Department of Energy

Contract Reform Is Progressing, but Full Implementation Will Take Years Gao ID: RCED-97-18 December 10, 1996

As the world's largest civilian contracting agency, the Department of Energy (DOE) has earmarked 91 percent ($17.5 billion) of its fiscal year 1995 obligations for contracts. For years, GAO has reported on weaknesses in DOE's contracting practices. In February 1994, DOE's Contract Reform Team completed a review of the Department's contracting practices. The team made several recommendations aimed at making DOE's contracting work better and cost less. This report (1) determines the status of the team's recommendations, (2) evaluates the effect of the initiatives on competition for management and operating contracts at DOE facilities, (3) evaluates DOE's attempts to insert performance goals in its management and operating contracts, and (4) evaluates DOE's early use of incentive contracts to control the costs of its management and operating contracts.

GAO found that: (1) DOE has completed action on 47 of the 48 contract reform recommendations, but 9 of the completed actions did not meet the requirements of the Contract Reform Team; (2) DOE also missed its deadlines for completing the required new policies, guidance, and plans that serve as the framework for contract reform by an average of 11 months; (3) the missed deadlines have added to the time needed to implement contract reform; (4) while DOE has changed its policy and adopted competitive contract awards as the new standard for management and operating (M&O) contracts, in practice, DOE continues to make noncompetitive awards for these contracts; (5) DOE's contracting offices are including performance goals in their M&O contracts, but the contract goals are not always clearly linked to those of the Department; (6) DOE's contracting offices have moved quickly to implement another important reform by using incentive contracts, but the negotiation of these incentives did not always prove effective; and (7) since DOE is authorized to use its own procurement regulation for M&O contracts, the contracting officers have been left to use their own judgment and have achieved different results with the use of these incentives.

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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