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Report to Congressional Requesters:

United States General Accounting Office:

GAO:

January 2004:

Defense Management:

Issues in Contracting for Lodging and Temporary Office Space at MacDill 
Air Force Base:

GAO-04-296:

GAO Highlights:

Highlights of GAO-04-296, a report to Congressional requesters 

Why GAO Did This Study:

Since the September 11, 2001, attacks and the beginning of Operation 
Iraqi Freedom, thousands of National Guard and Reserve members have 
been activated and mobilized to military installations across the 
country. Some installations, like MacDill Air Force Base in Tampa, 
Florida, where more than 3,000 reservists have been mobilized, have 
had to arrange for off-base lodging in local hotels and apartment 
buildings. In addition, MacDill, which serves as U.S. Central Command 
headquarters, has had to set up temporary office space for staffs of 
coalition partner nations. Public concerns have been raised about 
these arrangements. GAO was asked to review (1) the extent to which 
MacDill used cost-effective measures to provide off-base lodging for 
reservists and (2) whether a contract providing office space for 
coalition partners was adequately managed to control costs. 

What GAO Found:

During recent mobilizations, MacDill contracting officials used two 
practices that effectively reduced the overall cost of off-base 
lodging for reservists on extended temporary duty to below that 
allowed by the General Services Administration’s (GSA) lodging rate. 
Officials used a simplified acquisition procedure—Blanket Purchase 
Agreements (BPA)—to obtain prices that were at or below the maximum 
allowable GSA rate of $93 per day for Tampa, Florida. MacDill 
officials obtained daily lodging rates of $71 to $93 per unit for two-
bedroom apartments. The BPAs also provided greater flexibility in 
vacating units without incurring penalties. In addition, MacDill 
officials reduced per person lodging costs further by implementing a 
room-sharing policy for personnel at certain ranks. When two 
reservists shared a two-bedroom unit (about 600 reservists), the cost 
dropped by up to 55 percent of the daily GSA rate. Overall, during 
fiscal year 2003, MacDill reported that it saved about $12.6 million 
using these practices. Our review of local rental costs showed that 
BPA prices were similar to those paid by corporate entities for 
comparable lodging units, but were lower on a per-person basis because 
of lodging sharing arrangements. 

Comparison of Prices for Furnished Two-Bedroom, Corporate, and 
Military (MacDill) Apartments in Tampa, Florida

[See PDF for image]

Source: GAO analyses. 

[a] Amenities include kitchenware, linens, vacuum cleaners, microwave 
ovens, and cable television service.

[End of figure]

From project initiation to settlement of the contractor’s claim, the 
Coalition Village II contract suffered from questionable acceptance of 
the winning offer, poor record keeping, undocumented contracting 
decisions, and changes to contract requirements that were not properly 
coordinated with contracting officials. Although MacDill officials 
determined that the winning offer was received on time, only the first 
page of the proposal was received by the established deadline. 
Contract costs for the project, which was implemented under tight time 
constraints, increased by more than $367,000 over the winning offer of 
$142,755. However, due to the absence of proper documentation in the 
contract files, we were unable to fully assess the basis for 
additional costs paid to the contractor or the extent to which costs 
might have been avoided or minimized. 

What GAO Recommends:

GAO is recommending that the Secretary of Defense direct the Secretary 
of the Air Force to direct the Commander of the Air Mobility Command 
to emphasize to MacDill personnel the importance of adhering to sound 
contract management procedures. In commenting on a draft of this 
report, DOD partially concurred with GAO’s recommendation and 
identified corrective actions taken or planned.

www.gao.gov/cgi-bin/getrpt?GAO-04-296.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Barry W. Holman at 
(202) 512-8412 or holmanb@gao.gov. 

[End of section]

Contents:

Letter:

Results in Brief:

Background:

MacDill Air Force Base Implemented Procedures to Reduce Off-Base 
Lodging Costs for Reservists:

Weaknesses in Contract Management Hamper Efforts to Assess Contract 
Costs:

Conclusions:

Recommendations for Executive Action:

Agency Comments and Our Evaluation:

Appendix I: Scope and Methodology:

Appendix II: Comments from the Department of Defense:

Tables:

Table 1: Differences between BPA Prices and GSA Rates for Off-Base 
Apartment Units in Tampa, Florida:

Table 2: Comparison of Prices for Two-Bedroom Furnished, Corporate, and 
Military (MacDill) Apartments in Tampa, Florida:

Table 3: Contracted Prices for Bedrooms Used to House Reservists in 
Fayetteville, North Carolina, Area:

Table 4: Payments and Claims for Coalition Village II Contract:

Abbreviations:

BPA: Blanket Purchase Agreement: 
CENTCOM: U.S. Central Command: 
DOD: Department of Defense: 
FAR: Federal Acquisition Regulation: 
GSA: General Services Administration: 
JFTR: Joint Federal Travel Regulations 
SOCOM: U.S. Special Operations Command:

United States General Accounting Office:

Washington, DC 20548:

January 27, 2004:

The Honorable Bill Nelson: 
Ranking Minority Member: 
Subcommittee on Strategic Forces: 
Committee on Armed Services: 
United States Senate:

The Honorable Jim Davis: 
House of Representatives:

Since the September 11, 2001, terrorist attacks, more than 3,000 
active-duty, reservists[Footnote 1] and National Guard personnel have 
been mobilized to MacDill Air Force Base (MacDill) in Tampa, Florida, 
for periods of up to 2 years. Because of this large influx of military 
personnel, MacDill, like some other military installations, has had to 
arrange for off-base lodging in commercially operated apartment 
buildings and hotels for many reservists. In addition, MacDill, which 
is headquarters to both the U. S. Central Command (CENTCOM) and the U. 
S. Special Operations Command (SOCOM),[Footnote 2] had to provide 
temporary office space for foreign military personnel who serve as 
liaison officers from coalition partner nations fighting with the 
United States in Afghanistan and Iraq. MacDill leased dozens of 
trailers to provide office space in two complexes called Coalition 
Village I and Coalition Village II.

In the summer of 2003, public concerns were raised in the Tampa area 
that reservists assigned to MacDill could be paying apartment rents 
that were substantially higher than market prices and that MacDill 
officials had not followed proper contracting procedures in obtaining 
office trailers for Coalition Village II.

In your initial request, you asked us to conduct a review of the 
Department of Defense's (DOD) practices for providing lodging for 
military personnel on extended temporary duty. Subsequently, after 
discussions with your offices, we expanded the request to include 
MacDill's contracting procedures in leasing trailers for Coalition 
Village II. Our objectives were to (1) determine the extent to which 
MacDill Air Force Base used cost-effective measures to provide off-base 
lodging for reservists on extended temporary duty and whether more 
cost-effective procedures could be identified at other military 
installations and (2) assess whether the contract to provide office 
space for coalition partners supporting the war against Iraq was 
adequately managed to avoid significant escalation of costs.

To address these objectives, we visited MacDill Air Force Base in 
Tampa, Florida, and Fort Bragg Army base and Pope Air Force Base in 
Fayetteville, North Carolina. We also reviewed information from five 
other Army and Air Force installations[Footnote 3] to determine if they 
acquired off-base lodging for reservists on extended temporary duty 
and, if so, what practices they used to obtain such services. In 
addition, we obtained data from Navy and Marine Corps headquarters 
officials about their practices for housing reservists. We also 
interviewed contracting officials at MacDill and reviewed contract 
files and records related to Coalition Village II. We conducted our 
review from July 2003 through December 2003 in accordance with 
generally accepted government auditing standards. A more detailed 
description of our scope and methodology is provided in appendix I.

Results in Brief:

During recent mobilizations, officials at MacDill Air Force Base in 
Tampa used two practices that effectively reduced the overall cost of 
off-base lodging for some 1,700 personnel on short-term and extended 
temporary duty[Footnote 4] to below the maximum amount allowed under 
the General Services Administration's (GSA) standard lodging 
rate.[Footnote 5] MacDill's contracting officials used Blanket Purchase 
Agreements (BPA)[Footnote 6] with local hotels and apartments to obtain 
prices that were at or below the maximum allowable GSA rate of $93 per 
day for Tampa. MacDill officials obtained daily lodging rates of $71 to 
$93 per unit for two-bedroom apartments and used installation-specific 
guidance to lower per-person costs further by requiring personnel at 
specified ranks to share lodging. When two reservists shared a two-
bedroom unit (about 600 reservists), the cost dropped by up to 55 
percent of the daily GSA rate. The BPAs also provided greater 
flexibility in vacating units without incurring penalties. Overall, 
MacDill officials estimate that they saved about $12.6 million in 
lodging costs in fiscal year 2003, of which about $7.6 million could be 
attributed to the use of apartments. In reviewing local rental costs, 
we found that on a unit basis, the prices MacDill paid under its BPAs 
were similar to those paid by corporate entities for comparable lodging 
units, but were lower on a per-person basis due to lodging sharing 
arrangements. Although we found some similarities and differences at 
other installations that we identified as providing off-base lodging 
for military personnel (e.g., Fort Bragg and Pope Air Force Base), our 
review did not find any one approach that stood out as being 
significantly more cost-effective than other approaches where shared 
lodging was required. Other alternatives for acquiring off-base 
lodging, such as long-term government leases for blocks of properties, 
would need to consider added overhead cost implications associated with 
government management of such properties.

From project initiation to settlement of the contractor's claim, the 
management of Coalition Village II suffered from questionable 
acceptance of the winning offer, poor record keeping, undocumented 
decisions regarding changes to the contract, and changes to contract 
requirements that were not properly coordinated with contracting 
officials. Although MacDill contracting officials determined that the 
winning offer of $142,755 was received on time, only the first page of 
the proposal was received by the deadline established for receipt of 
proposals. The project was implemented under tight time constraints, 
and contract costs increased by over $367,000 over the winning offer. 
However, we were not able to determine if the government paid for costs 
that otherwise might have been avoided or disallowed because of the 
absence of proper documentation in contract files. For example, 
although changes to the contract were made during twice-weekly meetings 
of representatives of the contractor, the customer (CENTCOM), technical 
advisors (civil engineers), and contracting staff, no official minutes 
of the meetings were maintained to document the agreements reached, who 
authorized the changes, or the proposed cost of the changes. Because of 
these weaknesses, we were unable to fully assess the basis for 
additional costs paid to the contractor for Coalition Village II or the 
extent to which costs might have been avoided or otherwise minimized 
through more effective contract management.

We are recommending that the Secretary of Defense direct the Secretary 
of the Air Force to direct the Commander of the Air Mobility Command to 
emphasize to MacDill personnel the importance of adhering to sound 
contract management procedures that exist to protect the interests of 
the government. Communications should ensure that contract files are 
properly maintained and that only authorized personnel initiate changes 
to contract requirements, even during time-sensitive procurements.

In commenting on a draft of this report, DOD did not disagree with our 
findings but expressed the view that our recommendation was not needed 
due to corrective actions that had been planned or taken by the 6TH 
Contracting Squadron at MacDill Air Force Base. Because all planned 
corrective actions have not been completed, we continue to believe that 
our recommendation has merit.

Background:

On September 14, 2001, President Bush proclaimed a national emergency 
in the wake of the September 11, 2001, terrorist attacks. In his 
proclamation,[Footnote 7] he said he would use various sections of 
Title 10 of the United States Code to mobilize additional forces. 
Section 12302, in particular, authorizes the President to call up 
National Guard and Reserve members to active duty for up to 2 years. 
Since September 2001, DOD has activated about 300,000 of the 1.2 
million National Guard and Reserve personnel. As of October 8, 2003, 
about 166,000 Reserve and National Guard members remained on active 
duty. Some of the reservists were assigned to domestic military 
installations to provide, for example, base security.

When reserve members are mobilized to serve on active duty at military 
installations in the United States, the installations where they serve 
arrange lodging for them. If lodging is not available on base, 
installations may provide activated reservists with Certificates of 
Non-Availability enabling them to acquire off-base lodging in the local 
area at prevailing GSA rates. Because of the size and length of the 
current mobilization, some installations, like MacDill Air Force Base, 
made arrangements with local hotels and apartment vendors to provide 
reservists with off-base lodging. The 6TH Contracting Squadron at 
MacDill was responsible for developing the BPAs, and the 6TH Services 
Squadron/Military Lodging was in charge of assigning reservists to 
available lodging. (NOTE: I believe the 6th Contracting Squadron 
belongs to the Air Mobility Wing, not to MacDill).

Because mobilized National Guard and Reserve personnel are considered 
to be in temporary duty status, their per-diem, travel, and 
transportation allowances are governed by DOD's Joint Federal Travel 
Regulations. A per-diem allowance is designed to offset the cost of 
lodging, meals, and incidental expenses incurred by reservists while 
they are on travel status or on temporary duty away from their 
permanent duty station. DOD's regulations state that within the 
continental United States, travelers are entitled to the per diem set 
by GSA for a particular location. Specifically, if a contracting 
officer contracts for rooms and/or meals for members traveling on 
temporary duty, the total daily amount paid by the government for the 
member's lodging, meals, and incidental expenses may not exceed the 
applicable GSA per-diem rate.

In December 2002, CENTCOM established plans for providing working 
quarters at MacDill for coalition partners supporting Operation Iraqi 
Freedom and titled the project Coalition Village II. The project was 
modeled after similar working quarters established at MacDill for 
coalition partners supporting the war on terrorism, Coalition Village 
I. Representatives from CENTCOM and Civil Engineering[Footnote 8] 
supported the 6TH Contracting Squadron, which provides contracting 
support to MacDill's base tenant units, in its efforts to establish 
Coalition Village II. The 6TH Contracting Squadron is a part of the 6TH 
Air Mobility Wing, which reports to the Air Mobility Command. The Air 
Mobility Command is a component of the United States Transportation 
Command.

During the summer of 2003, public concerns were raised in the Tampa 
area about the practices used at MacDill to acquire off-base lodging 
for reservists and temporary office space for coalition partners in the 
war against Iraq. Specifically, these concerns questioned whether 
MacDill officials paid above-market rates for apartments; used 
competition in awarding BPAs for off-base lodging; and advertised for 
bids for lodging services. Questions were also raised about whether the 
contract providing office space for coalition partners supporting 
military operations in Iraq was adequately managed to avoid excessive 
costs.

MacDill Air Force Base Implemented Procedures to Reduce Off-Base 
Lodging Costs for Reservists:

In order to reduce the cost of off-base lodging for 1,700 military 
personnel and reservists on short-term and long-term temporary duty, 
MacDill Air Force Base officials instituted two procedures. MacDill 
used BPAs as a flexible procurement method to obtain lodging at prices 
that were at or below the maximum allowable GSA rate of $93 per day for 
Tampa. MacDill also implemented installation guidance that required 
reservists at certain ranks to share two-bedroom apartment units that 
further reduced costs on a per-person basis. MacDill officials estimate 
that these procedures saved about $12.6 million in off-base lodging 
costs in fiscal year 2003. Our review showed that the prices paid by 
MacDill were similar to those paid by corporate entities in Tampa for 
comparable lodging units, but were lower on a per-person basis due to 
lodging sharing arrangements. Our work showed that practices used at 
other military installations to provide off-base lodging varied but did 
not reveal any one approach that resulted in more significant cost 
savings over other approaches, where shared lodging was required. 
Alternative approaches for obtaining off-base lodging, such as 
obtaining long-term leases for blocks of properties, could be 
considered but would require that various factors be weighed in 
considering their use.

MacDill's Use of BPAs and Shared Housing Achieved Cost Savings and 
Complied with Federal Regulations:

MacDill Air Force Base contracting officials used BPAs to acquire off-
base lodging to handle the large influx of reservists who were 
mobilized following the September 11, 2001, terrorist attacks. 
According to the Federal Acquisition Regulation (FAR), a BPA is a 
simplified method of filling anticipated, repetitive needs for supplies 
or services by establishing "charge accounts" with qualified sources of 
supply.[Footnote 9] Air Force officials had used this method to acquire 
off-base lodging for several years.[Footnote 10] We have no basis to 
conclude that the Air Force's use of BPAs was inconsistent with the 
FAR.

MacDill contracting officials told us that these agreements provide 
them with greater flexibility than contracts would in arranging 
temporary lodging. BPAs permit either party to walk away from the 
agreement without a penalty. The agreements allow federal travelers to 
use their government-issued travel cards to obtain lodging at hotels 
and apartments at reduced prices and favorable contract terms. The 
costs for reservists who do not have government-issued travel cards are 
billed to MacDill under a purchase order.[Footnote 11]

MacDill officials indicated that they go through an established process 
to set up an agreement with an apartment vendor or hotel. The process 
begins when either MacDill contacts a lodging facility or a facility 
contacts MacDill. As part of this initial contact, MacDill schedules an 
inspection to ensure that the facility meets its cleanliness, safety, 
health, and fire standards. If the facility passes the inspection, 
MacDill sets up an agreement with the facility and lists the facility 
as a source of lodging for reservists at an agreed-upon daily rate. 
MacDill officials told us they review BPAs annually to ensure that 
their needs are still being met and to determine if the facility still 
meets standards.

MacDill's Practices Achieved Cost Savings:

At the time of our review, MacDill had agreements with 35 vendors (29 
hotels and 6 apartment providers) and was housing an average of about 
1,700 personnel a day in off-base lodging facilities. Of these, about 
900 were in hotels and 800 were in apartments. In September 2003, the 
prices that MacDill had obtained for hotel rooms ranged from $44 to $93 
per person per day, and for apartment units from $55 to $93 per person 
per day (see table 1). The agreements with apartment vendors do not 
require security deposits and also allow reservists to leave earlier 
than their scheduled departure dates without paying penalties. 
Apartment rental officials told us that, in contrast, other apartment 
renters must give a 30-day notice before leaving or incur penalties, 
such as the loss of 1 month's rent, forfeiture of the security deposit, 
or being held liable for the cost of the remaining term of the lease. 
The apartments acquired by MacDill are fully furnished. The daily rate 
for the apartment covers the cost of utilities, amenities (kitchenware, 
linens, vacuum cleaners, microwave ovens, and cable television 
service), and weekly maid service. Apartment vendors also do not charge 
reservists a 12 percent Florida tax for leases of less than 6 months, 
which private renters typically pay.

Table 1: Differences between BPA Prices and GSA Rates for Off-Base 
Apartment Units in Tampa, Florida:

Unit type: One-bedroom; 
BPA price range per person per month: $1,650- $2,790; 
BPA price range per person per day: $55-93; 
Difference between BPA price and GSA rate ($93): $38-0; 
Average percentage difference[A]: 23.4.

Unit type: Two-bedroom[B]; 
BPA price range per person per month: $1,065-$1,395; 
BPA price range per person per day: $35.50-$46.50; 
Difference between BPA price and GSA rate ($93): $57.50-$46.50; 
Average percentage difference[A]: 55.4. 

Source: GAO analysis of MacDill data.

[A] Based on our analysis of all BPAs.

[B] Based on two persons sharing a two-bedroom unit, with one person in 
each bedroom.

[End of table]

In addition to using BPAs to procure off-base lodging for reservists, 
MacDill used installation-specific guidance on sharing lodging to 
further reduce off-base lodging costs in two-bedroom apartments. The 
guidance requires officers at or below the rank of Lieutenant Colonel 
and enlisted personnel at or below the rank of Chief Master Sergeant or 
Sergeant Major to share two-bedroom apartments. This practice allowed 
MacDill to achieve a cost savings of up to 55 percent of the GSA rate 
(table 1). For example, if two reservists were sharing a two-bedroom 
apartment that costs $93 per day, each would pay half of that amount, 
significantly less than the GSA daily rate of $93 per person. Of a 
total of 800 reservists housed in apartments, about 600 shared two-
bedroom units.

MacDill officials responsible for lodging operations told us that they 
try to place military personnel[Footnote 12] who are on temporary duty 
for 45 days or longer in apartments. This allows personnel to have 
access to cooking facilities, as well as more room than they would have 
in a hotel room. MacDill officials indicated that they consider three 
criteria in placing personnel in apartments: (1) whether or not 
personnel have access to transportation to get to the base, (2) whether 
they are compatible in terms of rank and gender to fill a vacancy in a 
two-bedroom apartment, and (3) if these two criteria are met, officials 
randomly assign personnel to a unit. However, the officials also must 
consider such factors as security or the ability of a particular 
apartment complex to accommodate an entire reserve unit.

Based on data that we received from MacDill lodging officials, the base 
spent about $23.3 million for 386,466 bed-nights in off-base lodging, 
including both short-and long-term stays, in fiscal year 2003. However, 
had MacDill paid the maximum allowable GSA rate of $93 per day for the 
same number of days, the costs would have amounted to $35.9 million. As 
a result, the installation reported that it saved an estimated $12.6 
million for off-base lodging costs by using blanket purchase agreements 
and requiring apartment sharing. Of the $23.3 million spent in fiscal 
year 2003, MacDill paid about $13.9 million for apartment rentals and 
about $9.3 million for hotels. The estimated savings attributable to 
apartments is about $7.6 million and about $5 million in savings is 
attributable to hotels.

MacDill's Lodging Costs Are Similar to Corporate Lodging Prices on a 
Unit Basis but Less on a Per-Person Basis:

In our limited review of local rental prices in the Tampa area, we 
found that MacDill's lodging costs were comparable with those paid by 
corporate entities for the same types of units but were higher than 
prices for typical furnished apartments cited in media reports. These 
reports compared MacDill's apartment costs with the cost of furnished 
apartments that ranged, for example, from $1820 to $1880 ($60.66 to 
$62.66 per day) for a two-bedroom unit with maid service and utilities. 
In a search of Internet sites listing housing prices in the Tampa area, 
we found that individually furnished two-bedroom apartments ranged from 
$623 to $1655 ($20.77 to $55.17 per day)--but typically would not 
include the full range of services obtained by MacDill.

However, according to apartment brokers that we contacted in the Tampa 
area who provide services to corporate entities and private sector 
renters as well as MacDill, corporate-style facilities may be the most 
appropriate to compare to MacDill's costs. Corporate apartments offer 
essentially the same provisions as the apartments that MacDill obtains: 
they are fully furnished and the prices include amenities (i.e., 
kitchenware, linens, microwave ovens, vacuum cleaners, and cable 
television service), maid service, and utilities. The main difference 
is that corporate apartments generally require a minimum 3-month lease 
and a 30-day notice to break the lease while MacDill's BPA arrangements 
do not require a minimum length of stay or have any penalties if 
reservists leave earlier than scheduled.

We found that prices paid per unit by MacDill are comparable to those 
paid by corporate entities, but MacDill's prices are generally much 
lower on a per-person basis due to lodging sharing arrangements. 
According to one apartment broker we interviewed, the price of a 
corporate apartment ranged from $46.50 to $114.60 per day. The price 
that MacDill pays for a similar apartment at the same complex ranges 
from $71 to $93 per day. Another apartment broker we contacted told us 
that the corporate rates for his apartments ranged from $76 to $100 per 
day, depending on the location of the apartment. The price that MacDill 
pays for a similar unit ranges from $71 to $93 per day, with the actual 
cost per person in both examples being lower depending on the number of 
occupants.

Table 2: Comparison of Prices for Furnished Two-Bedroom, Corporate, and 
Military (MacDill) Apartments in Tampa, Florida:

Type: Furnished apartments; 
Cost per day: $20.77-$55.17; 
Cost per month: $623-$1,655; 
Extras beyond furniture: None.

Type: Corporate apartments; 
Cost per day: $46.50-$114.60; 
Cost per month: $1,395-$3,438; 
Extras beyond furniture: Amenities,[A] utilities, maid service.

Type: MacDill apartments via BPAs 1 occupant; 
Cost per day: $71-$93; 
Cost per month: $2,130-$2,790; 
Extras beyond furniture: Amenities, utilities, maid service.

Type: MacDill apartments via BPAs 2 occupants; 
Cost per day: Per person $35.50-$46.50; 
Cost per month: Per person $1,065-$1,395; 
Extras beyond furniture: Amenities, utilities, maid service. 

Source: GAO analyses.

[A] Amenities include kitchenware, linens, vacuum cleaners, microwave 
ovens, and cable television service.

[End of table]

Public concerns were raised about the absence of advertising and 
competition in creating BPAs to provide off-base lodging, suggesting 
that increased competition and advertising would help control costs. 
However, because a BPA is not a contract,[Footnote 13] competition and 
advertising were not required to establish these BPAs.[Footnote 14] In 
any event, while MacDill did not hold a competition or advertise for 
bids, it did establish BPAs with multiple vendors. According to MacDill 
officials, contracts over $25,000 require 15 days to advertise, 30 days 
for the vendor to respond, and 15 days to negotiate. MacDill officials 
told us that they used BPAs because they could be arranged in a shorter 
time frame than solicited contracts. They stated that they were under 
extreme time pressures to acquire immediate housing in February 2003 
when 325 reservists arrived at MacDill to provide force protection 
services.

Approaches Used at Some Other Military Installations Have Similar Cost 
Benefits:

Other DOD installations that we contacted during our review either 
provided lodging for reservists on base or used similar practices to 
reduce off-base lodging costs. In the few selected instances where we 
identified the use of off-base lodging, housing officials used a 
variety of procurement methods (BPAs, contracts, and purchase orders) 
to obtain prices at or below the allowable GSA lodging rate for those 
locations. In addition, they required reservists to share hotel rooms 
and apartment units. However, our review did not identify any one 
approach that stood out as offering more significant cost benefits than 
other approaches where shared lodging was required.

Army Installations Use Contracts to Obtain Off-Base Lodging:

In general, the Army installations that we surveyed used purchase 
orders or requirements contracts[Footnote 15] to procure off-base 
lodging for temporary duty reservists. At the time of our review, Fort 
Bragg housed about 2,400 reservists off base. Fort Bragg had awarded 
contracts to 25 vendors (20 hotels and 5 apartment providers) to supply 
lodging for reservists and had spent an estimated $35 million between 
October 2002 and November 2003 for this lodging. The contracted lodging 
rates were at or below the maximum allowable GSA lodging rate of $63 
per day for Fayetteville. Fort Bragg had also implemented an 
installation policy requiring reservists at the rank of sergeant and 
below to share hotel rooms as well as apartment bedrooms. This sharing 
resulted in average savings of up to 56 percent in relation to the GSA 
lodging rate (see table 3)--savings similar to those realized at 
MacDill.

Although Fort Bragg used purchase orders immediately after September 
11, 2001, the base switched to contracts to obtain off-base lodging 
soon thereafter to streamline the process. When they used purchase 
orders, for example, contracting officials had to issue a modification 
each time a reserve unit increased or decreased its numbers or changed 
its length of stay. Two full-time contracting specialists and one part-
time contracting officer were needed to handle the paperwork. According 
to Fort Bragg officials, the change to contracts made the process more 
economical because contracts require less paperwork and less manpower 
to administer.

Unlike MacDill's BPAs, however, Fort Bragg's contracts were based on 
the number of bedrooms being rented, irrespective of whether they were 
in a hotel or an apartment. Bedrooms were defined as single-or double-
occupancy.[Footnote 16] Fort Bragg's contracted rates were below the 
GSA lodging rate of $63 per day and ranged from $32 to $60 per day for 
single-occupancy rooms and from $20 to $30 per day for double-occupancy 
rooms (see table 3). Thus, at Fort Bragg, two reservists sharing a two-
bedroom apartment with single-occupancy rooms could cost $60 per room 
or up to $120 per day. However, if the bedrooms were double-occupancy, 
up to four reservists could be housed for $120 per day. The contract 
terms required a 72-hour to 2-week notice to vacate the lodging unit 
earlier than scheduled.

Table 3: Contracted Prices for Bedrooms Used to House Reservists in 
Fayetteville, North Carolina, Area:

Unit type: Single room[B]; 
Contracted price range per person per day: $32-$60; 
Difference between contracted price and GSA rate ($63): $31-$3; 
Average percentage savings[A]: 20.8.

Unit type: Double room[C]; 
Contracted price range per person per day: $20-$30; 
Difference between contracted price and GSA rate ($63): $43-$33; 
Average percentage savings[A]: 55.7.

Source: GAO analysis of Fort Bragg data.

[A] Based on our analysis of all BPAs.

[B] Based on one person in a room.

[C] Based on two persons in a room; price shown is half the daily rate 
of $40-$60 per day. NOTE: THE NUMBERS IN THE THIRD COLUMN NEED TO BE 
CONSISTENT. EITHER "$31 - 3" AND "$43 - 33" OR "$3 - 31" AND "$33 - 
43":

[End of table]

Fort Bragg's sharing policy required enlisted personnel at the rank of 
sergeant and below to share rooms. When a bedroom was to be shared, 
Fort Bragg required that each reservist have sufficient space and be 
provided with a dresser or chest of drawers in the room.

In contrast to Fort Bragg, Army officials at Fort Hood, Texas, and Fort 
Dix, New Jersey, told us that they were able to accommodate most of 
their temporary duty reservists on base. In the few cases when off-site 
lodging had to be procured, the installation's contracting personnel 
used purchase orders to obtain the needed facilities. Officials told us 
that, in general, these off-base stays were for 3 to 4 days at Fort 
Hood and a maximum of 60 days at Fort Dix. At both bases, enlisted 
personnel below the rank of Sergeant First Class were required to share 
hotel rooms.

Other Air Force Installations House Most Reservists on Base:

Unlike MacDill Air Force Base, reservists on long-term temporary duty 
at Pope, Dover, and McGuire Air Force bases were accommodated on site. 
According to an Air Force official, most reservists did not have 
transportation and, thus, were given priority for on-site lodging. As a 
result, some non-reserve service members had to be placed in off-base 
lodging. Like MacDill, these Air Force bases used BPAs to procure their 
off-site lodging needs, which were generally for short periods of time.

At the time of our review, Pope Air Force Base had 12 BPAs with hotel 
vendors. Pope officials said that they do not use apartments because 
most stays off-base are less than a week, and personnel are not 
required to share rooms. We were told that, in general, service members 
or reservists who are assigned to Pope for extended duty are housed on 
base. Under the terms of the BPAs, personnel accommodated in hotels may 
vacate the hotel at any time without a penalty. The first priority in 
selecting a hotel for off-base lodging is the distance from the base to 
the hotel because aircrews sometimes have to leave on short notice. 
According to a Pope official, in general about 300 airmen are housed in 
off-base lodging facilities each month. Prices for a one-bedroom hotel 
room for Pope ranged from $48 to $63, for savings of up to $15 per day 
compared with the GSA lodging rate of $63 per day for Fayetteville. 
According to a lodging official, Pope spent an estimated $1.825 million 
on off-base lodging in fiscal year 2003.

Most Navy and Marine Corps Reservists Receive On-site Lodging:

Our analysis of data provided by Navy officials indicates that the Navy 
spent a total of $14.8 million in fiscal year 2003 on contracted and 
leased lodging facilities. However, a Navy official told us that, in 
most cases, the temporary-duty reservists were accommodated in on-site 
lodging. The major exceptions are reservists mobilized in the 
Washington, D.C., area. These reservists are provided with Certificates 
of Non-Availability, which enable them to acquire lodging in local area 
hotels, and they are reimbursed for their lodging costs up to the 
maximum GSA rate allowed for the Washington, D.C., area, which 
currently is $150 per day. About $11.3 million of the $14.8 million the 
Navy spent on contracted and leased lodging facilities was used to 
acquire lodging in local markets with Certificates of Non-Availability. 
Marine Corps reservists were accommodated in existing on-site 
facilities.

Alternative Off-Base Lodging Arrangements Could Be Explored:

The extent and length of the current mobilization has created some 
long-term, off-base lodging requirements and associated costs that 
appear high when considered on a monthly basis and when compared with 
private sector prices that typically, however, offer fewer amenities. 
Whether other alternatives for obtaining off-base lodging should be 
considered or whether they would be cost effective is unclear. Much 
would depend on individual circumstances, local market conditions and 
costs, the number of personnel requiring lodging, and the length of the 
lodging requirement.

One alternative approach that could be explored might be to obtain 
long-term leases for blocks of properties to provide lodging for 
reservists on extended temporary duty during times of high 
mobilizations. However, MacDill lodging officials told us that this 
approach would require them to obtain furnishings, utility hook-ups, 
and amenities (i.e., vacuum cleaners, kitchenware, linens) as well as 
staffs to manage property inventories and reservation systems. 
Government management of such inventories could be viewed as counter to 
recent defense initiatives to rely on the private sector for the 
provision of commercially available services. MacDill lodging officials 
also pointed out that the need for long-term lodging could vanish as 
quickly as it materialized, leaving them committed to long-term leases, 
property inventories, and the attendant costs. Under the approach 
MacDill currently uses, apartment units and hotels assume these risks. 
This approach would also need to consider potential force protection 
issues that might be of concern with large concentrations of personnel 
lodged together off base.

Weaknesses in Contract Management Hamper Efforts to Assess Contract 
Costs:

From project initiation to settlement of the contractor's claim, the 
management of Coalition Village II suffered from questionable 
acceptance of the winning offer, poor record keeping, undocumented 
decisions regarding changes to the contract, and changes to contract 
requirements that were not properly coordinated with contracting 
officials. As a result of these weaknesses, we were unable to assess 
the basis for significant cost increases in the contract. These 
weaknesses also made it difficult for us to determine whether the 
government paid for costs that otherwise might have been avoided or 
disallowed.

Challenges Associated with Contract Solicitation, Award, and Pricing 
for Coalition Village II:

Coalition Village II was implemented under tight time constraints that 
presented unique challenges for the 6TH Contracting Squadron in the 
solicitation, award, and pricing of the contract. MacDill contracting 
officials reference a March 21, 2003, memorandum from the Air Force's 
Deputy Assistant Secretary (Contracting)/Assistant Secretary 
(Acquisition) whose subject was, "Rapid, Agile Contracting Support 
During Operation Iraqi Freedom." The memorandum encourages, "…every 
contracting professional to lean way forward, proactively plan for 
known and anticipated customer needs, and put the necessary contract 
vehicles and supporting documents in place as soon as possible." The 
memorandum further calls for Air Force contracting officers to be a 
"community of innovative, even daring risk takers.":

CENTCOM initiated its urgent request for temporary office space to the 
6TH Contracting Squadron in February 2003. It requested 14 temporary 
office trailers to house additional coalition partners that were 
supporting the United States in Operation Iraqi Freedom. CENTCOM said 
it needed the trailers in 30 days, and the 6TH Contracting Squadron 
used a provision of the FAR, entitled "Unusual and Compelling 
Urgency,"[Footnote 17] to meet the tight timeline. Under this 
provision, the government is allowed to limit the number of sources and 
approve written justifications after the contract is awarded within a 
reasonable time, if preparation and approval prior to the award would 
unreasonably delay the acquisition. Consistent with the authority for 
an urgent and compelling acquisition, MacDill's contracting office 
developed a list of three potential contractors. According to a MacDill 
contracting official, the office contacted only those contractors who 
had proven records of timely and satisfactory performance for similar 
work at the base. MacDill issued the solicitation for leasing the 
trailers on February 14, 2003, and established 12:00 p.m. Eastern 
Standard Time on February 18, 2003, as the deadline for receipt of 
proposals.

One contractor, the Warrior Group, did not submit a proposal in time to 
meet the deadline, and its proposal was not considered. Two other 
contractors were judged to have met the deadline for submitting their 
proposals, although acceptance of the winning proposal was 
controversial. William Scotsman, the incumbent contractor for the 
Coalition Village I project, hand-carried its proposal to the 6TH 
Contracting Squadron at 11:31 a.m. on February 18, 2003, and there was 
no question that it had met the deadline. The third contractor and 
winning offeror, Resun Leasing, faxed its proposal at 3 minutes past 
12:00 p.m., according to the time stamp on the fax machine. However, 
MacDill contracting officials determined that the fax machine clock was 
3 minutes fast, and that the first page of Resun's proposal was 
received by the 12:00 p.m. deadline. Although not all the pages of 
Resun's proposal were received by the deadline, the contracting officer 
determined that because the first page had been received in time, the 
entire proposal was timely.

Although Resun's proposal was arguably late, MacDill contracting 
officials determined that Resun Leasing was the "lowest price, 
technically acceptable offeror" and verbally notified the contractor on 
February 18, 2003, to proceed with the project. Resun's initial offer 
for the contract was $111,000, but a MacDill contracting official 
subsequently noted a computation error, which increased the offer to 
$142,755. The offer submitted by William Scotsman was for $196,000. 
William Scotsman subsequently questioned MacDill officials about the 
propriety of considering Resun's apparently late offer. Nevertheless, 
although William Scotsman submitted a timely offer and therefore could 
have protested to GAO, it did not protest the award to Resun Leasing 
and MacDill's handling of the Resun offer.[Footnote 18] A contracting 
official told us that MacDill has now instituted a policy clearly 
stating that all pages of a faxed proposal must be received by the 
deadline for it to be considered timely.

Numerous modifications to the contract were made after work began on 
February 19, 2003. On April 22, 2003, Resumn filed a claim for 
additional work, including six additional flagpoles, electrical and 
wiring changes, interior and exterior trailer modifications, revised 
grounding/lightning protection, interior and exterior locks, and 
additional air conditioning units totaling $467,000, but revised the 
amount several times. Resumn submitted another revision on June 9, 
2003, claiming an amount of $372,172. On May 20, 2003, MacDill 
validated $134,000 of the claim, leaving $238,172 to be negotiated. On 
July 20, 2003, the contractor acknowledged that it owed the government 
$4,977 because of erroneous billing, which left a total of $233,196 to 
be negotiated. MacDill officials agreed to pay this amount and issued a 
contract modification on July 31, 2003, to capture this change. The 
total amount paid for the project was, therefore, $509,951 (see table 
4). However, as discussed subsequently, the contract file did not 
contain adequate documentation for us to determine how MacDill 
officials arrived at this settlement.

Table 4: Payments and Claims for Coalition Village II Contract:

Contract phase: Initial contract award; Date: 02/18/03; Amount paid by 
MacDill: $142,755; Amount claimed by contractor: [Empty].

Contract phase: Contractor's claim for additional work; Date: 04/22/03; 
Amount paid by MacDill: [Empty]; Amount claimed by contractor: 
$467,082.

Contract phase: Amount of claim validated for payment by MacDill; Date: 
05/20/03; Amount paid by MacDill: 134,000; Amount claimed by 
contractor: [Empty].

Contract phase: Revised contractor's claim for additional work; Date: 
06/09/03; Amount paid by MacDill: [Empty]; Amount claimed by 
contractor: 372,172.

Contract phase: Additional reduction in contractor's claim due to 
erroneous billing; Date: 07/20/03; Amount paid by MacDill: [Empty]; 
Amount claimed by contractor: -4,977.

Contract phase: Payment on claim for additional work; Date: 07/31/03; 
Amount paid by MacDill: 233,196; Amount claimed by contractor: [Empty].

Contract phase: Total amount paid by MacDill; $509,951.

Source: GAO analysis of MacDill data.

[End of table]

Poor Record Keeping, Undocumented Decisions, and the Lack of 
Coordination of Changes with Contracting Officials Hamper Ability to 
Assess Contract Costs:

Our efforts to assess contract costs for Coalition Village II were 
hampered by missing documents in the contract file, undocumented 
decisions for properly authorized changes to the contract, and changes 
to contract requirements by on-site personnel that were not properly 
coordinated with contracting officials. Because of these weaknesses in 
contract management, we were unable to determine if the government paid 
costs that otherwise might have been avoided or minimized.

Our review of the Resun contract file showed that it was missing 
several key documents needed to assess the appropriateness of contract 
costs. The file did not contain documentation that the winning proposal 
represented a technically acceptable offer[Footnote 19] or an 
assessment that the price was reasonable.[Footnote 20] MacDill 
contracting officials agreed that poor record keeping was a problem 
with the Coalition Village II contract. (NOTE: Need FAR citation for 
this statement)The contract file also did not contain documentation to 
fully validate the contractor's entire claim. While validation of 
$134,000 of the initial claim was documented, there was no 
documentation indicating how MacDill officials determined that the 
remaining amount of the claim was valid and reasonable.

Further, the file did not contain sufficient documentation regarding 
authorized changes to the contract. Modifications to the contract were 
made during twice-weekly meetings between representatives of the 
contractor, the customer (CENTCOM), technical advisors (civil 
engineers), and contracting staff, but no official minutes were 
maintained to document the agreements that were reached. In a 
memorandum for the record, the contract administrator acknowledged that 
a written log of contract changes was not developed. The absence of 
documentation of authorized contract modifications makes it difficult 
to assess contract costs.

The Resun contract file also did not contain sufficient documentation 
to indicate who authorized some contract changes[Footnote 21] or the 
cost estimates for some changes. MacDill officials told us that they 
were surprised when the contractor submitted the claim for $467,000 to 
cover additional work performed under the contract. They said that the 
contracting officer and contract administrator were not aware of all 
changes that had been made because unauthorized personnel 
inappropriately authorized changes to the contract on site without 
informing contracting officials. During the rush to get the project 
completed, involved parties including representatives of the customer 
and technical advisors made on-site changes that were not always 
coordinated with the contracting officer. In a memorandum for the 
record dated June 29, 2003, the contract administrator wrote that he 
did not know about many of the changes, nor did the CENTCOM point of 
contact or the representative from civil engineering, who assisted with 
contract oversight. The price negotiation memorandum written to 
document the final settlement of the claim also notes a lack of 
adequate documentation to determine who authorized the extra work. The 
absence of these documents along with inadequate documentation of 
contract changes makes it difficult to retrospectively assess the 
appropriateness of contract costs.

Conclusions:

MacDill Air Force Base and other installations we identified that 
provide lodging for reservists on extended temporary duty are often 
making efforts to reduce off-base lodging costs by (1) obtaining prices 
that are below the maximum allowable rate for lodging established by 
GSA and (2) requiring military personnel below specified ranks to share 
apartments and/or hotel rooms. While public concerns in the Tampa area 
were accurate in citing MacDill's monthly rental costs for some two-
bedroom apartment units of $2,400, these concerns failed to recognize 
that GSA establishes lodging rates for travelers on official government 
business based on daily per-person rates. Therefore, a two-bedroom 
apartment renting for $2,400 per month ($80 per day) shared by two 
people results in a daily lodging rate of $40 per person, well below 
the maximum allowable GSA rate of $93 per day in the Tampa area. On a 
unit basis, these rates are also comparable to corporate housing rates 
in the Tampa area, which generally provide furnished units with similar 
amenities to those provided to military personnel, though MacDill's 
per-person costs were usually lower due to lodging sharing 
arrangements.

Each installation we visited had different methods for providing 
extended temporary lodging. The majority of installations contacted had 
sufficient capacity to provide lodging for reservists on base or made 
arrangements to provide lodging off base for other military travelers 
on a short-term basis. Installations providing off-base lodging used 
different procurement tools (BPAs, purchase orders, and contracts) but 
obtained comparable savings regardless of the procurement instrument 
used. Local GSA lodging rates are public knowledge and generally 
represent the ceiling for acceptable offers. Significant savings over 
GSA daily rates were also obtained through the implementation of 
installation specific guidance requiring reservists at specific ranks 
to share rooms and/or apartments, but the ranks required to share units 
varied by installation. Installations also obtained varying terms in 
their agreements with hotels and apartment vendors, primarily regarding 
penalties for early departures.

The primary factors affecting off-base lodging prices are local market 
conditions (the inventory of vacant hotel rooms and apartment units) 
and the prevailing GSA lodging rate. An alternative approach to 
providing off-base lodging, such as direct leasing of apartment 
properties, might be considered but would need to consider other 
factors such as the added costs of government management and the 
provision of additional services comparable to those now being 
provided.

Although Coalition Village II was implemented under extreme time 
constraints, effective contract management suffered from questionable 
acceptance of the winning offer, poor record keeping, undocumented 
decisions, and changes to contract requirements that were not properly 
coordinated with contracting officials. We were not able to assess the 
basis for additional costs paid to the contractor or the extent to 
which costs might have been avoided or minimized because of these 
contract management weaknesses.

Recommendation for Executive Action:

We recommend that the Secretary of Defense direct the Secretary of the 
Air Force to direct the Commander of the Air Mobility Command to 
emphasize to MacDill personnel the importance of adhering to sound 
contract management procedures that exist to protect the interests of 
the government. Communications should reemphasize that contract files 
should be properly maintained and only authorized personnel should 
initiate changes to contract requirements, even during time sensitive 
procurements. In addition to contracting officials, such communications 
should also be provided to contractors, base customers of contracting 
services, and contract support personnel.

Agency Comments and Our Evaluation:

In commenting on a draft of this report, the office of the Director, 
Defense Procurement and Acquisition Policy, did not dispute the GAO 
audit findings regarding the Coalition Village II procurement and 
partially concurred with our recommendation. The office suggested that 
the recommendation is not needed because the 6TH Contracting Squadron 
at MacDill Air Force Base had already taken corrective actions, 
including an internal review of Coalition Village II contract files 
that resulted in letters of reprimand for a contracting officer and 
contract administrator. However, as noted in DOD's response, some of 
the more significant actions that relate to the specifics of our 
recommendation are planned but not yet completed. Accordingly, we 
believe it appropriate to retain the recommendation pending completion 
of all indicated corrective actions. We expect to follow up to 
determine the extent to which planned actions have been taken. The 
comments from the office of the Director, Defense Procurement and 
Acquisition Policy, are included in appendix II of this report.

We are sending copies of this report to the Secretary of Defense; the 
Secretaries of the Army, the Navy, and the Air Force; the Commandant of 
the Marine Corps; the Director, Office of Management and Budget; and 
other interested parties. We will also make copies available to others 
upon request. In addition, the report will be available at no charge on 
the GAO Web site at http://www.gao.gov.

If you or your staff have any questions on the matters discussed in 
this letter, please contact me at (202) 512-5581. Key contributors to 
this letter were George Poindexter, Vijay Barnabas, Nelsie Alcoser, 
Kenneth Patton, Tanisha Stewart, and Nancy Benco.

Barry W. Holman: 
Director, Defense Capabilities and Management:

Signed by Barry W. Holman: 

[End of section]

Appendix I: Scope and Methodology:

To describe the extent to which MacDill Air Force Base used cost-
effective measures to provide long-term, off-base lodging for 
reservists on extended temporary duty, we visited and interviewed 
officials from the 6TH Contracting Squadron and 6TH Services Squadron 
at MacDill Air Force Base, and we interviewed apartment managers and 
brokers in the Tampa, Florida, area. We analyzed records on temporary 
lodging rates paid for military personnel housed off-site at MacDill 
Air Force Base and the numbers of National Guard and Reserve service 
members on extended temporary duty at this installation. We identified 
the allowable GSA lodging rate for the Tampa, Florida, area and 
compared this amount to the amounts paid for off-base lodging. We 
determined whether MacDill Air Force Base used contracts or BPAs to 
provide off-site lodging for service members on extended temporary duty 
and reviewed the processes followed in developing these procurement 
instruments for acquiring off-base lodging. We reviewed the BPAs 
MacDill had with hotel and apartment vendors in the Tampa area.

To compare the practices used at MacDill Air Force Base to acquire off-
base lodging to practices at other installations, we visited and 
interviewed contracting and lodging officials at Fort Bragg and Pope 
Air Force Base. These installations were selected based on our review 
of Reserve and National Guard deployment data for force protection 
activities and follow-up phone calls to establish that the bases 
procured off-base lodging. In addition, we obtained information on 
lodging practices at Fort Meyer, Dover Air Force Base, McGuire Air 
Force Base, Fort Hood, and Fort Dix. We also contacted Navy and Marine 
Corps officials at the headquarters level to determine their practices 
for providing lodging for reservists on extended temporary duty. We 
identified the allowable GSA lodging rates for Fort Bragg and Pope Air 
Force Base and compared these amounts to the amounts paid for off-base 
lodging. We determined whether these installations used contracts, 
purchase orders or BPAs to provide off-site lodging for service members 
on extended temporary duty and the processes followed in developing 
these procurement instruments.

We met officials from the Under Secretary of Defense (Personnel and 
Readiness), U.S. Air Force (Installations and Logistics Contracting), 
and DOD's Per Diem, Travel and Transportation Allowance Committee to 
collect information on Department of Defense lodging regulations and 
procedures. At each of the installations we visited, we collected and 
reviewed lodging policies, procedures, and practices regarding 
temporary duty personnel. In addition, we reviewed the requirements in 
the Joint Federal Travel Regulations regarding temporary duty travel. 
We reviewed all data that we received, but we did not verify the 
accuracy of the data provided by DOD or the installations.

To determine if MacDill followed proper procedures in contracting for 
the lease of temporary office trailers for Coalition Village II, we 
interviewed officials from the 6TH Contracting Squadron, including the 
commander, the current contracting officer, the contract administrator, 
and other contract staff familiar with the procurement process. In 
these discussions, we sought information on the actions taken to 
implement the project, the timing of such actions, and the 
justification for contracting procedures followed. We reviewed 
documents prepared by contracting officials to explain procedures 
followed in administering the contract, including a Talking Paper and 
Acquisition Timeline of Events for Coalition Village II. In addition, 
we reviewed the contract and other documentation in the contract file, 
including correspondence, memorandums for the record and the 
contractor's claims for payment. We also reviewed relevant provisions 
of the Federal Acquisition Regulation (FAR) related to this 
procurement. Specifically, we researched FAR authorities related to the 
use of "Unusual and Compelling Urgency" in government procurements, 
including competition and documentation requirements under such 
circumstances. We also researched and analyzed prior GAO bid protest 
decisions regarding determinations of timeliness in the acceptance of 
electronic submissions of proposals.

We conducted our review from June 2003 through December 2003 in 
accordance with generally accepted government auditing standards.

[End of section]

Appendix II: Comments from the Department of Defense:

OFFICE OF THE UNDER SECRETARY OF DEFENSE:
ACQUISITION, TECHNOLOGY AND LOGISTICS:

3000 DEFENSE PENTAGON 
WASHINGTON, DC 20301-3000:

JAN 13, 2004:

Mr. Barry W. Holman:

Director, Defense Capabilities and Management 
U.S. General Accounting Office:

Washington, D.C. 20548:

Dear Mr. Holman:

This is the Department of Defense (DoD) response to the GAO draft 
report, GAO-04-296, "DEFENSE MANAGEMENT: Issues in Contracting for 
Lodging and Temporary Office Space at MacDill Air Force Base," dated 
December 15, 2003 (GAO Code 350399). We are pleased your review found 
that MacDill contracting officials used blanket purchase agreements, 
coupled with a room sharing policy, to effectively reduce the overall 
cost of off-base lodging for reservists on extended temporary duty to 
an amount below the General Service Administration's lodging rate for 
Tampa, FL. Enclosed are DoD's detailed comments regarding the 
recommendation on page 23 of your draft report.

My point of contact for this report is Mr. Christopher Werner, 703-695-
9764 or christopher.werner@osd.mil. We appreciate the opportunity to 
review and comment on your findings.

Enclosure: As stated:

Sincerely,

Signed for:

Deidre A. Lee 
Director, Defense Procurement and Acquisition Policy:

GAO CODE 350399/GAO-04-296:

"DEFENSE MANAGEMENT: ISSUES IN CONTRACTING FOR LODGING AND TEMPORARY 
OFFICE SPACE AT MACDILL AIR FORCE BASE":

DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMENDATION:

RECOMMENDATION: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Air Force to direct the Commander of the 
Air Mobility Command to emphasize to MacDill personnel the importance 
of adhering to sound contract management procedures that exist to 
protect the interests of the Government. Communications should 
reemphasize that contract files should be properly maintained and only 
authorized personnel should initiate changes to contract requirements, 
even during time sensitive procurements. In addition to contracting 
officials, such communications should also be provided to contractors, 
base customers of contracting services, and contract support personnel. 
(Page 23/Draft Report):

DoD RESPONSE: Partially concur. DoD does not dispute the GAO audit 
findings regarding the Coalition Village II procurement. However, there 
is no need for this recommendation because the 6th Contracting Squadron 
at MacDill Air Force Base had already taken the following corrective 
actions in this matter prior to the GAO initiating its review in June 
2003:

a. In April 2003, the 6THContracting Squadron conducted an internal 
review of the Coalition Village II contract file and found 
deficiencies, including the absence of meeting minutes and a lack of 
documentation for contract changes. This review resulted in letters of 
reprimand being issued to both the contracting officer and to the 
contract administrator. The contracting officer was subsequently 
replaced.

b. The new contracting officer immediately cautioned the customer, 
CENTCOM, as well as Civil Engineering, to refrain from directing any 
contractor actions in the future, because only the contracting officer 
or his duly appointed representative has the legal authority to direct 
changes to the contract.

Additionally, in October 2003, the 6th Contracting Squadron instituted 
an on-going training initiative for its personnel to reemphasize 
contracting fundamentals, including negotiating contract changes and 
properly documenting contract files. Headquarters contracting 
personnel from the Air Mobility Command have also scheduled a visit to 
MacDill Air Force Base in January 2004, which will include discussion 
of the Coalition Village II procurement and the associated remedial 
actions taken. The headquarters staff will then develop training based 
on the Coalition Village II procurement to help ensure that contracting 
personnel throughout the Air Mobility Command follow sound contract 
management procedures.

Note: Page numbers in the draft report may differ from those in this 
report.

[End of section]

FOOTNOTES

[1] Unless specified otherwise, the terms "reserves" and "reservists" 
refer to the collective forces of the Army National Guard, the Air 
National Guard, the Army Reserve, the Naval Reserve, the Marine Corps 
Reserve, and the Air Force Reserve.

[2] CENTCOM is the unified command responsible for executing military 
operations in Afghanistan and Iraq. SOCOM is the unified command that 
directs special operations, psychological operations and civil affairs 
forces from the Army, Navy, and Air Force under a single commander.

[3] These installations were Fort Hood, TX; Fort Dix, N.J.; McGuire Air 
Force Base, N.J.; Dover Air Force Base, Del.; and Fort Meyer, Va.

[4] At MacDill, short-term temporary duty consists of less than 45 
days, and long-term or extended temporary duty consists of 45 days or 
longer.

[5] DOD's Joint Federal Travel Regulations (JFTR) govern the amount of 
per diem, travel, and transportation allowances that reserve personnel 
can receive when they are traveling on official government business in 
the continental United States. JFTR, Chapter 1, Part A, paragraph U 
1000. They are entitled to the per diem set by the General Services 
Administration (GSA) for a particular location. At the time of our 
review, the maximum allowable GSA rate for lodging in Tampa, Florida, 
was $93 per day.

[6] Blanket purchase agreements (BPA) are simplified procurement 
procedures used to fill repetitive needs for supplies or services by 
establishing "charge accounts" with qualified sources of supply. 48 
C.F.R. § 13.303-1.

[7] Proclamation No. 7463, 66 Fed. Reg. 48199 (Sept. 14, 2001).

[8] A contractor, Chugach Management Services, performs the civil 
engineering function at MacDill. Chugach Management Services provides 
base operations and maintenance, construction management, facilities 
operation, and environmental services. 

[9] 48 C.F.R.§ 13.303-1.

[10] Air Force Contracting Policy Memo 96-C-04, Aug. 16, 1996, 
encouraged officials to use BPAs to obtain off-base housing. 

[11] A purchase order when issued by the government means an "offer by 
the Government to buy supplies or services including construction and 
research and development, upon specified terms and conditions, using 
simplified acquisition procedures." 48 C.F.R. § 2.101. 

[12] MacDill lodging officials told us they make no distinction in 
providing off-base lodging for active duty personnel and reservists in 
that they follow the same procedures for both groups.

[13] See Boehringer Mannheim Corporation, B-279238, May 21, 1998, 98-1 
CPD ¶ 141. 

[14] 48 C.F.R. § 13.302-2.

[15] The Federal Acquisition Regulation (FAR) describes a requirements 
contract as providing for "filling all actual purchase requirements of 
designated Government activities for supplies or services during a 
specified contract period, with deliveries or performance to be 
scheduled by placing orders with the contractor." 48 C.F.R. § 
16.503(a). As with the BPA, a requirements contract may be used to 
acquire supplies or services when the exact times or exact quantities 
of future deliveries are not known at the time of contract award. This 
type of contract allows flexibility in both quantities and delivery 
scheduling and ordering of supplies or services after requirements 
materialize.

[16] A single occupancy room has one bed. A double occupancy room has 
two beds, along with a chest of drawers or dresser for each bed. 

[17] 48 C.F.R. § 6.302-2.

[18] Under GAO's Bid Protest Regulations, a protest by William Scotsman 
at this time would be untimely and would not be considered. See 4 
C.F.R. § 21.2 (a)(2).

[19] "The relative strengths, deficiencies, significant weaknesses, and 
risks supporting proposal evaluation shall be documented in the 
contract file." 48 C.F.R. § 15.305 (a).

[20] "The contracting officer shall document the cost or price 
evaluation." 48 C.F.R. § 15.305 (a)(1).

[21] 48 C.F.R. § 43.102 (a) provides that "[o]nly contracting officers 
acting within the scope of their authority are empowered to execute 
contract modifications on behalf of the Government. Other government 
personnel shall not (1) Execute contract modifications; (2) Act in such 
a manner as to cause the contractors to believe that they have 
authority to bind the Government; or (3) Direct or encourage the 
contractor to perform work that should be the subject of a contract 
modification."

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