The U.S. Department of Energy could do a better job of monitoring how its contractors spend billions of dollars in federal money, the Government Accountability Office said Tuesday.
A new GAO report recommends DOE entities, including the Office of Environmental Management and the semiautonomous National Nuclear Security Administration, put more emphasis on how management and operations contractors control costs.
The Energy Department spent roughly $193 billion on management and operations contracts for facilities around the country from fiscal years 2006 to 2016, the report says. In annual performance reviews the agency typically issued the contractor high marks and over 90 percent of available performance incentive fees.
Concern over the growing environmental liability for within the weapons complex, has the GAO putting greater scrutiny on how the Energy Department tracks and manages its costs.
The Energy Department generally spends about 90 percent of its annual budget on contracts. In fiscal 2016 it oversaw contracts valued at more than $24 billion.
The agency’s “history of inadequate management and oversight of its contractors has led us, since 1990, to designate aspects of the department’s contract management as a high-risk area vulnerable to fraud, waste, abuse, and mismanagement,” the GAO said.
The information available in performance reviews, such as those found in agency fee scorecards, do rate contractors on “cost control,” or staying within budget. Byt such reviews lacked detail, applied only to certain activities, and generally were of limited value in DOE’s determination whether to extend a contract, the GAO said.
The government management watchdog reviewed performance evaluation reports issued for 21 operations contracts at a half-dozen DOE branches: the NNSA; and the Offices of Environmental Management, Energy Efficiency and Renewable Energy, Fossil Energy, Nuclear Energy, and Science.
The NNSA is budgeted at $15 billion for fiscal 2019 to manage the nation’s nuclear weapons stockpile and promote international nuclear safety and nonproliferation. The Office of Environmental Management has a budget of $7.2 billion to oversee cleanup and waste management of active and retired nuclear weapons sites.
The GAO studied performance evaluations for two Environmental Management contracts for the Savannah River Site in South Carolina and one for the Waste Isolation Pilot Plant (WIPP) in New Mexico. At the NNSA, GAO studied reviews performed on nine contracts: Savannah River, the Los Alamos National Laboratory in New Mexico, Lawrence Livermore National Laboratory in California, Nevada National Security Site, NNSA Production Office locations, Pantex Plant in Texas, Y-12 National Security Complex in Tennessee, Sandia National Laboratories in New Mexico, and the Kansas City, Mo., National Security Campus.
There is evidently a limited number of contenders for these big contracts. About half of DOE’s fiscal 2015 spending on management and operation was either not awarded competitively or drew only a single offer for the contract.
Two of the three instances in which contractors received less than 50 percent of the incentive fee were connected to a nearly three-year waste disposal outage at WIPP. There were two unrelated accidents, a truck fire and a radiation release at the underground disposal site in February 2014. Both the contractor for WIPP and the then-management contractor for Los Alamos National Laboratory, which packaged the radioactive waste drum that burst, received low ratings.
The other sub-50 percent rating came in 2008 after the Lawrence Livermore National Laboratory in California was assessed an unsatisfactory rating for security.
The Office of Environmental Management acknowledges cost planning and reporting at WIPP “did not get much attention during the site’s recovery from two 2014 accidents but that the office plans to evaluate contractor cost performance more rigorously in the future,” the GAO said. This shift in emphasis is occurring as the transuranic waste disposal site moves toward more normal operations after its closure.
The Office of Nuclear Energy’s Idaho National Laboratory consistently claimed over 90 of its total potential fees during the review period, as did the NNSA’s Kansas City site.
While GAO listed seven recommendations, only two were directed at NNSA, and one at the DOE nuclear cleanup office.
Both NNSA and the Office of Environmental Management concurred with the GAO findings and said they could provide more quality cost data into their performance reviews. The NNSA also said it is complying with the recommendation to provide detailed procedures on its Corporate Performance Evaluation Process for Management and Operating Contractors policy (NAP-4C).
Like NNSA and Environmental Management, the Office of Nuclear Energy was urged to include more quality information on costs in contractor reviews. The GAO said such data is integral to better cost control of contractors.
The Office of Nuclear Energy pushed some, saying the report creates the impression it does not do an adequate job of monitoring costs. The Energy Department monitors expenses in both daily operations and the year-end annual planning process, as well as the decisions on whether to extend the contract for an incumbent site vendor, according to its response.
While the current process is not “fundamentally flawed,” Nuclear Energy said it would incorporate more cost data in its contractor review process.
The department has often used fee reductions outside its normal review process to dock contractors for issues such as accidents or other safety problems, the GAO noted.
The GAO performance audit was conducted from October 2016 to February 2019. The report was filed for the Senate Homeland Security and Governmental Affairs Committee and the House Energy and Commerce Committee.
