Base Operations: DOD's Use of Single Contracts for Multiple Support
Services (Letter Report, 02/27/98, GAO/NSIAD-98-82).

Pursuant to a legislative requirement, GAO reviewed the Department of
Defense's (DOD) use of single contracts for multiple base operations
support functions, focusing on: (1) the history and characteristics of
selected single contracts for multiple base operations support services;
(2) the kinds of services procured under these contracts; (3) lessons
DOD has learned from the use of these contracts; (4) whether small
businesses participate in these contracts; and (5) whether cost and
efficiency gains have been documented.

GAO noted that: (1) the history and characteristics of selected single
contracts for multiple base operations support services varied at the 10
installations GAO reviewed; (2) the decisions to use a single contract
for multiple services occurred in two ways; (a) at seven installations,
the decision occurred at the time of a commercial activity, or OMB
Circular A-76 study; and (b) in the other three cases, the decision was
made at the time the installation or its current mission was
established; (3) most of the contracts were awarded for 5 years and
ranged from about $5.4 million to $100 million annually; (4) although
some installations received extensive base operations support services
through a single contract, none received all of its required services
through a single contract; (5) at all 10 installations, base operations
support requirements were met through some combination of single
contracts for multiple services; (6) the kinds of services procured
under the multiple service contracts also varied and were influenced by
a number of factors; (7) comparing and contrasting services between
contracts and installations to precisely say what services were included
or excluded from individual contracts in comparison with others is
difficult because there are no generally accepted definitions for base
operations support services; (8) as a result, contracting officials
often used the same or similar terms differently; (9) DOD officials at
the 10 installations GAO reviewed have learned a number of lessons from
their experiences with single contracts for multiple base operation
support services; (10) although many contracting officials GAO spoke
with stated that coordination is much easier when there is a single
contract, they acknowledged problems can still arise; (11) at 3 of the
10 installations GAO reviewed, small businesses were participating in
single contracts for multiple base operations support services; (12) in
all three cases, the small business was the prime contractor and the
contracts were awarded under various small business programs; (13) the
Small Business Administration and DOD officials are aware that
consolidating multiple base operation services into single contracts may
reduce the participation of small business as prime contractors; (14)
officials from both agencies have issued guidance for considering small
businesses in contract consolidation decisions; and (15) although
contracting officials reported efficiency gains, cost savings from using
single contracts for multiple base operations support services are not
documented.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-98-82
     TITLE:  Base Operations: DOD's Use of Single Contracts for Multiple 
             Support Services
      DATE:  02/27/98
   SUBJECT:  Cost effectiveness analysis
             Defense cost control
             Strategic planning
             Defense procurement
             Privatization
             Defense operations
             Small business contractors
             Defense contracts
             Department of Defense contractors
IDENTIFIER:  SBA 8(a) Program
             
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Cover
================================================================ COVER


Report to Congressional Committees

February 1998

BASE OPERATIONS - DOD'S USE OF
SINGLE CONTRACTS FOR MULTIPLE
SUPPORT SERVICES

GAO/NSIAD-98-82

Base Operations

(709282)


Abbreviations
=============================================================== ABBREV

  DOD - Department of Defense
  OMB - Office of Management and Budget
  OSD - Office of the Secretary of Defense
  TACOM - Tank-Automotive and Armaments Command

Letter
=============================================================== LETTER


B-279121

February 27, 1998

Congressional Requesters

This report responds to the requirement of the report by the National
Security Committee, House of Representatives, on the National Defense
Authorization Act for Fiscal Year 1998 that we review the Department
of Defense's (DOD) use of a single contract for multiple base
operations support functions.  The June 16, 1997, report noted that
there was little information on how these contracts work, what
services are best delivered under this arrangement, and what savings
are realized.  In response, this report addresses (1) the history and
characteristics of selected single contracts for multiple base
operations support services, (2) the kinds of services procured under
these contracts, (3) lessons DOD has learned from the use of these
contracts, (4) whether small businesses participate in these
contracts, and (5) whether cost and efficiency gains have been
documented. 

This report provides detailed information about the use of single
contracts for multiple base operations support services at 10
military installations in the continental United States.  We selected
these installations from a list of 15 that were identified for us by
DOD officials.  The officials could not identify all installations
that use these kinds of contracts because they do not compile that
information; however, they believe the number of such contracts is
relatively limited.  Our scope and methodology is described in
appendix I. 


   BACKGROUND
------------------------------------------------------------ Letter :1

Base operations support services, generally called commercial
activities, are the functions necessary to support, operate, and
maintain DOD installations.  Although the Office of Management and
Budget (OMB) identifies 29 services as base support functions, DOD
does not have a generally accepted definition of base support
services, and the military services differ in how they define them. 
Without a common definition it is difficult to accurately determine
the size and cost of DOD's base support workforce; however, DOD
estimates that base support activities such as facilities and vehicle
maintenance, food services, and local transportation cost more than
$30 billion in fiscal year 1997. 

Numerous studies from the 1993 Bottom-Up Review through the recent
Quadrennial Defense Review, Defense Reform Initiative, and National
Defense Panel have concluded that DOD could realize significant
savings by outsourcing commercially available support services.  Some
studies have concluded that DOD could achieve the largest savings by
using a single contract, rather than several smaller contracts, to
encompass multiple base operations support services. 

Although a subject of increasing emphasis in recent years, federal
agencies have been encouraged, since 1955, to obtain commercially
available goods and services from the private sector through
outsourcing, or contracting out, whenever they determine it is
cost-effective.  In 1966, OMB issued Circular A-76, which established
federal policy for the government's performance of commercial
activities and set forth the procedures for studying commercial
activities for potential contracting.  Later, in 1979, OMB issued a
supplemental handbook to the circular that included the procedures
for competitively determining whether commercial activities should be
performed in-house, by another federal agency through an interservice
support agreement, or by the private sector.  OMB updated this
handbook in 1983 and again in March 1996. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

The history and characteristics of selected single contracts for
multiple base operations support services varied at the 10
installations we reviewed.  The decisions to use a single contract
for multiple services occurred in two ways.  At seven installations,
the decision occurred at the time of a commercial activity, or A-76,
study.  In the other three cases, the decision was made at the time
the installation or its current mission was established.  One
installation has been using a single contractor for multiple services
since the 1950s.  Most of the other installations began using single
contracts for multiple services in the 1980s but one, Laughlin Air
Force Base, awarded its contract in 1996.  Most of the contracts were
awarded for 5 years and ranged from about $5.4 million to $100
million annually.  Seven of the 10 installations awarded
fixed-price-award-fee contracts.  Although some installations
received extensive base operations support services through a single
contract, none received all of its required services through a single
contract.  At all 10 installations, base operations support
requirements were met through some combination of single contracts
for multiple services, single contracts for specific services,
regional contracts for specific services, and the use of in-house
personnel. 

The kinds of services procured under the multiple service contracts
also varied and were influenced by a number of factors, including the
mission and functions performed at the installation, missions of
tenant activities, existing contractual arrangements, a desire to
keep some functions in-house, and legislative restrictions.  The
activities contracted out ranged from relatively basic tasks such as
messenger mail and refuse services to more complex ones such as
computer software development and utilities systems operations. 
Comparing and contrasting services between contracts and
installations to precisely say what services were included or
excluded from individual contracts in comparison with others is
difficult because there are no generally accepted definitions for
base operations support services.  As a result, contracting officials
often used the same or similar terms differently--not always
referring to or including the same categories or subcategories of
services. 

DOD officials at the 10 installations we reviewed have learned a
number of lessons from their experiences with single contracts for
multiple base operation support services, including the need for
well-defined performance work statements, and when to use best-value
selection criteria and contract performance incentives.  The
officials also cited the need for maintaining good
contractor-government relations.  Although many contracting officials
we spoke with stated that coordination is much easier when there is a
single contract, they acknowledged problems can still arise. 

At 3 of the 10 installations we reviewed, small businesses were
participating in single contracts for multiple base operations
support services.  In all three cases, the small business was the
prime contractor and the contracts were awarded under various small
business programs.  Small Business Administration and DOD officials
are aware that consolidating multiple base operation services into
single contracts may reduce the participation of small businesses as
prime contractors.  In 1996, DOD issued a policy statement requiring
the services to consider the effect of consolidating contract
requirements on small businesses when considering outsourcing.  Also
the Small Business Administration Reauthorization Act for Fiscal Year
1997 adds new provisions to
section 15(a) of the Small Business Act, which at the time of our
work required federal agencies to consider the effect on small
businesses when requirements currently being performed by small
business are considered for consolidation. 

Although contracting officials reported efficiency gains, cost
savings from using single contracts for multiple base operations
support services are not documented.  Moreover, at most of the
installations savings cannot be easily quantified because there is no
requirement to track savings.  In addition, the contracts have
changed since the initial commercial activities studies were
completed so there is no basis for comparative analysis.  Some of the
efficiency gains that have been cited include reduced overhead, cross
utilization of contract personnel, and increased flexibility. 


   HISTORY AND CHARACTERISTICS OF
   SINGLE CONTRACTS FOR MULTIPLE
   SERVICES VARY
------------------------------------------------------------ Letter :3

Most of the multiple service contracts were initiated when the
installation performed a commercial activities study and all but one
were established in the 1980s or earlier.  As shown in table 1, the
estimated costs of the contracts range from $5.4 million to $100
million annually and most were awarded on a fixed-price basis. 
Single contracts for multiple support services were critical to
meeting the overall requirements for base operations support at all
10 installations we reviewed; however, none used a single contract to
meet all of its requirements. 



                                     Table 1
                     
                       Characteristics of Multiple Service
                                    Contracts

                              (Dollars in milllons)

            Multiple
            service
            contract                    Est.      Current               Origin
            since                       base      contract              of
Installati  fiscal      Contract        year      dates and   Small     original
on          year        type            cost      years       business  contract
----------  ----------  ----------  --------  --  ----------  --------  --------
Vance Air   1961        Fixed-         $40.2      FY 96-00    No        New work
Force                   price                     5 years
Base,
Oklahoma

Arnold      1951        Cost            $100      FY 96-03    No        New work
Engineerin                                        8 years
g
Developmen
t Center,
Tennessee

Laughlin    1997        Fixed-          $5.4      FY 97-01    Yes       A-76
Air Force               price                     5 years
Base,
Texas

Fort        1986        Fixed-           $12      Apr. 1995   No        A-76
Belvoir,                price                     -
Virginia                                          Mar. 2000
                                                  5 years

Fort Irwin  1982        Cost           $14.2      FY 96-00    No        A-76
National                               $35.3      FY 97-01
Training                                          5 years
Center,                                           each
California

Tank-       1983        Cost             $15      FY 94-98    No        A-76
Automotive                                        5 years
&
Armaments
Command,
Warren/
Selfridge,
Michigan

Naval       1976        Fixed-           $40      FY 98-07    No        New work
Submarine               price                     10 years
Base
Bangor,
Washington

Naval Air   1987        Fixed-         $15.3      FY 97-01    Yes       A-76
Station                 price                     5 years
Whidbey
Island,
Washington

Naval Air   1983        Fixed-          $6.6      FY 97-01    Yes       A-76
Station                 price                     5 years
Whiting
Field,
Florida

Naval Air   1987        Fixed-           $15      FY 98-02    No        A-76
Station                 price                     5 years
Fallon,
Nevada
--------------------------------------------------------------------------------

      MOST MULTIPLE SERVICE
      CONTRACTS RESULTED FROM
      COMMERCIAL ACTIVITY STUDIES
---------------------------------------------------------- Letter :3.1

At 7 of the 10 installations we reviewed, we were told that the
decisions to use single contracts for multiple services occurred when
the installations performed formal studies to determine whether the
commercial activities should be performed in-house or by a
contractor.  All of these contracting efforts, except one, were
initiated in the 1980s.  At the other three locations, officials told
us that the decision to use a single contract for multiple services
was made at the time that the installation or its current mission was
established.\1

Of the installations we visited, Laughlin Air Force Base was the one
that most recently made a decision to use a single contract for
multiple services in connection with a commercial activities study. 
A contracting official at Laughlin stated that the study had been
done as a result of a DOD Management Review Directive.  The study,
conducted from April 9, 1992, to July 12, 1996, resulted in a
contract awarded in 1996 pursuant to a small business set-aside.  The
contract initially is for about $5.4 million annually and will
provide for functions dealing with supply, civil engineering, fuels
management, and vehicle operation and maintenance. 

Naval Air Station Fallon went to a multiple service contract in 1987
following a commercial activities study that was conducted from May
1981 until January 1984.  Officials at Fallon could not say for
certain but believed the study was conducted because of the priority
placed on contracting out at the time.  The current contract is the
third multiple service contract and is worth about $15 million
annually.  The contract covers such functions as food service,
supply, pest control, custodial, housing, and airfield services, as
well as operating a combined bachelor quarters facility. 

At the U.S.  Army Tank-Automotive and Armaments Command in Michigan,
we found that the Army had two contracts for multiple base operations
support services that followed separate commercial activities studies
conducted in 1981 and 1982.  Each of the contracts covered services
at separate locations that are approximately 20 miles apart.  Each
contract was competitively awarded until fiscal year 1989 when a
decision was made that it would be in the best interest of the
government to combine the requirements under a single multiple
service contract and reduce overhead and contract administration
costs.  The current contract for approximately $15 million annually
covers such functions as freight, supply, warehousing, facility
engineering, housing, and administrative services at the two
locations. 

At three installations--Vance Air Force Base, Arnold Air Force Base,
and Naval Submarine Base Bangor--the decision to use multiple service
contracts was made at the time the installation was established.  The
decision at Vance was based on an Air Force decision to evaluate the
success of contracting out as compared to another base that performed
the services with in-house personnel.  At Arnold Air Force Base, the
decision was based on a 1950 study by the Scientific Advisory Board
of how the engineering development and test center should be
operated.  According to contracting officials, the study
recommendation and a lack of qualified Air Force personnel at the
time led the Secretary of the Air Force to direct that the services
be provided through a contract.  Naval Submarine Base Bangor was
activated in 1976 and the decision to contract out base operations
support services, according to a contracting official, was based on a
study by a private Seattle company that determined a contract
operation would be more cost-effective. 


--------------------
\1 Under OMB Circular A-76, bases may contract for services without
an A-76 competition between an in-house workforce and the private
sector to meet new work requirements. 


      MOST MULTIPLE SERVICE
      CONTRACTS ARE FIXED-PRICED
      TYPE
---------------------------------------------------------- Letter :3.2

At 7 of 10 installations we reviewed, contracting officials have
awarded fixed-price contracts for multiple base operations support
services (see table 2).




                                Table 2
                
                   Installations Reviewed and Current
                             Contract Type

                                        Principal multiple service
                                                 contract
                                    ----------------------------------
Base                                Type              Fee
----------------------------------  ----------------  ----------------
Vance Air Force Base                Fixed price       Award fee

Arnold Air Force Base               Cost              Award fee

Laughlin Air Force Base             Fixed price       None

Fort Belvoir                        Fixed price       None

Fort Irwin                          Cost              Award fee

Tank-Automotive and Armaments       Cost              Award fee
Command, Warren and Selfridge

Naval Submarine Base Bangor         Fixed price       Award fee

Naval Air Station Whidbey Island    Fixed price       Award fee

Naval Air Station Whiting Field     Fixed price       None

Naval Air Station Fallon            Fixed price       Award fee
----------------------------------------------------------------------
At the other three locations, contracting officials have awarded cost
type contracts.  In some instances, incentives or award fees were
included within each of these types of contracts to contain or reduce
costs.  Regardless of the contract type, eight have been awarded on a
5-year basis. 

A firm-fixed price contract provides for a price that is not subject
to any adjustment on the basis of the contractor's cost experience in
performing the contract.  It remains firm for the life of the
contract unless revised pursuant to the changes clause in the
contract.  It places maximum risk on the contractor and minimum risk
on the government.  The contractor is responsible for all costs
incurred and the resulting profit or loss.  The cost contract places
more risk on the government and less risk on the contractor.  Under
cost contracts, the contractor is reimbursed for all reasonable and
allowable costs incurred. 

In conjunction with these contracts, award fees are often used to
provide incentives for outstanding performance in areas such as
timeliness, quality, and cost effectiveness.  The maximum amount of
the award, periods of evaluation, and the officials who determine the
fee are specified in an award-fee plan that is part of the contract. 
With the exception of three contracts, an award fee provision was
included to foster maximum contractor performance based upon the
government's subjective evaluation of the contractor's level of
performance. 

At Fort Irwin, contracting officials decided that a cost-type
contract was preferable to fixed price because the workload and
workforce were continually changing and requirements could not be
adequately defined beforehand.  At Vance, the decision to use a
fixed-price contract was due to the nature of the contract
requirements, where the contractor provides mainly labor, and the
number of employees, their respective labor rates, and expected hours
were all known.  This allowed contracting officials and offerors to
estimate the cost of the contract with a higher degree of confidence. 

The multiple service contracts we reviewed were generally awarded for
5 years (1 base year and 4 option years).  However, we did find two
contracts with longer performance periods.  At Arnold Air Force Base
its cost-plus-award-fee contract was awarded in 1995 for 8 years (5
years and a single 3-year option) to foster workforce stability and
morale.  At the other, Naval Submarine Base Bangor, a 10-year
fixed-price-award-fee contract (1 base year and 9 option years) was
awarded in 1997.  Based on suggestions from contractors during a
presolicitation conference, the Bangor contract was increased from 5
to 10 years to save money over the life of the contract by allowing
contractors to spread their costs over more years.  Officials also
expected that the change would encourage more companies to compete
for the contract.  The contract also includes incentives for the
contractor to reduce costs.  It further includes a provision for the
contractor to meet ISO 9000\2

standards to better ensure it can meet customer requirements and help
reduce contract monitoring costs. 


--------------------
\2 ISO 9000 is a series of international standards for quality
management and quality assurance and represents an international
consensus on good management practices with the aim of ensuring that
an organization can consistently deliver products or services that
meet the customer's quality requirements. 


      MULTIPLE SERVICE CONTRACTS
      ARE ONE TOOL FOR
      ACCOMPLISHING BASE
      OPERATIONS SUPPORT
---------------------------------------------------------- Letter :3.3

At the 10 installations we reviewed, base operations support
requirements were being met through a variety of means, including
in-house personnel, as well as single contracts for multiple
services, single contracts for specific services, and regional
contracts.  Several of the installations, including Arnold Air Force
Base and Naval Submarine Base Bangor, rely heavily on single
contracts for multiple base operations support services.  In
contrast, Fort Belvoir and Naval Air Station Whiting Field use single
contracts for multiple services but also rely heavily on other
contracts or in-house personnel to meet these support requirements. 

Arnold has used a single contract for virtually all base operations
support services from the time the installation was established.  The
first multiple service contract was awarded in 1951 and provided for
all testing and support services at the installation.  In fiscal year
1981, the contract was separated into three contracts--two testing
contracts and one for multiple base operations support services.  The
support services contract includes a wide variety of functions such
as central computer operations, base support and maintenance,
environmental, utilities, logistics, transportation, base security,
and fire protection.  In addition, Arnold uses in-house personnel to
perform morale, welfare, and recreation services. 

Similarly, Bangor accomplishes nearly all base operations support
service requirements through a single contract.  The current contract
for multiple support services spans 10 years and provides a wide
range of base support services, including administrative support,
various public works services, utility and supply services, and
security services.  Bangor has used a multiple service contract for
base operations support services since it was activated as a
submarine base in 1976.  Bangor has several individual contracts to
meet additional support needs such as family services, food
preparation and administration, architect and engineering services,
and maintenance of automated data processing equipment.  Also, Bangor
provides services such as morale, welfare, and recreation; automated
data processing; and crane inspection and certification through the
use of in-house personnel. 

In contrast, Fort Belvoir and Naval Air Station Whiting Field are
using single contracts for multiple services but also rely heavily on
other contracts for specific support services, and in-house personnel
to meet base operations support requirements.  Fort Belvoir's current
multiple support services contract is a firm-fixed price contract for
5 years.  The contract includes such services as family housing,
grounds, pest control, hospital operations and maintenance, and
refuse collection.  Fort Belvoir uses other contracts for specific
support services such as major road repairs, asbestos removal, and
custodial services.  Military personnel provide such services as
installation security and medical functions at the hospital. 
In-house civilians provide morale, welfare, and recreation; logistics
management; and information management services. 

Similarly, Whiting Field meets its needs for base operations support
through a single contract for multiple support services, several
contracts for specific services, and the use of in-house personnel. 
The current multiple service contract was awarded for 5 years
beginning in fiscal
year 1997.  Services in the contract include waste water treatment,
pest control, grounds maintenance, hazardous materials management,
communications systems, transportation, and utilities services.  The
first contract was awarded in fiscal year 1983 for a 3-year period
following a commercial activities study.  In addition to the multiple
service contract, functions such as custodial, military family
housing maintenance and repair, aircraft maintenance, and simulation
are provided under single service contracts.  Services such as
morale, welfare, and recreation; fire protection; supply services;
ground electronics; and child development are provided by in-house
personnel. 


   SERVICES PROVIDED BY MULTIPLE
   SERVICE CONTRACTS REFLECT
   VARIED INSTALLATIONS NEEDS
------------------------------------------------------------ Letter :4

At the 10 installations we reviewed, the single contracts for
multiple support services generally contained a broad range of
activities such as refuse collection to computer support.  Appendix
II identifies selected base operations support activities included in
contracts we reviewed.  Although contracting officials often use the
same or similar terms for services differently, we found that
activities such as public works services, pest control, hazardous
waste removal, family housing management, and administrative services
were generally included in the multiple support service
contracts--although differences existed in the degree to which
activities within these categories were included in individual
contracts.  Thus, individual contracts we examined varied in the
extent to which the range of activities identified at one
installation were comparable with another installation's contract.\3

Functions and base support activities included in a given contract
may vary due to requirements of the installation designing the
contract to meet individual needs associated with its mission, the
geographical location, and command preferences.  For example,
contracting officials said that base commanders need the flexibility
to determine which functions to include in their multiple service
contracts in order to most effectively serve each base's needs.  At
Arnold Air Force Base, where the mission is the testing of aerospace
hardware, a provision was developed to preclude a manufacturer of
aerospace hardware from competing for the contract, thus avoiding a
conflict of interest.  At Fort Irwin functions such as provost
marshall and morale, welfare, and recreation were included because
the base was being reactivated, while cooking was excluded so that
soldiers could receive training.  The geographic location of Laughlin
Air Force Base affected services in its contract because, according
to officials, the grass in that region grows extremely fast and must
be cut frequently. 


--------------------
\3 DOD does not have a generally accepted definition of what should
be included in base operations support contracts and the services
differ in how they define base support activities; therefore, it is
difficult to compare and contrast services between contracts and
installations. 


   LESSONS LEARNED FROM MULTIPLE
   SERVICE CONTRACTS
------------------------------------------------------------ Letter :5

Contracting officials at the 10 installations we reviewed have
learned a number of lessons from their experience with single
contracts for multiple base operations support services.  Among the
lessons most often cited were the need for well-developed and
articulated requirements, and the importance of award fees and
best-value selection criteria where appropriate.  Also, while there
can be significant advantages to using multiple service contracts,
there can be some disadvantages. 


      WELL-DEFINED REQUIREMENTS
      ARE CRITICAL TO GOOD
      PERFORMANCE
---------------------------------------------------------- Letter :5.1

Well-developed contract requirements articulated in performance work
statements were often mentioned as necessary to the successful
execution of multiple service contracts.  Contracting officials
stated that the contract requirements should, in the case of simple
tasks, be very specific so there is no question as to what is
expected.  For more complex situations and needs, results-oriented
requirements that describe the government's desired outcomes without
telling the contractor exactly how to accomplish the tasks are
preferable.  Contracting officials at Naval Submarine Base Bangor
stated that the performance work statement in their multiple service
contract was a good example of such results-oriented requirements. 
For example, they cited the area of vehicle maintenance, where the
performance work statement states that the contractor is to maintain
vehicles in accordance with the manufacturers' schedules, and that
the amount of time that the vehicles are not available for use shall
not exceed minimum standards.  They also stated a well-defined
performance work statement is the key to meeting these requirements
and preventing excessive modifications to contracts and unanticipated
cost increases. 

The Laughlin base operations support contract, solicited and awarded
by officials at the Air Education Training Command, contains no
award-fee provision because the contracting officials believed that
the contract was so straightforward and well defined that an award
fee was not necessary to get quality service for the base.  While at
Fort Belvoir, a contracting official stated that many of the
modifications to their multiple service contract were due to
incorrect inventories of equipment and confusion over what equipment
the contractor could use.  They also said that when discrepancies
arise as to what is required, it is often because requirements are
not covered adequately in the contract and the government must modify
the contract to get the services needed. 


      AWARD FEES VIEWED AS
      IMPROVING CONTRACTOR
      RESPONSIVENESS
---------------------------------------------------------- Letter :5.2

Contracting officials at 8 of the 10 installations we reviewed stated
that award fees help focus the contractor on feedback from base
personnel receiving the services and result in better responsiveness
and higher quality work because these awards provide a monetary
incentive for outstanding performance. 

At two of the installations where the contracts did not contain an
award fee--Laughlin Air Force Base and Fort Belvoir--we were told
that, at the time of the solicitation, the officials involved
determined that the contract requirements were not complex enough to
warrant the use of an award fee.  In the case of Laughlin, the
decision not to incorporate an award-fee provision was made by
officials not directly located at the installation.  According to a
contracting official at Laughlin, officials at the Air Education
Training Command, who solicited and awarded the Laughlin contract,
believed that the contract was straightforward and well defined
enough that an award fee was not necessary to get quality service for
the base.  At Fort Belvoir the contract was transferred to them from
the Army Corps of Engineers after it had been solicited and awarded. 
When the Corps moved from Fort Belvoir, responsibility for contract
administration was transferred to the Fort Belvoir Directorate of
Contracting.  Subsequently, the contracting officials that are
currently administering the contracts at Laughlin and Fort Belvoir
told us that based on their contract administration experiences, they
would prefer to have an award-fee provision because they believe it
would ensure improved contractor responsiveness and attention to
quality. 


      BEST-VALUE ARE CRITERIA
      HELPFUL TO CONTRACTING
      OFFICIALS
---------------------------------------------------------- Letter :5.3

Contracting officials stated that best-value criteria in selecting a
contractor can be important because this allows the contracting
agency to avoid selecting contractors that have lower offers but may
not have the capability to effectively execute the contract.  Through
the use of a best- value selection process, a government agency can
select an offer from the private sector that is most advantageous to
the government, considering price or cost as well as past performance
and other noncost factors.  The agency does not have to select the
lowest priced, acceptable offer.  In a commercial activities (A-76)
study, the "best value" private sector offer is compared to the
government's in-house proposal on the basis of cost only.  Best-value
criteria are considered most appropriate when work involves higher
levels of complexity, significant technical expertise, and risk.  In
these situations, the government may be able to obtain a better value
by comparing the various private sector technical proposals and
making trade-offs between various technical and noncost factors such
as past performance as well as costs. 

Officials explained that a contractor who wins based upon a low price
that does not provide adequate profit is less likely to focus on
quality or responsiveness and more likely to put forth only minimal
effort to retain some profit or cut losses.  Such situations can be
more expensive for the government because of the cost of modifying
contracts or finding a new contractor when one defaults. 


      SINGLE CONTRACTS VIEWED AS
      ENHANCING COORDINATION BUT
      CAN BECOME CUMBERSOME
---------------------------------------------------------- Letter :5.4

Our previous outsourcing work identified the benefits and drawbacks
of using single contracts for multiple base operations support
services.\4 Benefits can include (1) a single manager accountable for
performance; (2) greater opportunities for efficiencies, such as
reduced overhead; and (3) reduced cost and effort to develop and
award one contract versus multiple contracts.  Conversely, while
single contracts may produce large savings, they do not always
succeed and can adversely affect a greater number of activities when
problems arise. 

Contracting officials we spoke with during this review told us that
coordination is much easier when there is a single contractor.  One
official stated that base operations support tasks are often
interrelated and require good coordination for smooth operations. 
This official said that the interrelationships between tasks amplify
the benefits of a reduced need for coordination. 

For example, an official at Laughlin Air Force Base stated that
failed coordination between two contractors prevented a third
contractor from being able to perform assigned duties, when a dispute
occurred over who was responsible for mowing the airfield.  This
impacted the third contractor's ability to effectively spray for bugs
to help reduce the number of birds attracted to the airfield.  As a
result, this official stated that the base was not able to fly up to
300 sorties of additional training because birds, attracted to the
airfield by the bugs in the long grass, can be pulled into a jet
engine causing damage.  This contracting official said that if one
contractor had been solely responsible for all these tasks the
coordination would not have been necessary.  In contrast, at Vance
Air Force Base these services are provided by one contractor; as a
result, all coordination responsibilities lie with that contractor. 

Fort Irwin had difficulties with a multiple service contract.  The
size and complexity of Fort Irwin's contract had grown until the
administration and overall management of the contract had become
cumbersome and in some cases not responsive to the needs of the
installation.  For example, the contractor directly supports the
training mission of the base by maintaining combat equipment used in
training.  Officials found that the contractor was more focused on
maintaining this equipment than on providing other installation
support functions, such as public work services and range, airfield,
and training support functions.  In 1994, Forces Command conducted a
study to determine whether the one multiple service contract was in
the government's best interest.  As a result of this study, Fort
Irwin's contract was divided into five separate contracts--two base
support contracts to support the logistical and installation support
functions and three individual contracts for custodial, food
services, and indefinite quantity work. 


--------------------
\4 Base Operations:  Challenges Confronting DOD as It Renews Emphasis
on Outsourcing (GAO/NSIAD-97-86, Mar.  11, 1997). 


   SMALL BUSINESSES PARTICIPATE,
   BUT CONCERNS REMAIN
------------------------------------------------------------ Letter :6

At 3 of the 10 installations we reviewed, small businesses were
participating as prime contractors under single contracts for
multiple base operations support activities.  In each case, the small
business was awarded the prime contract under programs designed to
assist small and disadvantaged businesses.  Participation by small
businesses in multiple service contracts is a sensitive issue because
the scope of requirements can reduce the ability of small businesses
to compete as prime contractors.  DOD officials recognize this and
have taken actions to enhance small business participation, but Small
Business Administration officials remain concerned about the
potential impact of multiple service contracts.  The Small Business
Administration Reauthorization Act for Fiscal
Year 1997 adds new provisions to section 15(a) of the Small Business
Act, which at the time of our work required federal agencies to
consider the effect on small businesses when requirements currently
being performed by small business are considered for consolidation. 
The Reauthorization Act, among other things, instructs agencies, to
the "maximum extent practicable--avoid unnecessary and unjustified
bundling of contract requirements that precludes small business
participation in procurements as prime contractors."


      SMALL BUSINESSES ARE PRIME
      CONTRACTORS ON MULTIPLE
      SERVICE CONTRACTS
---------------------------------------------------------- Letter :6.1

The small business contracts we encountered were awarded under one of
two programs.  At two locations--Laughlin Air Force Base and Naval
Air Station Whiting Field--the contract awards were set aside
exclusively for competition among small businesses.  At Naval Air
Station Whidbey Island, the contract with a small disadvantaged
business was negotiated on a sole-source basis directly with the
Small Business Administration under section 8(a) of the Small
Business Act. 

Whiting Field performed a commercial activities study in 1983 and
awarded the first contract competitively.  During the second
competition in 1985, a small business was awarded the contract and it
has been performed by a small business since then.  The current
contract is for approximately $6.6 million annually and provides for
a range of base functions such as utilities services, grounds, pest
control, mail, and fuel distribution. 

Whidbey Island contracted with a small business for approximately
$15.3 million annually to provide base functions such as maintenance
of property, grounds, utilities, housing, supply operations,
warehousing, and refuse services.  This contract was originally
awarded to a small business in fiscal year 1987.  During the second
procurement in fiscal year 1992, it was determined that there would
not be enough small businesses to compete; therefore, the
solicitation was unrestricted, and the contract was awarded to a
large business.  When it was time to resolicit the third procurement
in fiscal year 1997, the government was contacted by a small
disadvantaged firm and the contracting officer worked with the Small
Business Administration to subcontract with the small disadvantaged
business under the 8(a) program. 


      CONCERNS REMAIN ABOUT
      OVERALL IMPACT ON SMALL
      BUSINESS PARTICIPATION
---------------------------------------------------------- Letter :6.2

Small Business Administration and DOD officials are concerned that
consolidating multiple base operation services into single contracts
may limit the participation of small businesses as prime contractors. 
Contracting officials also stated that it was difficult for small
businesses to compete for multiple service contracts due to the high
cost of preparing proposals and the low probability of winning
against large business. 

Small Business Administration officials stated that their primary
concern with omnibus contracts is in cases where requirements that
were previously performed by small business are consolidated with
other contract requirements so that small business participation
becomes less likely.  They noted that it is generally not to the
advantage of small business to have all or many requirements for base
operations included in one contract. 

On October 28, 1996, the Deputy Secretary of Defense issued a policy
statement concerning the consolidation of requirements.  In it, the
Deputy Secretary announced that in planning to consolidate several
contracts or requirements, the services must consider the effect on
small businesses.  According to the Deputy Secretary, requirements
cannot preclude small businesses as prime contractors unless a market
research analysis shows significant benefits in terms of reduced
costs and services or both.  The policy statement recognizes the
balance that must be maintained between the potential cost benefits
that can be obtained through consolidated contracts and the loss of
small business participation.  The Deputy Secretary's statement also
recognizes the policy of fostering the participation of small
business in federal contracting embodied in statutes such as the
Small Business Act and section 2323 of title 10 as implemented by the
Federal Acquisition Regulation and Defense Federal Acquisition
Regulation Supplement. 

According to several contracting officials, the high cost of
preparing a proposal combined with a low probability of winning
against large business competition often makes small businesses
reluctant to compete for contracts that are not set aside exclusively
for small business.  For those contracts not awarded to small
business, we found only one case where a small contractor competed
against a large business.  In this case during the evaluation, the
small business was determined to be outside the competitive range
because it did not fully respond to the scope and terms of the
solicitation. 


      SMALL BUSINESS
      ADMINISTRATION
      REAUTHORIZATION ACT
      ADDRESSES BUNDLING
---------------------------------------------------------- Letter :6.3

The Small Business Administration Reauthorization Act of 1997, among
other things, amends the provisions in section 15(a) of the Small
Business Act concerning the consolidation of agency requirements. 
The act requires federal agencies to consider the impact on small
businesses' ability to compete when considering consolidating
requirements that have been performed by small businesses into
multiple services contracts.  The consolidation must be justified by
measurable substantial benefits and be subject to review by the
agency's Small Business Administration Procurement Center
Representative.  Small Business Administration officials told us they
are drafting guidelines for federal agencies to follow in
implementing this requirement.  They expect the guidelines to be
completed by September 1998. 


   SAVINGS ARE NOT DOCUMENTED, BUT
   EFFICIENCY GAINS ARE RECOGNIZED
------------------------------------------------------------ Letter :7

Although contracting officials reported efficiency gains, cost
savings from using single contracts for multiple base operations
support functions are not documented.  Moreover, at most of the
installations savings cannot be easily quantified because once a
commercial activities study is completed there is no requirement to
track actual savings.  Some of the efficiency gains that have been
cited include reduced overhead, cross utilization of contract
personnel, and increased flexibility. 


      SAVINGS CANNOT BE EASILY
      QUANTIFIED
---------------------------------------------------------- Letter :7.1

As previously discussed, at 7 of the 10 installations we reviewed, an
initial determination had been made that it was cost-effective to
contract out base operation support services.  The other three
installations contracted out from the time of inception of the base
or its mission and did not necessitate an A-76 study. 

Each of the seven installations that performed an A-76 study had
determined that the commercial activities could be performed more
economically by contracting out.  These commercial activities studies
involved comparing estimated contract and in-house costs for the
specific work to be performed to determine the most cost-effective
approach.  However, once the decision was made that it was more cost
effective to contract for the services, the officials were not
required to track actual savings.  In this regard, contracting
officials told us that because the nature of the requirements being
contracted has changed enough over time, any baseline for cost
comparisons has been lost. 


      OFFICIALS SEE EFFICIENCIES
      IN MULTIPLE SERVICE
      CONTRACTS
---------------------------------------------------------- Letter :7.2

Officials stated that single contracts for multiple base operations
services had some obvious efficiency gains that are not available
under separate contracts, such as reduced overhead, cross
utilizations of contract personnel, and reduced solicitations.  For
example, contracting officials at Vance, Whidbey Island, and Fallon
stated that less work is required to conduct a single competition for
a large contract than multiple competitions for smaller contracts. 
At Warren/Selfridge, Vance, and Bangor, officials told us that the
ability to cross-utilize personnel was an advantage.  Also, at
Warren/Selfridge, Whiting Field, and Whidbey Island officials told us
the reduced overhead associated with single contracts for multiple
base operations services is an advantage. 


   CONCLUSIONS
------------------------------------------------------------ Letter :8

Single contracts for multiple services were one tool being used to
meet base operations support needs at the 10 installations we
reviewed.  Although some installations received extensive support
through a single contract, none received all of their required
services through a single contract.  The history and characteristics
of the contracts varied between the 10 installations and the services
obtained through the contracts often reflected differences in mission
and geographical location.  Comparing and contrasting services
between contracts and installations to precisely say what services
were included or excluded from individual contracts in comparison
with others is difficult because there are no generally accepted
definitions for base operations support services.  All of this
suggests that multiple service contracts need to be tailored to the
needs, missions, and other factors effecting individual
installations. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :9

In commenting orally on a draft of this report, DOD believed our
conclusion did not sufficiently recognize that variations in multiple
service contracts were necessary and good.  Specifically, DOD
emphasized that because such contracts are intended to satisfy the
individual installation's requirements a standard contract will not
necessarily fit the needs of all installations.  We revised the
report to reflect that our work suggests that multiple service
contracts need to be tailored to the needs, missions, and other
factors of importance to the installation. 

DOD also noted that our report did not recognize all factors that may
prevent small businesses from participating in multiple service
contracts.  Specifically, DOD cited limits on the amount of work that
can be subcontracted as a factor, which prevents small businesses
from competing as prime contractors.  This factor was not identified
as a significant issue at the ten installations we reviewed.  DOD
also noted that our report did not discuss whether small businesses
were participating as subcontractors on multiple service contracts. 
We recognize that small businesses are likely participating as
subcontractors, but we did not collect data about subcontracts as it
was outside the scope of our work.  The Small Business Administration
provided technical clarifications, which we incorporated where
appropriate. 


---------------------------------------------------------- Letter :9.1

We conducted our review from August 1997 to February 1998 in
accordance with generally accepted government audit standards.  We
are sending copies of this report to the Secretaries of Defense, the
Army, the Navy, and the Air Force; the Administrator, Small Business
Administration; and the Director, Office of Management and Budget. 
We will make copies available to others upon request. 

Please contact me at (202) 512-8412 if you or your staff have any
questions concerning this report.  Major contributors to this report
were Barry W.  Holman; Tom Howard; C.  Douglas Mills, Jr.; John R. 
Beauchamp; Patricia F.  Blowe; and John Brosnan. 

David R.  Warren, Director
Defense Management Issues

List of Requesters

The Honorable Strom Thurmond
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate

The Honorable Ted Stevens
Chairman
The Honorable Daniel Inouye
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
United States Senate

The Honorable Floyd Spence
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on National Security
House of Representatives

The Honorable C.W.  Bill Young
Chairman
The Honorable John P.  Murtha
Ranking Minority Member
Subcommittee on National Security
Committee on Appropriations
House of Representatives


SCOPE AND METHODOLOGY
=========================================================== Appendix I

To examine the use of single contracts for multiple base operations
support services, we held discussions with cognizant Office of the
Secretary of Defense (OSD), Army, Navy, and Air Force officials. 
While no central listing of these contracts existed, these officials
were able to identify the following 15 installations as locations
that contracted out multiple base operations support services under a
single contract. 


      AIR FORCE
------------------------------------------------------- Appendix I:0.1

Arnold Engineering Development Center, Arnold Air Force Base,
 Tennessee
Laughlin Air Force Base, Texas
Vance Air Force Base, Oklahoma


      ARMY
------------------------------------------------------- Appendix I:0.2

Fort Belvoir, Virginia
Fort Irwin, National Training Center, California
Tank-Automotive and Armaments Command (TACOM), Michigan
 US Army Garrison Selfridge
 TACOM-Warren


      NAVY
------------------------------------------------------- Appendix I:0.3

Naval Submarine Base Bangor, Washington
Naval Submarine Base Kings Bay, Georgia
Naval Air Station Fallon, Nevada
Naval Air Station Whidbey Island, Washington
Naval Air Station Whiting Field, Florida
Naval Air Facility El Centro, California
Naval Station Roosevelt Roads, Puerto Rico
Naval Security Station, Washington, D.C. 


      OTHER ACTIVITIES
------------------------------------------------------- Appendix I:0.4

U.S.  government activities in the Republic of Singapore

We did not independently validate the information provided by the
services but accepted it as a sample of locations utilizing single
contracts to perform multiple base operations support services.  From
this list, we selected 10 to visit and examine their current multiple
service contract.  We reviewed legislation, various reports, and
studies and held discussions with the Office of the Secretary of
Defense; U.S.  Headquarters Forces Command; Naval Facility
Engineering Command; and Secretary of the Army for Research,
Development, and Acquisition officials.  Likewise, we held
discussions with the Office of Small and Disadvantaged Business
Utilization, Office of Assistant Deputy Under Secretary of Defense,
the Small Business Administration, and the U.S.  Chamber of Commerce
concerning implications for small business. 

To accomplish our objectives, we met with installation and contract
officials at 10 installations to review and discuss the management of
their base operations support contracts.  At seven of these
locations, commercial activities studies (A-76) had been performed in
the past to determine which functions should be contracted and which
kept in-house.  We did not attempt to validate these studies;
however, we discussed with contracting officials the results of these
studies and which functions were contracted as a result of these
studies.  Locations we reviewed were, Arnold Engineering Development
Center, Arnold Air Force Base, Tennessee; Laughlin Air Force Base,
Texas; Vance Air Force Base, Oklahoma; Tank-Automotive and Armaments
Command, Warren and Selfridge, Michigan; Fort Belvoir, Virginia; Fort
Irwin National Training Center, California; Naval Submarine Base
Bangor and Naval Air Station Whidbey Island, Washington; Naval Air
Station Fallon, Nevada; and Naval Air Station Whiting Field, Florida. 

To determine the characteristics of multiple service contracts and
the kinds of services being procured, we reviewed the current
multiple service contract to identify the contract type, length and
dates of performance, cost, number of offerors, and contractor, and
whether the contractor was a small business.  We examined the
services contained in the performance work statement to determine
which were commonly included or omitted.  We discussed with contract
officials these characteristics and the history of the multiple
service contract at their installation.  We also discussed with
officials whether single contracts for specific services, regional
contracts for specific services, and in-house personnel were used to
meet the installations' base operations support service requirements. 

To determine what lessons were learned from past and current multiple
service contracts and whether cost and efficiency gains were
documented, we interviewed contracting officials at each of the 10
installations to find out whether any record or history was
maintained.  Since we found no formal record of lessons learned or
cost and efficiency gains, we obtained agency officials' opinions on
contracting for both current and past multiple service contracts and
contracting in general at the installation.  Officials also commented
on efficiency gains they believed had resulted from the use of
multiple service contracts. 

To ascertain the implications for small businesses when multiple
service contracts are utilized, we determined the extent to which
small businesses were participating as prime contractors through
discussions with contracting officials.  Further, we interviewed
contracting officials to determine the extent to which small
businesses competed for these contracts and, in the cases where a
small business won the contract, the method by which the contract was
awarded.  Additionally, we spoke to officials at the Small Business
Administration and the Office of Small and Disadvantaged Business
Utilization, Office of the Assistant Deputy Under Secretary of
Defense, to learn of their concerns regarding the use of single
contracts for multiple services and the implications for small
business. 

We conducted our review from August 1997 to February 1998 in
accordance with generally accepted government audit standards. 


SELECTED BASE SUPPORT FUNCTIONS
========================================================== Appendix II

Selected base support functions identified in the multiple service
contracts at installations reviewed. 

---------------------------------------  ---------------------------------------
Administrative Services                  Heating Plants and Systems
Air Conditioning and Refrigeration       Housing Operations and Maintenance
Plants and Systems                       Information Management Functions
Aircraft Maintenance                     Installation Support (Range, Airfield,
Airfield Management                      Training, Support)
Airfield Services                        Janitorial Services, and Refuse
Audiovisual Services                     Collection and Disposal
Base Information Management              Laboratory Services
Base Visual Information Services         Logistics Maintenance Functions
Buildings and Structures                 Logistics Supply Functions
Central Heating Plant and Distribution   Machining and Fabrication
System                                   Maintenance, Repair, Alteration and
Civil Engineering Support                Construction of Real
Combined Bachelor Quarters Operations    Property
Services                                 Messenger Mail
Communications-Computer Systems          Pest Management Services
Computer System Operation and Systems    Potable Water Pump, Wells, Treatment,
Administration                           Storage and
Contractor Applied Technology            Distribution System
Custodial Services                       Precision Measurement Equipment
Dining Facility Appliances and           Laboratory
Equipment                                Public Works Services
Electrical Distribution and Emergency    Purchasing
Generation System                        Railroads
Electrical Plants and Systems            Refuse Services
Emergency Management Planning and        Security Services
Operation                                Software Development and Maintenance
Environmental Services                   Stock Level Inventory
Equipment Support                        Storage and Warehousing
Facility Engineering                     Supply Operations
Family Housing                           Support Facility Operations,
Fire Detection and Suppression           Maintenance, and Repair
Fire Protection Services                 Telephone Operations Services
Food Service                             Test Associated Services
Foreign Technology                       Test Support
Freight                                  Training Management Systems
Fuels Management                         Transportation Services
General Library Operations               Utilities Systems Operations and
Ground Electronics Maintenance and       Maintenance
Services                                 Vacuum Systems
Grounds and Surfaced Areas               Vehicles Operations and Maintenance
Hazardous Waste or Material Management   Waste Water Collection, Pump, Treatment
and Disposal                             and Disposal System
Heating, Air Condition, Refrigeration
and Compress Air
Vacuum System
--------------------------------------------------------------------------------

MULTIPLE SERVICE CONTRACT HISTORY
FOR MILITARY INSTALLATIONS
REVIEWED
========================================================= Appendix III


      VANCE AIR FORCE BASE
----------------------------------------------------- Appendix III:0.1

Vance Air Force Base is located in Enid, Oklahoma, 90 miles north of
Oklahoma City, Oklahoma.  Vance is a joint undergraduate pilot
training base and home to the 71st Flying Training Wing.  Vance meets
the majority of its base operations support needs with a single
contract for multiple support services and a small number of
contracts for single services; some additional services are performed
by in-house personnel. 

Vance currently has a single contract for multiple base operations
support services with Northrop-Grumman Technical Services, Inc., that
runs from fiscal year 1996 to fiscal year 2000.  The contract is a
fixed-price-incentive contract with an award fee for 1 base year plus
4 option years and an estimated cost of $40.2 million annually.  It
provides for services such as communications, supply, civil
engineering, transportation, airfield management, and aircraft
maintenance.  Additionally, some morale, welfare, and recreation
functions are included in this contract.  According to contracting
officials at Vance, they originally awarded a fixed-price multiple
service contract in 1960, when the training mission was established
at the base.  According to contracting officials, the decision to
contract for base operations support services was part of an
experiment to determine how well and efficiently a contractor-run
base could operate compared to another base that used in-house
personnel to perform the services.  In 1972, the contract was offered
for a 5-year period and Northrop-Grumman Technical Services won the
contract.  Four subsequent competitions for the contract have also
gone to Northrop-Grumman Technical Services.  The last solicitation
had two offerors. 

Vance also uses other contracts and in-house personnel to meet its
base operations support requirements.  Specifically, Vance utilizes a
single-service contract for simulation instruction, simulator
maintenance, and technical support for training aircraft.  Other
services such as pilot instructors, air traffic control, weather
monitoring, and quality assurance are performed by in-house
personnel. 


      ARNOLD ENGINEERING
      DEVELOPMENT CENTER, ARNOLD
      AIR FORCE BASE
----------------------------------------------------- Appendix III:0.2

The Arnold Engineering Development Center at Arnold Air Force Base is
an Air Force aerospace ground environmental test center providing
testing services for the armed services, National Air and Space
Administration, both domestic and foreign commercial aerospace firms,
and foreign governments.  Located in southern central Tennessee, the
center has been operated by contractors under the management of an
Air Force commander and staff since 1951.  Arnold meets its needs for
base operations support by means of one contract for multiple support
services and an additional service provided by in-house personnel. 
Additionally, testing services, once part of the multiple support
services contract, are now provided separately in a multiple testing
service contract. 

The current contract is a cost-plus-award-fee contract for 5 years
plus a single 3-year option and is worth about $100 million annually. 
The support contract for fiscal 1996 to fiscal 2003 was won by
Aerospace Center Support, a joint venture of Computer Sciences
Corporation, DynCorp, and General Physics.  The functions included in
the support contract include central computer operations, base
support and maintenance, environmental, utilities, logistics,
transportation, base security, and fire protection.  During 1949 and
1950, while Arnold was under construction, a study for the Secretary
of the Air Force was conducted by the Scientific Advisory Board.  The
study, prepared in 1950, recommended that the Arnold Engineering
Development Center be operated by a non-profit entity, preferably one
sponsored by a large industrial corporation with a variety of
technical interests.  After reviewing this and other reports and
information available at the time, the Secretary of the Air Force
decided that the Air Force would be best served by contracting with a
for-profit corporation to take advantage of the profit motive.  To
avoid conflicts of interest, a contract provision was developed to
preclude operation by firms involved in the manufacture of hardware
amenable to testing at Arnold.  The first contract was awarded in
1950 and the test center was established 1951.  The contract provided
for all testing and support services at the installation.  In fiscal
year 1981, the contract was separated into two testing contracts and
a single mission support contract.  The mission support contract
provides most of the base operations support services at the
installation.  In addition, Air Force Services (formerly, morale,
welfare, and recreation) are run by in-house Air Force personnel. 


      LAUGHLIN AIR FORCE BASE
----------------------------------------------------- Appendix III:0.3

Laughlin Air Force Base is a pilot training installation located in
Del Rio, Texas, 150 miles west of San Antonio, Texas.  Laughlin meets
its requirements for base operations support through a single
contract for multiple support services, several contracts for
specific services, and some support services performed by in-house
personnel. 

Laughlin is now in its second year of a 5-year
multiple-service-fixed-price contract, which was awarded to a small
business in fiscal year 1997 for approximately $5.4 million in the
base year and contains no award-fee provision.  According to
contracting officials, the multiple service contract resulted from a
commercial activities study and provides supply, civil engineering
operations, and transportation functions.  According to a contracting
official at Laughlin, the commercial activities study was the result
of a DOD Management Review Directive and was conducted from April 9,
1992, until July 12, 1996.  The civil engineering functions include
facilities management, pest management, plumbing, and utilities,
while supply functions include such services as inventory control,
computer support, and customer service.  Beginning in fiscal year
1999, vehicle maintenance and fuels management services will become
part of the multiple service contract.  According to a contracting
official, this multiple service base operating support contract was
awarded to a small business as a result of a small business set aside
competition between three small business firms. 

Laughlin has other single service contracts for such functions as
grounds maintenance, custodial services, and transient alert. 
In-house civilians also perform some services such as aircraft
maintenance while military personnel provide the installation
security functions. 


      FORT BELVOIR
----------------------------------------------------- Appendix III:0.4

Fort Belvoir, located 18 miles southwest of Washington, D.C.,
provides support services to the Military District of Washington, the
National Capitol Region, and Fort Belvoir tenants.  Command of the
installation was transferred to the Military District of Washington
in October 1988.  The current mission is to provide support for the
growing number of tenants.  According to contract officials, Fort
Belvoir meets its base operations support needs through a single
contract for multiple support services, contracts for specific
support services, and the use of in-house personnel. 

Contracting officials stated that Fort Belvoir's current multiple
service contract is fixed price for approximately $12 million
annually with DynCorp for 5 years.  They stated that this is the
third contract awarded since the first one in January 1986, and there
were three offerors for the current contract.  According to a Fort
Belvoir official, the first contract resulted from a commercial
activities study performed in the early 1980s, and the study was the
result of a mandate by the Army's Training and Doctrine Command, then
the Command with authority over Fort Belvoir.  Fort Belvoir's
contract includes such functions as family housing operations and
maintenance, grounds, pest control, hospital operations and
maintenance, and refuse collection. 

Contracting officials at Fort Belvoir stated that Fort Belvoir uses
other contracts for specific support services such as major road
repairs, asbestos removal, and custodial services.  These officials
also stated that military personnel provide such services as
installation security and medical functions at the hospital, while
in-house civilians provide such services as morale, welfare, and
recreation; logistics management; and information management. 


      FORT IRWIN
----------------------------------------------------- Appendix III:0.5

Fort Irwin is located in the desert of California, approximately 150
miles east of Los Angeles.  In 1981, it was activated as the Army's
National Training Center, with the mission of providing realistic
joint and combined arms training focused on developing soldiers,
leaders, and Army units on the battlefield.  Fort Irwin meets its
base operations support needs through the use of two multiple service
contracts, several contracts for specific support services, one
Army-wide contract, and in-house personnel. 

When the decision was made to activate Fort Irwin as the National
Training Center in 1981, a commercial activities study was conducted
to determine whether a contract or in-house operation was more cost-
effective.  The study results demonstrated that a contract operation
was more cost-effective and a cost-plus-fixed-fee contract was
awarded in fiscal 1982.  This contract was recompeted three times.  A
cost-type contract was used because requirements could not be
precisely estimated.  In Fort Irwin's case, the base had been
reactivated and there were no existing personnel operations on-site. 

During an extensive Forces Command review in the early 1990s, it was
determined that the size and complexity of the contract had become
cumbersome and in some cases not responsive to the installation's
needs.  This led to a May 1994 study to determine the most efficient
and effective configuration to support the mission.  As a result,
Fort Irwin divided the multiple service contract into five separate
contracts, two multiple service contracts, and three single function
contracts for the 1996 resolicitation.  The major portion of the
existing multiple service contract was split into two
cost-plus-award-fee contracts, one for installation support services
and the other for logistics support.  They were valued at
approximately $14.2 million and $35.3 million, respectively.  The
logistics support contract provides services for tactical and
nontactical vehicle maintenance, supply including ammunition, central
receiving, and storage/issue/turn-in to name a few.  The installation
support contract provides a wide range of services such as public
works, range, airfield, training support, community activities
(morale, welfare, and recreation), and provost marshal.  The other
three were fixed-price contracts for custodial services, food
services, and indefinite quantity work, respectively. 

Although contracts are used to meet most base support service needs,
in-house personnel perform some support functions.  Examples of the
services provided in-house include cooking, child development
services, technical services, supply services, and training support. 
Additionally, during the breakup of Fort Irwin's contract, the Army
Medical Command decided to take over contracting of the medical
support functions--hospital housekeeping and biomedical maintenance. 
These functions were contracted out Army-wide by the Army Medical
Command. 


      U.S.  ARMY TANK-AUTOMOTIVE
      AND ARMAMENTS COMMAND,
      WARREN AND SELFRIDGE
----------------------------------------------------- Appendix III:0.6

Both Warren and Selfridge support activities are under the command of
the U.S.  Army Tank-Automotive and Armaments Command with Warren
being the home of the Command.  These activities are located 20 miles
apart and 5 miles from Detroit Michigan.  The Tank-Automotive and
Armaments Command's mission is to field and support mobility and
armament systems.  Selfridge is one of these centers and also directs
programs that provide support services at Selfridge for personnel and
dependents in such areas as housing, morale, safety, environmental
and recreational services.  The activities' base operations support
needs are met through the use of one contract for multiple services,
several contracts for specific support services, and in-house
personnel. 

As a result of separate commercial activities studies conducted
approximately 18 years ago, two contracts for multiple support
services were awarded.  One contract supported Warren, the other
Selfridge.  However, in 1989, a decision was made that it would be in
the best interest of the government to combine these two contracts
into a single cost-type contract as a means to reduce overhead and
contract administration cost.  The current contract was awarded to
Serv-Air, Inc., for about $15 million annually for 5 years, from
fiscal years 1994 through 1998.  This contract includes such services
as supply, warehousing, audiovisual, facility engineering, family
housing, and administrative services to support the operations of
both activities. 

Contracting officials told us that due to existing contracts at the
Warren activity, the custodial and refuse collection services are
performed there under separate single function contracts.  In-house
personnel handle functions such as community family services,
engineering and technical services, resource management, information
technology, provost marshall, and public affairs services. 


      NAVAL SUBMARINE BASE BANGOR
----------------------------------------------------- Appendix III:0.7

Naval Submarine Base Bangor is a fully operational shore activity
selected as the West Coast Trident submarine base.  It is home to 9
nuclear submarines and 54 tenant commands.  Bangor is located on the
western side of the Puget Sound, outside of Seattle, Washington.  Its
mission is to provide support to the Trident submarine launched
ballistic missile system, maintain and operate facilities for
administration and personnel support for operations of the submarine
force, and provide logistic support to other activities in the area,
and other functions as may be directed by competent authority. 
Bangor meets its base support needs primarily through a single
contract for multiple support services.  In addition, Bangor has
several contracts for specific services, and utilizes in-house
personnel for others. 

According to a Bangor official, Bangor has contracted for base
operations services, since it was activated as a Naval Submarine Base
in 1976.  Officials stated that it was determined a contract
operation would be more cost-effective, based on the results of a
commercial firm's study of all the base tenants and operations.  The
original contract was a 1-year cost- plus-incentive-fee contract. 
The current contract is a fixed-price-award-fee contract awarded to
Johnson Controls World Services, Inc., for a base price of about $40
million annually.  It also includes a provision for the contractor to
meet ISO 9000 standards to better ensure they can meet customer
requirements and help reduce contract monitoring costs.  The term of
this contract is 10 years from October 1997 through September 2007. 
It provides a wide range of base support services, including
administrative support, various public works services, utility and
supply services, and security services.  Contract officials stated
the current contract was resolicited for a 10-year period in an
effort to attract competition and save money over the life of the
contract.  Despite this change, there was only one offeror for the
contract.  Officials stated that due to the current contractors
success in collecting a large portion of the maximum possible award
fee, other firms did not think that their chances of winning the
contract outweighed the cost of preparing a solicitation.  Except for
the initial contract, the other four solicitations were for 5-year
periods each. 

Bangor has several individual contracts to meet the needs of base
operations support functions, such as architect engineering services,
electronic and communications equipment, animal control, recreational
library services, and maintenance of automated data processing
equipment.  Also, Bangor provides such services as morale, welfare,
and recreation; family services; food preparation and administration;
and crane inspection and certification through the use of in-house
personnel. 


      NAVAL AIR STATION WHIDBEY
      ISLAND
----------------------------------------------------- Appendix III:0.8

Naval Air Station Whidbey Island is located on Whidbey Island in the
Puget Sound, Washington.  The base mission is to provide the highest
quality facilities, services, and products to the naval aviation
community and all organizations utilizing the air station.  According
to contract officials, Whidbey Island meets its needs for base
operations support through a single contract for multiple support
services, several single contracts for specific services, and the use
of in-house personnel. 

The current fixed-price-award-fee contract was awarded for fiscal
years 1997 through 2001 for approximately $15.3 million annually. 
The contract was negotiated on a sole-source basis with the Small
Business Administration pursuant to the 8(a) program with services
provided by Chugach Development Corporation.  Functions include such
services as family housing maintenance, refuse collection, supply
operations, grounds and pest control, and utilities services.  The
current multiple service contract is the third 5-year contract
awarded by Whidbey Island.  The first contract was awarded in fiscal
1987 as the result of a commercial activities study. 

Although the multiple service contract provides for a large portion
of Whidbey Island's base operations needs, contracts for specific
functions and in-house personnel are also used.  Such services as
morale, welfare, and recreation; environmental services; aircraft
operations; public works engineering; and housing are provided for
through the use of in-house personnel.  Other services such as
janitorial, grounds, indefinite order work for paving, painting, and
roofing are provided under single contracts for specific services. 


      NAVAL AIR STATION WHITING
      FIELD
----------------------------------------------------- Appendix III:0.9

Naval Air Station Whiting Field is located approximately 33 miles
northeast of Pensacola, Florida, near the city of Milton.  The
activity includes two major landing fields and is home station of
Training Air Wing Five, which consists of three fixed-wing pilot
training squadrons and two helicopter pilot training squadrons.  In
addition, the activity maintains
13 outlying fields in support of the pilot training mission.  Whiting
Field meets its needs for base operations support through a single
contract for multiple support services, several contracts for
specific services, and the use of in-house personnel. 

The current multiple service contract with Tumpane Services
Corporation was awarded for approximately $6.6 million in the base
year to a small business under the set-aside program.  This
fixed-price-award-fee contract covering fiscal years 1997 through
2001 was awarded pursuant to a best- value selection process. 
Functions in the contract include waste water treatment, pest
control, grounds maintenance, hazardous materials management,
communications systems, transportation, and utilities services.  The
first contract was awarded in fiscal year 1983 for a 3-year period as
the result of a commercial activities study.  Since fiscal year 1985,
the contract has been recompeted three times, and each time it was
awarded to a small business. 

In addition to the multiple service contract, Whiting Field uses
single contracts and in-house personnel to provide base operations
support.  Services such as morale, welfare, and recreation; fire
protection; supply services; ground electronics; and child
development are provided through the use of in-house personnel. 
Other functions such as custodial, military family housing
maintenance and repair, aircraft maintenance, and simulation are
provided under single service contracts. 


      NAVAL AIR STATION FALLON
---------------------------------------------------- Appendix III:0.10

Naval Air Station Fallon, located 60 miles east of Reno, Nevada, is
an air-to-air training facility for naval pilots.  According to
contract officials, Fallon uses a single contract for multiple
support services to provide for a large portion of its base
operations support needs, in addition to in-house personnel and some
contracts for specific services. 

The current multiple service contract was awarded to Day-Zimmerman on
a fixed-price-award-fee basis and is worth about $15 million
annually.  The contract covers fiscal years 1998 through 2002.  The
current contract is the third 5-year contract awarded, with each
having a single base year and four individual option years. 
According to a contracting official at Fallon, the decision to
contract for base operations support services at Fallon was the
result of a commercial activities study conducted from May 1981 until
January 1984.  According to this official, the impetus for the study
was the desire on the part of the administration of the time to
privatize commercial activities at military installations. 
Contracting officials told us that the first contract was awarded in
November 1987 for fiscal year 1988.  Some of the base operations
support services provided for in the multiple service contract
include operating combined bachelors quarters, public works,
custodial, airfield management, pest management, transportation, food
services, supply, and housing operations. 

According to contracting officials, in-house personnel provide such
functions as locksmith and most of the morale, welfare, and
recreation services.  These officials stated that contracts for
specific services are used to provide such functions as grounds
maintenance, fuels handling, aircraft maintenance, and minor
construction. 


*** End of document. ***