DOE's Alcohol Fuels Awards Process Resulted in Questionable Award Selections and Limited Small Business Success

EMD-81-125: Published: Aug 21, 1981. Publicly Released: Aug 28, 1981.

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As part of the alternative fuels program, the Department of Energy (DOE) made two rounds of alcohol fuels feasibility study grants and cooperative agreement awards. In response to requests by four congressmen, GAO evaluated the criteria and process that DOE used to evaluate proposals and make award selections and the extent to which awards were made to large and small businesses.

GAO found that certain events which occurred during the process DOE used to select awardees reduced the integrity of the selection process and furthermore cast doubt over whether DOE selected the best proposals for award. DOE devoted substantial effort to conducting detailed technical evaluations of the proposals it received, yet frequently disregarded these evaluations in making award selections. It often passed over proposals with high technical rankings to select those with much lower rankings. The primary rationale given by DOE for selecting lower ranked proposals was the desire to achieve nontechnical objectives set forth in its program policy factors. While consideration of such factors in the selection process is valid, GAO believed that their application in the alcohol fuels competitions was excessive. The integrity of the DOE awards selection process was further reduced by altered cost and business management evaluations. In addition to scoring each proposal according to technical criteria, DOE evaluated the cost reasonableness and business management aspects of each cooperative agreement proposal. GAO found that the ratings on nearly half the proposals had been altered by one member of the evaluation team. Finally, GAO found that the approach DOE used in conducting its competitions limited the success small businesses had in obtaining contract awards. The DOE evaluation criteria was slanted so that large corporations with considerable financial resources were in a better position to receive contract awards.

Recommendations for Executive Action

  1. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Energy should establish guidelines governing the application of program policy factors in the selection process and the treatment of minority viewpoints during the proposal evaluation process. Concerning the program policy factors, these guidelines should set forth appropriate limits on the importance attributed to program policy factors in the selection process and direct that, when applied the factors are applied consistently to all proposals. With respect to the treatment of minority views, the guidelines should provide an equitable mechanism for hearing and considering those views, perhaps in minority report format, while still maintaining the consensus viewpoint for consideration.

    Agency Affected: Department of Energy

  2. Status:

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Energy should strengthen the DOE commitment towards enhancing small business involvement. While implementing this commitment could involve a number of specific steps, GAO believes that some of the more obvious ones include providing assistance to help small businesses prepare better proposals, placing small business advisors on proposal evaluation teams, and establishing targets for small business involvement.

    Agency Affected: Department of Energy


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