DOD Installation Services: Use of Intergovernmental Support Agreements Has Had Benefits, but Additional Information Would Inform Expansion

The Department of Defense (DOD) budgets about $25 billion annually to operate and support its installations. GAO has designated DOD support infrastructure management as a high-risk area since 1997, in part because DOD has needed to reduce its installation support costs. In 2013, Congress authorized the military services to enter into IGSAs with local and state governments to receive installation services, if an agreement will provide financial benefits or enhance mission effectiveness. As of July 2018, the military services had approved 45 IGSAs at 33 installations.

In this report, GAO, among other objectives, evaluated the extent to which the military services have (1) realized and monitored the benefits from IGSAs and (2) supported the use of IGSAs and monitored whether installations are evaluating opportunities to use IGSAs.

GAO reviewed the IGSA statute and policies and procedures; evaluated a nongeneralizable sample of 8 IGSAs, selected based on factors including the military service involved, the amount of expected financial benefits, and the length of time in place; compared the services' processes and actions against standards for internal control; and interviewed service, installation, and local government officials.

Based on analysis of 8 selected intergovernmental support agreements (IGSAs) and interviews with officials, GAO found that the military services have realized financial and nonfinancial benefits from using IGSAs with local or state governments to obtain installation services such as waste removal, grounds maintenance, and stray animal control.

Financial benefits. Of the 8 selected IGSAs, 5 resulted in cost savings, in which the actual cost of each IGSA during its first year was lower than the expected cost of a contract the installation had previously used to obtain the installation service. For example, Moody Air Force Base realized an estimated cost savings of $270,000 by using an IGSA for water and wastewater treatment services, versus continuing to obtain this service via contract. Installation officials stated that the other 3 selected IGSAs resulted in cost avoidances, in which the installations used the IGSAs to obtain a service they were not previously paying for at a lower cost than other alternatives.

Nonfinancial benefits. According to officials from all four services, IGSAs have provided nonfinancial benefits such as enhanced mission effectiveness and readiness, reduced administrative time, and improved relationships with local communities.

However, the military services are not fully monitoring benefits being realized from implemented IGSAs because they have not established formal processes to do so. For example, Navy and Marine Corps officials stated that they are not monitoring the financial and nonfinancial performance of implemented IGSAs in part because they are in the early stages of using IGSAs. The Air Force monitors some information on realized IGSA financial benefits, but this information is not complete because reporting by installations is voluntary. Developing and documenting processes to monitor any realized benefits of implemented IGSAs would provide the services with useful information on IGSA performance as they make decisions on devoting resources to developing and implementing these agreements in other locations.

The military services have developed various approaches for supporting the use of IGSAs to reduce costs or enhance mission effectiveness. For example, the services have issued policies and procedures for their installations to follow in order to develop, obtain approval for, and implement IGSAs. However, officials from each of the military services told us they are not fully monitoring whether installations are evaluating opportunities to use IGSAs. For example, Army policy states that installations are to review current, soon-to-expire contracts for possible transition to an IGSA, but Army officials said they are not yet monitoring whether installations are doing so. Without a process in place to monitor whether installations are evaluating opportunities to use IGSAs, the military services do not know the extent to which this is occurring and thus may be missing opportunities to further reduce costs or enhance mission effectiveness.

GAO is making eight recommendations to monitor both the benefits realized from implemented IGSAs and whether installations are evaluating IGSA opportunities. DOD concurred with six recommendations and non-concurred with two, but plans to implement them all.

The Department of Defense (DOD) budgets about $25 billion annually to  operate and support its installations, which include over 160 active-duty  installations in the United States. To operate and support their respective  installations, the military services arrange for the provision of essential  services that support the mission and preserve quality of life for  installation personnel and their families—for example, utility system  operations, custodial services, waste management, equipment  maintenance, and snow removal. Since 1997, we have designated DOD’s  support infrastructure management as a high-risk area. In our 2017  update to our High-Risk Series, we reported that DOD needed to show  measurable and sustained progress in reducing installation support costs  and achieving efficiencies in installation support.

In 2013, Congress authorized the military services to enter into  intergovernmental support agreements (IGSAs) with local and state  governments to receive, provide, or share installation support services.  According to the IGSA statute (10 U.S.C. § 2679), the military services  may enter into an IGSA, on a sole source basis, for installation services if  they determine that the agreement will serve the best interests of the  department by enhancing mission effectiveness or by creating efficiencies  or economies of scale, including by reducing costs.

As of July 2018, the military services had approved 45 IGSAs at 33  installations in which local and state governments provide a variety of  installation services, including waste removal, grounds maintenance,  stray animal control, water treatment and testing, and road maintenance.  The military services estimate that these IGSAs will lead to approximately  $9 million in annual financial benefits, including cost savings or cost  avoidances. A cost savings can occur when an installation uses an IGSA  to obtain a needed service it was already paying for at a higher price  through another means. A cost avoidance can occur when an installation,  due to a change in circumstances, uses an IGSA to obtain a service it  was not previously paying for at a lower cost than other alternatives.

We performed our work under the authority of the Comptroller General to  conduct evaluations in light of congressional interest in GAO’s high-risk  areas, including in DOD support infrastructure management. In this  report, we (1) evaluate the extent to which the military services have  realized and monitored the benefits from IGSAs; (2) evaluate the extent to  which the military services have supported the use of IGSAs and  monitored whether installations are evaluating opportunities to use  IGSAs; and (3) describe any challenges the military services have  identified to using IGSAs.

For all three of our objectives in this report, we included the Army, the  Navy, the Air Force, and the Marine Corps in our review and all 45 IGSAs  that had been approved as of July 2018. For our first objective, we  selected a nongeneralizable sample of 8 IGSAs chosen in rough  proportion to the number of IGSAs implemented by each military service  (see app. I for further details on the selected IGSAs). We chose IGSAs  from among those the military services estimated would have the largest  financial benefits, that had been in place long enough to provide  information about actual costs and implementation, and that reflected a  range of installation services. We reviewed the business case analysis  and supporting documents for each IGSA in our sample, and included  both cost savings and cost avoidances in our evaluation of financial  benefits.

For IGSAs in our sample that the military services expected would result  in cost savings, we assessed the reliability of the installation’s cost  savings estimates by comparing the estimated cost of the least expensive  non-IGSA alternative identified as feasible in the business case analysis  with the prior contract or historical cost data upon which the estimate was  based. We found the estimated cost of these non-IGSA alternatives to be  sufficiently reliable to estimate realized financial benefits. For IGSAs  expecting cost savings, we estimated the realized financial benefits of  each by comparing the installation’s estimated cost of the non-IGSA  alternative with the actual first-year (or as many months as available) cost  of the implemented IGSA, derived from our analysis of the local  government’s monthly IGSA invoices. For IGSAs in our sample that the  military services expected to result in cost avoidance, we found that the  installations’ estimates included costs that we could not verify—such as  the cost of repairing or replacing facilities—and thus we could not  estimate total realized financial benefits for these agreements. Finally, we  reviewed IGSA documentation and interviewed installation and local  government officials about any nonfinancial benefits realized from  implemented IGSAs, including those in our sample and other  implemented IGSAs. We also evaluated the services’ IGSA policies and  guidance to identify any documented processes the services have for  monitoring the benefits, if any, realized from implemented IGSAs. We  assessed these policies and processes against federal internal control  standards related to documenting policies used to collect and utilize  quality information for evaluating program performance.

For our second objective, to identify military service support to  installations on implementing IGSAs and any actions taken to monitor  whether installations have evaluated opportunities to use IGSAs, we  reviewed military services’ IGSA policies and procedures and interviewed headquarters and installation officials. We evaluated the services’ actions  against the services’ IGSA policies and federal internal control standards.  Those standards state that management should design control activities  to achieve objectives, including monitoring actual performance and  comparing it with established goals and objectives, and implement those  control activities through policies.

For our third objective, we interviewed officials from the military services,  the installations and local governments for our 8 selected IGSAs, and  installations that developed IGSA proposals that were not approved, to  obtain information on any challenges related to using IGSAs and any  actions to address them. Based on that information, we also reviewed  statutory requirements for IGSAs to identify any restrictions or limitations  on the military services’ use of IGSAs and analyzed IGSA proposals that  were not approved. We provide a list of organizations we met with during  this review in appendix II.

We conducted this performance audit from September 2017 to October  2018 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

Statutory Provisions for Entering into IGSAs

The IGSA statute (10 U.S.C. § 2679) authorizes such agreements based  on a determination that the agreement will serve the best interests of the  department by creating efficiencies or economies of scale, including by  reducing costs, or by enhancing mission effectiveness. The law also  states that IGSAs are not subject to other provisions of law governing the  award of federal government contracts for goods and services. In  addition, IGSAs may be entered into on a sole source basis with a state  or local government and may use wage rates normally paid by that state  or local government.

At the same time, there are limitations on the use of IGSAs. Specifically,  any installation services obtained through an IGSA must already be  provided by the state or local government for its own use, and any  contract awarded by the federal government or by a state or local  government pursuant to an IGSA must be awarded competitively. In  addition, IGSAs cannot be used to circumvent the requirements of Office  of Management and Budget Circular A-76, which governs competitions to  determine whether commercial activities should be performed by  government employees or by private contractors. Finally, IGSAs are  statutorily limited to a term of no more than 10 years, but the statute does  not preclude their renewal after the initial agreement period ends.

Process for Developing, Approving, and Implementing IGSAs

The military services each have a process for developing, approving, and  implementing IGSAs. These processes generally begin with meetings  between installation and state or local government officials to discuss  services the installation requires that the state or local government could  provide. If there is agreement that an IGSA could be beneficial to both  parties, installation officials put together an IGSA proposal for obtaining  the service from the state or local government.

Proposals are required to include a business case analysis showing the  proposed IGSA is expected to provide a financial or nonfinancial benefit.  For example, Army Regulation 5-9, Installation Agreements, states that  an Army installation must submit a proposal and a cost benefit analysis  that demonstrates the IGSA will bring financial benefits. Similarly, a  memorandum from the Assistant Secretary of the Navy for Energy,  Installations, and Environment requires that Navy and Marine Corps  installations include material describing the IGSA’s risks and benefits,  including financial benefits and enhanced mission effectiveness. Air  Force guidance requires that IGSA proposals include a business case  analysis and meet the purpose of 10 U.S.C. § 2679 by either bringing  financial benefits or enhancing mission effectiveness.

Once an IGSA proposal is complete, installation commanders either  approve it or submit it to a higher command for review and approval,  according to certain dollar thresholds. Figure 1 shows the office within  each military service that reviews the proposed IGSA for approval, based  on the dollar thresholds.

Once a proposed IGSA is approved, installation officials draft the  agreement in coordination with state or local government officials. When  finalized, representatives of the military service and the state or local  government sign the agreement. For Army, Navy, and Marine Corps  IGSAs, the installation commander has authority to sign the IGSA, while  Air Force IGSAs must be signed by an installation contracting officer. The  IGSA is then implemented.

Military Services Have Benefitted from Selected IGSAs but Are Not Fully Monitoring the Benefits of Implemented IGSAs

Military Services Have Realized Financial and Nonfinancial Benefits from Selected IGSAs

Our analysis of a sample of 8 implemented IGSAs, and interviews with  officials about these and other IGSAs, found that the military services  have realized financial (i.e., cost savings and cost avoidances) and  nonfinancial (e.g., enhanced mission effectiveness) benefits from these  agreements.

In 5 of the 8 IGSAs in our sample, we found that the actual cost of each  IGSA during its first year of implementation was lower than the expected  cost of obtaining the installation service through an alternative contract,  as shown in the respective business case analysis for each IGSA. Table  1 provides each installation’s estimated cost for obtaining the installation  service through an alternative contract and the estimated cost for  obtaining the installation service through an IGSA; the actual cost paid by  the installation to the local government for the first year of each IGSA,  based on our analysis of monthly invoices; and our calculation of the  estimated realized cost savings achieved from using the IGSA, relative to  the alternative.

Overall, we found that the estimated cost savings realized by these 5  IGSAs totaled about $2.4 million during the first year of implementation.  For example:

Fort Polk realized an estimated $1.9 million in cost savings by  implementing an IGSA for waste removal with its local government.  Specifically, installation officials estimated that a private contract  would have cost the installation about $4.5 million from June 2017  through May 2018, while we found that the implemented IGSA cost  about $2.6 million for the same period.

Moody Air Force Base realized an estimated $270,000 in savings in  fiscal year 2017 by implementing an IGSA for water and wastewater  treatment. In the IGSA’s business case analysis, officials estimated  that continuing to obtain this service from their existing contractor  would have cost about $642,000, while the implemented IGSA cost  was about $372,000, according to our analysis.

Marine Corps Logistics Base Barstow realized an estimated $68,000  in cost savings during the first 9 months of its IGSA for water testing  and analysis with the local government. Specifically, installation  officials estimated that renewing the previous contract would have  cost about $153,000 for 1 year, or about $115,000 for 9 months, while  we found that the actual cost under the implemented IGSA was about  $47,000 for 9 months.

The other 3 IGSAs in our sample resulted in cost avoidances, according  to installation officials. First, officials at Fort Sill, Oklahoma, told us that  the Army Medical Command and the Army Public Health Command had  previously provided stray animal control without cost to the installation.  When this arrangement ended, Fort Sill had to find an alternative.  Officials stated that implementing an IGSA with the city of Lawton,  Oklahoma, allowed the installation to avoid the higher costs of a private  contractor or of renovating facilities and hiring civilians to perform these  duties. Second, Fort Bragg, North Carolina, implemented an IGSA for  stray animal control with Cumberland County, North Carolina, that,  according to its proposal documentation, allowed the installation to avoid  the cost of replacing its stray animal control facility, which was inadequate  and sub-standard. Finally, after 2 years with no contract in place, Fort  Bragg implemented an IGSA with the city of Fayetteville, North Carolina,  for maintenance services at the Airborne and Special Operations  Museum that allowed the installation to avoid the overhead costs and fee  involved in securing the services through a contract with the Army Corps  of Engineers.

According to officials from all four services, achieving financial benefits  has been a primary purpose for utilizing IGSAs, but IGSAs can also  provide nonfinancial benefits—such as enhanced mission effectiveness  and readiness, reduced administrative time, and greater flexibility.

Enhanced mission effectiveness and readiness. Military service  officials cited examples of IGSAs that led to enhanced mission  effectiveness and readiness. For example, according to its IGSA  proposal package, Fort Polk was using military personnel to conduct  grounds maintenance, which was contrary to the Army’s guidance that  military personnel, while at Fort Polk, should be training for their  mission. Officials told us that once the IGSA was implemented  military personnel were no longer assigned to grounds maintenance  duty, thus potentially enhancing mission effectiveness. In addition, an  official in the Army Partnerships Office told us that the IGSA at the  Presidio of Monterey, California, for various installation services  enabled the installation to obtain a work order for flood damage to a  satellite component within a matter of minutes. Direct contact between  installation officials and the local government, he stated, provides a  quicker response time and has a significant impact on installation  readiness.

Reduced administrative time and greater flexibility. Installation  officials stated that IGSAs had reduced the time personnel spent on  managing the services being provided. For example, Marine Corps  Logistics Base Barstow officials stated that the installation’s IGSA with  the city of Barstow, California, for water testing and analysis had  eliminated the time that installation personnel had to use to manage  the previous contract. At the time of our review, they were considering  further IGSAs, such as one for tree-trimming, that they said would  likely not bring cost savings, but that would provide flexibility and ease  of managing due to reduced administrative time and regular  communication with city officials. Similarly, officials at Fort Polk and  Fort Bragg stated that managing their IGSAs is easier than managing  other contracts for services, as they can make any needed changes to  the IGSA by working directly with the local government.

Other benefits. Installation officials also cited benefits such as  improved relations with the local government, better quality of service,  and the local community’s stronger commitment to working with the  installation, compared with contractors. For example, Moody Air Force  Base officials noted that the installation’s IGSA for water and  wastewater treatment has been positive because the local  government cares about the overall good of the installation, due to its  importance to the community.

Military Services Are Not Fully Monitoring the Benefits of Implemented IGSAs

As part of the approval process for IGSAs, the military services collect  information on IGSAs’ potential expected benefits, which are estimated  prior to IGSA implementation. However, once IGSAs are implemented,  the services do not fully monitor whether these IGSAs are resulting in  actual financial and nonfinancial benefits. Standards for Internal Control in  the Federal Government states that management should design  processes, and document them in policy, to obtain relevant, accurate  information that it can use to evaluate the entity’s performance in  achieving key objectives and make informed decisions about any needed  changes. The standards also state that management communicates  such information throughout the entity to support achieving those key  objectives.

Following are descriptions of the status of each military service’s  approach and plans for monitoring the benefits of implemented IGSAs.

Army headquarters collects data on the expected financial benefits of  IGSAs, based on information provided in the IGSAs’ business case  analyses. These data reflect the financial benefits that the installations  expect to achieve by using IGSAs, which are estimated prior to IGSA  implementation. Army headquarters does not, however, currently  monitor whether financial or nonfinancial benefits are actually realized  from IGSAs after implementation. Army officials told us in May 2018  that they were drafting guidance that likely will assign responsibility for  tracking both the realized financial and nonfinancial benefits of IGSAs,  on an annual basis, to the Army’s four land-holding commands.  They noted, however, that they have not yet decided what specifically  to track or finalized a process for monitoring IGSA benefits and  evaluating program performance, but stated that their goal was to  have a process in place by the end of 2018.

Navy headquarters collected information on the expected benefits of  the IGSAs it has thus far approved. In addition, in May 2018, the Navy  Installations Command chose 12 high-priority IGSA opportunities  identified by its regional commands to focus on for implementation  and monitoring. According to the Navy Installations Command  official who oversees the Navy’s IGSA efforts, this effort is in the very  early stages. The official also stated that the expected financial  benefits for these 12 will likely be tracked by the Navy Installations  Command, but any monitoring of realized financial benefits after the  IGSAs are implemented would be left to the regional commands. On  the other hand, the official stated that nonfinancial benefits are very  subjective and the Navy has not yet determined what information will  be collected.

Marine Corps headquarters officials stated that they collect  information on the expected benefits of IGSAs, but they are not  currently monitoring the actual performance of implemented IGSAs  because few are in place and existing IGSAs are less than 2 years  old. They added that the Marine Corps plans to establish a process  to track and analyze the realized financial benefits of IGSAs, but the  headquarters official with lead responsibility for IGSAs did not provide  a timeline for doing so. He added that the process will likely task the  regional installation commands with tracking cost savings, with  headquarters officials collecting and maintaining consolidated regional  data. In addition, he did not indicate that the Marine Corps plans to  monitor whether nonfinancial benefits are realized by implemented  IGSAs.

In addition to collecting data on the expected benefits of IGSAs prior  to their implementation, Air Force headquarters has taken some steps  to monitor the benefits realized by the 8 implemented IGSAs it had in  place as of July 2018. Specifically, Air Force Community Partnership  Program officials have taken the initiative to request information at the  beginning of each fiscal year from Air Force installations on any actual  financial benefits realized from their implemented IGSAs, including  cost savings and cost avoidance. However, officials stated that  submitting information is voluntary for installations, and some  installations do not always provide timely information. For example,  two installations with IGSAs in place beginning in fiscal year 2015 did  not provide information in response to the fiscal years 2016 and 2017  data requests. Officials with the partnerships office also noted that  they plan to monitor nonfinancial benefits to use for lessons learned  and program talking points, but that information on any nonfinancial  benefits from implemented IGSAs was currently being collected  anecdotally.

The military services generally are not monitoring whether all of their  IGSAs are bringing financial and nonfinancial benefits because they have  not established formal processes to obtain this information and  documented them in their policies or procedures, as called for in  Standards for Internal Control in the Federal Government. Specifically,  the Army, Navy, and Marine Corps IGSA policies do not include  processes for monitoring the degree to which expected benefits from  IGSAs were actually realized after implementation. The military services  also differ in regard to the types of benefits they plan to monitor in the  future. In addition, the informal process used by the Air Force to collect  some data on realized IGSA benefits is not documented in Air Force  policy or procedures.

Officials from all four services stated that they are still in the early stages  of developing their IGSA processes. In addition, officials from the Army  and the Air Force told us that they believed that it may be premature to  monitor IGSA performance because the authorization to use IGSAs has  only been in use for 3 years and only a limited number of IGSAs have  been approved. We recognize the use of IGSAs is relatively new, but  developing and documenting formal processes to collect and monitor  information on the benefits realized through implemented IGSAs now, as  the services continue to refine their IGSA programs, could assist the  services in at least two ways. First, it would provide the services with  information they could use to assess the performance of IGSAs in  comparison with the expected benefits outlined in the IGSAs’ business  case analyses. An accurate assessment of actual performance would  provide decision makers with important context when reviewing individual  IGSAs for possible renewal, and could inform the services’ decisions on  developing and implementing similar agreements in other locations.  Second, developing formal processes to monitor the performance of  implemented IGSAs would provide information that the military services  could communicate internally to their installations as part of their outreach  efforts to increase awareness of and, when beneficial, expand the use of  IGSAs as a means of achieving financial benefits or enhancing mission  effectiveness.

Military Services Have Supported IGSA Use but Not Fully Monitored Whether Installations Are Evaluating IGSA Opportunities

Military Services Have Developed Approaches for Supporting Installations’ Use of IGSAs

The military services have developed various approaches for supporting  their installations’ use of IGSAs. These include issuing policies on the use  of IGSAs; issuing procedures and templates for IGSA development and  approval; and providing headquarters-level support, such as facilitating  meetings between installation and state and local government officials.  The following are descriptions of these approaches for supporting  installations’ use of IGSAs.

Policies. The services have issued IGSA policies that, among other  things, either direct their installations to evaluate opportunities for  using IGSAs to obtain installation services or to implement mutually  beneficial partnerships that include IGSAs. Army Installation  Management Command policy states that installations are to explore  opportunities to enter into IGSAs with state or local governments, and  it directs installations to review current, soon-to-expire installation  support contracts for possible transition to an IGSA. Similarly, Navy  Installations Command and Marine Corps Installations Command  policies direct regional commands and installations to investigate and  identify existing and potential services that could be provided by the  state or local governments surrounding their installations. While Air  Force policy does not specifically direct its installations to evaluate  opportunities for using IGSAs, it does direct Air Force installations to  implement mutually beneficial partnerships with their local  communities.

Procedures and templates. Each of the military services has issued  procedures for its installations to follow in order to develop, obtain  approval for, and implement IGSAs. For example, the Marine Corps  has issued an IGSA handbook that provides information on the roles  and responsibilities of installation and headquarters officials in the  IGSA process. The handbook also outlines a process installations can  follow to develop an IGSA, which includes identifying a need that an  IGSA could address, meeting with potential state and local partners,  developing a draft and final IGSA, and signing and implementing the  IGSA.

Additionally, the Army and the Air Force have provided templates of  required documents to help installations through the IGSA approval  process. For example, Army Installation Management Command’s  IGSA procedures include templates and examples of documents  installations are to develop, such as a memorandum from the  installation commander describing the IGSA proposal; a business  case analysis that demonstrates the benefits of the proposed IGSA;  and the IGSA document to be signed by the installation and the state  or local government. Similar to the Army and the Air Force, one of the  Navy’s regional commands has included templates along with their  region-specific IGSA procedures, and a Navy Installation Command  official told us that the Navy may adapt those procedures and  templates for Navy-wide use.

Headquarters support. The Army and the Air Force have established  partnership offices within their headquarters that serve as resources  to support installations interested in using IGSAs. Support includes  facilitating meetings between installation and state and local  government officials to identify IGSA opportunities. For example, the  Army facilitated such meetings at Fort Polk in late 2016, during which  officials identified the IGSA opportunity between Fort Polk and Vernon  Parish, Louisiana, for waste removal that was implemented in June  2017. The Air Force partnership office also provides periodic training  on IGSAs and other topics, as well as a website with various  resources for installations to use in developing IGSAs. Marine Corps  Installations Command officials stated that they provide headquarters  support to installations for developing IGSAs—to include facilitating  meetings between installation and local and state officials—but as a  collateral duty to other responsibilities. Navy Installation Command  officials said that their regions and installations are to take the lead on  IGSA development but that they have offered assistance to regions,  as needed. Service officials added that representatives from each  military service meet quarterly to discuss their IGSA programs,  including best practices and lessons learned.

Military Services Have Not Fully Monitored Whether Installations Are Evaluating Opportunities to Use IGSAs

Officials from all four military services told us that they are not fully  monitoring whether all of the services’ installations are complying with  their respective service policies to evaluate opportunities to use IGSAs to  reduce costs or enhance mission effectiveness.

Army headquarters officials told us that their efforts to date have been  focused on raising awareness of IGSAs at installations and removing  any obstacles that prevent IGSAs from being approved. However,  Army officials stated that they currently do not monitor whether Army  installations are evaluating opportunities to use IGSAs, but they said  that installations may need greater encouragement from higher  headquarters to use IGSAs. Thus, Army officials said they are  planning to revise Army IGSA policy to include a process for obtaining  information from installation officials on whether they evaluated  expiring contracts for transition to IGSAs, as well as any reasons for  not doing so, and expect it to be complete by the end of 2018.  Additionally, Army officials said they plan to review installation  contracts for waste removal services to determine whether IGSAs can  be used instead, and that additional installation services will be  identified for review in the future.

The Navy Installations Command has, as discussed previously,  collected a list of IGSA opportunities from the Navy’s regional  commands and plans to focus on implementing 12 of them, according  to the Navy Installation Command official who oversees the Navy’s  IGSA efforts. However, the official said that the Navy Installations  Command does not know how the regions identified these IGSA  opportunities, and it has not directed the Navy regions to monitor  whether each of their installations are evaluating opportunities to use  IGSAs going forward. The Navy official said that asking each  installation whether it identified any IGSA opportunities would be a fair  question in order to avoid missing any potential IGSA opportunities.

Marine Corps Installation Command officials said they monitor the  efforts of installations that are already in the process of developing an  IGSA or that have already implemented an IGSA, but they do not  monitor the efforts of other installations in the Marine Corps to identify  IGSA opportunities. However, a Marine Corps Installation Command  official said that such monitoring could help expand the use of IGSAs  in the Marine Corps.

Officials in the Air Force partnerships office told us that beginning in  fiscal year 2018 they had begun to monitor whether some of their  installations are evaluating IGSA opportunities for certain installation  services that are needed at all Air Force installations—specifically,  waste management, grounds maintenance, and pavement  maintenance. Air Force officials stated that they are in the process of  contacting installations that have volunteered for the Air Force’s  community partnership program—which includes most, but not all,  installations for active-duty personnel—to determine whether they  have evaluated IGSAs as a means to obtain these services.

As of July 2018, the military services had approved 45 IGSAs at 33  installations (see app. I). Opportunities for more IGSAs—and thus  opportunities to achieve more financial and nonfinancial benefits similar to  those we found in our analysis of 8 selected IGSAs—may exist at the  services’ installations, including their more than 160 active-duty  installations. Recognizing this potential, the services have directed their  installations to evaluate IGSA opportunities or to implement mutually  beneficial partnerships with local communities, which can include IGSAs.

However, the military services do not know the extent to which their  installations are evaluating opportunities for IGSAs because service IGSA  policies and procedures do not include a process for monitoring whether  these evaluations are occurring or for obtaining information on the  outcome of any such evaluations. Standards for Internal Control in the  Federal Government states that management should design control  activities to achieve objectives, such as monitoring actual performance  and comparing it with established goals and objectives. Additionally,  those standards state that management should implement those control  activities by, for example, documenting responsibilities in policies.

Army, Navy, and Marine Corps IGSA policies and procedures do not  include a process for monitoring whether installations are complying with  service directives to evaluate IGSA opportunities, or for obtaining  information on the outcome of those evaluations. Additionally, the process  that the Air Force is currently using to monitor whether some of its  installations are evaluating opportunities to use IGSAs for specific types  of installation services is not documented in Air Force policy or  procedures. As a result, it is uncertain whether these and any other  monitoring efforts will continue beyond the current leadership of the Air  Force partnerships office.

Without establishing, implementing, and documenting a process to  monitor whether installations are evaluating opportunities to use IGSAs  and obtain information on the outcome of those evaluations, which may  also identify challenges that could hamper the ability to use IGSAs, the  military services do not fully know whether their installations are  conducting these evaluations, and thus may be missing opportunities to  reduce costs or enhance mission effectiveness.

Military Services Have Identified Statutory, Review Time, and Financial Incentive Challenges to Using IGSAs

Statutory-Related Challenges to Using IGSAs

Air Force and Army officials identified instances in which they did not  implement an IGSA because of provisions in the IGSA statute on the term  limit for IGSAs—which was originally 5 years and is currently 10 years— and on the prohibition against contracting for services that are designated  for federal civilians to provide.

Term limits. Buckley Air Force Base, Colorado, and Fairchild Air  Force Base, Washington, did not use IGSAs to obtain firing range  services because of the IGSA term limit, according to Air Force  headquarters and installation officials. In both cases, the  installations were considering using IGSAs in which local  governments would construct new firing ranges that would be shared  by the installation and those local governments. Air Force officials told  us that in each case the local governments planned to fund the new  construction costs with municipal bonds; however, the repayment  periods for those bonds would have been longer than the IGSA term  limit, and thus the Air Force would not have been able to sign an  IGSA that would have covered the entire term of the repayment  periods. For example, an official at Fairchild Air Force Base told us  that the local government would not sign an IGSA with a term limit of  fewer than 20 years because the local government wants to ensure  they receive sufficient funding to repay their bond.

As a result, that official from Fairchild Air Force Base told us that the  Air Force has continued to use its existing firing range for training, but  it needs to be replaced because of ventilation problems and  limitations on the types of weapons that can be fired at the range. At  Buckley Air Force Base, an official told us that the installation received  military construction appropriation funding in fiscal year 2017 to build  a new firing range at a cost of $10.5 million—approximately $2 million  more than the estimated cost of the IGSA. Air Force officials added  that they had discussed increasing the IGSA term limit with Members  of Congress.

Prohibition against contracting for services designated for  federal civilians. According to Army officials, two Army installations— Aberdeen Proving Ground, Maryland, and Fort Leonard Wood,  Missouri—decided not to use IGSAs for grounds maintenance  because of legal concerns regarding the IGSA statute’s prohibition on  using IGSAs to circumvent the requirements of Office of Management  and Budget Circular A-76 regarding public-private competitions.  According to those requirements, public-private competitions must be  performed to determine if government personnel should perform  commercial activities that are required by an agency. Further, 10  U.S.C. § 2461 states that no function of DOD that is performed by  civilian employees may be converted to performance by a contractor  unless based on a public-private competition that follows a detailed  list of requirements under that statute. Currently, however, DOD is  prohibited from conducting such competitions.

Army officials told us that Aberdeen Proving Ground submitted an  IGSA proposal in 2016 for grounds maintenance that they expected to  result in a cost savings of approximately $1 million annually. However,  those services had previously been provided by temporary Army  civilian employees. Because of this and based on the Army’s  interpretation of the IGSA statute, Army officials said the IGSA  proposal was not approved. Additionally, Army officials told us that  Fort Leonard Wood also considered using an IGSA for grounds  maintenance services in 2017 because it had unfilled civilian positions  and was using military personnel instead, which took those personnel  away from their primary mission. However, officials said that the  installation did not submit an IGSA proposal because officials did not  think it would be approved, due to the existing civilian positions.

Army officials told us they worked with the Office of the Secretary  Defense to try to address some of the legal concerns within the Army  regarding these types of IGSA proposals. Specifically, language was  included in a May 2018 memorandum from the Assistant Secretary of  Defense for Manpower and Reserve Affairs stating that even though  DOD is prohibited from conducting Circular A-76 public-private  competitions, this does not preclude the use of an IGSA as long as  the IGSA is not used to circumvent Circular A-76 requirements.  Although the memorandum does not provide any further details, an  official with the Army Partnerships Office stated that the memorandum  may provide more support for the use of IGSAs during internal legal  reviews of IGSA proposals and could result in additional IGSAs being  approved. If not, Army officials plan to communicate to Congress the  effects of the current language in the IGSA statute and make any  appropriate recommendations to address those effects.

Review Time-Related Challenges to Using IGSAs

Officials from each of the 6 installations we met with during our review  told us that the length of time to review and approve IGSAs was a  challenge, in part due to the multiple levels of review required before an  IGSA is approved. For example:

Marine Corps Logistics Base Barstow officials told us that their IGSA  proposal for water testing and analysis took approximately 1 year to  be reviewed and approved—first at the installation level, then at  Marine Corps Installation Command-West (a regional command), and  finally at Marine Corps Installation Command headquarters. As a  result, officials said they had to continue to pay their contractor for an  additional year to perform those services, which they estimate cost  them approximately $80,000 more than if the IGSA had been  approved and in place. The officials added that IGSAs are a new way  to obtain installation services within the Marine Corps, and this IGSA  was the Marine Corps’ first, which likely contributed to the long review  time.

In July 2017, Fort Polk submitted an IGSA proposal for both facility  maintenance and repair services and also grounds maintenance  services, which would be provided by a local government. However,  Fort Polk officials said that approval of the proposal was delayed at  Army headquarters because there was concern by those  headquarters officials about replacing the existing AbilityOne  contractor at Fort Polk, which was providing facility maintenance and  repair services for the installation. As a result, Fort Polk re-submitted  an IGSA proposal only for the grounds maintenance services, and this  narrower IGSA was approved in March 2018—8 months after the  original IGSA proposal was submitted.

The military services have delegated responsibility to approve IGSAs to  lower levels, which could decrease the review and approval time for  IGSAs. For example, in January 2018 the Air Force delegated approval  authority to installation commanders for IGSAs that cost less than $15  million over a 10-year time frame—with the exception of any IGSAs that  obtain installation services currently obtained from an AbilityOne  contractor.

Financial Incentive- Related Challenges to Using IGSAs

An installation may lack a financial incentive to use IGSAs because that  installation’s military service may choose to use any realized cost savings  for service-level priorities elsewhere. As discussed earlier, we found that  5 installations in our sample realized cost savings from their implemented  IGSAs. Three of those installations—Fort Polk, Luke Air Force Base, and  Marine Corps Logistics Base Barstow—were able to retain those savings  to apply to other installation needs that were not funded, according to  installation officials. For example, Fort Polk officials stated that they were  able to reallocate savings from the waste removal IGSA to repair landing  strips at the installation, and Luke Air Force Base officials told us that the  ability to retain IGSA cost savings was an incentive for them to put in the  effort to implement an IGSA. Officials at the other 2 installations with  IGSA cost savings—Moody Air Force Base and Fort Bragg—told us that  those savings were retained by the installations’ higher headquarters.

The military services are at various stages in deciding how IGSA cost  savings are to be used, according to service officials. Air Force officials  said they are considering letting their installations retain IGSA cost  savings to incentivize the use of IGSAs. Army officials stated that they do  not yet have a policy on using IGSA savings, but their commands are  responsible for contributing resources to supporting readiness, which may  include the use of IGSA cost savings. Marine Corps officials similarly told  us that they have not yet developed a policy, but added that IGSA cost  savings will be retained within Marine Corps Installation Command.  Finally, Navy officials told us that they have not yet considered a policy  that would allow installations to retain any cost savings, although they  added that Navy Installations Command does not intend to recoup any  IGSA cost savings achieved by an installation or a region.

DOD budgets about $25 billion annually to operate and support its  installations, and our analysis shows that IGSAs have provided  opportunities for the military services to reduce some of those costs.  However, the services could improve the visibility they have over the  performance of IGSAs after implementation. Specifically, developing  processes to monitor any benefits being realized from implemented  IGSAs and documenting these processes in policies or procedures would  enhance the military services’ ability to evaluate the performance of these  agreements and provide lessons learned that could inform their efforts to  encourage greater use of IGSAs. In addition, the military services have  already taken steps to direct and facilitate the use of IGSAs. However,  without a process to monitor whether their installations are evaluating  opportunities to use IGSAs and obtain explanations of the outcomes of  such evaluations, the military services do not have visibility over whether  their installations are considering the use of IGSAs, as directed in  guidance. Consequently, the services may be missing opportunities to  reduce costs or enhance mission effectiveness. Furthermore, by  documenting their processes in policies or procedures, the military  services will increase the likelihood that such oversight will endure  beyond the initiatives of current leadership and officials. Taking these  actions would support the military services’ oversight of IGSAs and could  potentially expand interest in and the use of IGSAs.

We are making the following eight recommendations to DOD:  The Secretary of the Army should (a) finalize and implement a process to  collect and monitor information on the extent to which all implemented  IGSAs have resulted in financial and nonfinancial benefits and (b)  complete documentation of that process in Army IGSA policy or  procedures. (Recommendation 1)

The Secretary of the Navy should (a) establish and implement a process  to collect and monitor information on the extent to which all implemented  IGSAs have resulted in financial and nonfinancial benefits and (b)  document that process in Navy IGSA policy or procedures.  (Recommendation 2)

The Commandant of the Marine Corps should (a) establish and  implement a process to collect and monitor information on the extent to  which all implemented IGSAs have resulted in financial and nonfinancial  benefits and (b) document that process in Marine Corps IGSA policy or  procedures. (Recommendation 3)

The Secretary of the Air Force should (a) establish and implement a  formal process to collect and monitor information on the extent to which  all implemented IGSAs have resulted in financial and nonfinancial  benefits and (b) document that process in Air Force IGSA policy or  procedures. (Recommendation 4)

The Secretary of the Army should (a) finalize and implement a process to  monitor whether Army installations are evaluating opportunities for using  IGSAs and to obtain explanations from installations on the outcome of  their evaluations and (b) complete documentation of that process in Army  IGSA policy or procedures. (Recommendation 5)

The Secretary of the Navy should (a) establish and implement a process  to monitor whether Navy installations are evaluating opportunities for  using IGSAs and to obtain explanations from installations on the outcome  of their evaluations and (b) document that process in Navy IGSA policy or  procedures. (Recommendation 6)

The Commandant of the Marine Corps should (a) establish and  implement a process to monitor whether Marine Corps installations are  evaluating opportunities for using IGSAs and to obtain explanations from  installations on the outcome of their evaluations and (b) document that  process in Marine Corps IGSA policy or procedures. (Recommendation 7)

The Secretary of the Air Force should document in Air Force IGSA policy  or procedures its process for monitoring whether Air Force installations  are evaluating opportunities for using IGSAs. (Recommendation 8)

We provided a draft of this report to DOD for comment. DOD provided  written comments, which are reproduced in appendix III.

DOD concurred with six recommendations and non-concurred with two  recommendations, but DOD’s response indicates that the department  plans to implement all of the actions we recommend.

DOD concurred with our six recommendations to the Army, the Navy, and  the Air Force. DOD did not concur with our two recommendations to the  Marine Corps, stating that the Marine Corps is one of two military services  within the Department of the Navy and that the recommendations are  unnecessary. While we understand that the Marine Corps is within the  Department of the Navy, we made recommendations to the Marine Corps  because we learned during the course of our review that the Marine  Corps had developed service-specific IGSA processes. For our two  recommendations to the Navy, DOD stated that the Deputy Assistant  Secretary of the Navy (Installations and Facilities) will issue policy by  November 30, 2018, directing the Chief of Naval Operations and the  Commandant of the Marine Corps to implement our recommendations.  We believe that implementing these actions will meet the intent of our  recommendations to the Marine Corps.

We are sending copies of this report to the appropriate congressional  committees; the Secretary of Defense; the Secretaries of the Army, the  Navy, and the Air Force; and the Commandant of the Marine Corps. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-4523 or leporeb@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. Key contributors to this report are listed in appendix  IV.

Appendix I: Military Services’ Intergovernmental Support Agreements Approved as of July 2018

Table 2 shows the military service, installation, state or local government,  and type of installation service for each of the 45 intergovernmental  support agreements that have been approved within the military services  as of July 25, 2018.

Appendix II: Organizations We Met with During This Review

We met with officials from the following offices, installations, and local  governments during this review. Unless otherwise specified, these  organizations are located in or near Washington, D.C.

Appendix III: Comments from the Department of Defense

Appendix IV: GAO Contact and Staff Acknowledgments

In addition to the contact named above, individuals who made key  contributions to this report include Maria Storts (Assistant Director),  Whitney Allen, Vincent Buquicchio, Michele Fejfar, Mae Jones, Amie  Lesser, Geoffrey Peck, Ophelia Robinson, Jack Wang, and Erik Wilkins- McKee.