Objectives, Scope, and Methodology

The objectives of our review were to determine (1) the extent of concessions operations in the federal government, (2) the rate of return received by the federal government from concessions and the factors affecting the rate of return, (3) how the federal government’s rate of return compared to other governments’ rates of return, and (4) the extent of agencies’ nonconcessions activities that generated income in fiscal year 1994 and whether they offered opportunities for the agencies to handle them like concessions. As shown in table 1, 10,427 (over 92 percent) of the total 11,263 reported concessions agreements were with the 6 land management agencies. The reported $82.5 million of government receipts includes funds that concessioners deposited into special accounts that officials said are primarily used for repairs and improvements to facilities on government property. Nine of the 42 agencies or agency components also estimated that concessioners provided an additional $4.7 million in nonfee compensation by maintaining government property. Our analysis of the reported data showed a rate of return of 2.8 percent for the 6 land management agencies’ concessions, 9.2 percent for the nonland management agencies’ concessions, and 3.1 percent for the 50 concessions with the largest reported amount of gross revenues in our survey. Four states and Canada reported on average a 12.7 percent rate of return. Competition Resulted in a Higher Rate of Return From Concessions Operations

As shown in appendix VI, concessions agreements entered into on a competitive basis had higher rates of return than those that were not competed. The information showed that nonland management agencies entered into 101 of the agreements and competed 96 percent of them, and the land management agencies initiated 2,133 of these concessions agreements and competed 8.6 percent of them. They estimated that activities generating $175 million, or about 1 percent of the $20.5 billion in income, could be converted into concessions operations. Forty-two departments and agencies responded because some had more than one component managing concessions. Some agencies reported that gross revenue data were not available because concessioners paid a flat concessions fee and the agency had no requirement to track gross revenues. It charged a flat concessions fee. All 75 agencies responded to our request. 27, 1991).
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on government concession contracting in 1994, focusing on: (1) the extent of government concession operations; (2) the amount of and factors that affect federal concession returns; (3) how federal concession return rates compare with other governments' return rates; and (4) whether agencies' non-commission income gathering operations could be converted into concessions.

What GAO Found

GAO noted that: (1) 27 of the 75 federal departments and agencies surveyed had entered into concessioning agreements; (2) 42 of these agencies and agency components managed a total of 11,263 concessions programs; (3) 92 percent of these concession agreements were held by 6 land management agencies; (4) gross revenue from the concessions totalled $2.2 billion, but agencies lacked sufficient data to determine the gross revenues of all concession operations; (5) concessioners paid the government $82.5 million, including $64.6 million in concession fees and $17.9 million for facility repair and improvement; (6) concessioners provided the government with an additional $4.7 million in non-fee compensation by maintaining government property; (7) the government's return rate on concessioners' gross revenues was 3.6 percent; (8) other governments surveyed had average concession return rates of 12.7 percent; (9) competitively awarded concession agreements where fees were considered in the competition had higher return rates than those that were not competed; (10) although 96 percent of non-land-management-agency concessions were awarded competitively, only 8.6 percent of land management agencies concessions were awarded competitively; (11) the agencies able to retain more than 50 percent of their concessions fees had higher return rates than those agencies required to deposit their returns into treasury funds; and (12) 29 of the 75 agencies had income generating-operations other than concessions, but many of these activities could not be concession contracted because of security and privacy concerns.