Dispute Regarding the Operation of DOE's OTEC-1

Brief Background and Status Gao ID: EMD-80-107a August 8, 1980

GAO was requested to make a preliminary inquiry concerning a Department of Energy (DOE) sponsored Ocean Thermal Energy Conversion Project to determine whether alleged contracting improprieties surrounding the project warrant a full investigation. The alleged improprieties relate to DOE failure to conduct a cost comparison in accordance with OMB regulations before making its decision to undertake the final operational phase of the project. A full investigation is unwarranted at this time. DOE awarded a contract to a firm for the design, conversion, and deployment of an old Navy tanker to be used as the test facility for the project. The project will include the assessment of: heat exchanger technology, long-term biofouling and corrosion effects, cleaning and testing techniques, and environmental issues. The contract contained an option for the firm to also conduct the operational testing phase. DOE notified the firm that it would not exercise the option in the contract. On the basis of an estimated cost savings, DOE decided to do the operational testing in cooperation with the Navy. However, cited savings were not derived from a cost comparison that complied with procurement requirements. DOE is presently taking steps to conduct a cost comparison that is to be in full compliance, and the Navy has decided not to participate in the operational testing. DOE plans to decide whether continued performance of the operation of the project for the remainder of the operational testing phase will be performed by a private contractor or by DOE. The cost comparison will aid DOE in making that decision. GAO plans to review the DOE Ocean Thermal Energy Conversion Project, including various aspects of this project.

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