Contract Reform:

DOE Has Made Progress, but Actions Needed to Ensure Initiatives Have Improved Results

GAO-02-798: Published: Sep 13, 2002. Publicly Released: Sep 13, 2002.

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The Department of Energy (DOE), the largest civilian contracting agency in the federal government, relies primarily on contractors to operate its sites and carry out its diverse missions, such as maintaining the nuclear weapons stockpile, cleaning up radioactive and hazardous wastes, and performing research. Although federal law generally requires federal agencies to use competition in selecting a contractor, until the mid-1990s, DOE contracts for the management and operation of its sites generally fit within an exception that allowed for the use of noncompetitive procedures. Since 1996, DOE has made progress toward implementing contract reform initiative in three key areas--developing alternative contracting approaches, increasing competition, and using performance-based contracts. However, DOE continues to encounter challenges in implementing these initiatives. Although DOE has made strides in implementing contract reform initiatives, it is difficult to determine whether contractors' performance has improved because objective performance information is scarce. Over the past 8 years, DOE has primarily gauged progress by measuring its implementation of the reforms, such as the number of contracts competed each year, and by reviewing individual contract performance incentives. DOE faces a fundamental challenge to ensuring the effectiveness of its contract reform initiatives--developing an approach to managing its initiatives and sustaining improvements that would incorporate the best management practices of high-performing organizations. These practices include four key elements: (1) clearly defined goals; (2) an implementation strategy that sets milestones and establishes responsibility; (3) results-oriented outcome measures, established early in the process; and (4) systematic use of results-oriented data to evaluate the effectiveness of the initiative and make additional changes where warranted.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to the recommendation, DOE issued Notice 125.1, Managing Critical Management Improvement Initiatives, in October 2003. The notice established a systematic, results-oriented approach for the management of critical improvement initiatives to ensure that such initiatives are managed in an organized and disciplined manner, consistent with the best practices of high-performing organizations. This notice and approach incorporated the key elements contained in the GAO recommendation.

    Recommendation: To improve the effectiveness of DOE's contract reform initiative, as well as other management improvement initiatives, the department should develop an approach to implementing its initiatives that incorporates best practices including key elements of (1) clearly defined goals, (2) an implementation strategy that sets milestones and establishes responsibility, (3) results-oriented outcome measures, and (4) a mechanism that uses results-oriented data to evaluate the effectiveness of the department's initiatives and to take corrective actions as needed.

    Agency Affected: Department of Energy


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