JUNE 15, 2000

Thank you for the opportunity to discuss with you the recently issued report by the General Accounting Office (GAO) on the management of the National Park Service concessions program. This report, entitled "Park Service: Need to Address Management Problems That Have Plagued The Concessions Program" (GAO/RCED-00-70), highlights issues and factors that impact the National Park Service (NPS) concession program.

As Don Barry, Assistant Secretary for Fish and Wildlife and Parks, indicated in a letter to GAO dated March 16, 2000, overall, we agree with many of the report's findings. This report offers us an opportunity to strengthen our program and begin true concessions reform, while supplementing our ongoing efforts to implement the Concessions Management Improvement Act of 1998. One such effort includes a proposal in the President's 2001 Budget to establish a new Senior Executive Service position in the National Park Service for an Associate Director for Partnerships and Business Practices, which will enforce our commitment to improving the concessions program. Another effort involves the increased consideration of performance-based contracting measures. Though the report focuses on the condition and management of lodging facilities operated by concessioners, it appears that many of the factors that were examined could apply equally to other aspects of the NPS concession management program. The implementation of these recommendations will benefit park visitors and the program in general.

The report covers issues that are very similar to those that are being dealt with by the National Park Service Management Advisory Board. This body, created by Congress in the Concessions Management Improvement Act of 1998, is tasked with advising the Secretary on ways to improve the concessions program. The Board consists of members from the hospitality, tourism, accounting, outfitting, and crafts industries, as well as a member from a nonprofit conservation group, and a member from a state government agency. The Board is in the process of preparing a report to Congress pursuant to this act, and it will deal with many of the issues covered by this GAO report, such as outsourcing, and the professionalization of the NPS concessions workforce.


The GAO report recommends that NPS recruit workers with business and hospitality backgrounds, and train its employees in these disciplines. It notes that our program lacks employees with professional education and experience in business, finance, and accounting. We agree that NPS must enhance its concessions management expertise by improving training for current employees, recruiting new employees with a background in the hospitality industry, and contracting out when it is more efficient to do so. The NPS previously identified professionalization of the work force and succession planning as a priority and identified them as elements in the Concession Careers Future Report approved by the Associate Director, Park Operations and Education in 1997. The report outlines a series of human resource management processes that will allow us to professionally manage the concessions program into the next century. The Concessions Management Improvement Act of 1998 could potentially provide us with some additional fiscal resources, especially to address immediate needs for outsourced appraisals and financial analysis of contracts that have built up over the past few years.

We understand the need for more concessions staff with a background in the hospitality industry. We believe, however, that the GAO report may understate the value of concession managers and staff having broad experience in other park programs. It is common practice in business to rotate key staff through different programs within a company to gain a breadth of experience in company operations. We believe the most effective team for NPS concession management consists of a good mix of those with experience in other park programs, teamed up with specialists from the business community and hospitality industry. In fact, employees who have a stronger NPS background and insignificant hospitality experience, administer the outstanding program at Zion and Bryce Canyon National Parks that was highlighted in this report.

In the same vein, we believe that GAO may have over-emphasized the importance of specialists from the hotel industry. The majority of businesses in national parks are not part of the hospitality industry, which is generally thought to include lodging, food service, marinas, and merchandising. More than half of all park concession contracts involve traditional park activities, such as livery operations, river running, hiking, and climbing, all of which have very little or no relation to the standard hospitality industry activities and businesses. Less than 25 percent would be recognized as traditional industry operations. Alaska, for example, has 400 companies providing commercial visitor services in 15 national parks. Only three of these are primarily in the lodging business. The majority is in guide and outfitting, with the largest revenues and franchise fees generated by cruise and tour operators. We do recognize, however, that the majority of concessions revenue is earned from businesses in the hospitality industry, and our emphasis should be on improving the oversight and management of these contracts.

Another area of emphasis is the increased use of performance-based contracting. People with financial skills, coupled with current facility assessments and adequate planning documents are necessary for development of contract requirements, while people with contracting backgrounds are needed for the actual mechanics of contracting and contract administration (amendments, extensions, sales/transfers). More contracting challenges could also arise as competition for new contracts increases as a result of Public Law 105-391 and sales and transfers become more complex. Concessioner support of the NPS visitor service and education mission depends on the traditional agency abilities and knowledge that park employees bring to the table when working with concessioners. Yet, we also need contract specialists that can introduce some of the advances that other agencies and businesses have made in using performance-based contracts to encourage more responsive contractors and concessioners.

The National Park Service Organic Act, as well as the new concessions law, provides for visitor use and enjoyment of an area when necessary and appropriate and when consistent with the protection of park resource values. The use component is not an independent or unconnected arm without any ties to our agency preservation responsibilities. There must be a coordinated effort that blends together the use and preservation components seamlessly when providing a park visitation experience.

The National Park Service will aggressively recruit from the private business sector when specific positions require that type of knowledge and expertise. The NPS will also implement the previously discussed Concession Careers Future Report to ensure NPS employees with concession responsibilities have mastered program competencies. Furthermore, the NPS will contract out for expertise when it is appropriate to do so. In the interim, we are developing a concession contracting certification program modeled after the Department of the Interior’s contracting officer’s warrant certification program, and are having discussions with Cornell University on the development of an advanced finance course. We have also discussed with the Department of Defense Training Academy the cross training of NPS concession personnel and the development of specialized training specifically to meet NPS contracting needs. We are also working with Northern Arizona University to develop a hospitality curriculum for concessions employees, and we are actively recruiting recent graduates from MBA programs, having recently hired two individuals from nationally recognized business schools.

We have recommended that $90,000 be dedicated for concession training in the FY 2001 servicewide program. Additional training funds may be needed, depending on the mix of training, new hires, and contracting out. We recognize that governmental entities face many of the same challenges of the private sector—containing costs, improving performance and serving customers. To help us meet these challenges, we have contracted with Pricewaterhouse Coopers to provide us with an analysis of our organizational structure and process, to determine how we can improve our efficiency and effectiveness.


The GAO Report also stated that NPS has outdated contracting practices. We agree with GAO that concession contracting can benefit from the best practices of the Federal Acquisition Regulations. There is, however, a significant difference between concession contracting and the procurement function. Concessions contracting must have as its primary goal the protection of park resources. FAR contracting, on the other hand, is often (but not always) focused on the lowest cost bidder. Both, however, are intended to obtain the most appropriate return to the government, so there are issues that apply to both. To this end, we are presently developing a contracting certification program for concession personnel based on the FAR warrant model to ensure program competencies in contracting are mastered. In the interim, only senior NPS personnel with previous contracting training and extensive experience, and with solicitor consultation, will develop major prospectuses.

We concur with GAO that contract extensions hamper the effectiveness of the program and affect the quality of visitor services and facilities. Public Law 105-391 and new concession regulations will allow us to move forward and address this important issue. Approximately 280 contracts are presently operating as extensions. Approximately 112 expired contracts are identified for solicitation this year, with highest priority being given to 7 contracts with over $5 million in revenues.

The National Park Service will review the concession program and update its practices where appropriate. We will also continue to investigate mechanisms, such as performance-based contracting, for providing financial incentives to concessioners for exceptional performance and disincentives for mediocre performance. The development of certifications and specialized training for our personnel, as noted above, will help us update our contracting practices. We have also, in select locations, incorporated the concession program with other business and procurement functions in parks and regional offices, such as Golden Gate National Recreation Area, Yosemite National Park, and our Intermountain regional office in Denver.



The GAO report also recommends that NPS outsource certain aspects of the concessions program. We agree with GAO and are, in fact, presently outsourcing significant components of the concession contracting process. Financial analysis and appraisals are contracted out to the private sector on a regular basis. There are, however, other significant components of the contracting process, such as planning, that occur at the park level and cannot be contracted out. Park planning documents based on General Management Plans, Development Concept Plans, Commercial Services Plans, and cultural and natural resource compliance documents relate to the fundamental mission of the Park Service to preserve park resources, and thus should not be contracted out.

The National Park Service will continue to contract out portions of the concessions contracting program. We will also explore the possibility of contracting out other functions, such as intermittent inspections of larger, more complex concession facilities with centralized teams to augment existing park concession management programs.



We concur with GAO that the NPS must improve accountability of park managers. A number of factors contribute to this weakness. One factor is the use of the collateral duty concession manager in parks with major, complex concession programs. Collateral duty personnel administer approximately 20 percent of the 90 contracts that gross over one million dollars. The use of collateral duty personnel contributes to a lack of understanding of the details of the program, an inconsistent approach on how the program is managed and a lack of focus and consideration for the complexity and importance of the concession management program. Technical assistance from a centralized source to some of these parks could remove the need for most collateral duty operations. Coupled with a policy that would place full-time concession specialists in parks that presently have collateral duty personnel administering the concessions program, this would ensure a more consistent approach to concession management servicewide. We have also tasked Pricewaterhouse Coopers with developing recommendations for possible restructuring of the program and realigning resources.

We agree with GAO that successful completion of concession management responsibilities and oversight should be considered during annual performance reviews. This is a review that must be applied servicewide. To this end, we have developed a performance standard for regional directors and superintendents that will address concession management oversight and responsibilities during annual performance reviews.

NPS will ensure successful completion of concession management responsibilities during annual performance reviews conducted by the Director for each regional director, and by the appropriate regional director for each park superintendent with concession responsibilities.

This concludes my testimony. I would be happy to answer any of your questions.