The Department of Defense (DOD) spends about $8 billion annually to provide housing for military members and their families either by paying cash allowances for members to live in private sector housing or by assigning members to military-owned or -leased quarters. Over the past several years, DOD has expressed concern over the poor quality of the military housing inventory and the need for renovations and improvements to bring the housing up to contemporary standards. To improve housing faster and more economically than could be achieved if only traditional military construction appropriations were used, the Congress approved DOD's request for a new initiative, known as the Military Housing Privatization initiative, that allows and encourages private sector financing, ownership, operation, and maintenance of military housing. Under the initiative, DOD can provide direct loans, loan guarantees, and other incentives to encourage private developers to construct and operate housing either on or off military installations. Because it represents a new approach to improving military housing, GAO reviewed the implementation of the new initiative to (1) measure progress to date, (2) assess issues associated with privatizing military housing, and (3) determine whether the new initiative is being integrated with other elements of DOD's housing program.