Department of Energy:

Performance Evaluations Could Better Assess Management and Operating Contractor Costs

GAO-19-5: Published: Feb 26, 2019. Publicly Released: Feb 26, 2019.

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(202) 512-3841
bawdena@gao.gov

 

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The Department of Energy depends on the expertise of firms, universities, and others to do much of its work, including managing and operating nuclear weapons labs. In 10 years, it spent about $193 billion on management and operating contracts.

DOE generally gave these contractors high ratings and awarded over 90% of available performance incentives. However, we found DOE could do a better job reporting on how well contractors spend these federal funds.

We made 7 recommendations, including that DOE report more useful information on cost performance.

DOE remains on our High Risk List for inadequate contractor management and oversight.

Sites where the Department of Energy has contracts for management and operations of its facilities

This map of the United States shows 22 locations.

This map of the United States shows 22 locations.

Additional Materials:

Contact:

Allison Bawden
(202) 512-3841
bawdena@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

In fiscal years 2006 through 2016, six offices within the Department of Energy (DOE) generally used one of three different approaches to evaluate management and operating (M&O) contractor performance. Although these approaches varied in the performance criteria and methodologies used for determining contractor ratings and incentives, all the offices annually set expectations for contractors and assessed performance.

In analyzing DOE's fiscal year 2016 Performance Evaluation Reports (PER), GAO found that these reports provided less information on M&O contractors' cost performance than on contractors' technical and administrative performance. The cost information provided in the PERs often was not detailed, did not indicate the significance of the performance being described, and applied only to specific activities. Further, the information is of limited use for acquisition decision-making, such as deciding whether to extend the length of a contract, because it does not permit an overall assessment of cost performance. A key reason PERs did not include more cost performance information is that the DOE offices' policies do not require specific assessments of cost performance or discuss how to ensure cost information is useful for future acquisition decision-making. By updating policies to require inclusion of quality cost performance information in PERs, DOE offices could better assess M&O contractors' costs, improve acquisition decision-making, and ensure performance evaluations fully address required elements.

Based on GAO's review of DOE M&O contractor performance evaluations from fiscal years 2006 through 2016, DOE generally provided high performance ratings and more than 90 percent of available performance incentives (see figure). Ratings for some areas of contractor performance, as well as ratings for contractor performance at specific DOE sites, varied from this trend. For example, three times during this period contractors received 50 percent or less of available award and incentive fees due to a major accident and safety and security issues.

Median Annual Percentage of Available Award Fee Provided to Management and Operating Contractors, Fiscal Years 2006 through 2016

Median Annual Percentage of Available Award Fee Provided to Management and Operating Contractors, Fiscal Years 2006 through 2016

Why GAO Did This Study

In fiscal years 2006 through 2016, the federal government spent almost $193 billion on DOE's M&O contracts—a form of contract that traces its origins to the Manhattan Project. Six DOE offices use M&O contracts to manage and operate federally owned sites that perform work to fulfill DOE's diverse missions, such as conducting scientific research and maintaining nuclear weapons.

GAO was asked to review DOE's performance management of its M&O contracts. This report examines, among other things, (1) how DOE offices evaluated M&O contractor performance in fiscal years 2006 through 2016; (2) the extent to which DOE's fiscal year 2016 M&O contractor PERs provide information on contractors' technical, administrative, and cost performance; and (3) the results of DOE's M&O contractor performance evaluations for fiscal years 2006 through 2016.

GAO reviewed performance evaluation documents for 21 of the 22 DOE M&O contracts; analyzed DOE policies, procedures, and guidelines, and federal regulations; analyzed technical, administrative, and cost aspects of M&O contracts' 2016 PERs; and interviewed DOE officials.

What GAO Recommends

GAO is making seven recommendations to DOE, including to each of the six DOE offices to update their policies requiring that PERs include quality information to enable an overall assessment of M&O contractor cost performance. In commenting on a draft of this report, DOE generally agreed with these recommendations.

For more information, contact Allison Bawden at (202) 512-3841 or bawdena@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: NNSA concurred with the recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Administrator for the National Nuclear Security Administration should develop and document clear procedures for implementing NAP-4C, specifying the process for collecting contractor performance information and describing how officials are to ensure this information can be traced to rating determinations. (Recommendation 1)

    Agency Affected: Department of Energy: National Nuclear Security Administration

  2. Status: Open

    Comments: The Office of Energy Efficiency and Renewable Energy partially concurred with the recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Assistant Secretary for the Office of Energy Efficiency and Renewable Energy should update its policy to require that Performance Evaluation Reports include quality information on cost performance to enable an overall assessment of Management and Operating contractor cost performance. (Recommendation 2)

    Agency Affected: Department of Energy: Office of Energy Efficiency and Renewable Energy

  3. Status: Open

    Comments: The Office of Environmental Management concurred with the recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Assistant Secretary for the Office of Environmental Management should update its policy to require that Performance Evaluation Reports include quality information on cost performance to enable an overall assessment of Management and Operating contractor cost performance. (Recommendation 3)

    Agency Affected: Department of Energy: Office of Environmental Management

  4. Status: Open

    Comments: The Office of Fossil Energy concurred with the recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Assistant Secretary for the Office of Fossil Energy should update its policy to require that Performance Evaluation Reports include quality information on cost performance to enable an overall assessment of Management and Operating contractor cost performance. (Recommendation 4)

    Agency Affected: Department of Energy: Office of Fossil Energy

  5. Status: Open

    Comments: NNSA concurred with the recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Administrator for the National Nuclear Security Administration should update its policy to require that Performance Evaluation Reports include quality information on cost performance to enable an overall assessment of Management and Operating contractor cost performance. (Recommendation 5)

    Agency Affected: Department of Energy: National Nuclear Security Administration

  6. Status: Open

    Comments: The Office of Nuclear Energy partially concurred with the recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Assistant Secretary for the Office of Nuclear Energy should update its policy to require that Performance Evaluation Reports include quality information on cost performance to enable an overall assessment of Management and Operating contractor cost performance. (Recommendation 6)

    Agency Affected: Department of Energy: Office of Nuclear Energy

  7. Status: Open

    Comments: The Office of Science partially concurred with the recommendation. When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Director of the Office of Science should update its policy to require that Performance Evaluation Reports include quality information on cost performance to enable an overall assessment of Management and Operating contractor cost performance. (Recommendation 7)

    Agency Affected: Department of Energy: Office of Science

 

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