Additional Improvements Needed in Logistics Support for the Strategic Petroleum Reserve

RCED-84-12: Published: Apr 13, 1984. Publicly Released: Apr 13, 1984.

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GAO reviewed the Department of Energy's (DOE) efforts to develop an integrated logistics support system for the Strategic Petroleum Reserve (SPR) storage locations. The review was made as part of a comprehensive effort to evaluate DOE performance in developing, filling, and maintaining the SPR.

During initial planning and construction of the SPR, emphasis was placed upon meeting oil storage goals as quickly as possible rather than developing a logistics support system, which resulted in difficulties in acquiring spare parts and replacing defective equipment at storage locations. DOE initiated logistics support planning, with the intention of making its operations and maintenance contractor responsible for this work, but the scope of the contract work was not clear and the contractor used support planning funds for other activities. In 1982, DOE hired a new contractor and redefined the logistics support planning responsibilities more clearly; however, the new contractor's progress has been slower than expected, and DOE due dates for various segments of the system have been consistently missed. As of September 1983, the contractor had not developed the system's database for operating and maintenance histories and, without the complete database, the system cannot accurately estimate spare parts requirements. Despite the slow progress, GAO found that DOE has paid performance incentive bonuses to contractors for logistics support work as well as for other tasks. In addition, the actual development cost of the logistics support planning system is uncertain because DOE has not been able to track the costs incurred by some of its contractors.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Site construction stopped prior to becoming operational.

    Recommendation: The Secretary of Energy should instruct the SPR Project Manager to develop a cost-tracking system that clearly identifies costs being expended in the development and operation of the SPR integrated logistics support system.

    Agency Affected: Department of Energy

  2. Status: Closed - Not Implemented

    Comments: Site construction stopped prior to becoming operational.

    Recommendation: The Secretary of Energy should instruct the SPR Project Manager to take appropriate steps to determine the optimum level of SPR spare and repair parts inventories and warehousing facilities based on operational experience and design specifications.

    Agency Affected: Department of Energy

  3. Status: Closed - Implemented

    Comments: Equipment purchased and installed is standardized to the extent possible.

    Recommendation: The Secretary of Energy should instruct the SPR Project Manager to more closely monitor contractor activities to ensure that equipment and spare parts acquired for the Big Hill site are standardized to the maximum extent possible.

    Agency Affected: Department of Energy

  4. Status: Closed - Not Implemented

    Comments: DOE has stopped all further site development.

    Recommendation: The Secretary of Energy should instruct the SPR Project Manager to more closely monitor contractor activities to ensure that logistics support activities at the Big Hill site are properly completed and implemented in a timely manner.

    Agency Affected: Department of Energy

  5. Status: Closed - Implemented

    Comments: DOE revised its contract award fee process to better link fee with performance.

    Recommendation: The Secretary of Energy should instruct the SPR Project Manager to structure the contract award fee plans in future contracts so that: (1) award fees are not paid for less than satisfactory performance and (2) award fee payments are clearly linked to the contractor's actual achievement in meeting stated objectives.

    Agency Affected: Department of Energy

 

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