Energy Management

Is the Department of Energy adequately monitoring and overseeing its contracting process by performing contract audits, and what is the impact or potential impact to the government when they are not performed? Even though DOE contracted out about $17.6 billion in fiscal year 1990 for goods and services, no assurance exists that oversight and control of contract expenditures, through contract auditing, will deter and detect potential fraud, waste, and abuse. Beginning in April 1990, DOE's Office of Inspector General (OIG) reported that DOE managers lack adequate OIG assurance that the management and operating contractors are operating economically, efficiently, and in the government's best interest. The assurance is lacking because the OIG's cyclical audit coverage of DOE's largest management and operating contractors has been incomplete due to staffing and resource limitations. In addition, because nonmanagement and operating contracts can go unaudited for many years, DOE does not know whether it paid a fair and reasonable price for such contracts or whether the costs claimed were accurate and allowable. GAO's review revealed many instances involving millions of dollars in which the government was potentially overbilled, or the amounts paid or claimed were questionable. Unallowable costs claimed included such items as alcoholic beverages, unauthorized spouse travel, and registration for golf tournaments.

GAO found that: (1) due to staffing and resource limitations, DOE has not provided the necessary cyclical audit coverage it established to determine whether costs from M&O contractors are accurate, allowable, and reasonable; (2) many of the internal auditors working for M&O contractors are not performing the required allowable-cost audits; (3) since many non-M&O contracts go unaudited for years, DOE does not know if it pays fair and reasonable prices for such contracts and whether the costs claimed are accurate and allowable; and (4) lack of guidance, procedures, and aid to offices in monitoring contracts has hindered appropriate audit coverage.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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