The costs associated with these class action suits are large, in part, because several of the suits involve multiple contractors and law firms. DOE Did Not Establish Cost Guidelines

Cost guidelines are necessary for contractors and law firms to know what costs will or will not be reimbursed; however, DOE had not developed and implemented such cost criteria. DOE was reimbursing its contractors at a much higher rate. These include costs for word processing services, overtime, utilities and supplies, and legal publications. DOE Recently Began to Control Litigation Costs

DOE has recognized that its controls over contractors’ litigation costs are problematic and has taken some actions to improve them. A staff has been assembled in headquarters to develop requirements and procedures for reviewing bills and to conduct detailed review of bills. They provided comments and information on the actions they are taking to reduce litigation costs and improve cost controls. Costs Incurred for Litigation Data Bases

Savings DOE Could Have Achieved by Requiring Discounted Professional Fees

Savings DOE Could Have Achieved If Rate for Document Duplication Had Been Standardized

Objectives, Scope, and Methodology

On October 29, 1993, the Chairman of the Subcommittee on Oversight and Investigations, House Committee on Energy and Commerce, asked us to review the Department of Energy’s (DOE) expenses for outside litigation. After discussions with the Chairman’s office, we agreed to (1) determine how much DOE was spending for litigation to defend its contractors, (2) evaluate whether adequate controls are in place to ensure that all of these costs are appropriate, and (3) assess the efforts being made by DOE to improve its controls over these outside litigation costs.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on the Department of Energy's (DOE) efforts to control its litigation costs, focusing on: (1) the amount DOE spends on litigation to defend its contractors; and (2) whether DOE controls are adequate to ensure that these legal costs are appropriate.

What GAO Found

GAO found that: (1) although DOE cannot accurately determine the total amount it reimburses contractors for their outside litigation costs, preliminary findings show that in 1992, DOE spent about $40 million on its contractor litigation costs; (2) most DOE contractor legal costs are incurred through the hiring of outside law firms; (3) DOE does not have effective cost controls for reimbursing outside legal services; (4) DOE has been billed at higher rates than other federal entities for professional legal fees, travel, word processing, document duplication, and other litigation expenses because it has not effectively overseen contractor payments or developed adequate criteria that define which costs are reimbursable; and (5) DOE efforts to improve its cost controls include issuing specific cost guidelines, instituting procedures for periodically reporting all litigation costs, establishing audit functions that enable it to conduct detailed reviews of legal bills, and consolidating cases involving multiple contractors and law firms to improve case management and reduce costs.