Department of Energy Contract Management

Gao ID: HR-93-9 December 1, 1992

Many GAO audit reports have spotlighted the effect of management failures in the federal government--waste, inefficiency, and even scandal. Political leaders have been forced to spend too much time reacting to surprises like the Department of Housing and Urban Development debacle rather than doing the work the agencies were created to do. GAO began its high-risk program to identify those high-dollar government programs most vulnerable to fraud, waste, abuse, and mismanagement. This report is part of the program's high-risk series of reports, which examine the federal government's efforts to identify and correct problems in 17 especially vulnerable areas, fall into three main categories: lending and insuring, contracting, and accountability. Many of the root causes of the problems afflicting these government programs are traceable to the absence of fundamental processes and systems. GAO urges that future congressional oversight focus on the agency reports and audited financial statements required by the Chief Financial Officers Act, agency management's progress in correcting material weaknesses in program internal control and accounting systems, and federal agency efforts to develop and implement performance standards. The Comptroller General summarized the high-risk series in testimony before Congress; see: Government Management--Report on 17 High-Risk Areas, by Charles A. Bowsher, Comptroller General of the United States, before the Senate Committee on Governmental Affairs. GAO/T-OCG-93-2, Jan. 8, 1993 (22 pages).

GAO noted that: (1) DOE contract management weaknesses have led to mismanagement of federal property and funds; (2) DOE is required to reimburse contractors for money and materials stolen by contractor employees and for fines the contractors incurred for environmental law violations; (3) vulnerability to waste, fraud, abuse, and mismanagement stemmed from long-standing inadequacies in DOE oversight of contactors' operations and activities; (4) 70 percent of DOE management and operating contracts did not employ standard contract clauses used by other federal agencies; and (5) DOE contracts gave contractors excessive latitude, increased the government's financial risk, and restricted its ability to control costs, since DOE failed to provide objective criteria for award or management fees paid to contractors.



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