Concessions Contracting:

DOD Military Exchange Services' Rates of Return

GGD-96-108: Published: May 9, 1996. Publicly Released: Jun 10, 1996.

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Pursuant to a congressional request, GAO reviewed concessions contracting in the Department of Defense's (DOD) three military exchange services, focusing on: (1) the extent of centrally managed concessions operations; (2) the rates of return and factors that influenced the rates of return; and (3) the rates of return compared to other agencies' or governments' rates of return.

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.

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