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Pursuant to a congressional request, GAO reviewed the Department of Energy's (DOE) operating contractors' use of systems contracting to determine whether DOE ensures that systems contracting is in the government's best interest.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Energy 1. To help ensure that the operating contractors' use of systems contracting is in the best interest of the federal government, the Secretary of Energy should enforce its requirement that GSA be used when it is economically advantageous to the government by having the operating contractors compare and evaluate the costs and benefits of systems contracting with purchases from GSA before awarding such contracts.
Closed - Implemented
DOE concurred with this recommendation, noting its long-standing policy concerning the use of government sources of supply. On June 21, 1989, DOE reminded offices overseeing M&O contractors that they must review the contractor's policies, procedures, and practices regarding government sources of supply, as well as ensure that appropriate checks and balances are in place to ensure compliance.
Department of Energy 2. To help ensure that the operating contractors' use of systems contracting is in the best interest of the federal government, the Secretary of Energy should require DOE operating contractors to provide detailed documentation supporting their evaluations and independently review the contractors' evaluations.
Closed - Implemented
DOE guidance to offices overseeing M&O contractors added a requirement to ensure that reasons for decisions not to use government sources of supply be documented in both the field office's official contract file, as well as the contractor's file. DOE did not address the need for it to independently review the cost benefit analysis that supports the use of the systems contracting process.
Department of Energy 3. The Secretary of Energy should require Sandia to establish adequate internal controls to help ensure that: (1) the lowest-cost items available under a systems contract are selected unless otherwise justified; and (2) items added to the systems contract are obtained at the lowest prices consistent with requirements for quality and timeliness.
Closed - Implemented
DOE promised increased emphasis on oversight. Sandia agreed to examine automated system enhancements to ensure that items purchased are the lowest priced, considering quality requirements, and to establish procedures requiring market surveys for items added to systems contracts to ensure prices of the item are competitive. Sandia eliminated nonstock purchases under the system contracting process.
Department of Energy 4. The Secretary of Energy should determine whether other operating contractors have established adequate controls over their purchases under systems contracts and, if not, require them to establish such controls.
Closed - Implemented
DOE concurred with this recommendation. DOE offices overseeing M&O contractors reviewed controls over systems contracts and reported to the Property and Equipment Management Office that the contractors were in compliance with DOE regulations.

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