Defense Management: Issues in Contracting for Lodging and Temporary Office Space at MacDill Air Force Base
Published: 2004-01-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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 roomsharing 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 perperson basis because of lodging sharing arrangements. 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.

section_title: Letter
paragraphs: Since the September 11, 2001, terrorist attacks, more than 3,000 active- duty, reservists 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), 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 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.
subsections: section_title: Background
paragraphs: On September 14, 2001, President Bush proclaimed a national emergency  in the wake of the September 11, 2001, terrorist attacks. In his  proclamation, 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.
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 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.
section_title: MacDill Air Force Base Implemented Procedures to Reduce Off-Base Lodging Costs for Reservists
paragraphs: 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.
subsections: section_title: MacDill’s Use of BPAs and Shared Housing Achieved Cost Savings and Complied with Federal Regulations
paragraphs: 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. Air Force officials had  used this method to acquire off-base lodging for several years. 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.
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.
subsections: section_title: MacDill’s Practices Achieved Cost Savings
paragraphs: 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.
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 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.
section_title: MacDill’s Lodging Costs Are Similar to Corporate Lodging Prices on a Unit Basis but Less on a Per-Person Basis
paragraphs: 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.
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, competition and advertising were not  required to establish these BPAs. 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.
section_title: Approaches Used at Some Other Military Installations Have Similar Cost Benefits
paragraphs: 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.
subsections: section_title: Army Installations Use Contracts to Obtain Off-Base Lodging
paragraphs: In general, the Army installations that we surveyed used purchase orders  or requirements contracts 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. 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.
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.
section_title: Other Air Force Installations House Most Reservists on Base
paragraphs: 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.
section_title: Most Navy and Marine Corps Reservists Receive On-site Lodging
paragraphs: 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.
section_title: Alternative Off-Base Lodging Arrangements Could Be Explored
paragraphs: 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.
section_title: Weaknesses in Contract Management Hamper Efforts to Assess Contract Costs
paragraphs: 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.
subsections: section_title: Challenges Associated with Contract Solicitation, Award, and Pricing for Coalition Village II
paragraphs: 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,” 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. 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, Resun 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. Resun  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.
section_title: Poor Record Keeping, Undocumented Decisions, and the Lack of Coordination of Changes with Contracting Officials Hamper Ability to Assess Contract Costs
paragraphs: 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 or an assessment that the price  was reasonable. MacDill contracting officials agreed that poor record  keeping was a problem with the Coalition Village II contract. 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 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.
section_title: Conclusions
paragraphs: 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.
section_title: Recommendation for Executive Action
paragraphs: 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.
section_title: Agency Comments and Our Evaluation
paragraphs: 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.
section_title: Appendix I: Scope and Methodology
paragraphs: 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.
section_title: Appendix II: Comments from the Department of Defense