Contract Reform
DOE's Policies and Practices in Competing Research Laboratory Contracts Gao ID: GAO-03-932T July 10, 2003DOE is the largest civilian-contracting agency in the federal government, and relies primarily on contractors to operate its sites and carry out its diverse missions. For fiscal year 2003, DOE will spend about 90 percent of its total annual budget, or $19.8 billion, on contracts, including $9.4 billion to operate 16 of its research laboratories (called federally funded research and development centers). Since 1990, GAO has identified DOE's contract management as high-risk for fraud, waste, abuse, and mismanagement. In 1994, DOE began reforming its contracting practices to, among other things, improve contractor performance and accountability. As part of that effort, DOE has at times used competition in awarding contracts to manage and operate its research laboratories. In September 2002, GAO reported on the status of contract reform efforts in DOE. (Contract Reform: DOE Has Made Progress, but Actions Needed to Ensure Initiatives Have Improved Results) (Sep. 2002, GAO-02-798) This testimony discusses some of the findings in that report. GAO was asked to testify on DOE's rationale for deciding whether to compete a laboratory research contract, the extent to which DOE has competed these contracts, and the role of competition and other mechanisms in improving contractor performance.
DOE has competed its research laboratory contracts in three main situations--when the contractor operating the laboratory is a for-profit entity, when mission changes warrant a review of the capabilities of other potential contractors, or when the incumbent contractor's performance is unsatisfactory. DOE guidance requires that to extend a contract noncompetitively, the department must present a convincing case for doing so to the Secretary of Energy. Among other things, DOE must certify that competing the contract is not in the best interests of the government and must describe the incumbent contractor's past successful performance. Of the 16 research laboratory contracts currently in place, DOE has competed 6. The remaining 10 contracts have not been competed since the contractors began operating the sites--in some cases, since the 1940s. DOE recently decided to compete 2 of the 10 contracts that had never before been competed--contracts to operate the Los Alamos National Laboratory in New Mexico and the Argonne West Laboratory, located at the Idaho National Laboratory. DOE decided to compete the Los Alamos contract because of concerns about the contractor's performance, and to compete the Argonne West contract as part of an overall effort to separate the Idaho National Laboratory's nuclear energy research mission from the environmental cleanup mission at the Idaho site. Competing contracts is one of several mechanisms DOE can use to address contractor performance problems or strengthen contract management. However, just competing a contract does not ensure that contractor performance will improve. Other aspects of DOE's contract reform initiative intended to improve contractor performance included greater use of fixed-price contracts instead of cost-reimbursement contracts and establishing or strengthening performance-based incentives in existing contracts. In addition, GAO has reported that DOE must (1) effectively oversee its contractors' activities in carrying out projects and (2) use appropriate outcome measures to assess overall results and apply lessons learned to continually improve its contracting practices. GAO's recent evaluation of DOE's contract reform efforts indicates that DOE is still working to put these management practices and outcome measures in place.
GAO-03-932T, Contract Reform: DOE's Policies and Practices in Competing Research Laboratory Contracts
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Testimony:
Before the Subcommittee on Energy, Committee on Science, House of
Representatives:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 10:00 a.m. EDT:
Thursday, July 10, 2003:
Contract Reform:
DOE's Policies and Practices in Competing Research Laboratory
Contracts:
Statement of Robin M. Nazzaro, Director, Natural Resources and
Environment:
DOE Laboratory Contracts:
GAO-03-932T:
GAO Highlights:
Highlights of GAO-03-932T, testimony before the Subcommittee on
Energy, Committee on Science, House of Representatives
Why GAO Did This Study:
DOE is the largest civilian-contracting agency in the federal
government, and relies primarily on contractors to operate its sites
and carry out its diverse missions. For fiscal year 2003, DOE will
spend about 90 percent of its total annual budget, or $19.8 billion,
on contracts, including $9.4 billion to operate 16 of its research
laboratories (called federally funded research and development
centers). Since 1990, GAO has identified DOE‘s contract management as
high-risk for fraud, waste, abuse, and mismanagement. In 1994, DOE
began reforming its contracting practices to, among other things,
improve contractor performance and accountability. As part of that
effort, DOE has at times used competition in awarding contracts to
manage and operate its research laboratories. In September 2002, GAO
reported on the status of contract reform efforts in DOE. (Contract
Reform: DOE Has Made Progress, but Actions Needed to Ensure
Initiatives Have Improved Results) [Sep. 2002, GAO-02-798]
This testimony discusses some of the findings in that report. GAO was
asked to testify on DOE‘s rationale for deciding whether to compete a
laboratory research contract, the extent to which DOE has competed
these contracts, and the role of competition and other mechanisms in
improving contractor performance.
What GAO Found:
DOE has competed its research laboratory contracts in three main
situations”when the contractor operating the laboratory is a for-
profit entity, when mission changes warrant a review of the
capabilities of other potential contractors, or when the incumbent
contractor‘s performance is unsatisfactory. DOE guidance requires that
to extend a contract noncompetitively, the department must present a
convincing case for doing so to the Secretary of Energy. Among other
things, DOE must certify that competing the contract is not in the
best interests of the government and must describe the incumbent
contractor‘s past successful performance.
Of the 16 research laboratory contracts currently in place, DOE has
competed 6. The remaining 10 contracts have not been competed since
the contractors began operating the sites--in some cases, since the
1940s. DOE recently decided to compete 2 of the 10 contracts that had
never before been competed”contracts to operate the Los Alamos
National Laboratory in New Mexico and the Argonne West Laboratory,
located at the Idaho National Laboratory. DOE decided to compete the
Los Alamos contract because of concerns about the contractor‘s
performance, and to compete the Argonne West contract as part of an
overall effort to separate the Idaho National Laboratory‘s nuclear
energy research mission from the environmental cleanup mission at the
Idaho site.
Competing contracts is one of several mechanisms DOE can use to
address contractor performance problems or strengthen contract
management. However, just competing a contract does not ensure that
contractor performance will improve. Other aspects of DOE‘s contract
reform initiative intended to improve contractor performance included
greater use of fixed-price contracts instead of cost-reimbursement
contracts and establishing or strengthening performance-based
incentives in existing contracts. In addition, GAO has reported that
DOE must (1) effectively oversee its contractors‘ activities in
carrying out projects and (2) use appropriate outcome measures to
assess overall results and apply lessons learned to continually
improve its contracting practices. GAO‘s recent evaluation of DOE‘s
contract reform efforts indicates that DOE is still working to put
these management practices and outcome measures in place.
www.gao.gov/cgi-bin/getrpt?GAO-03-932T.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Robin M. Nazzaro
(202) 512-3841 or nazzaror@gao.gov.
[End of section]
Madam Chairman and Members of the Subcommittee:
We are pleased to be here today to discuss the Department of Energy's
(DOE) use of competition and other mechanisms to help ensure effective
contractor performance in managing and operating its research
laboratories. DOE is the largest civilian-contracting agency in the
federal government, relying primarily on contractors to operate its
sites and carry out its diverse missions. These missions include not
only conducting research but also maintaining the nuclear weapons
stockpile, and cleaning up radioactive and hazardous waste. For fiscal
year 2003, DOE will spend about 90 percent of its total annual budget,
or $19.8 billion, on contracts, including $9.4 billion to operate 16 of
its research laboratories.
For over a decade, we, DOE's Office of Inspector General, and others
have criticized DOE's contracting practices, including its failure to
hold its contractors accountable for results. DOE's longstanding
approach had been to develop a broadly defined statement of work,
provide considerable direction to the contractor, and reimburse
virtually all costs. This approach placed limited emphasis on cost
control or accountability for results. Furthermore, poor contractor
performance led to schedule delays and cost increases on many of the
department's major projects. Since 1990, such problems have led us to
designate DOE contract management--defined broadly to include both
contract administration and management of projects--as a high-risk area
for fraud, waste, abuse, and mismanagement.
In 1994, DOE began its contract reform initiative to improve
contractors' performance. Through this initiative DOE intended, among
other things, to strengthen contracting practices, hold contractors
more accountable for their performance, and demonstrate progress in
achieving the agency's missions. DOE implemented numerous changes, such
as performance based-contracts with results-oriented measures and a
greater use of competition in awarding contracts, including contracts
to manage and operate its research laboratories known as Federally
Funded Research and Development Centers (FFRDC). According to the
Federal Acquisition Regulation, FFRDCs are entities that engage in
activities sponsored by a government agency or agencies to conduct or
manage basic or applied research and development. Contracts to operate
such facilities differ from other contracts because the government
contemplates a long-term relationship with the FFRDC contractor and the
contractor has access to government data, employees, and facilities
beyond that common in a normal contractual relationship.
My testimony today will discuss (1) DOE's rationale for deciding
whether to compete a FFRDC contract, (2) the extent to which DOE has
competed these contracts, and (3) the role of competition and other
mechanisms in improving contractor performance. Although we have not
conducted a review solely related to FFRDC contracts, our past work on
DOE's contract reform initiative, especially our September 2002
report,[Footnote 1] focused in part on DOE's use of competition as a
tool to improve contractor performance, including the contractors that
manage and operate DOE's laboratories. My testimony today is based on
the findings in that report as well as related information we have
developed as part of our ongoing oversight of DOE's contracting
activities.
In summary we found the following:
* DOE has competed its FFRDC contracts in three main situations: when
the contractor operating the laboratory is a for-profit entity, when
mission changes warrant a review of the capabilities of other potential
contractors, or when the incumbent contractor's performance is
unsatisfactory. DOE guidance on contracting reflects a strong emphasis
on competition that exists, in part, as a result of its contract reform
initiative. Statutes and regulations give DOE considerable flexibility
in deciding whether to compete or noncompetitively extend a FFRDC
contract. However, for noncompetitive extensions, DOE guidance requires
the department to present a convincing case to the Secretary. Among
other things, DOE must certify that competing the contract is not in
the best interests of the government and must describe the incumbent
contractor's past successful performance.
* Of the 16 FFRDC contracts in place, DOE has competed 6. It has not
competed the remaining 10 contracts since the contractors began
operating the sites--in some cases, since the 1940s. DOE recently
decided to compete 2 of the 10 contracts that had never before been
competed--contracts to operate the Los Alamos National Laboratory in
New Mexico and the Argonne West Laboratory, located at the Idaho
National Laboratory. DOE decided to compete the (1) Los Alamos contract
because of concerns about the contractor's performance and (2) Argonne
West contract as part of an overall effort to separate the Idaho
National Laboratory's ongoing research mission from the environmental
cleanup mission at the Idaho site.
* Competing contracts is one of several mechanisms DOE can use to
address contractor performance problems or strengthen contract
management. However, just competing a contract does not ensure that
contractor performance will improve. Other aspects of DOE's contract
reform initiative intended to improve contractor performance included
greater use of fixed-price contracts instead of cost-reimbursement
contracts and establishing or strengthening performance-based
incentives in existing contracts. In addition, we have reported that
DOE must (1) effectively oversee its contractors' activities in
carrying out projects and (2) use appropriate outcome measures to
assess overall results and apply lessons learned to continually improve
its contracting practices. Our recent evaluation of DOE's contract
reform efforts indicates that DOE is still working to put these
management practices and outcome measures in place.
Background:
DOE has a large complex of sites around the country dedicated to
supporting its missions: sites that were used to produce or process
materials and components for nuclear weapons and laboratories that
conduct research on nuclear weapons, defense issues, basic science, and
other topics. These sites and laboratories are often located on
government-owned property and facilities, but are usually operated by
organizations under contract to DOE, including universities or
university groups, non-profit organizations, or other commercial
entities.
DOE contracting activities are governed by federal laws and
regulations. Although federal laws generally require federal agencies
to use competition in selecting a contractor, until the mid-1990s, DOE
contracts for the management and operation of its sites generally fit
within an exception that allowed for the use of noncompetitive
procedures. Those contracts were subject to regulation that established
noncompetitive extensions of contracts with incumbent contractors as
the norm and permitted competition only when it appeared likely that
the competition would result in improved cost or contractor performance
and would not be contrary to the government's best interests. In the
mid-1990s, DOE began a series of contracting reforms to improve its
contractors' performance. A key factor of that initiative has been the
increasing use of competition as a way to select management and
operating contractors for DOE sites. Although DOE initially focused the
increased use of competition on its contracts with for-profit
organizations, the laboratories operated by universities and other
nonprofit organizations have not been completely insulated from these
changes.
Contract administration in DOE is carried out by the program offices,
with guidance and direction from DOE's Office of Procurement and
Assistance Management. The management and operating contracts at DOE's
FFRDC laboratories are administered primarily by the National Nuclear
Security Administration, a semi-autonomous agency within DOE; or DOE's
Offices of Science, Environmental Management, or Nuclear Energy,
Science, and Technology.
DOE Has Competed FFRDC Contracts for Three Main Reasons:
DOE has had three main reasons for competing its FFRDC contracts
instead of extending the contracts noncompetitively: when the
contractor operating the laboratory is a for-profit entity, when
mission changes warrant a review of the capabilities of other potential
contractors, or when the incumbent contractor's performance is
unsatisfactory. Without one of these conditions, DOE has generally
extended these contracts without competition.
DOE has considerable flexibility in deciding whether to compete a
management and operating contract for one of its FFRDC laboratories.
Although federal procurement law specifies a clear preference for
competition in awarding government contracts, the Competition in
Contracting Act of 1984 provided for certain conditions under which
full and open competition is not required. One of these noncompetitive
conditions occurs when awarding the contract to a particular source is
necessary to establish or maintain an essential engineering, research,
or development capability to be provided by an educational or other
nonprofit institution or a FFRDC.
The Federal Acquisition Regulation, which implements federal law,
defines government-wide policy and requirements for FFRDCs, including
the establishment, use, review, and termination of the FFRDC
relationship. Under this regulation (1) there must be a written
agreement of sponsorship between the government and the FFRDC; (2) the
sponsoring governmental agency must justify its use of the FFRDC; (3)
before extending the agreement or contract with the FFRDC, the
government agency must conduct a comprehensive review of the use and
need for the FFRDC; and (4) when the need for the FFRDC no longer
exists, the agency may transfer sponsorship to another government
agency or phase out the FFRDC.
DOE's 1996 acquisition guidance describes the procedures DOE program
offices must follow to support any recommendation for a non-competitive
extension of any major site contract, including a FFRDC contract. This
guidance indicates a clear preference for competition and requires DOE
program offices to make a convincing case to the Secretary before a
noncompetitive contract extension is allowed. This preference for
competition is an outcome of DOE's contract reform initiative, which
concluded that DOE needed to expand the use of competition in awarding
or renewing contracts. Among other things, the 1996 guidance specifies
that, before a noncompetitive contract extension can occur, DOE must
provide:
* a certification that full and open competition is not in the best
interest of the department,
* a detailed description of the incumbent contractor's past
performance,
* an outline of the principal issues and/or significant changes to be
negotiated in the contract extension, and:
* in the case of FFRDCs, a showing of the continued need for the
research and development center in accordance with criteria established
in the Federal Acquisition Regulation.
In November 2000, DOE's Office of Procurement and Assistance Management
issued additional guidance on how to evaluate an incumbent contractor's
past performance when deciding whether to extend or compete an existing
contract. The guidance states that DOE contracting officers must review
an incumbent contractor's overall performance including technical,
administrative, and cost factors, and it outlines the information
required to support the performance review and the expected composition
of the evaluation team. When reporting the results of a performance
evaluation, the team should address all significant areas of
performance and highlight the incumbent contractor's strengths and
weaknesses. The evaluation team's report serves as the basis for
determining whether extending a contract is in the best interests of
the government and is subject to review and concurrence by the
responsible assistant secretary and DOE's Procurement Executive.
DOE Has Competed or Plans to Compete Half of Its 16 FFRDC Contracts:
In September 2002, we reported that DOE had taken several steps to
expand competition for its site management and operating FFRDC
contracts. First, DOE reassessed which sites it should continue to
designate as federally funded research and development centers. As a
result of the reassessment, DOE removed 6 of the 22 sites from the
FFRDC designation. DOE subsequently competed the contracts for two of
these--the Knolls and Bettis Atomic Power Laboratories in New York and
Pennsylvania. DOE restructured the other four contracts and, because of
the more limited scope of activities, no longer regards them as major
site contracts. The six site contracts that DOE has dropped from FFRDC
status since 1992 are listed in table 1.
Table 1: Sites Where DOE Has Eliminated the FFRDC Designation:
Site: Bettis Atomic Power Laboratory, Pennsylvania; Year FFRDC status
terminated: 1992.
Site: Hanford Engineering Development Laboratory, Washington; Year
FFRDC status terminated: 1992.
Site: Inhalation Toxicology Research Institute, New Mexico; Year FFRDC
status terminated: 1995.
Site: Energy Technology Engineering Center, California; Year FFRDC
status terminated: 1995.
Site: Knolls Atomic Power Laboratory, New York; Year FFRDC status
terminated: 1992.
Site: Oak Ridge Institute of Science and Education, Tennessee; Year
FFRDC status terminated: 1999.
Source: GAO analysis of DOE data.
[End of table]
For the 16 remaining FFRDC contracts that DOE sponsors, DOE has
competed 6 of them and is planning to compete two additional contracts
in 2004 and 2005. The 16 current FFRDC sites and the competitive status
of the site contract are shown in table 2.
Table 2: DOE's FFRDC Sites and Contract Status:
Site: Sites with contracts that have not been competed:
Site: Ames National Laboratory, Iowa; Site contractor: Iowa State
University; Contract status: Initiated in 1943.
Site: Argonne National Laboratory, Illinois; Site contractor:
University of Chicago; Contract status: Initiated in 1946. DOE plans to
compete the Argonne West (Idaho) portion of the contract in 2004.
Site: Fermi National Laboratory, Illinois; Site contractor:
Universities Research Association; Contract status: Initiated in 1967.
Site: Jefferson Laboratory, Virginia; Site contractor: Southeastern
Universities Research Association; Contract status: Initiated in 1984.
Site: Lawrence Berkeley National Laboratory, California; Site
contractor: University of California; Contract status: Initiated in
1947.
Site: Lawrence Livermore National Laboratory, California; Site
contractor: University of California; Contract status: Initiated in
1952.
Site: Los Alamos National Laboratory, New Mexico; Site contractor:
University of California; Contract status: Initiated in 1943. DOE plans
to compete the contract in 2005.
Site: Pacific Northwest National Laboratory, Washington; Site
contractor: Battelle Memorial Institute; Contract status: Initiated in
1964.
Site: Princeton Plasma Physics Laboratory, New Jersey; Site contractor:
Princeton University; Contract status: Initiated in 1975.
Site: Stanford Linear Accelerator Facility, California; Site
contractor: Stanford University; Contract status: Initiated in 1976.
Site: Sites with competed contracts:
Site: Brookhaven National Laboratory, New York; Site contractor:
Brookhaven Science Associates; Contract status: Competed in 1997.
Site: Idaho National Engineering and Environmental Laboratory, Idaho;
Site contractor: Bechtel BWTX Idaho, LLC; Contract status: Competed in
1999. DOE plans to restructure the site contract and compete it in
2004.
Site: National Renewable Energy Laboratory, Colorado; Site contractor:
Midwest Research Institute; Contract status: Competed in 1998.
Site: Oak Ridge National Laboratory, Tennessee; Site contractor: UT-
Battelle, LLC; Contract status: Competed in 1999.
Site: Sandia National Laboratory, New Mexico; Site contractor: Sandia
Corporation; Contract status: Competed in 1993.
Site: Savannah River Site, South Carolina; Site contractor:
Westinghouse Savannah River Company; Contract status: Competed in
1996.
Source: GAO analysis of DOE data.
[End of table]
DOE's decision to compete the six FFRDC sites shown in table 2 is
consistent with the department's overall policy on determining when
competition is appropriate. For example, DOE competed the contract for
the Brookhaven National Laboratory in 1997, after terminating the
previous contract for unsatisfactory performance by the incumbent
contractor. DOE competed the contract for the National Renewable Energy
Laboratory in 1998 to incorporate additional private sector expertise
into the management team for the site. This competition resulted from
an expanded mission at the site to develop innovative renewable energy
and energy efficient technologies and to incorporate these technologies
into cost effective new products. For the remaining four FFRDC
contracts that DOE has competed, the operator of the laboratory was a
for-profit entity.
When DOE has decided not to compete its FFRDC contracts but to extend
them noncompetitively, its decisions have not been without controversy.
For example, in 2001, DOE extended the management and operating
contracts with the University of California for the Los Alamos and
Lawrence Livermore National Laboratories. The University of California
has operated these sites for 50 years or more and has been the sites'
only contractor. In recent years, we and others have documented
significant problems with laboratory operations and management at these
two laboratories--particularly in the areas of safeguards, security,
and project management.[Footnote 2] Congressional committees and others
have called for DOE to compete these contracts. Until recently,
however, DOE did not compete them. Instead, DOE chose to address the
performance problems using contract mechanisms, such as specific
performance measures and interim performance assessments. In our
September 2002 report, we commented that if the University of
California did not make significant improvements in its performance,
DOE may need to reconsider its decision not to compete the contracts.
In April 2003, the Secretary of Energy decided to open the Los Alamos
National Laboratory contract to competition when the current contract
expires in September 2005. The Secretary made this decision based on
"systemic management failures" that came to light in 2002. The
management failures included inadequate controls over employees' use of
government credit cards, inadequate property controls and apparent
theft of government property, and the firing of investigators
attempting to identify the extent of management problems at the
laboratory.
DOE has also decided to restructure the FFRDC contracts supporting work
at the Idaho National Laboratory. Currently the laboratory has two
FFRDC contracts--(1) a site management contract that includes
activities ranging from waste cleanup to facility operations activities
and (2) a contract to operate Argonne National Laboratory, which
includes the Argonne West facility at the Idaho site. DOE plans to
restructure the two contracts so that one focuses on the nuclear energy
research mission and the other focuses on the cleanup mission at the
site. DOE also plans to include the activities at Argonne West in the
contract competition for the site's research mission and to remove the
Argonne West scope of work from DOE's existing contract with the
University of Chicago to operate Argonne National Laboratory. DOE
believes this contract restructuring will help revitalize the nuclear
energy research mission at the Idaho Site and accelerate the
environmental cleanup.
DOE is continuing to examine the nature of its relationship with FFRDC
contractors and the implications of that relationship for its
contracting approach. DOE established FFRDCs in part to gain the
benefits of having a long-term association with the research community
beyond that available with a normal contractual relationship. However,
more recent events are causing DOE to rethink its approach. As
discussed above, DOE has been criticized for not competing laboratory
contracts where the contractors are performing poorly. Furthermore,
annual provisions in the Energy and Water Development Appropriations
Acts since fiscal year 1998 have required DOE to compete the award and
extension of management and operating contracts, including FFRDC
contracts, unless the Secretary waives the requirement and notifies the
Subcommittees on Energy and Water of the House Committee on
Appropriations 60 days before contract award.
Given these concerns, in 2003 the Secretary of Energy commissioned an
independent panel to determine what criteria DOE should consider when
deciding whether to extend or compete a laboratory management and
operating contract. The panel is expected to help DOE determine, among
other things, the conditions under which competition for laboratory
contracts is appropriate, the appropriate criteria for deciding to
compete or extend laboratory contracts, the benefits and disadvantages
derived from competing laboratory contracts, and whether different
standards and decision criteria should apply depending on whether the
contractor is non-profit, an educational institution, an academic
consortium, or a commercial entity.
Competing Its Contracts Is One of Several Mechanisms DOE Has to Address
Contractor Performance, but Effective Oversight and Improved Outcome
Measures Are Also Needed:
Competing contracts is one of several mechanisms DOE can use to address
contractor performance problems or strengthen contract management.
However, competing a contract does not ensure that contractor
performance will improve. Other steps DOE has taken as part of its
contract reform initiative to address contractor performance issues
include changing the type of contract, such as from a cost-
reimbursement to a fixed-price contract, or establishing or
strengthening performance-based incentives in the contract. For
example, in September 2002, we reported that DOE now requires
performance-based contracts at all of its major sites. DOE has also
increased over time the proportion of contractors' fees tied to
achieving those performance objectives. However, DOE has struggled to
develop effective performance measures and continues to modify and test
various performance measures that more directly link performance
incentives to a site's strategic objectives.
Even these changes to DOE's contracts do not by themselves ensure that
contractor performance will improve. We have reported that DOE must
also (1) effectively oversee its contractors' activities in carrying
out projects and (2) use appropriate outcome measures to assess overall
results and apply lessons learned to continually improve its
contracting practices. Effectively overseeing contractor activities
involves, among other things, ensuring that appropriate and effective
project management principles and practices are being used. Since June
1999, DOE has been working to implement recommendations by the National
Research Council on how to improve project management at DOE. In 2003,
the National Research Council reported that DOE has made progress in
improving its management of projects but that effective management of
projects was not fully in place.
Regarding the use of outcome measures to assess overall results, in
September 2002, we reported that DOE did not have outcome measures or
data that could be used to assess the overall results of its contract
reform initiatives. We recommended that DOE develop an approach to its
reform initiatives, including its contracting and project management
initiatives, that is more consistent with the best practices of high-
performing organizations. DOE is still working to put a best-practices
approach in place.
As we reported in 2001, improving an organization's performance can be
difficult, especially in an organization like DOE, which has three main
interrelated impediments to improvement--diverse missions, a confusing
organizational structure, and a weak culture of
accountability.[Footnote 3] However, DOE expects to spend hundreds of
billions of dollars in future years on missions important to the well-
being of the American people, such as ensuring the safety and
reliability of our nuclear weapon stockpile. Therefore, the department
has compelling reasons to ensure that it has in place an effective set
of contracting and management practices and controls.
Thank you, Madam Chairman and Members of the Subcommittee. This
concludes my testimony. I would be pleased to respond to any questions
that you may have.
Contacts and Acknowledgments:
For further information on this testimony, please contact Ms. Robin
Nazzaro at (202) 512-3841. Individuals making key contributions to this
testimony included Carole Blackwell, Bob Crystal, Doreen Feldman, Molly
Laster, Carol Shulman, Stan Stenersen, and Bill Swick.
FOOTNOTES
[1] U.S. General Accounting Office, Contract Reform: DOE Has Made
Progress, but Actions Needed to Ensure Initiatives Have Improved
Results, GAO-02-798 (Washington, D.C.: Sept. 13, 2002).
[2] For, example, see U.S. General Accounting Office, Department of
Energy: Key Factors Underlying Security Problems at DOE Facilities,
GAO/T-RCED-99-159 (Washington, D.C.: Apr. 20, 1999); U.S. General
Accounting Office, Nuclear Security: Improvements Needed in DOE's
Safeguards and Security Oversight, GAO/RCED-00-62 (Washington, D.C.:
Feb. 24, 2000); and A Special Investigative Panel, President's Foreign
Intelligence Advisory Board, Science at its Best, Security at its
Worst: A Report on Security Problems of the U.S. Department of Energy
(Washington, D.C.: June 1999).
[3] U.S. General Accounting Office, Department of Energy: Fundamental
Reassessment Needed to Address Major Mission, Structure, and
Accountability Problems, GAO-02-51 (Washington, D.C.: Dec. 21, 2001).
