Energy Management

Tightening Fee Process and Contractor Accountability Will Challenge DOE Gao ID: RCED-92-9 October 30, 1991

The Department of Energy's (DOE) contracting practices are one of 16 areas in the federal government GAO has identified as highly vulnerable to waste, fraud, abuse, and mismanagement. As part of a broader GAO effort to examine DOE's process for formally reviewing and assessing the performance of management and operating contractors, this report focuses on those contractors operating under cost-plus-award-fee contracts with DOE's Albuquerque Field Office. GAO selected this office because it administers contractors for four large defense materials production plants--Kansas City, Mount, Pantex, and Pinellas--as well as the contract for the Waste Isolation Pilot Plant, in which DOE plans to store radioactive waste. GAO discusses (1) the effectiveness of DOE's use of performance objectives to set expectations and evaluate contractor performance, (2) the effectiveness of DOE's use of data from on-site reviews to evaluate contractor performance for award fee purposes, and (3) the effect of DOE's new award fee regulations on the performance evaluation and award determination process.

GAO found that: (1) the Albuquerque Field Office's use of performance objectives does not result in effective evaluations of contractor performance or effectively communicate DOE expectations to contractors; (2) Albuquerque's contractor performance objectives are often very broad and provide no criteria or standards against which to evaluate contractor performance; (3) DOE has managed its contractors by establishing broad objectives and relying on contractors to plan and carry out the programs; (4) since Albuquerque does not ensure that contractors take prompt action to correct identified deficiencies, a contractor's failure to implement recommendations may not only go unnoticed by Albuquerque officials, but also may not affect the contractor's performance evaluation; (5) the new DOE award fee policy is designed to make contractors, rather than the government, accountable for costs that could have been avoided by prudent contractor action; and (6) because of the magnitude of the changes needed, contractors may be eligible for increased compensation long before DOE is able to fully implement the accountability requirements.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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