Natural Gas

Opportunities for Federal Cost Savings Through Competitive Purchases Gao ID: RCED-91-35 October 23, 1990

GAO reviewed natural gas purchases by an Air Force base and two veterans medical centers to determine: (1) the extent to which the agencies used competitive procurement practices; (2) actual and potential cost savings from competitive procurement; and (3) why more agencies did not use competitive procurement practices.

GAO found that: (1) the military spent over $345 million annually for natural gas, but only 63 of 600 military installations purchased it competitively; (2) federal civilian agencies spent over $160 million annually for natural gas, but there was little knowledge on how they purchased it; (3) facilities that purchased gas competitively saved 10 to 30 percent on their gas costs; (4) four reviewed agencies could have reduced their natural gas costs by 11 to 22 percent over a 12-month period if they had purchased it competitively; and (5) the Department of Defense (DOD) could save an estimated $25 million to $38 million, or 7 to 11 percent, on gas costs annually if it purchased gas competitively. In addition, GAO found that more agencies did not buy natural gas competitively because they lacked: (1) awareness of this purchase option; and (2) time, staff resources, and technical expertise for evaluating the various options available and for managing the competitive bid process. GAO also found that: (1) the General Services Administration (GSA) planned to initiate a program to assess federal civilian agency potential to procure natural gas competitively; and (2) in January 1990, DOD established a program to increase natural gas competitive purchasing by centralizing and expanding wellhead purchases.


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