Upon further troubleshooting.  The error occurs in /usr/lib/apt-
setup/generators/60local.  The apt-key command has this error:

E: gnupg, gnupg2, and gnupg1 do not seem to be installed, but one of
them is required for this operation.

It appears that while gpgv is installed in the base image, gnupg (or
gpg) is not. In Xenial, gnupg is installed in the base image.

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https://bugs.launchpad.net/bugs/1761030

Title:
  bionic 20101020ubuntu535: netboot installer fails with local
  repository

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