MDinana, yes, they must sleep in a shelter they built out of locally available materials. However, they should learn to build shelters out of anything that they can find. I have seen grown people, well trained, have such tunnel vision on what they were "supposed" to build that they totally disregarded very useful materials and features in the environment. They expend great effort and resources building it when they could have easily produced a better shelter at lower resource cost. When teaching techniques for each of the priorities, the scouts should be encouraged to observe and increase their situational awareness. The first "Priority" in the BSA list is S.T.O.P: Stop, Observe, Think, Plan. I like to give them a variety of unusual materials and challenge them to build a shelter out of them.

In my own experience, I have always been surprised what materials you find in some very unusual places. Except for the park system, which generally is kept clean, you can almost always find manmade materials if you keep your eyes open. While this particular merit badge is wilderness survival, I have taught more urban specific shelters for the emergency preparedness merit badge, such as the cardboard shelter, which can be very warm if built right.

The ten essentials do not include a tent of poncho, or even a space blanket. I do encourage them, however, to learn to build shelters our of anything.