Energy Management:

Improving Cost-Effectiveness in DOE's Support Services Will Be Difficult

RCED-93-88: Published: Mar 5, 1993. Publicly Released: Apr 9, 1993.

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Pursuant to a congressional request, GAO reviewed the Department of Energy's (DOE) support services contracts, focusing on: (1) what obstacles DOE has encountered in its efforts to improve the cost-effectiveness of its support services activities; and (2) what actions DOE has taken to overcome these obstacles.

GAO found that: (1) DOE conducted cost comparisons on only three of the activities covered by its 75 support services contracts; (2) contracting for support services can cost substantially more than using DOE employees to perform the same work; (3) DOE revised its order on support services contracting to require units requesting support services to compare contract and in-house costs before deciding how to perform the work; (4) DOE developed and tested a method for conducting the cost comparisons; (5) DOE does not intend to solicit competitive bids to compare costs, since soliciting bids would add 6 to 8 months to each cost analyses; (6) the Office of Management and Budget (OMB) has agreed to work with DOE to evaluate the results of DOE cost comparisons and determine what procedures it needs to justify conversions to in-house performance; (7) the DOE simplified cost comparison method did not meet OMB detailed procedures for justification of in-house performance; (8) DOE viewed personnel ceilings as a major obstacle to achieving cost-effectiveness in its support services activities; and (9) fundamental differences in opinion on OMB Circular A-76 and ceiling issues have strained relations between the agencies and blocked efforts to improve the cost-effectiveness of DOE support services activities.

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