Summary

Federally Funded Research and Development Centers first came into existence during World War II to meet special research needs that federal and private-sector facilities were unable to meet. Currently, 39 centers are sponsored by eight federal agencies--the Energy Department (DOE) sponsors 18, the Defense Department (DOD) sponsors 11, and NASA sponsors one. In 1992, a congressional committee reported on variations in the fees paid by sponsoring federal agencies for management of the centers, the formulas used to calculate the fees, and the justifications for paying the fees provided by the sponsoring agencies. The committee also indicated that because there were no governmentwide guidelines for setting the fees, evaluating their reasonableness was difficult. This report provides information on federal policies and practices governing the fees pair by DOE, DOD, and NASA for managing the centers.

GAO found that: (1) although DOD has specific regulations for its centers' fees, DOE follows its operation and management contractor regulations, and NASA uses the Federal Aquisition Regulation and its own general procurement regulations; (2) FY 1994, DOE paid about $122.8 million in fees to compensate contractors for overhead costs, fund contract performance awards, and provide incentives; (3) in FY 1994, DOD paid about $45.9 million in fees for corporate research, capital equipment and facilities, working capital requirements, contingencies, and unreimbursed costs; (4) in FY 1994, NASA paid $16.5 million in fees for a contract performance award; (5) DOE centers are all operated under management and operating contracts and the contractors' work generally covers more than R&D; and (6) 1994 DOE contract reforms revised contracts to include objective performance measures, but not all contracts now link fees to contractor performance.