Department of Energy

This report to the Secretary of Energy summarizes GAO's views on her Contract Reform Team's 1994 report entitled Making Contracting Work Better and Cost Less. The Reform Team acknowledges that weaknesses in the Energy Department's (DOE) "contracting practices are significant and systemic." In GAO's view, the Team's recommendations--more than 45 in all--represent a bold step forward for DOE and address many of GAO's long-standing concerns. These suggestions include using performance-based measures to evaluate contractors, providing more incentives to motivate behavior, and reducing strict reliance on cost contracts. The challenge facing DOE's leadership will be to develop a strategy for making these reforms a reality. Overcoming workforce and management information weaknesses--essential prerequisites for change--is a major hurdle for DOE.

GAO found that: (1) DOE contracting weaknesses are significant and systemic; (2) the Contract Reform Team has made many recommendations to change DOE contracting procedures including using performance-based measures to evaluate contractors, providing added incentives to motivate contractor behavior, and reducing DOE reliance on cost contracts; (3) DOE needs to strengthen its contract administration and oversight skills, equip its staff with sufficient management and financial information systems, ensure that nonprofit contractors are held accountable, develop fee and profit policies that are consistent with results-oriented performance measures, require audited financial statements from its contractors, and establish an institutional entity to oversee DOE managers' implementation of the Reform Team's recommendations; and (4) DOE needs to develop an implementation strategy and overcome workforce and management information weaknesses so that the reforms can be successfully implemented.