September 13, 2019
Department of Defense Outleasing and Enhanced Use Leases
Pursuant to 10 U.S.C. §2667, the Secretary of Defense and
the Secretaries of the Military Departments are authorized
to lease out (otherwise outlease) department-owned non-
excess real or personal property (commonly called outlease
authority). According to 40 U.S.C. §102(3), excess property
is defined as “property under the control of a federal agency
that the head of the agency determines is not required to
meet the agency’s needs or responsibilities.” DOD’s
outlease authority applies only to non-excess property,
meaning that to some degree it meets a DOD need, and is
not in a disposal process where it would be removed from
DOD’s inventory. Other requirements are that the property
must not for the time be needed for public use, and that it
must be under the control of the Secretary concerned.
DOD exercises its outlease authority for real property
generally through two types of contracts: short-term cash
consideration leases (five years or less) for activities such
as farming or grazing, or more complex ground leases
called Enhanced Use Leases (EULs), which typically have
longer leasing periods (e.g., 5-55 years) and may include
unique development terms that can benefit military
installations. DOD’s outlease authority also permits the
collection of in-kind consideration in addition to, or in lieu
of, cash payments, as long as the amount is generally not
less than the fair market value of the lease interest.
Types of in-kind consideration named in 10 U.S.C. §2667
include the following:
“Maintenance, protection, alteration, repair, improvement,
or restoration (incl. environmental restoration) of property
or facilities under the control of the Secretary concerned.
Construction of new facilities for the Secretary concerned.
Provision of facilities for use by the Secretary concerned.
Provision or payment of utility services for the Secretary
concerned, which shall prioritize energy resilience in the
event of commercial grid outages.
Provision of real property maintenance services for the
Secretary concerned.
Provision of such other services relating to activities that
will occur on the leased property as the Secretary
concerned considers appropriate.”
An EUL is not a legally defined partnership between DOD
and a selected developer, since DOD does not contribute
equity to a project or guarantee revenue to the developer.
However, EULs may offer several benefits to each party
involved and can encourage public-private partnerships and
public-to-public partnerships through relationship building.
DOD can also use an EUL to support additional federal
contracting authorities, such as cooperative research and
development agreements (CRADAs), intergovernmental
support agreements (IGSAs), and power purchase
agreements (PPAs).
DOD views EULs as a useful contracting tool that can help
manage deteriorating and underused facilities (i.e., facilities
that are vacant or partially vacant) and undeveloped land
that a department does not seek to label excess, but also
lacks the funding to improve or modernize. Thus, DOD has
continued to use EULs for underutilized real property, to be
able to repair and maintain existing facilities, or to construct
new facilities that promote the national defense or are in the
public interest. Payments received from outleasing are
placed in a special account in the Treasury, where at least
50% of the proceeds are made available to the originating
military installation or defense agency location.
Congressional Involvement
Congress participates in the approval process for EULs and
has oversight responsibilities to try to ensure DOD is
adhering to its statutory requirements, such as those set
forth in 10 U.S.C. §2667 (see GAO-11-574). Members of
Congress may also play a role in the development of EULs
by helping identify developers, facilitating government
communications, and encouraging and promoting projects.
DOD Management of EULs
The Deputy Assistant Secretary of Defense (DASD) for
Infrastructure (INF) manages real property accountability
and real estate policy in DOD, on behalf of the Secretary of
Defense. However, because outleasing authority is granted
to each of the Service Secretaries, and pertains to both real
and personal property, each military department is
responsible for establishing and managing leases under
Section 2667 for property they own. EULs for DOD-owned
property (i.e., the Defense Agencies, DOD Field Activities,
and U.S. Special Operations Command) are authorized by
the Secretary of Defense and managed by the Office of the
Secretary of Defense. EULs are not governed by the
Federal Acquisition Regulation System.
Army Management
Within the Department of the Army, the Deputy Assistant
Secretary of the Army for Installations, Housing, and
Partnerships (DASA-IH&P) “provides worldwide policy,
programming and oversight of the Secretary of the Army's
Title 10 U.S. Code responsibilities in the areas of real
estate.” The DASA-IH&P must approve leases for any real
property for more than five years, including EULs. The
U.S. Army Corps of Engineers manages the Army EUL
program and is responsible for EUL project development,
execution, and management (see Army Regulation 700-90,
Army Industrial Base Process).
Air Force Management
Within the Department of the Air Force, the Deputy
Assistant Secretary of the Air Force for Installations
(SAF/IEI), “provides guidance, direction, and oversight of
matters pertaining to the shaping and strengthening of Air
Force installations,” and has responsibility for Air Force
