Energy Management:

Tightening Fee Process and Contractor Accountability Will Challenge DOE

RCED-92-9: Published: Oct 30, 1991. Publicly Released: Dec 5, 1991.

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Pursuant to a congressional request, GAO provided information on the Department of Energy's (DOE) appraisal process for management and operating contractors, focusing on the: (1) effectiveness of DOE use of performance objectives to set expectations and evaluate contractor performance; (2) effectiveness of DOE use of data from on-site reviews to evaluate contractor performance for award fee purposes; and (3) effect of new DOE award fee regulations on the performance evaluation and award determination process.

GAO found that: (1) the Albuquerque Field Office's use of performance objectives does not result in effective evaluations of contractor performance or effectively communicate DOE expectations to contractors; (2) Albuquerque's contractor performance objectives are often very broad and provide no criteria or standards against which to evaluate contractor performance; (3) DOE has managed its contractors by establishing broad objectives and relying on contractors to plan and carry out the programs; (4) since Albuquerque does not ensure that contractors take prompt action to correct identified deficiencies, a contractor's failure to implement recommendations may not only go unnoticed by Albuquerque officials, but also may not affect the contractor's performance evaluation; (5) the new DOE award fee policy is designed to make contractors, rather than the government, accountable for costs that could have been avoided by prudent contractor action; and (6) because of the magnitude of the changes needed, contractors may be eligible for increased compensation long before DOE is able to fully implement the accountability requirements.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Initially, DOE concurred, indicating that it was carrying out similar recommendations made by an internal review. DOE now indicates the only action needed was the continuation of the policies and practices already implemented. These policies and procedures, however, existed during the period reviewed and did not prevent the problems identified.

    Recommendation: The Secretary of Energy should ensure continued improvement in the performance evaluation and award determination processes by: (1) requiring that specific, measurable performance objectives be developed; (2) developing procedures to communicate to the contractor what is expected and how it will be measured; and (3) establishing procedures to ensure that those requirements are implemented consistently by all DOE organizations that take part in the award fee process.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: DOE issued clarifying guidance requiring the program secretarial officers to establish controls and tracking systems to ensure review findings are considered in fee determinations, and ensure that contractors respond to all findings and reviews consider actions on all previous findings. DOE field office managers were also reminded of the contractors' self assessments requirements.

    Recommendation: The Secretary of Energy should: (1) ensure that the results of on-site reviews are given appropriate consideration in the award determination process; (2) establish procedures for requiring and tracking contractor responses to all review findings; (3) ensure that contractor responses to previous review findings are considered in all on-site reviews; and (4) establish procedures for ensuring that all deficiencies identified in performance evaluations are addressed in contractor self-assessments.

    Agency Affected: Department of Energy

  3. Status: Closed - Implemented

    Comments: DOE agreed that implementing the accountability requirement requires new procedures, increased staff training, and realignment of field resources and that sufficient time is available to include the changes as management and operations contracts are renewed. If a field office and contractor are not ready, the program will be run on a test basis if implementation is not made by the contractor.

    Recommendation: The Secretary of Energy should ensure that procedures for determining contractor liability for lost or damaged property and avoidable costs are in place and that sufficiently trained staff are available to implement the new accountability requirements, or delay the planned increase in award fees until DOE is ready to hold the contractors accountable.

    Agency Affected: Department of Energy


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