The recommendations included three key areas: selecting alternatives to traditional contracting arrangements used for management and operation of its sites, increasing competition to improve performance, and developing and using performance-based contracting tools. DOE Has Made Progress in Implementing Contract Reforms, but Challenges Remain

Since 1996, the department has made progress in implementing three key contract reform initiatives—developing alternative contracting approaches, increasing competition, and converting to performance-based contracts, although DOE continues to address challenges in implementing these initiatives. Over the 8 years since the contract reform initiative was introduced, DOE has primarily gauged its progress by monitoring implementation of the reforms and reviewing individual contracts rather than by developing objective measures to determine whether the reforms have resulted in improved contractor performance. DOE has had problems with cost and schedule performance on its contract for the Mound site in Ohio. DOE faces a fundamental challenge to ensuring the effectiveness of its contract reform initiative—developing an approach to managing the initiative that is more consistent with the best practices of high-performing organizations. Recommendation for Executive Action

To improve the effectiveness of DOE’s contract reform initiative, as well as other management improvement initiatives, we recommend that the department develop an approach to implementing its initiatives that incorporates best practices including the key elements of (1) clearly defined goals, (2) an implementation strategy that sets milestones and establishes responsibility, (3) results-oriented outcome measures, and (4) a mechanism that uses results-oriented data to evaluate the effectiveness of the department’s initiatives and to take corrective actions as needed.
What GAO Found

The Department of Energy (DOE), the largest civilian contracting agency in the federal government, relies primarily on contractors to operate its sites and carry out its diverse missions, such as maintaining the nuclear weapons stockpile, cleaning up radioactive and hazardous wastes, and performing research. Although federal law generally requires federal agencies to use competition in selecting a contractor, until the mid-1990s, DOE contracts for the management and operation of its sites generally fit within an exception that allowed for the use of noncompetitive procedures. Since 1996, DOE has made progress toward implementing contract reform initiative in three key areas--developing alternative contracting approaches, increasing competition, and using performance-based contracts. However, DOE continues to encounter challenges in implementing these initiatives. Although DOE has made strides in implementing contract reform initiatives, it is difficult to determine whether contractors' performance has improved because objective performance information is scarce. Over the past 8 years, DOE has primarily gauged progress by measuring its implementation of the reforms, such as the number of contracts competed each year, and by reviewing individual contract performance incentives. DOE faces a fundamental challenge to ensuring the effectiveness of its contract reform initiatives--developing an approach to managing its initiatives and sustaining improvements that would incorporate the best management practices of high-performing organizations. These practices include four key elements: (1) clearly defined goals; (2) an implementation strategy that sets milestones and establishes responsibility; (3) results-oriented outcome measures, established early in the process; and (4) systematic use of results-oriented data to evaluate the effectiveness of the initiative and make additional changes where warranted.