Government-owned, contractor-operated (GOCO) is a procurement and operational model in which a government agency retains ownership of a physical plant and its equipment while a private contractor manages daily operations under a performance-based contract. The contractor supplies the workforce and management; the government supplies the capital assets and assumes long-term infrastructure liability. The model is most prevalent in two areas of the United States federal government: the United States Department of Energy (DOE), whose network of national laboratories is almost entirely GOCO, and the United States Department of Defense (DoD), which relies on GOCO contractors to operate most active Army ammunition plants. Related models include government-owned, government-operated (GOGO), in which federal employees run the facility, and contractor-owned, contractor-operated (COCO), in which the private sector owns and runs the plant with no government ownership stake.
The GOCO model originated during World War II as a mechanism for rapidly expanding munitions production capacity beyond what existing government arsenals could supply. Congress authorized large-scale private construction and operation of ordnance facilities beginning in 1940, and by the war's peak the United States owned 73 GOCO ammunition production plants. The Manhattan Project extended the model to nuclear production, and the Atomic Energy Act of 1946 institutionalized it for the postwar nuclear weapons complex. That legacy structure survives in the DOE laboratory system today.
History
World War II origins
Assembly line workers at the Twin Cities Ordnance Plant, New Brighton, Minnesota, 1946. The plant was a GOCO facility producing small-arms ammunition during World War II.
On July 1, 1940, Congress authorized emergency munitions funding that set the GOCO model in motion. Existing government arsenals—the traditional GOGO facilities such as Rock Island Arsenal and Watervliet Arsenal—were capable of meeting only approximately five percent of Allied munitions requirements projected for a global war.[1] Rather than attempt to expand organic government capacity on the required timeline, the War Department adopted a hybrid approach: the federal government financed construction and retained title to the facilities and machinery, while experienced private manufacturers supplied the management and operating workforce.
Private firms could be recruited immediately without the hiring constraints that applied to civil service positions. Contract terms could be renegotiated or terminated as operational requirements changed. Firms with relevant commercial experience—in explosives, propellants, small-arms ammunition, and metals fabrication—could transfer that knowledge directly to government-owned plants with minimal conversion lag.
At peak wartime production, the United States government owned 73 GOCO ammunition production facilities.[2] Representative examples include:
Lake City Army Ammunition Plant (Independence, Missouri) — opened in 1941; still an active GOCO facility producing small-arms ammunition.
Iowa Army Ammunition Plant (Middletown, Iowa) — operated by Iowa Ordnance Plant during the war; reactivated for the Korean War and Vietnam War.
The legal and contractual framework developed during this period—government ownership of real property and equipment, contractor responsibility for labor and operations, cost-plus-fixed-fee or cost-plus-incentive-fee pricing, and government audit rights—became the template for subsequent GOCO arrangements across the federal government.[4]
Manhattan Project and national laboratories
Calutron operators at the Y-12 plant in Oak Ridge, Tennessee, circa 1944. Tennessee Eastman operated the government-owned plant under contract to the Manhattan Project.
The Manhattan Project extended the GOCO model to nuclear weapons production.
The Atomic Energy Act of 1946 transferred the Manhattan Project's assets and mission to the newly created Atomic Energy Commission (AEC) and formally institutionalized the GOCO model for the nuclear weapons complex. The AEC retained title to all fissile material, facilities, and related equipment as a matter of national security policy while relying on universities and private corporations to supply scientific and technical expertise. When Congress replaced the AEC with the Energy Research and Development Administration in 1974 and then created the Department of Energy in 1977, the GOCO model carried forward intact.
Post-war and Cold War period
The end of World War II triggered rapid demobilization of the wartime GOCO ammunition base. Most plants were placed in standby status or declared surplus.[1] The Korean War and, later, the Vietnam War prompted reactivation of facilities that had been maintained in caretaker status.
By 1994, more than 90 percent of the World War II GOCO facilities had been closed or transferred; approximately 78 facilities remained in the defense industrial base in some form.[1] The DOE national laboratory system expanded during the Cold War into basic science, energy technology, and environmental remediation, becoming the largest sustained peacetime GOCO enterprise in the United States government.
Comparison of ownership and operating models
The federal government uses three principal models for government-affiliated industrial facilities:
Most commercial defense prime contractors and suppliers
The choice among models involves trade-offs in strategic control, cost, flexibility, and access to private-sector expertise. GOGO ensures maximum government control and classified workforce management but limits access to private-sector specialization and carries full civil-service overhead. COCO transfers risk and capital investment to the private sector but gives the government no ownership stake in the productive capacity. GOCO is typically chosen when the facility involves strategic materials, classified information, or specialized processes that the government must control in perpetuity, yet where the contracting agency has determined that private management is more efficient than direct government operation.[2]
Economic rationale
GOCO arrangements are often analyzed as a form of hybrid governance that separates ownership of capital-intensive, mission-specific assets from operational control. When facilities require large sunk investments, involve high asset specificity, or must be retained for surge capacity, government ownership preserves long-term control and reduces the risk that essential capability will exit the market. Contracting out operations can lower administrative costs and give agencies access to specialized commercial management and engineering talent that the civil service may lack.[2][6]
Risk allocation also differs by model. Under GOCO, the government typically retains capital and long-term infrastructure risk (and, for some programs, portions of catastrophic risk), while the contractor bears operational execution risk subject to performance incentives, fee structures, and audit rights. Agencies may prefer GOCO where mission requirements are uncertain or evolve over time—conditions that can favor cost-type or incentive contracts—while still preserving governmental control of strategic assets.
Legal and regulatory framework
Federal Acquisition Regulation
Federal Acquisition Regulation (FAR) Part 45 governs government-furnished property, including all property owned by the government and in the possession or control of a contractor.[7] Contractors operating GOCO facilities must maintain accountability records for government property, report losses and damage, and return or dispose of property according to FAR procedures.
FAR Subpart 17.6 governs management and operating contracts (M&O contracts), the contract vehicle used by DOE for most of its national laboratories. M&O contracts are defined as agreements under which the government contracts for the operation, maintenance, or support of a government-owned or -controlled research, development, special production, or testing establishment. They are awarded on a cost-reimbursement basis and typically run for five-year base periods with options.
Arsenal Act
The Arsenal Act, codified at 10 U.S.C. § 4532, requires the United States Army to manufacture in its own arsenals and factories, so far as practicable, articles needed for the Army, provided the cost is not greater than the cost of procuring them elsewhere. Under a 1978 Government Accountability Office ruling (B-189604), the Army must conduct a formal cost comparison before awarding an M&O contract to a private operator for work that could be performed at a government-operated facility.[8] According to the Congressional Research Service, the Arsenal Act analysis has rarely reversed a GOCO determination; its principal effect has been procedural, requiring documented justification.
Price-Anderson Nuclear Industries Indemnity Act
The Price-Anderson Nuclear Industries Indemnity Act provides a tiered indemnification structure for nuclear incidents occurring at DOE GOCO facilities. Contractors operating DOE nuclear plants are indemnified by the government for nuclear incidents that exceed the contractor's required private insurance coverage.[9] The indemnification does not extend to willful misconduct and does not shield contractors from regulatory penalties or non-nuclear environmental claims.
Congressional Research Service analysis
The Congressional Research Service has documented the Arsenal Act's legislative history and noted ongoing tension between the Act's preference for organic government production and the DoD's operational reliance on GOCO contractors for virtually all active ammunition production capacity.[10] A separate CRS product addresses the conventional ammunition production industrial base and the concentration of production in a small number of GOCO facilities.[11]
Current GOCO facilities
Department of Energy national laboratories
Sixteen of the seventeen DOE national laboratories operate under GOCO arrangements. The sole exception is the National Energy Technology Laboratory (NETL), which is government-operated.[12] The laboratories are managed under M&O contracts, typically held by limited liability companies formed by university and industrial partners. Selected laboratories and current M&O contractors include:[13]
M&O contracts for DOE laboratories are awarded through competitive solicitations and include performance evaluation metrics tied to mission deliverables, safety, environmental compliance, and management effectiveness. Contract terms typically run five years with options for additional five-year periods.
Department of Defense ammunition plants
The Army relies on GOCO contractors for the production of most conventional ammunition. Active Army GOCO ammunition plants include:[11][2]
The Army owns the real property, process equipment, and explosives storage magazines at each facility. Contractors supply the operating workforce, maintenance, quality assurance, and production management under cost-plus or fixed-price incentive contracts. The Army's Joint Munitions Command provides oversight and contract administration.
Environmental liability
The N Reactor at the Hanford Site along the Columbia River. Hanford was a GOCO facility from 1943 and is now the most contaminated nuclear site in the United States.
GOCO contractors occupy an unusual position under federal environmental law. The United States Environmental Protection Agency (EPA) treats GOCO contractors as private parties subject to enforcement under Resource Conservation and Recovery Act (RCRA) Section 3008(a) and Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) Section 107, notwithstanding the government's ownership of the underlying facility.[14] Contract indemnification provisions—under which the government agrees to hold the contractor harmless for certain environmental costs—do not constitute a defense to EPA enforcement actions and do not transfer CERCLA liability away from the responsible party.
Joliet Army Ammunition Plant (Joliet, Illinois) — soil and groundwater contamination from TNT and DNT manufacturing
Hanford Site (Richland, Washington) — the most contaminated nuclear site in the United States, a legacy of plutonium production under GOCO operation by DuPont and successors
Cleanup costs at Hanford are estimated at $364 billion to $589 billion[16], with the DOE serving as the lead agency and GOCO contractors providing remediation services under separate contracts.
Oversight and accountability
The Government Accountability Office (GAO) has designated DOE contract management—primarily the M&O contract portfolio—a high-risk area since 1990.[17] Recurring concerns identified in GAO reports include:
A small government oversight staff relative to the total value and scope of M&O contracts, creating monitoring gaps.
Lack of specificity in performance work statements, making it difficult to hold contractors accountable for defined outputs.
Difficulty measuring scientific and technical output against cost, since many laboratory missions involve basic research with inherently uncertain timelines and deliverables.
Contractor fee structures that may not adequately incentivize cost control.
Earlier GAO work identified similar structural problems in the Army ammunition GOCO base, including inadequate cost comparison methodologies and inconsistent application of the Arsenal Act.[18]
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