Analysis of Contract Prices: Comparing Department of Defense With Local Governments

Abstract

In this paper, we first compare the costs of waste disposal services across Air Force (AF) bases and then between AF bases and their neighboring cities. Using linear regression analysis, we find the average cost per ton of waste disposal is negatively correlated with the number of containers across bases. But, the average cost is not significantly correlated with local economic factors such as average wages, population density, and the consumer price index of the county where the base is located. We also find no significant difference in costs per ton for waste disposal between AF bases and their neighboring cities. However, when we split the sample, we find smaller bases have significantly higher costs per ton of waste disposal. Costs per ton are almost twice as high for smaller bases with fewer than 75 containers compared to larger bases. We recommend smaller AF bases review their waste disposal contracts, compare and contrast their costs relative to their neighboring cities, and then consider coordinating with their neighboring city to reduce costs.