DOE said that it wanted to increase its oversight of contractors and involve federal employees more in contract management. Both field and headquarters offices competed for the 1,200 positions, but DOE used a different process to allocate the new positions to the offices. Collectively, the offices requested 1,575 new FTEs and proposed a total of $1.235 billion in savings. These savings do not include the FTEs’ salary and benefit costs, about $70,000 per employee—$84 million annually if all 1,200 new employees are hired. In its review of the field offices’ revised bids, the evaluation team concluded that the justifications were not adequate for almost $900 million—87 percent—of the $1.035 billion in savings targeted for the 2 years. DOE Is Developing a Reporting System to Track Cost Savings and Productivity Improvements

DOE is assured of lower costs because the agency is incurring major reductions in its cleanup budget—about $913 million in fiscal years 1995 and 1996. By the fourth quarter of fiscal year 1995, procedures to collect, report, and validate the productivity improvements and resulting dollar savings related to the new staff are expected to be in place. Our review focused on the following three major questions:
What process did DOE use to justify the new hires? Did DOE’s justifications support the claimed cost savings and productivity improvements? How is DOE assuring itself that the established cost savings and productivity improvements will be achieved?
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Department of Energy's (DOE) process for hiring new employees and improving the productivity of environmental cleanup, focusing on: (1) the process DOE used to justify the new hires; (2) whether DOE justifications support the claimed cost savings and productivity improvements; and (3) how the cost savings and productivity improvements will be achieved.

What GAO Found

GAO found that: (1) DOE used a competitive bidding process to justify the allocation of 1,200 new positions in its field and headquarters offices; (2) the offices requested 1,575 new staff and estimated that the new staff could save over $1.2 billion dollars in fiscal years (FY) 1995 and 1996, resulting from increased federal oversight of contractors and greater federal involvement in contract management; (3) DOE lowered the 2-year savings estimate to about $890 million, not including the $84 million annually in compensation for the 1,200 new staff; (4) DOE did not adequately justify about $900 million in savings from productivity improvements; (5) although DOE is unsure of the justifications, it is reducing its Environmental Management Office's budget by about $300 million in FY 1995, before seeing if productivity improvements occur; and (6) DOE is developing procedures to measure productivity improvements and resulting cost savings the new staff are expected to achieve.