Energy Management

The Department of Energy (DOE) contracts extensively for a wide variety of support services, including management, administrative, and technical activities. GAO reported in August 1991 (GAO/RCED-91-186) that contracting for this work can cost substantially more than using federal employees. GAO also indicated that many of these contracts had been awarded, not on the basis of comparisons between federal and contract costs, but solely because DOE did not have enough staff to do the work. This report discusses (1) what actions have been taken in response to GAO's earlier recommendations, (2) obstacles DOE has encountered in trying to improve the cost-effectiveness of support services, and (3) whether steps have been taken to overcome these barriers.

GAO found that: (1) DOE conducted cost comparisons on only three of the activities covered by its 75 support services contracts; (2) contracting for support services can cost substantially more than using DOE employees to perform the same work; (3) DOE revised its order on support services contracting to require units requesting support services to compare contract and in-house costs before deciding how to perform the work; (4) DOE developed and tested a method for conducting the cost comparisons; (5) DOE does not intend to solicit competitive bids to compare costs, since soliciting bids would add 6 to 8 months to each cost analyses; (6) the Office of Management and Budget (OMB) has agreed to work with DOE to evaluate the results of DOE cost comparisons and determine what procedures it needs to justify conversions to in-house performance; (7) the DOE simplified cost comparison method did not meet OMB detailed procedures for justification of in-house performance; (8) DOE viewed personnel ceilings as a major obstacle to achieving cost-effectiveness in its support services activities; and (9) fundamental differences in opinion on OMB Circular A-76 and ceiling issues have strained relations between the agencies and blocked efforts to improve the cost-effectiveness of DOE support services activities.