Summary: In the 15 instances in which domestic military bases have sought banking services since 1996, the military services openly solicited proposals from financial institutions and chose from among them to authorize a bank or credit union to operate on the base, as required by Defense Department (DOD) regulations. However, the applicable regulations and instructions lack specific guidance for this selection process, and the solicitations did not specify selection criteria or the weights associated with the various factors considered. The lack of clear selection criteria makes it difficult to know the basis for selection and ensure fairness in the selection process. Financial institutions on military bases face significant competition both on and off the base. On many bases, both a bank and a credit union compete for business. Fees charged by base financial institutions appeared to be in line with the range of charges found at banks nationally. DOD has several options for increasing the revenue it obtains from these financial institutions. For example, DOD could periodically reassess the fair-market value associated with long-term leases or negotiate some type of fee-sharing arrangement for ATM services. However, it is unclear how successful these measures would be, and customers and banking services could be adversely affected.
