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In response to a congressional request, GAO reviewed certain aspects of the operations of the Department of Energy's (DOE) Naval Petroleum Reserve, California (NPRC), including: (1) the process used in establishing the fee for the contractor to operate NPRC in fiscal year 1984; (2) the adequacy of NPRC audit coverage; and (3) justification for the proposed construction of additional NPRC office space.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Energy 1. The Secretary of Energy should verify and document the consistency of the fee-setting process with relevant DOE criteria prior to awarding the next contract to operate NPRC.
Closed - Implemented
DOE provided documentation showing that all relevant factors were considered in negotiating the 1985 fee. DOE contends that the 1984 fee considered these factors, as evidenced by the subsequent typing and insertion in the files of the contracting officer's personal notes. Rebuttal of this contention would be time consuming and probably not cost-effective.
Department of Energy 2. The Secretary of Energy should direct that the NPRC audit staff report to a management level that is independent of the officials who are directly responsible for the operations they review, such as the Inspector General, the Assistant Secretary for Fossil Energy, or the Under Secretary of Energy.
Closed - Not Implemented
Although GAO does not feel that the reporting level of the local audit staff has been elevated sufficiently high, the increased coverage being provided by the Inspector General effectively accomplishes the purpose of this recommendation.
Department of Energy 3. The Secretary of Energy should fully consider the leasing alternative before authorizing new construction due to the relatively high cost of constructing a new facility at NPRC compared to leasing space in Bakersfield.
Closed - Implemented
DOE has technically complied with this recommendation and concluded that construction is still preferable to leasing. The primary objective was that GAO provide a basis for questioning the construction of the building. According to DOE, no construction will take place until 1988 at the soonest. DOE appropriations should be monitored for a possible accomplishment report.

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