Energy Management

GAO reported in 1989 that the Department of Energy (DOE) was encouraging the use of "systems contracts" without any proof that these contracts were cost-effective. Systems contracts are used to procure commonly used items, such as office, industrial, and laboratory supplies, as needed rather than purchasing the items in bulk and storing them in inventory. GAO revisited this issue and discovered that DOE's San Francisco Operations Office has yet to implement GAO's earlier recommendations to help ensure that the use of systems contracting is in the government's best interest. As a result, since January 1990, contractors at DOE's Stanford Linear Accelerator Center and the Lawrence Berkeley Laboratory have spent more than $2 million on office supplies without any assurance that the contracts are cost-effective. The San Francisco Operations Office also has not determined whether controls over systems contracts are adequate at the Stanford and Berkeley facilities. During a nine-month period in 1992, Stanford and Berkeley spent more than $540,000 on office supplies with no guarantee that the prices paid were competitive with prices from other suppliers.

GAO found that: (1) the San Francisco Operations Office has not adequately implemented the 1989 GAO recommendations to ensure that its management and operating contractors evaluate and document the costs and benefits of systems contracting before awarding supply contracts; (2) DOE has assessed the adequacy and thoroughness of the Operations Office's action plan and terminated the recommendations in its audit tracking and resolution system; (3) the Operations Office has relied on information supplied by its contractors on the costs and benefits of system contracts rather than conducting independent cost assessment; (4) DOE contractors have not assessed the costs and benefits of contracting for supplies from the General Services Administration as recommended; and (5) DOE cannot ensure that contractors obtain merchandise at the lowest cost, since the Operations Office has not determined the adequacy of internal controls over purchasing at contractor facilities.

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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