in nature. Their claims are erroneous and have already been proven false and week by an outside third party, the Government Accountability Office. The GAO has proven that the Privatization of Army Lodging Program will end up costing the government, the Department of Defense, the Department of the Army and the American Taxpayer billions of dollars over the life of this hazardous and seemingly politically treacherous program and should be ceased immediately. By costing additional money, something must be given up. Will it be armor and other protective gear? Will it be additional Strykers and Submarines? Whatever it ends up being it is up to those with the ability to do something about it. If you are reading this you can easily visit Project Vote Smart where you can easily search for your elected officials. From there you can easily e-mail, write or call your congressmen and tell them where you stand on the Privatization of Army Lodging. It is your choice, allow wasteful spending in lieu of protective gear for our soldiers or STOP IT NOW!

HISTORICALLY FACTUAL DATA

1. Army Lodging APF Utilities Funding is based on current scenarios: Housing shall be included in the installation plan to reduce installation energy consumption 20 percent, on a square footage basis, by the year 2000 as compared with comparable energy use in 1985, per E.O. 12759, as stated in 4165.63-M September 1993. Furthermore, (can't find the source, but) from December 2005 to January 2006 all new HVAC Systems are supposed to be 30% more efficient, so, Lodging's utilities cost for at least all heating and cooling systems should be right sized by 20% over 1985 and 30% more efficient than over 2005. Of course, that is without considering the advances in-between and prior to those dates.
2. Army Lodging M&R (Maintenance and Repair) APF (Appropriated) Funding is based on current scenarios: How can you claim that the M&R APF funding will be as stated in their scenario if the Army’s buildings are ancient and in general not built for Lodging? You cannot claim that a building built during the Korean War as a headquarters building will have essentially the same funding requirements as a building built in 2007 as a hotel. For example, a facility in PAL Group A has a facility meeting this representation. It has 80 plus rooms in it. It's HVAC System is a two pipe system and requires almost daily adjustments to make the building comfortable and the layout of the building is based on an office complex dating to before the Korean War. The rooms remain in this configuration as does the bathrooms. So, you must assume that a building built today would take into consideration that it is being built as a hotel and should have those standard efficiencies built in. This would include modem best use, long lasting materials that require less maintenance. The PAL Model almost purposefully disregards this fact.
3. The percentages used to create their savings over government construction projects assume that Army Lodging Builds to Military Construction Standards which is not true. Army Lodging Builds to NAF Standards which is Local Building Codes, just like the Private Partner. Also, the contractor will have to meet the Installation Design Guide and the Anti-Terrorism Standards as stated in the RFQ, just like a nonappriated fund.
4. A prime fact that is suspect is that they essentially try showing that the Private Sector will obtain economies of scale by building all 8 hotels. Well Army Lodging does the same and is capable of doing so if PAL will get out of the way so that they can pursue their statutorily authorized loan.
5. The PAL office shows a laundry cost being subsidized with APF. This ignores the fact that when Army Lodging builds new they move the laundry service in house, which lowers their cost immensely as they bring in efficiencies such as chemicals purchased through their prime vendor program, no transportation to and from many facilities and in-house labor is vastly less costly.
6. The PAL office says an advantage to their model is a quick construction timeline. This ignores the authority for Army Lodging to obtain a loan and do the same (DoDI 1015.15):
5.3. Planning, Programming and Budgeting. NAFI programs are supported by APF and NAF resources and may be financed through private sources or commercial borrowing.
7. The PAL Model also does not address competition with other unofficial lodging operations on an installation, primarily, recreational lodging. Recreational Lodging is defined as (Within DA PAM 415-28 Table 8-94): A building used to provide hotel/motel type housing to military personnel, authorized civilians, their families, and retired military personnel while they use recreational facilities or are in an off duty status. The PAL Solicitation, ‘Request for Qualifications’ (RFQ) does not address the fact that Recreational Lodging provides lodging for authorized users that are in an off duty status and will therefore place the private entity in direct competition with an established NAFI which is against DOD Instruction 1000.15, Oct. 23,1997, which is based on statute: 6.4. A private organization covered by this Instruction offers programs or services similar to either appropriated or nonappropriated fund activities on a DoD installation shall not compete with but may, when specifically authorized in the approved document, supplement those activities.
8. The other item the PAL Office consistently never addresses is the fact that absent competition privatization of government functions often results in higher costs. They also don't address that tying their model and the privateer to per diem allows for the authority to increase the installations per diem based on costs to the privateer. EXAMPLE IN POINT FORT IRWIN: ? Fort Irwin has PPV (Public/Private Venture) Hotel on the installation but without government or competition on the installation. The PPV Charges $76.00 plus tax. The Per Diem for Fort Irwin is $76.00.
9. Now, tax, as you notice above the PPV Charges Tax. They just happen not to charge tax if you are on official Orders at the three Landmark Inns due to the state laws in those areas, but, they do charge 100% Per Diem when on Official Travel. If you are not on official Orders you pay tax. So, this brings up two points:
A. If the Privateer charges 75% of Per Diem for Official Travelers across the Portfolio (up to 100% at a location for Official Travelers and Fair Market Value for unofficial travelers), but will have to charge tax for unofficial travelers, how do they intend on meeting DOD 4165. 63-M September 1993, section C1. 3.4 Since, guests and family members will not be on orders to visit family in the hospital and PCS Soldiers and Families are only under TLE for 10 days, what happens then? Are they moved up to the higher rate and have to pay taxes? The PAL Model and RFQ does not address such important and fundamental points. See the applicable section of 4165.63-M below: 4165.63-M Temporary Lodging Facilities (TLFs). TLFs are authorized to reduce hardships and inconveniences that might otherwise impact on military personnel if such facilities were not available. TLFs are acquired specifically to support active duty military members and/or their dependents who are temporarily without permanent housing due to permanent change of station (PCS) orders, and guests of patients in military hospitals.
B. If an installation is in a state that does not waive taxes or certain taxes and having their, PAL, revenue potential limited how do they intend on accounting for taxes? Are the taxes considered a part of the 75% per diem? This is not addressed adequately in the RFQ. For example, the following states do not exempt travelers if paying with an Individually Billed Credit Card (Example: The Official Government Travel Card): Michigan, New Mexico, Virginia (except Alexandria), Washington, Oklahoma and Oklahoma. Another example is that sales tax is still charged to government travelers in Georgia. (http://www.gsa.gov/Portal/gsa/ep/channelView.do?pageTypeId= 8203&channelPage=%2Fep%2Fchannel%2FgsaOverview.jsp&c hannelId=-16881)
10. Army Lodging’s Mission is not discussed by the PAL Model or the RFQ. Which means it neglects to adequately address such programs as the Military Training Service Support (MTSS).
DoDI 1015.12, October 30, 1996, supports the fact that Army Lodging is Vital to mission accomplishment and directly supports the Readiness Mission, which is a core function and value of the Army, so how can you claim Lodging is not a core function?
4.2. Lodging Programs. Lodging programs are vital to mission accomplishment and directly support the readiness mission by providing community support systems for a mobile military population.