Concessions Contracting

This report provides information on concessions contracting in the Defense Department's (DOD) three military exchange services. Concessions generally are businesses that use government property to deliver services to the public or specific individuals and share the profits with the government. The military exchanges have a dual mission: they provide patrons with articles and services necessary for their health, comfort, and convenience and are a source of funding for DOD morale, welfare, and recreation programs. GAO discusses (1) the extent of centrally managed concessions operations in DOD's military exchange services, (2) the rate of return from centrally managed concessions operations and factors that affected the rate of return, and (3) how the exchange services' rates of return compared to other agencies or governments' rates of return from concessions.

GAO found that: (1) in fiscal year (FY) 1994, 27 centrally managed DOD concessions operations produced $273.5 million in gross revenues; (2) in FY 1994, DOD received $57.7 million or a 21.1 percent rate of return from centrally managed concessions operations; (3) the 1994 rate of return was higher than the average rates of return of civilian agencies, selected state governments, and Canada; (4) DOD policy requires that centrally managed concession contracts be procured as competitively as possible at the headquarters level from a central location by trained procurement personnel to obtain the best advantage possible; (5) DOD concessions policies do not provide preferential treatment to the incumbent concessioners or grant concessioners compensation for improvements made to federal property; and (6) in 1994, 6 of the 9 centrally managed contracts were awarded competitively and DOD controlled all concessions fees.