Energy Management:

Vulnerability of DOE's Contracting to Waste, Fraud, Abuse, and Mismanagement

RCED-92-101: Published: Apr 10, 1992. Publicly Released: May 11, 1992.

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Pursuant to a congressional request, GAO provided information on the Department of Energy's (DOE) contracting practices, focusing on: (1) problems resulting from the DOE approach to contracting; and (2) recent DOE efforts to address those problems.

GAO found that DOE: (1) generally adopted the contracting approach that its predecessor, the Atomic Energy Commission (AEC), used, characterized by limited interference in contractor work and reimbursement of almost all contractor costs; (2) in spite of congressional criticism, continues to use that contract management approach, which is partially responsible for serious environmental, safety, and operational problems at its nuclear production facilities; (3) has included in its management and operating contracts weak, nonstandard, and ineffective clauses that limit its authority, its ability to control costs, and contractor accountability; (4) contract oversight does not adequately detect problems concerning contractors' work for non-DOE sources, inventory errors, appropriate award fees, and the safeguarding of secret documents; (5) does not adequately oversee contractors' use, procurement, or spending for subcontractors; and (6) to improve its contracting approach, plans to incorporate new contract clauses regarding contractor accountability, award fees, contract extension negotiations, work statements, and contractor and subcontractor oversight. GAO believes that, although the corrective actions DOE proposed could help to address longstanding and pervasive contracting weaknesses, DOE contract management currently remains highly vulnerable to waste, fraud, abuse, and mismanagement.

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