The Department of Energy (DOE) is not doing enough to explore alternative approaches to its management and operating (M&O) contracts, the Government Accountability Office (GAO) said in a report released Thursday.
The government spent nearly $19 billion on 22 DOE M&O contracts in fiscal 2015, three-quarters of its total spending, the report said. DOE did not consider during the acquisition planning process alternatives for 16 of these contracts “beyond extending or competing” them; these 16 contracts involved approximately $13.9 billion, it said.
Federal acquisition regulations direct M&O acquisition planning teams must consider broader alternatives, which could include the use of non-M&O contracts for some activities, for instance.
Moreover, roughly half of DOE’s M&O contract spending in fiscal 2015 was on contracts that were awarded noncompetitively or only received one offer, the GAO said.
NNSA did not consider alternatives in the acquisition planning documents for some of its contracts, including in 2014 for the Kansas City National Security Campus and in 2015 the Sandia National Laboratories, the GAO found. These two contracts, it noted, were awarded noncompetitively – specifically, they were noncompetitively extended.
The GAO also said that in 2012 it found NNSA’s budget estimate development process “relied heavily on its M&O contractors to develop budget estimates without an effective, thorough review of the validity of those estimates.”
NNSA officials told the GAO at that time that reviews of these budget estimates were minimized “because of the ‘inherent trust’ between NNSA and its M&O contractors that results from its contracting strategy with them.” However, in 2015 the Commission to Review the Effectiveness of the National Energy Laboratories determined DOE-laboratory relationships had “eroded.”
The GAO recommended that M&O contract acquisition planning documents be required to include contracting alternatives and that a periodic review process be established to assess DOE’s experience with other contract approaches beyond the single M&O model.
DOE said it will update its guidance accordingly and noted in its response that “the departmental elements with M&O contracts are in the best position to develop a process to analyze their experiences with those contracts.”
