Energy Management

Problems With Martin Marietta Energy Systems' Affiliate Relationships Gao ID: RCED-87-70 March 5, 1987

Pursuant to a congressional request, GAO evaluated a Department of Energy (DOE) contractor's actions in operating the DOE Oak Ridge National Laboratory to determine whether: (1) the contractor's relationship with an affiliate violated DOE conflict-of-interest regulations; and (2) DOE maintained adequate control over the contractor's procedure for acquiring personal services from its parent company.

GAO found that the contractor: (1) helped to set up an affiliated venture capital firm for the purpose of transferring technology developed at Oak Ridge to the private sector; (2) failed to follow DOE conflict-of-interest procedures when dealing with the affiliate; (3) failed to advise DOE of its relationship with the affiliate; (4) twice released technology-related information to the affiliate before obtaining DOE approval to do so; and (5) allowed the affiliate an unfair competitive advantage over a firm that was attempting to acquire certain Oak Ridge-developed technology. GAO also found that: (1) DOE does not review the contractor's compliance with the contract's conflict-of-interest provisions; and (2) in order to mitigate concerns over the apparent conflict of interest, DOE and the contractor negotiated an agreement limiting the contractor's parent company's gain from DOE technologies commercialized through the affiliate. In addition, GAO found that: (1) DOE and the contractor did not follow established procedures for approving the noncompetitive acquisition of services from the contractor's parent company; (2) the procedures that DOE and the contractor established for such acquisitions required neither written justifications for noncompetitive procurement nor documentation of labor costs; and (3) the contractor sometimes failed to submit required documentation of other costs.

Recommendations

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