DOE Needs to Improve Oversight of Subcontracting Practices of Management and Operating Contractors
T-RCED-91-79, Aug 1, 1991
GAO discussed the adequacy of the Department of Energy's (DOE) management controls to prevent fraud, waste, and abuse in subcontracting, focusing on: (1) subcontracting deficiencies at the DOE Lawrence Livermore National Laboratory; and (2) the DOE Contractor Purchasing System Review Program's effectiveness in identifying and correcting subcontracting deficiencies. GAO noted that: (1) DOE reviews show that contractors did not adequately perform and document basic analyses needed to ensure that subcontract prices are fair and reasonable; (2) inadequate DOE oversight and contractors' poor procurement practices have led to excessive subcontract costs; (3) the DOE Lawrence Livermore National Laboratory had such serious systemic weaknesses as inappropriate sole-source purchases, noncompliance with DOE review and approval requirements, and inadequate attention to subcontract costs; (4) DOE Contractor Purchasing System Reviews have identified internal control weaknesses in contractors' purchases of systems and the award of subcontracts after work has begun; and (5) such limitations in the DOE program as insufficient headquarters oversight, inadequate follow-up by field offices, and resistance to limit contractor purchasing authority has restricted DOE ability to identify all significant procurement weaknesses. GAO believes that millions of dollars may be wasted each year due to the extent of overpricing associated with the procurement weaknesses identified.