Energy Management:

Systems Contracting Weaknesses Continue

RCED-93-143: Published: Jun 23, 1993. Publicly Released: Jun 23, 1993.

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GAO reviewed the Department of Energy's (DOE) San Francisco Operations Office's implementation of 1989 GAO recommendations, focusing on whether: (1) systems contracts awarded by its management and operating contractors are cost-effective; and (2) the contractors' internal controls over systems contracts are adequate.

GAO found that: (1) the San Francisco Operations Office has not adequately implemented the 1989 GAO recommendations to ensure that its management and operating contractors evaluate and document the costs and benefits of systems contracting before awarding supply contracts; (2) DOE has assessed the adequacy and thoroughness of the Operations Office's action plan and terminated the recommendations in its audit tracking and resolution system; (3) the Operations Office has relied on information supplied by its contractors on the costs and benefits of system contracts rather than conducting independent cost assessment; (4) DOE contractors have not assessed the costs and benefits of contracting for supplies from the General Services Administration as recommended; and (5) DOE cannot ensure that contractors obtain merchandise at the lowest cost, since the Operations Office has not determined the adequacy of internal controls over purchasing at contractor facilities.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOE: (1) required its contractors to perform cost/benefit analyses of systems contractors implemented at DOE facilities; and (2) reviewed the analyses, including those prepared by contractors operating the Stanford and Berkeley facilities, to ensure that they were adequate. On April 20, 1994, DOE also issued guidance on establishing and implementing controls over systems contracts. However, DOE did not review its field offices' plans for implementing the guidance as discussed in DOE's initial response to the recommendations. Further, DOE did not take action to ensure that systems contracts are primarily used to purchase commonly used merchandise specified in the contract, as discussed in the recommendations.

    Recommendation: To ensure compliance with June 1989 GAO recommendations, the Secretary of Energy should evaluate the adequacy of actions taken by each DOE contracting activity to ensure that the earlier recommendations were implemented, including actions by the San Francisco Operations Office to assess other systems contracts within its purview. As part of this effort, DOE should ensure that systems contracts are primarily being used to purchase commonly used merchandise specified in the contract.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: As is customary, DOE tracked the status of its corrective actions on recommendations contained in this report. In June 1994, DOE certified that all of its corrective actions had been completed. Consequently, DOE terminated the recommendations in its audit tracking system. This certification was premature because DOE had not reviewed its field offices' plans for implementing DOE's new systems contracting guidance. Also, DOE had not taken action to ensure that systems contracts were primarily used to purchase commonly used merchandise specified in the contract, as recommended in the report.

    Recommendation: The Secretary of Energy should ensure that appropriate actions have been completed before terminating this recommendation in the DOE audit tracking and resolution system.

    Agency Affected: Department of Energy

 

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