DOE's Assignment of Operating and Testing Responsibilities for OTEC-1

GAO examined several contractual procedures used by the Department of Energy (DOE) in assigning operating and testing responsibilities for its ocean thermal energy conversion (OTEC) test facility called, OTEC-1. These responsibilities were assigned to the Energy Technology Engineering Center, which is government-owned and contractor-operated. The examination was conducted in response to questions raised in a protest filed with GAO. The questions centered on the agency's ability to assign the contracting responsibility for an operating and testing contract to a government-owned and contractor-operated facility. Specifically, the protest questioned: (1) whether the assignment was prohibited by the private contractor's operating agreement; (2) why the assignment was made without competition or justification; and (3) whether the assignment was in violation of DOE conflict-of-interest regulations.

GAO concluded from its review that DOE properly followed its procurement and related administrative procedures; the assignment of operating and testing responsibilities to the center was not prohibited by the contractor's contract to operate the center; these responsibilities were assigned without competition because of cost considerations and the center's existing involvement; and that there was no violation of conflict-of-interest regulations. GAO found that the assignment of contracting responsibility was within the realm of the normal process of DOE for administratively assigning tasks to contractors having responsibility for operating government facilities, such as the center. This administrative process is allowable under federal procurement regulations; however, DOE seems to be one of the few federal agencies that uses it. A review of the center contractor's contract disclosed that its scope is sufficiently broad to encompass the work DOE assigned to it.