DOE Should Strengthen Its Controls Over Award Fees to Contractors

RCED-84-39: Published: Nov 22, 1983. Publicly Released: Nov 22, 1983.

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GAO evaluated the Department of Energy's (DOE) policies and procedures for determining fees available to contractors working for DOE under cost-plus-award-fee contracts.

DOE favors using award-fee contracts because it believes that they provide the best incentive for good performance. GAO found that DOE needs to improve both its guidance and its practices for calculating allowable fees for award-fee contracts. Procurement reviews performed by GAO in fiscal year 1982 at three operations offices were not conducted in sufficient depth to detect the instances of noncompliance and inconsistent interpretation of procurement guidance. GAO believes that DOE needs to review procurement activities more frequently to ensure that fee calculations are proper.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Energy, to aid DOE procurement officials in establishing fee objectives for negotiating award-fee contracts that will produce fair and reasonable prices and the lowest ultimate overall cost to the Government, should clarify guidance for calculating fee negotiation objectives to help eliminate inconsistent practices among operations offices.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Energy, to aid DOE procurement officials in establishing fee objectives for negotiating award-fee contracts that will produce fair and reasonable prices and the lowest ultimate overall cost to the Government, should include evaluations of how operations offices compute fee bases and maximum available fees in Procurement Management and Assistance Directorate reviews of operations offices' procurement activities.

    Agency Affected: Department of Energy

 

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