Contractors Should Be Accountable for Environmental Performance

GAO discussed Department of Energy (DOE) and Department of Defense (DOD) procedures and policies concerning: (1) their payment of contractor fines, settlement payments and legal costs incurred in noncompliance with environmental law; and (2) contractor award fee reductions for noncompliance with environmental regulations. GAO noted that: (1) with few exceptions, DOE paid contractor noncompliance fines and associated costs, while DOD held its contractors financially accountable for environmental violations; (2) DOD and DOE regulations did not require environmental compliance considerations in award fee determinations, although both agencies included environmental performance criteria to some degree; (3) DOE and DOD contractors charged with repeated violations still received satisfactory environmental performance ratings and the majority of the available award fees; and (4) proposed legislation would limit agencies' payment of contractors' noncompliance penalties and related costs, and include criteria for allowable agency payments.