Military Banking: Solicitations, Fees, and Revenue Potential
NSIAD-99-72
Published: Apr 15, 1999. Publicly Released: Apr 15, 1999.
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Highlights
Pursuant to a legislative requirement, GAO provided information on the Department of Defense's (DOD) domestic banking program on military bases, focusing on whether: (1) domestic military bases have followed DOD procedures to provide for open solicitations in obtaining banking services; (2) on-base financial institutions face competition for banking services from other financial institutions and charge fees competitive with other banks; and (3) opportunities exist for DOD and military bases to generate additional revenues from banking services on military bases and how this might affect banking services and customers.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should direct that forthcoming regulations governing banking on military bases require base commanders to ensure that solicitations for banking services include information on factors and weights to be used in choosing among competing proposals and that the evaluation of proposals and the selection of on-base financial institutions be based on those factors and weights. |
Closed – Implemented
DOD included in draft regulations published August 11, 1999, the recommended requirement that solicitations for financial institutions on installations include factors and weights that will be used to make selections.
|
| Department of the Air Force | The secretaries of the military departments should consider including in new long-term lease arrangements provisions for periodically renegotiating fees based on updated fair market value to better ensure that the government is obtaining payments commensurate with the current value of the property. |
Closed – Implemented
Under procedures in place at the time of GAO's review, lease amounts remained constant through the life of a lease. In response to the recommendation, the Air Force stated that it agreed with and is in conformity with the recommendation and now typically includes a provision for adjustment of lease terms at the end of each 5-year period in long-term leases.
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| Department of the Navy | The secretaries of the military departments should consider including in new long-term lease arrangements provisions for periodically renegotiating fees based on updated fair market value to better ensure that the government is obtaining payments commensurate with the current value of the property. |
Closed – Implemented
The Navy concurred in principle with the recommendation. However, it stated that the decisions concerning adjustments to lease consideration are made on a case-by-case basis and depend on the unique circumstances of each lease.
|
| Department of the Army | The secretaries of the military departments should consider including in new long-term lease arrangements provisions for periodically renegotiating fees based on updated fair market value to better ensure that the government is obtaining payments commensurate with the current value of the property. |
Closed – Implemented
The U.S. Army Corps of Engineers, responding for the Army, stated that it concurred with the recommendation and is implementing the requirement by issuing 5-year outleases or including a condition in leases stating that the rental will be redetermined every 5 years based on an appraisal.
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Topics
Bid evaluationCompetitionElectronic funds transferEvaluation criteriaFair market valueFinancial institutionsMilitary basesPrices and pricingRevenue sharingSavings and loan associations