Energy Management:

DOE Has Not Shown Systems Contracting to Be in Government's Best Interest

RCED-89-118: Published: Jun 20, 1989. Publicly Released: Aug 4, 1989.

Additional Materials:

Contact:

Victor S. Rezendes
(202) 512-6082
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO reviewed the Department of Energy's (DOE) operating contractors' use of systems contracting to determine whether DOE ensures that systems contracting is in the government's best interest.

GAO found that: (1) although DOE has cited the Sandia National Laboratory's positive experience with systems contracting as a basis for encouraging its other operating contractors to consider systems contracting, it has not shown that systems contracting is in the government's best interest; (2) DOE has not independently evaluated the costs and benefits of systems contracting, verified Sandia's claimed savings and other benefits, or compared contractor procurement costs with the cost of procuring supplies from the General Services Administration (GSA); and (3) DOE has not required Sandia to establish adequate internal controls over purchases under a systems contract.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOE concurred with this recommendation, noting its long-standing policy concerning the use of government sources of supply. On June 21, 1989, DOE reminded offices overseeing M&O contractors that they must review the contractor's policies, procedures, and practices regarding government sources of supply, as well as ensure that appropriate checks and balances are in place to ensure compliance.

    Recommendation: To help ensure that the operating contractors' use of systems contracting is in the best interest of the federal government, the Secretary of Energy should enforce its requirement that GSA be used when it is economically advantageous to the government by having the operating contractors compare and evaluate the costs and benefits of systems contracting with purchases from GSA before awarding such contracts.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: DOE guidance to offices overseeing M&O contractors added a requirement to ensure that reasons for decisions not to use government sources of supply be documented in both the field office's official contract file, as well as the contractor's file. DOE did not address the need for it to independently review the cost benefit analysis that supports the use of the systems contracting process.

    Recommendation: To help ensure that the operating contractors' use of systems contracting is in the best interest of the federal government, the Secretary of Energy should require DOE operating contractors to provide detailed documentation supporting their evaluations and independently review the contractors' evaluations.

    Agency Affected: Department of Energy

  3. Status: Closed - Implemented

    Comments: DOE promised increased emphasis on oversight. Sandia agreed to examine automated system enhancements to ensure that items purchased are the lowest priced, considering quality requirements, and to establish procedures requiring market surveys for items added to systems contracts to ensure prices of the item are competitive. Sandia eliminated nonstock purchases under the system contracting process.

    Recommendation: The Secretary of Energy should require Sandia to establish adequate internal controls to help ensure that: (1) the lowest-cost items available under a systems contract are selected unless otherwise justified; and (2) items added to the systems contract are obtained at the lowest prices consistent with requirements for quality and timeliness.

    Agency Affected: Department of Energy

  4. Status: Closed - Implemented

    Comments: DOE concurred with this recommendation. DOE offices overseeing M&O contractors reviewed controls over systems contracts and reported to the Property and Equipment Management Office that the contractors were in compliance with DOE regulations.

    Recommendation: The Secretary of Energy should determine whether other operating contractors have established adequate controls over their purchases under systems contracts and, if not, require them to establish such controls.

    Agency Affected: Department of Energy

 

Explore the full database of GAO's Open Recommendations »

Sep 14, 2016

Sep 8, 2016

Aug 11, 2016

Aug 9, 2016

Aug 4, 2016

Jul 15, 2016

Jul 14, 2016

Jun 20, 2016

Mar 3, 2016

Looking for more? Browse all our products here