This study examines the ways in which Army Morale, Welfare, and Recreation (MWR) programs are fiscally managed, and develop a decision making model that can assess the relative costs of various MWR provision options. The goal of this research is to maximize the benefits soldiers receive from the resources devoted to Army MWR. The Army's MWR system is intended to support combat readiness, recruitment, and retention. A variety of services are provided, ranging from libraries to child care. MWR activities are managed at the installation level, albeit subject to guidelines from major commands (MACOMs) and the Army. The authors focused their research on seven MWR activities (i.e., gyms, sports, recreation centers, arts and crafts, auto crafts, outdoor recreation, and youth activities) at eight military installations: Fort Lewis, Schofield Barracks, Fort Shafter, Fort Knox, Fort Irwin, Fort Bliss, White Sands Missile Range, and Rock Island Arsenal. The goal was to obtain heterogeneity on six dimensions: installation type, MACOM, metropolitan scale, cost of living, proximity to other military installations, and military-civilian distribution. The results show there is a chronic underestimation of the costs of providing MWR and other services by government employees. The authors are concerned, therefore, that Army spending on MWR is being misallocated. They hypothesize that a fuller examination of the costs of different provision options would result in a greater heterogeneity of approaches. For instance, it may be optimal to have government employees or contractors directly provide MWR services at isolated installations, while soldiers in large urban areas might simply be given extra cash and allowed to procure whatever MWR services they wish on the private economy. The authors believe the issue of how Army MWR resources are allocated should be completely revisited. This report is meant as a first step in this direction. (20 tables, 3 figures, 26 refs.).