Specifically, we (1) determined the status of the Contract Reform Team’s recommendations; (2) evaluated the effect of the initiatives on competition for M&O contracts, which are used to manage and operate DOE’s facilities; (3) evaluated DOE’s initial efforts at inserting performance goals in its M&O contracts; and (4) evaluated DOE’s early use of incentive contracts to control the costs of its M&O contracts. Together, these reform actions, among others, should serve as the framework for contract reform. DOE Has Acted on 47 Recommendations but Some Actions Did Not Comply With Contract Reform Team’s Requirements

DOE states that it has completed action on 47 recommendations. We reviewed the documentation for each of DOE’s completed actions performed in response to the Reform Team’s recommendations and found that nine actions did not meet the specific requirements of the Reform Team’s recommendations. However, even the extended deadlines have been exceeded as well. Conclusions

Although, DOE has made significant progress in setting a framework for contract reform through the issuance of new policies, guidance, and plans, the real test of contract reform will be in the implementation of these reforms in contracts. DOE has (1) changed its policy and adopted competitive awards as its new contracting standard, (2) included performance goals in its contacts, and (3) moved quickly to implement the use of incentive contracts to control costs. As a result, we could not link the contract goals to those of the strategic plan. As DOE begins to use incentive contracts to control costs, its M&O procurement regulations are not providing the necessary direction for the placement of these incentives in contracts by DOE’s contracting officers. In addition, the contracting officer may have the proposal reviewed by an auditor.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed certain aspects of the Department of Energy's (DOE) contract reform initiative.

What GAO Found

GAO found that: (1) DOE has completed action on 47 of the 48 contract reform recommendations, but 9 of the completed actions did not meet the requirements of the Contract Reform Team; (2) DOE also missed its deadlines for completing the required new policies, guidance, and plans that serve as the framework for contract reform by an average of 11 months; (3) the missed deadlines have added to the time needed to implement contract reform; (4) while DOE has changed its policy and adopted competitive contract awards as the new standard for management and operating (M&O) contracts, in practice, DOE continues to make noncompetitive awards for these contracts; (5) DOE's contracting offices are including performance goals in their M&O contracts, but the contract goals are not always clearly linked to those of the Department; (6) DOE's contracting offices have moved quickly to implement another important reform by using incentive contracts, but the negotiation of these incentives did not always prove effective; and (7) since DOE is authorized to use its own procurement regulation for M&O contracts, the contracting officers have been left to use their own judgment and have achieved different results with the use of these incentives.