Energy Management: High Risk Area Requires Fundamental Change

GAO discussed the Department of Energy's (DOE) contract management. GAO noted that: (1) DOE vulnerability to waste, fraud, abuse, and mismanagement stems from long-standing inadequacies in oversight of contractors' operations and activities; (2) weak contractor oversight significantly affected DOE ability to control costs; (3) DOE spent $1.6 billion to provide managers and staff with information to assist them in accomplishing their missions, but did not have management and financial information essential for effective contract management; (4) DOE did not provide objective criteria for award or management fees paid to contractors and sometimes rewarded contractors for questionable performance; (5) continued use of nonstandard contract clauses limited DOE control; (6) contracting weaknesses have contributed to significant environmental, safety, and health problems at DOE nuclear weapons plants; (7) DOE is changing its contracting practices to address material weaknesses by incorporating a new accountability rule into its contracts with profit-making organizations, deleting nonstandard contract clauses, denying award fees if contractor performance is unacceptable, and increasing field staff and contract oversight; and (8) with new contract terms and conditions, DOE hopes to make its contracting relationships more consistent with the government's interests.