Park Service: Need to Address Key Management Problems That Plague the
Concessions Program (Testimony, 06/15/2000, GAO/T-RCED-00-136).

Pursuant to a congressional request, GAO discussed the National Park
Service's (NPS) concessions program, focusing on program management
problems and options available to address them.

GAO noted that: (1) shortcomings in the agency's overall approach to
managing the concessions program center on three areas: (a) the
inadequate qualifications and training of the agency's concessions
specialists and concessions contracting staff; (b) the agency's
out-of-date practices in handling its contracting workload as well as
its chronic backlog of expired contracts; and (c) a lack of
accountability within the concessions program; (2) for the most part,
these problems are long-standing and are consistent with similar
concerns raised by the Department of the Interior, its Office of the
Inspector General, and NPS concessions staff; (3) NPS has two principal
options available for dealing with the problems identified in the
management of the concessions program: (a) using better hiring and
training practices to professionalize the workforce and thus obtain
better business and contracting expertise; or (b) contracting for the
needed business and contracting expertise; (4) these two options are not
mutually exclusive in that the agency could contract for expertise in
certain functions while developing the expertise in-house for other
functions; (5) no matter which option--or combination of options--it
selects, the agency needs to strengthen its accountability for and
control of the program; and (6) unless this is done, the effectiveness
of other changes to the program will likely be diminished.

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

 REPORTNUM:  T-RCED-00-136
     TITLE:  Park Service: Need to Address Key Management Problems That
	     Plague the Concessions Program
      DATE:  06/15/2000
   SUBJECT:  Concessions contracts
	     National recreation areas
	     Contract oversight
	     National parks
	     Human resources training
	     Accountability
IDENTIFIER:  NPS Concession Program

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GAO/T-RCED-00-136

Testimony

Before the Subcommittee on National Parks, Historic Preservation and
Recreation, Committee on Energy and Natural Resources, U.S. Senate

For Release on Delivery

Expected at 2:30 p.m., EDT Thursday, June 15, 2000

PARK SERVICE

Need to Address Key Management Problems That Plague the Concessions Program

Statement of Barry T. Hill, Associate Director, Energy, Resources, and
Science Issues, Resources, Community, and Economic Development Division

GAO/T-RCED-00-136

Mr. Chairman and Members of the Subcommittee:

We are pleased to be here today to discuss the management of the Park
Service's concessions program. Our comments are based primarily on two
reports-both of which we did at the request of this Subcommittee. The first
report, which we issued in August 1998, reviewed the condition of lodging
facilities in 10 national parks. The condition of these facilities varied
considerably from park to park and was at times quite poor. The second
report addresses key management problems in the concessions program and
options available to address them.

In summary, our most recent work shows the following:

We found shortcomings in the agency's overall approach to managing the
concessions program that center on three areas: (1) the inadequate
qualifications and training of the agency's concessions specialists and
concessions contracting staff, (2) the agency's out-of-date practices in
handling its contracting workload as well as its chronic backlog of expired
contracts, and (3) a lack of accountability within the concessions program.
For the most part, these problems are long-standing and are consistent with
similar concerns raised by the Department of the Interior, its Office of the
Inspector General, and Park Service concessions staff.

The Park Service has two principal options available for dealing with the
problems identified in the management of the concessions program: (1) using
better hiring and training practices to professionalize the workforce and
thus obtain better business and contracting expertise or (2) contracting for
the needed business and contracting expertise. These two options are not
mutually exclusive in that the agency could contract for expertise in
certain functions while developing the expertise in-house for other
functions. No matter which option-or combination of options-it selects, the
agency needs to strengthen its accountability for and control of the
program. Unless this is done, the effectiveness of other changes to the
program will likely be diminished.

Background

Concessioners play a significant role in providing services to many of the
over 270 millions visitors who annually visit the national park system.
Concessioners, which are private businesses operating under contracts with
the Park Service, provide facilities and visitor services such as lodging,
food, merchandising, marinas, and various guided services. In 1998, the
latest year for which data are available, 630 concessioners provided visitor
services in many of the 379 park units located across the nation. These
concessioners generated about $765 million in revenues, of which about $479
million (almost two-thirds) came from the 73 concessioners that provide
lodging.

For many years, concerns have been raised by the Congress, the Park Service,
and GAO about the need to reform existing concessions law and better manage
the agency's concessions program. In November 1998, the Congress enacted a
new concessions law as part of the National Parks Omnibus Management Act of
1998. One of the Congress's intentions was that the new concessions law
would increase competition in the award of new concessions contracts. In
addition, the law established an advisory board whose mission was to advise
the Secretary of the Interior on improvements the agency could make in
managing park concessioners.

Long-Standing Management Problems

Affect the Condition of Lodging Facilities

Concerns about the qualifications and training of the Park Service's
concessions staff have been raised several times since 1990 by the
Department of the Interior's Office of the Inspector General and the
agency's own staff. (App. I lists several notable reports and other
documents that discuss these concerns.) The primary concern raised was that
the agency's concessions staff do not normally have the business, financial,
and contracting backgrounds needed to successfully carry out the concessions
program. The Park Service has made only limited progress in addressing these
concerns. The agency has made few efforts to professionalize its workforce
by hiring staff with education or experience in business management or
hospitality management. Instead, it has filled concessions positions by
internally transferring staff out of other career fields. Once transferred,
the agency's concession staff receive only limited training. A more
qualified and better-trained workforce would have a better understanding of
industry trends, best practices, and the tools needed to effectively manage
concessioners. Rather than seeking to professionalize the workforce, the
chief concessions official in one regional office said, the agency has taken
the view that "anyone can do concessions." Our work indicates that this
comment typifies the agency's approach to managing its concessions program.

In addition to these problems with the qualifications and training of its
concessions staff, the Park Service's concessions contracting practices are
out-of-date and do not reflect the best practices of the federal government,
the private sector, or even other contracting programs within the agency.
For example, contracting staff in other agencies throughout the federal
government are encouraged to write contracts that are performance
based-meaning that the contracts contain incentives for good performance and
disincentives for performance that falls below expectations. However, the
agency's concessions program is not using performance-based contracts, and,
according to several senior Park Service concessions program officials, has
no plans to do so. Furthermore, for about 10 years, the agency has had
difficulty addressing its contracting workload in a timely manner, resulting
in chronic backlogs of expired concessions contracts. Many concessions
contracts expired 5 to 10 years ago, and concessioners have since been
operating on 1- to 3-year contract extensions. These expired or extended
contracts contribute to the varying condition of lodging facilities because
concessioners operating under short-term contract extensions, or nearing the
end of their contracts, are less likely to invest in their facilities to
make needed capital improvements.

The third major management issue affecting the concessions program is a lack
of accountability. While the Park Service, like other federal agencies, is
trying to improve accountability and program performance in response to the
Government Performance and Results Act (GPRA) and other related initiatives,
the concessions program is an area where these efforts need to be improved.
Under the agency's organizational structure, the head of the program-the
Chief of Concessions-has no direct authority over those that implement the
program in individual park units. Thus, the organizational structure of the
agency limits the impact that the head of the program or other central
offices can have on its ultimate success. This structure relies on regional
directors holding park superintendents accountable for the results of their
parks' concessions programs. However, concessions officials in the Park
Service's headquarters and two largest regional offices indicated that this
is not occurring. Specifically, they acknowledged that superintendents are
not being evaluated on the results of their concessions programs. Further
contributing to this lack of accountability is the fact that there is no
process in place for headquarters or regional staff to ensure that park
concessioners are meeting the agency's minimum acceptable standards or that
these standards are being consistently applied. In the private hotel/motel
industry and the Department of Defense-which manages similar
activities-independent inspection teams are used to determine the condition
of facilities and services being provided to the public. The Park Service
does not have such teams. As a result, Park Service management has no
systematic way of determining what, if any, problems are occurring
throughout the agency; whether corrective actions are necessary; or whether
new initiatives are warranted.

Options Are Available to Address Problems

in Managing the Concessions Program

Two options are available to the agency to deal with the problems identified
in its management of the concessions program: (1) professionalize the
workforce to obtain better business and contracting expertise or (2)
contract for the needed business and contracting expertise.

The first option focuses on improving the skills and abilities of the Park
Service's concessions staff by changing the agency's hiring practices and
upgrading its training. Rather than filling concessions positions with staff
transferred from other career fields within the agency, the Park Service
could hire staff with backgrounds or education in hospitality and/or
business management. By doing so, the agency would gradually develop greater
in-house expertise in managing concessioners in a more businesslike manner.
In addition, the agency could upgrade the training of its concessions
contracting staff so that they were as well qualified as other agency
contracting staff outside the concessions program. As it is now, the Park
Service staff responsible for administering procurement and acquisition
contracts receive far more training than their counterparts in the
concessions program.

The benefit of pursuing this option would be that the agency could develop a
more qualified, better-trained, and professionalized workforce. However, the
agency's past record in taking action to address these issues is not
encouraging. Many of the concerns we have raised in this report about the
qualifications of concession staff have been raised repeatedly over the past
10 years by the Department of the Interior's Inspector General and by
several different departmental or agency task forces. Several times over
this period, the Park Service has generally agreed that it needs to
professionalize its concessions workforce. However, as our work indicates,
the agency has not made significant progress in this area.

Alternatively, the Park Service could contract for the expertise it needs to
operate its concessions program. Contractors could be hired to handle a
number of financial and business-related tasks, such as planning, writing
contract prospectuses, performing financial analysis, assisting with
contracting, and evaluating the performance of concessioners.

Contracting for business-related staff would have several benefits. For
example, through contracting, the agency could obtain a highly qualified
workforce in a short period of time. In addition, the agency would gain some
workforce flexibility because it could adjust the number of staff needed to
fit the size of its upcoming workload. Contracting would allow the agency to
bring more staff on to handle its backlog of expired and expiring
concessions contracts and to reduce the number of contractor staff when the
workload is diminished.

Furthermore, contracting for certain functions has the potential to improve
the program's performance as well as reduce its costs. For example,
traditionally, one responsibility of park concessions staff was to conduct
inspections of the concessioners' facilities and operations. These
inspections can be subjective, and the application of standards can vary
from park to park. If the agency centralized and contracted for this
function, it could perhaps perform inspections with fewer people and yet
achieve greater consistency across the agency.

While contracting has the potential to reduce some costs in the concessions
program, it could also increase some costs, particularly in areas where the
agency would contract for larger numbers of highly skilled staff than it
currently maintains. However, some of these increased costs could be
mitigated by centralizing certain functions, such as inspections. In
addition, the increased costs could be mitigated by reducing the number of
agency staff in the concession program.

The two options available to the Park Service for dealing with its
concessions management problems are not mutually exclusive, in that the
agency could contract for expertise in certain functions while developing
expertise in-house for other functions. These options are principally
focused on improving the agency's management of its largest
concessioners-most of which are lodging concessioners. In our view, once the
agency has made changes in the concessions program to address its largest
concessioners, the benefits of additional expertise--whether acquired
through hiring, training, or contracting-are likely to cascade down to
improve the management of its smaller concessioners.

Finally, regardless which option or combination of options it selects, the
Park Service will need to strengthen its accountability for and control of
the concessions program. Unless changes are made to better link the
concessions programs at the park level with the agency's leadership of the
concessions program, the impact of efforts to improve the program through
the suggested options will be reduced.

- - - - -

In closing, while the Park Service's concessions program continues to affect
the experiences of millions of park visitors each year, the management of
the program continues to be plagued by some of the same problems it faced as
many as 10 years ago. For the most part, these management problems are well
documented and well known. In fact, the agency generally agreed with the
findings and recommendations in our report. However, until the agency takes
action to address these management problems, it will continue to struggle in
managing the performance of concessioners to ensure that these operators
consistently provide high-quality facilities and services to park visitors.
To address these problems, our March 2000 report recommended that the agency
(1) either improve the qualifications of its own concessions staff, contract
for these services, or engage in some combination of the two; and (2)
improve the accountability of park managers by establishing a formal process
for performing periodic independent inspections of concessioners' lodging
operations throughout the park system and reporting the findings to the head
of the agency for corrective action.

This concludes my statement. I would be happy to answer questions from you
or other Members of the Subcommittee.

Contact and Acknowledgment

For further information on this testimony, please contact Barry T. Hill at
(202) 512-3841. Individuals making key contributions to this testimony
included Cliff Fowler, Ned Woodward, and Frank Kovalak.

Appendix I

Notable Reports and Memorandums That Raise Concerns About

the Qualifications and/or Training of Park Service Concessions Staff

 Source and date of                 Concerns raised by
 report/memorandum                  report/memorandum

 Report of the Task Force on        Concessions staff do not normally
 National Park Service Concessions, have the business, financial, and
 U.S. Department of the Interior,   contracting backgrounds needed to
 Apr. 9, 1990                       successfully carry out the
                                    concessions program.
                                    Agency staff working in concessions
 Follow-up Review of Concessions    do not have sufficient educational
 Management, National Park Service, backgrounds to perform their work
 Report No. 90-62, Office of the    well. The report recommends
 Inspector General, U.S. Department improving the qualifications of
 of the Interior, April 1990        staff working in the concessions
                                    field.
                                    This report recommends that all
                                    agencies within the Department
 Report of the Concessions          recruit staff for their concessions
 Management Task Force, U.S.        programs with a basic knowledge of
 Department of the Interior, Nov. 4,business, including such subjects
 1991                               as contract law and administration,
                                    hotel/restaurant management, and
                                    financial management.
                                    The agency needs more concessions
                                    staff with education or experience
 Memorandum from the Director of thein business, accounting, business
 Park Service on Personnel Staffing law or the hospitality industry. To
 for National Park Service          recruit qualified staff, the
 Concessions, Jan. 12, 1994         Director suggests that the agency
                                    look for candidates outside the
                                    government.
 Park Service concessions work
 group, June 1994-findings reported The agency needs to develop a
 in Concession Careers Future Task  recruitment program, enhance
 Force Report, National Park        training and development, and
 Service, Oct. 97.                  improve career development.
                                    The concessions management program
                                    has failed to give its employees
 Concessions Management Curriculum  the training they need to manage
 Task Force Report, National Park   the complex concessions program. A
 Service, Sept. 1995                systematic, comprehensive
                                    employment development program is
                                    needed.
                                    This report outlines a series of
 Concession Careers Future Task     human resource management processes
 Force Report, National Park        and recommendations to strengthen
 Service, Oct. 1997                 and professionalize the staff
                                    needed to effectively manage
                                    concessions.

Source: GAO's compilation of agency documents.

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