Contents

• Overview
• Debates on Facilities Sustainment Restoration and Modernization (FSRM) Funding
• Overview
• Legislative Action
• Selected Policy Provisions
• General Provisions
• Defense Community Infrastructure Program
• MILCON Contracting
• Housing

Summary

The National Defense Authorization Act (NDAA) for FY2026 authorized funding for the Department of Defense (DOD) military construction and family housing programs, and included policy provisions that may impact the management and oversight of these programs. (DOD is "using a secondary Department of War designation," under Executive Order 14347 dated September 5, 2025.) The FY2026 NDAA authorized 4.4% more for military construction (MILCON) and family housing than the amount the President requested in his FY2026 budget submission to Congress. The FY2026 NDAA included several provisions that gave DOD expanded authorities for executing military construction contracts. Other provisions may affect the Defense Community Infrastructure Program (DCIP), which is a DOD-run grant program that provides funding for local government entities in communities surrounding military installations to support civilian infrastructure projects that may in some way enhance military readiness. The law also included provisions that may affect the funding and oversight of military housing programs. Among those provisions are

• repeal of statutory requirements for construction standards intended to reduce risk of terrorist attacks;
• new authorities giving DOD more flexibility for MILCON contracting;
• expanded eligibility for grant programs supporting communities surrounding military installations, and
• additional requirements for DOD's management of the privatized housing programs.

During the legislative process, the Senate-passed version of an NDAA proposed to change the way Congress provides funding for military infrastructure by shifting Facilities Sustainment Restoration and Modernization (FSRM) funding from DOD's Operation and Maintenance (O&M) accounts into the accounts for MILCON. That proposed change was not included in the version of the legislation that was ultimately enacted.

Overview

Department of Defense (DOD) military construction and family housing programs fund infrastructure to support military operations and servicemembers around the world. (DOD is "using a secondary Department of War designation," under Executive Order 14347 dated September 5, 2025.) The Trump Administration's FY2026 budget submission to Congress requested a total of $18.893 billion in discretionary funding for military construction (MILCON) and family housing.¹ Congress typically authorizes MILCON funding for construction of new military facilities, separate and distinct from Facilities Sustainment Restoration and Modernization (FSRM) funding, which DOD uses to maintain existing facilities.²

The House Armed Services Committee (HASC) reported on August 19 an FY2026 version of a defense authorization bill (H.R. 3838) titled the Streamlining Procurement for Effective Execution and Delivery and National Defense Authorization Act for Fiscal Year 2026 and issued a committee report for the bill (H.Rept. 119-231). The Senate Armed Services Committee (SASC) on July 15 reported a defense authorization bill (S. 2296) titled the National Defense Authorization Act for Fiscal Year 2026, as well as an accompanying committee report (S.Rept. 119-39).³ Congress enacted a final version (S. 1071), with a conference committee joint explanatory statement on December 18, 2025, and President Trump signed the enacted version of the FY2026 NDAA (P.L. 119-60).⁴ The law provided $19.737 billion for DOD's military construction and family housing programs, which is about 4.4% more than the President's requested amount (see Table 1).

The FY2026 NDAA included policy provisions that may impact the management and oversight of military construction and family housing programs. The law included several provisions that gave DOD expanded authorities for executing military construction contracts. Other provisions may impact the Defense Community Infrastructure Program (DCIP), which is a DOD-run grant program that provides funding for local government entities in communities surrounding military installations to support civilian infrastructure projects that may in some way enhance military readiness. The law also included provisions that could affect the funding and oversight of military housing programs.

Appropriations for MILCON and family housing programs in the amount of $19.737 billion were provided in the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026 (P.L. 119-37).⁵ For more information about the FY2026 appropriations for MILCON and family housing, see CRS Insight IN12622, FY2026 Military Construction Appropriations: A Summary.

Debates on Facilities Sustainment Restoration and Modernization (FSRM) Funding

Overview

The condition of military infrastructure, and oversight of funding for such infrastructure, has been an issue of concern for some Members in the 118^th and 119^th Congresses. For FY2025, DOD data showed an estimate of "deferred maintenance and repairs" of military infrastructure totaling $278 billion.⁶ Some defense officials and Members of Congress have said the deferred maintenance backlog poses a risk to military readiness.⁷ Both DOD budget requests and appropriations enacted by Congress have periodically funded FSRM at levels below what DOD considers to be necessary.⁸ The NDAA for FY2025 set new minimum requirements for the military departments to invest certain levels of FSRM funding.⁹ Those minimum requirements are scheduled to begin in FY2027.

Congress previously has provided funding to support military infrastructure primarily through two separate and distinct accounts: MILCON funding to support construction of new or expanded facilities, and FSRM for maintenance of existing facilities. In the past, Congress has authorized MILCON funding within MILCON accounts and appropriated that funding within MILCON accounts as part of a Military Construction, Veterans Affairs, and Related Agencies (MILCON-VA) Act. For FSRM, Congress has in the past authorized FSRM activities within Operation and Maintenance (O&M) accounts and appropriated that funding within O&M accounts in a Defense Appropriations Act.

Congress in the past has authorized MILCON and FSRM with different expiration dates that impact how long each type of funding is available to DOD. While MILCON and FSRM accounts are budgetarily and legally separate and distinct, some infrastructure managers and budget planners may consider them interrelated because both provide support for infrastructure and, in some instances, investment from one account may diminish the need for spending from the other. For example, when DOD identifies a need for additional infrastructure, DOD officials may evaluate whether the need is best met by planning a new MILCON project, or investing FSRM funding in the improvement of an existing facility.¹⁰

Legislative Action

During the FY2026 legislative process, the Senate-passed version of an FY2026 NDAA that, had it been enacted, would have changed the structure of the defense budget components that support military infrastructure. The Senate-passed version of an FY2026 NDAA would have authorized FSRM funding within DOD's MILCON accounts instead of O&M accounts (Table 2). That bill would have authorized a total of $40.711 billion for MILCON, and family housing (a set of accounts sometimes referred to collectively as MILCON) plus FSRM. Specifically, the bill would have authorized $21.054 billion for the military construction and family housing accounts and an additional $19.658 billion for FSRM.¹¹ The change could have altered the duration of funding authorizations because past FSRM authorizations in the O&M accounts have expired at the end of the current fiscal year, meaning DOD has to "use it or lose it." Authorizations provided under MILCON accounts have been typically available for obligation for three years¹², which allows more flexibility for DOD to plan and execute multiyear construction projects.¹³ The Senate bill's proposed shift of FSRM funding into MILCON accounts was not included in the enacted public law. (Nor was a change of this nature included in defense appropriation legislation proposed and enacted for FY2026.¹⁴)

Selected Policy Provisions

The FY2026 NDAA contained policy provisions that may impact DOD's management and congressional oversight of military installations, military construction programs, and military housing. Selected provisions are summarized below.

General Provisions

Section 2801 revises the definition of "military installation resilience" contained in Title 10, Section 101(f)(8), of the U.S. Code, to include the capability to respond effectively to "energy or water disruptions, or human-induced hazards with respect to the environment."

Section 2803 directs the military departments (Departments of the Army, Navy, and Air Force) to develop 20-year infrastructure improvement plans and submit them to the congressional defense committees.

Section 2804 directs the Secretary of Defense to develop a "risk-based approach to water management and water security" for each military installation. (The Secretary of Defense is using "Secretary of War" as a "secondary title" under Executive Order 14347 dated September 5, 2025.)

Section 2813 increases the maximum amount that a Secretary of Defense may obligate to restore or replace damaged or destroyed facilities under Title 10, Section 2854(c)(3), of the U.S. Code from $100 million to $300 million.

Section 2817 directs the Secretary of Defense to implement measures intended to improve planning and reduce errors that can cause delays and increased costs for military construction projects. Specifically, the provision directed the Secretary to implement the recommendations outlined in a Government Accountability Office (GAO) report published in September 2024.¹⁵

Section 2848 repeals the provision in Title 10 that directed DOD to assess the vulnerability of military installations to terrorist attacks and to develop construction standards that are designed to reduce the vulnerability of structures to terrorist attacks. The provision repealed, Title 10, Section 2859, of the U.S. Code, was originally enacted in 2004.

Section 2841 amends the minimum capital investment requirements for FSRM funding contained in Title 10, Section 2860, of the U.S. Code.¹⁶

Defense Community Infrastructure Program

Section 2805 amends Title 10, Section 2391, of the U.S. Code, to authorize the Secretary of Defense to make grants, conclude cooperative agreements, and supplement other Federal funds in order to assist a State or local government in enhancing its capacities for "health care, housing and defense critical infrastructure projects and services."

Section 2806 amends Title 10, Section 2391, of the U.S. Code, to revise the statutory prioritization for grants and assistance under the DCIP Program to include projects that may enhance "the readiness of a military department or mission assurance at a military installation."

Section 2807 amends Title 10, Section 2391, of the U.S. Code, to authorize the provision of DCIP grants in support of demolition projects.

MILCON Contracting

Section 2802 authorizes DOD to enter into transactions other than contracts, cooperative agreements, or grants – known as other transactions, or OT – to carry out repair and construction of military infrastructure. OTs, in contrast to traditional procurement contracts, are exempt from many federal procurement laws and regulations.¹⁷

Section 2808 amends 10 U.S.C. Section 2851(a) to eliminate a reference to the Army Corps of Engineers and Naval Facilities and Engineering Command from requirements regarding supervision of MILCON projects.

Section 2809 authorizes the use of alternative project contracting methods that may combine design and construction under one contract, including accelerated design-build and progressive design-build procedures, for military construction projects.

Section 2814 authorizes DOD to enter into multiyear contracts for procurement relating to certain military construction projects. The provision stipulates that any obligation for DOD to make a payment under a contract for a fiscal year after the fiscal year in which the contract is awarded is subject to the availability of appropriations or funds for that purpose for such later fiscal year.

Section 2816 authorizes the use of cost-plus-incentive-fee contracts for certain military construction projects associated with the Shipyard Infrastructure Optimization Program.¹⁸

Housing

Section 2822 amends the requirements for annual reports that DOD provides to Congress regarding unaccompanied housing to include information about waivers granted for "health and safety standards," which include "standards relating to mold, ventilation, fire safety, or other related habitability conditions necessary to ensure safe occupancy."

Section 2823 amends the periodic reports that DOD provides to Congress regarding DOD's privatized housing program, known as the Military Housing Privatization Initiative, or MHPI, to include additional analysis of housing data and a requirement that the military departments disaggregate certain MHPI data by military installation.

Section 2824 modifies requirements for how and when a privatized housing company can close maintenance work orders related to privatized military housing.

Section 2825 directs privatized housing companies to provide to the Secretary of Defense additional annual financial information, including the total amount of payments the landlords made "pursuant to a dispute resolution process."

Section 2826 amends the law pertaining to how the military departments may comply with the National Historic Preservation Act (54 U.S.C. §§300101 et seq.) related to certain historic military housing facilities.

Section 2827 directs the Secretary of Defense to submit annually to Congress data regarding the number of servicemembers "whose rank would require that they live in military unaccompanied housing, but that also receive a basic allowance for housing" and the total amount of housing allowance provided to those servicemembers.

Section 2829 directs the Secretary of Defense to carry out a pilot program to assess and implement "emerging technologies for moisture control and mitigation" in certain military housing facilities that may be at higher risk for mold growth.

Section 2830 directs the Secretary of Defense to "develop and implement uniform guidelines for the remediation of mold in military housing facilities."

Section 2831 directs the Secretary of Defense to "establish a standard inspection and audit program for privatized military housing and Government-owned military housing" that involves "independent qualified home inspectors."

Section 2852 directs the Secretary of Defense to implement a series of GAO recommendations intended to address issues related to housing affordability in certain high-cost areas.¹⁹

Footnotes