DoD’s Growing Use of IGSAs Could Shift Installation Work Outside the Service Contract Act
The Department of Defense is increasingly obtaining installation services through agreements with state, local, and tribal governments rather than traditional federal procurement contracts. A new GAO report suggests that the trend could have important consequences for both federal service contractors and the employees performing the work.
Intergovernmental Support Agreements, or IGSAs, allow military installations to receive, provide, or share installation-support services with eligible public entities. Congress authorized the mechanism in 2013, and its use has expanded dramatically. According to GAO, the military services increased their use of IGSAs from just 45 agreements in 2018 to 316 in 2025. DoD and military-service officials expect further growth.
The agreements can cover services traditionally associated with installation operations, including utilities, road maintenance, waste management, transportation, and other support functions. Federal law permits these agreements when they enhance mission effectiveness or create efficiencies or economies of scale.
For federal contractors, one aspect of GAO’s review deserves particular attention.
Public partners in nine of the 21 single-installation IGSAs examined by GAO used private contractors to perform some or all of the required work. Yet the McNamara-O’Hara Service Contract Act does not apply to the IGSA itself. GAO therefore compared wages for a small, non-generalizable sample of positions under IGSAs with comparable SCA wage rates.
The results varied significantly. A driver received $15.36 per hour compared with an $18.98 SCA rate for a comparable shuttle-bus driver. A paralegal received $23.92 compared with an SCA rate of $28.89. Conversely, a stormwater environmental specialist received substantially more than the comparable SCA rate.
The point is not that IGSAs uniformly produce lower wages. GAO’s sample was limited, and state, local, collective-bargaining, or other labor requirements may apply. Rather, the report reveals that the labor economics of an IGSA can differ from those of a conventional federal service contract.
That matters competitively.
A federal contractor accustomed to pricing work under SCA wage determinations and associated fringe-benefit requirements may increasingly compete indirectly against delivery models in which a public entity performs the work itself or procures private support under a different labor framework.
GAO also questioned the reliability of some military-service estimates of IGSA savings. The services did not consistently apply cost-estimating best practices, some arrangements lacked adequate cost-benefit analyses, and certain services lacked procedures for verifying whether projected savings actually materialized.
That creates an important policy question: when an IGSA appears less expensive than a traditional federal service contract, how much of the difference reflects genuine operational efficiency—and how much reflects different assumptions, labor requirements, or cost-accounting methodologies?
For contractors providing installation services, IGSAs should therefore become part of market intelligence. The relevant competitive landscape may no longer consist solely of other federal prime contractors.
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Disclaimer:
This article is provided for general informational and educational purposes only and does not constitute legal, labor, wage-and-hour, or procurement advice. SCA applicability and other wage obligations depend on the legal instrument, contracting structure, workforce, location, applicable state and local requirements, collective bargaining agreements, and specific facts.