Labor & Employment Law Daily Wrap Up, REPORTS—GAO finds oversight gaps in Defense Department support agreements, (Sep 14, 2026)

By Patricia K. Ruiz, J.D.

The report identifies shortcomings in cost-savings reviews, limited tracking of contractor participation, and wage differences in selected installation-support position.

The Government Accountability Office (GAO) found that the Defense Department has significantly expanded its use of intergovernmental support agreements (IGSAs) with state and local governments while lacking key oversight mechanisms for some of those arrangements. The report said military services do not consistently conduct or document cost-benefit analyses for certain agreements, collect little information about the use of private contractors under the agreements, and have not uniformly verified projected cost savings. GAO also found that minimum wage rates for three of five selected positions reviewed under such agreements were lower than minimum rates that may be required for comparable work under the McNamara-O’Hara Service Contract Act.

Growth in agreement use. The GAO report examined the military services’ use and oversight of IGSAs, which allow military installations to receive, provide, or share installation-support services with state, local and tribal governments. According to GAO, the number of active IGSAs increased from 45 in 2018 to 316 as of December 2025, with Army installations accounting for 192 of those agreements, or about 61 percent.

The report said IGSAs support services including utilities, grounds maintenance, waste management, transportation, environmental services, equipment maintenance and other installation-support functions. GAO also found increasing use of multi-installation and multi-service agreements, including nationwide agreements involving Sourcewell, a Minnesota governmental cooperative.

Cost-benefit analysis concerns. GAO found that military service guidance requires cost-benefit analyses for prospective IGSAs but does not specifically address how to evaluate multi-installation and multi-service agreements. In reviewing four multi-installation IGSAs, GAO found that initial savings estimates were often based on a single project or installation and did not account for the full range of services or locations that could be covered.

The report also found that five of six multi-service agreements reviewed did not include cost-benefit analyses before the agreements were executed. GAO said that without reliable estimates of costs and savings, officials may lack important information when determining whether an agreement serves the military’s best interests.

Among 402 task orders executed under the Army’s multi-installation agreement with Sourcewell, GAO found that 101 either did not provide a documented financial benefit or lacked a documented cost comparison. For 49 of those 101 task orders, the Army also did not document a nonfinancial benefit.

Verification of projected savings. GAO reported that the Navy, Marine Corps, and Air Force do not have procedures to verify whether installations’ projected IGSA cost savings align with actual results. While the Army tracks actual IGSA costs and savings centrally, officials from the other services told GAO that cost information is maintained at the installation level.

The report cited one example in which Navy officials estimated that an agreement with the University of Hawaii would cost approximately $10 million annually and generate about $1.1 million in annual savings, but university officials told GAO that no task orders had been completed as of February 2026. As a result, the estimated fiscal year 2025 costs and savings were not realized.

Contractor involvement under agreements. GAO found that the military services collect little or no information regarding labor used under IGSAs and generally do not document whether private contractors perform work under the agreements. Officials told GAO they are not required by statute to collect such information.

In a review of 21 single-installation IGSAs, GAO found private contractor involvement in nine agreements. Public partners reported that all work under eight agreements was performed by public-sector employees, all work under one agreement was performed by contractors, and eight agreements involved a combination of public employees and contractors.

GAO also reported that officials from Sourcewell stated that work performed under its agreements can involve Sourcewell employees, contractors and subcontractors working through competitively awarded supplier contracts.

Wage comparisons with Service Contract Act rates. Because IGSAs are not subject to the Service Contract Act, GAO examined how wages for selected positions compared with minimum rates that may be required under the statute if comparable services were obtained through federal contracts. Of the 21 single-installation agreements reviewed, GAO found that 15 provided for services that the Service Contract Act may cover when acquired through federal contracting.

GAO compared five selected public-sector positions with similar occupations listed in Service Contract Act wage determinations. The analysis found that minimum hourly wages under the IGSAs ranged from 19 percent below to 50 percent above comparable Service Contract Act rates. Three positions had lower minimum wages than comparable Service Contract Act rates, one was nearly equal, and one exceeded the comparable rate. The report emphasized that the analysis was illustrative, did not account for fringe benefits, and should not be treated as a definitive legal conclusion.

The positions identified by GAO included a paralegal position paid at a minimum rate of $23.92 per hour compared with a comparable Service Contract Act rate of $28.89, a driver position paid $15.36 per hour compared with $18.98, and an emergency medical technician position paid $16.37 compared with $18.84. A stormwater environmental specialist position paid $39.84 per hour, compared with a comparable Service Contract Act rate of $26.64.

Congressional response. In a statement issued after publication of the report, House Education and Workforce Committee Ranking Member Robert C. “Bobby” Scott said the findings showed that the Defense Department was using IGSAs to bypass the Service Contract Act and relying on them despite worker-protection concerns. Rep. Lucy McBath, who joined Scott in requesting the review, said the report found that three of the five jobs examined paid workers less than they would have been paid under the Service Contract Act and cited GAO’s findings regarding the inability to verify cost-savings estimates.

Recommendations. GAO made five recommendations, including directing the Army, Navy, and Air Force to develop guidance for estimating costs and savings in multi-installation and multi-service IGSAs and directing the Navy and Air Force to establish procedures for verifying the accuracy of cost and savings estimates. The Defense Department generally agreed with the recommendations and described planned corrective actions.

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