Energy Management:

Using DOE Employees Can Reduce Costs for Some Support Services

RCED-91-186: Published: Aug 16, 1991. Publicly Released: Sep 17, 1991.

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Pursuant to a congressional request, GAO reviewed the Department of Energy's (DOE) support service contracting practices, focusing on: (1) the overall cost and use of such contracts; (2) the adequacy of controls to ensure that DOE support service contracts are cost-effective; and (3) whether work performed on selected support service contracts could be performed less expensively by federal personnel.

GAO found that: (1) in fiscal year (FY) 1990, DOE obligated $522 million for support service contracts, a 56-percent increase from FY 1986; (2) the Office of Management and Budget's (OMB) guidance on support service contracting does not uniformly require agencies to compare contract and in-house performance costs to determine which is more cost-effective; (3) DOE awarded few support service contracts on the basis of cost comparisons, since it could not get additional staff to perform the work in-house because of personnel ceilings; (4) although DOE guidelines for managing support service contracts limit the duration of each contract to 5 years, the guidelines do not limit how long an activity can be performed under successive support service contracts; (5) DOE policy does not require cost comparisons or establish other controls over assessing whether DOE support service contracts are cost-effective; (6) for 11 of the 12 contracts reviewed, DOE use of support service contracts cost $5 million more than federal employees would have cost; and (7) recent actions indicate that OMB may be willing to consider requests for additional staff if the requests adequately justify claimed cost savings.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Effective October 1, 1992, DOE required units to conduct a cost comparison prior to awarding or renewing support service contracts. And, although uncertainty continues about whether the comparisons can be used to justify additional personnel from OMB, DOE says it will nevertheless perform them because doing so is simply a good management practice.

    Recommendation: To ensure that DOE support service activities are conducted in a cost-effective manner, the Secretary of Energy should require DOE units to conduct cost comparisons before awarding or renewing support service contracts and regularly review existing contracts to ensure that they are cost-effective.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: DOE has met with OMB and Office of Federal Procurement Policy personnel to discuss the results of its completed cost analyses. The purpose of the meeting was to determine what additional actions, if any, would be needed to justify increased staffing from OMB. In June 1993, DOE and OMB agreed that these issues should be addressed as part of Secretary O'Leary's DOE-wide "Contract Reform Task Force Team" initiative. This initiative resulted in, among other things, OMB's approval to convert about 360 costly support service contract positions to federal positions in DOE's environmental restoration and waste management area. DOE estimates that these conversions will save about $46.3 million during fiscal years 1994 and 1995.

    Recommendation: To ensure that DOE support service activities are conducted in a cost-effective manner, the Secretary of Energy should use the results of cost comparisons to support requests for additional staff from OMB for converting any contracts determined to be less expensively performed in-house, except where other reasons exist for continuing the work under contract, and if the conversions are approved by OMB, DOE should reduce its support service contracting budget by a corresponding amount.

    Agency Affected: Department of Energy

  3. Status: Closed - Implemented

    Comments: OMB and DOE met to discuss: (1) the results of DOE's costs comparisons; and (2) what, if any, additional actions are needed to justify staffing increases. In June 1993, the parties agreed that these issues should be addressed as part of Secretary O'Leary's DOE-wide "Contract Reform Task Force Team" initiative. This initiative resulted in, among other things, OMB's approval to convert about 360 support service contract positions to federal positions in DOE's environmental restoration and waste management area. DOE estimates that these conversions will save about $46.3 million during fiscal years 1994 and 1995.

    Recommendation: To ensure that DOE understands the OMB position about converting costly support service contracts, OMB should issue guidance documenting the position and any additional information that would be needed to justify conversions, such as information about the type of cost comparisons DOE should perform.

    Agency Affected: Executive Office of the President: Office of Management and Budget

 

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