Large Businesses Dominated Awards Made Under DOE's Alternative Fuels Program

GAO was requested to evaluate selected aspects of the Department of Energy's (DOE) alternative fuels program. GAO concentrated its efforts on the alcohol fuels portion of the program.

GAO found that large, established corporations dominated the awards during both rounds of the DOE feasibility study and cooperative agreement competitions. The criteria used to evaluate proposals and the nature of the evaluation process contributed to this outcome. DOE evaluation team chairmen stated that the capital-incentive nature of many of the technologies involved and the primary objective of the program to spur maximum alternative fuels production as quickly as possible made such an outcome inevitable. GAO agrees that the primary objective of the alternative fuels legislation was to develop maximum alternative fuels capacity in the shortest possible time. It is also probable that large, experienced corporations with billions of dollars in assets are, as a general rule, in a better position to achieve the objective than smaller firms without such resources. Nonetheless, the DOE solicitations and announced program policy factors encouraged small businesses to submit proposals and suggested that such proposals would be viewed favorably during the competitions. It is clear from the results of the analysis that the DOE activities to enhance the role of small businesses in the feasibility study and cooperative agreement competitions met with limited success. In addition, the activities may have served to mislead small businesses into believing they had a bigger potential role than was reflected in the actual awards.