Summary

In 1989 GAO pointed out problems in the Department of Energy's (DOE) award fee process and recommended that DOE restructure it to reduce the level of discretion exercised in making a final determination. Although DOE tried to improve the process, the final outcome of the first award fee determination for EG&G--the contractor now running the Rocky Flats Plant in Colorado--indicates that some of same problems persist. Despite findings of significant deficiencies and marginal environmental, safety, and health performance, the contractor's overall performance was deemed "good" and slightly more than $1.7 million was awarded. This increase was possible through discretion exercised by the fee determination official with the concurrence of DOE's Defense Program Office, suggesting that the process remains subjective. Furthermore, the fee was awarded without clearly showing that at least 51 percent of the fee was based on environmental, safety, and health performance--a DOE requirement.

GAO found that: (1) during the award fee process, DOE raised the contractor's rating for the period of April 1991 through July 1991 from a satisfactory level with no recommended award fee to a performance level resulting in an award fee of more than $1.7 million; (2) the DOE Rocky Flats Office manager, who served as the fee determination official, cited six specific contractor accomplishments in addition to overall observations on contractor performance to justify the increased award, but some of the cited accomplishments were not consistent with the award fee board's findings, and the fee determination officer did not address numerous significant ESH deficiencies that the board cited; (3) the fee determination officer did not question the validity of the board's findings, but noted that the contractor could not be expected to meet the board's standards due to the legacy of ESH problems at Rocky Flats that the contractor was brought in to fix; (4) DOE supported the fee determination officer's award fee score and schedule; (5) in order to stress contractor ESH performance in the award fee process, DOE now requires that at least 51 percent of the award fee be associated with contractor ESH performance; and (6) in the board's assessment, contractor ESH activities were weighted to account for 57 percent of the contractor's performance score, but the information provided to support the final rating did not indicate how DOE weighted contractor ESH performance in the final determination.