GSA's Guidance and Oversight Concerning Areawide Utility Contracts

GAO-02-56R: Dec 17, 2001

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In a September 2001 report, GAO found that the District of Columbia school system used a utility contract with the Washington Gas Light Company to obtain $43 million worth of general facility improvements and maintenance--work that was outside the scope of the contract. GAO found that the General Service Administration's (GSA) guidance does not adequately indicate that, when the utility is not the only available source, services ordered under areawide contracts must be provided by the utility acting in its capacity as a public utility. In addition, GSA lacked oversight of the school system's use of the contract and was unaware of the scope of work ordered under it, largely because neither the school system nor Washington Gas complied with GSA's reporting requirements.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: GSA performed the following tasks: (1) requested the Department of Energy to conduct a study of the utility industry as it relates to energy management services in accordance with the Energy Policy Act of 1992; (2) adopted the revised definition of, and additional guidance on, what constitutes a demand-side energy management service; and (3) required agencies to follow the required justification and approval process of the Federal Acquisition Regulation at 6.303 for using other than full and open competition, including updating training materials regarding the formal justification and approval process and items to be addressed in FAR 6.303-2.

    Recommendation: The GSA should direct a revision of GSA's guidance on areawide utility contracts to emphasize that ordering agencies must use competitive acquisition procedures to procure utility services that are (1) not subject to regulatory authority and (2) available from more than one supplier.

    Agency Affected: General Services Administration

  2. Status: Closed - Implemented

    Comments: In response to our recommendation, GSA took action to (1) provide clearer language in areawide regarding Demand Side Management (DSM)work authorized to be ordered under an areawide contract, (2) conduct periodic sampling of contract actions placed against areawide contracts for DSM services, (3) encourage agencies to compete DSM requirements to the maximum extent practiciable between utilities when two or more utilties have areawides serving the same geographic area, (4) provide clearer guidance to both agencies and utilities on the use of the areawide contract for DSM services in any training, literature, training manuals, correspondence, and conferences, (5) review the terms of the areawide contracts to ensure that ordering agencies and the public utilities under contract adhere to the terms of the contract, and (6)issue new instructions to participating utility companies to provide GSA with a copy of any future authorization for energy management services.

    Recommendation: GSA should conduct an assessment--or request the GSA Inspector General to conduct an assessment--of the extent to which (1) ordering agencies and contractors are reporting the use of the contracts as required and (2) GSA is adequately monitoring the contracts' use. If appropriate monitoring is not taking place, GSA should develop cost-effective controls to ensure that agencies are complying with reporting requirements and properly using the contracts.

    Agency Affected: General Services Administration


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