Industry and government executives have debated for some time the topic of outsourcing and privatization in the defense industry. Many believe that it is imperative that the obstacles to the Department of Defense's aggressive use of outsourcing and privatization be identified and that solutions be proposed to remove such obstacles. This article was written with the intent to assist organizations in identifying, minimizing, and allocating the potentially massive environmental liability that confronts contractors in any on-site outsourcing and privatization services (i.e., depot support, coproduction and GOCOs, logistics, maintenance, remedial action contracting, and even generic “ash & trash” services). In addition, this article examines potential sources for recovery of environmental costs that contractors incur in consolidating their own facilities during discretionary downsizing or post-merger restructuring.