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Report to the Chairman, Committee on Government Reform, House of 
Representatives: 

June 2006: 

Doe Contracting: 

Better Performance Measures and Management Needed to Address Delays in 
Awarding Contracts: 

GAO-06-722: 

GAO Highlights: 

Highlights of GAO-06-722, a report to the Chairman, Committee on 
Government Reform, House of Representatives 

Why GAO Did This Study: 

The Department of Energy (DOE), the largest civilian contracting agency 
in the federal government, spends over 90 percent of its annual budget 
on contracts to operate its facilities and carry out its diverse 
missions. Federal law and regulations outline the steps DOE must follow 
in planning and carrying out the contract award process and emphasize 
the importance of awarding contracts in a timely manner. Several of 
DOE’s recent contracts have taken much longer than anticipated to 
award. GAO was asked to determine (1) the extent to which DOE has 
experienced delays in awarding contracts and factors contributing to 
delays, (2) the impacts of any such delays, and (3) the extent to which 
DOE has taken steps to address the delays. 

What GAO Found: 

Delays in awarding DOE contracts occurred in most of the 31 contracts 
that GAO reviewed. In fiscal years 2002 through 2005, DOE awarded 131 
contracts valued at $5 million or greater; the 31 contracts GAO 
reviewed were affiliated with DOE’s three largest component 
organizations and represented about 73 percent of the dollars awarded. 
None of the 24 contracts awarded competitively was awarded by the date 
planned in DOE’s schedule, with 23 of the contracts awarded between 
several weeks and 4-1/2 years later than the planned date. Of the 7 
contracts awarded without competition, 6 were awarded on time or nearly 
so, with the remaining contract awarded 2 months late. Delays in 
awarding contracts occurred, in part, because DOE had to modify its 
approach after beginning the contract award process. At least some of 
the delays were avoidable, such as when DOE had to rework a contract 
award to correct errors. 

Delays in awarding contracts could increase costs both to DOE and 
companies competing for DOE work. Because the department does not track 
its costs for awarding contracts, it was not feasible to quantify the 
impact of these delays. Companies competing for DOE’s work may also 
face increased costs when contract awards are delayed, such as the 
costs associated with ensuring that key personnel identified in 
proposals continue to be available. Increased costs and delays may 
affect the willingness of companies to compete for future DOE work, 
although the actual impact is unknown. 

Until recently, DOE had not been addressing delays in awarding 
contracts because incomplete performance data indicated that most of 
the contracts were awarded in a timely manner. In late 2005, DOE began 
several efforts to improve its contract award process, including 
implementing improved measures of contract award timeliness and 
restructuring the Office of Environmental Management to strengthen 
management of the contracting process. However, two concerns could 
limit the effectiveness of these efforts: (1) the efforts do not 
encompass all of DOE’s contract awards and (2) DOE does not have a 
systematic method of identifying and disseminating lessons learned and 
best practices from past or current contract awards. 

Figure: Timeliness of 31 DOE Contract Awards, Fiscal Years 2002 through 
2005: 

[See PDF for Image] 

Source: GAO analysis of DOE contract files. 

[End of Figure] 

What GAO Recommends: 

GAO recommends that DOE (1) develop more accurate and comprehensive 
performance measures for the timeliness of its contract awards and (2) 
establish a consistent system for identifying and sharing lessons 
learned and best practices on contract awards. In commenting on the 
report, DOE generally agreed with the recommendations but raised 
concerns about GAO’s sampling methodology, as well as GAO’s 
characterization of late contract awards as delayed and DOE’s 
performance measures as incomplete. GAO believes that the methodology 
and conclusions are correct. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-722]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Gene Aloise, 202-512-
3841, aloisee@gao.gov. 

[End of Section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Delays Occurred in Most of the Contract Awards We Reviewed: 

Delays in Awarding Contracts Could Increase Costs to the Government and 
Industry and Affect Future Competition: 

Efforts to Address the Causes of Delays Are in Early Stages, but 
Concerns Remain about the Potential Effectiveness of DOE's Planned 
Actions: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Scope and Methodology: 

Appendix II: Comments from the Department of Energy: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Table: 

Table 1: Value of DOE Contracts Selected in the Nonprobability Sample, 
by Location: 

Figure: 

Figure 1: DOE's Timeliness in Awarding 31 Contracts from Fiscal Years 
2002 through 2005: 

Abbreviations: 

DOE: Department of Energy: 

EM: Environmental Management: 

NNSA: National Nuclear Security Administration: 

June 30, 2006: 

The Honorable Tom Davis: 
Chairman: 
Committee on Government Reform: 
House of Representatives: 

Dear Mr. Chairman: 

The Department of Energy (DOE), the largest civilian contracting agency 
in the federal government, spends over 90 percent of its annual budget 
on contracts to operate its laboratories, production facilities, and 
environmental restoration sites. In fiscal year 2005, DOE spent 
approximately $22.9 billion on contracts for mission-related activities 
such as maintaining the nation's nuclear weapons stockpile, cleaning up 
radioactive and hazardous wastes, and conducting complex scientific 
research; and for mission-support activities such as purchase of 
computer equipment and maintenance and repair of buildings. Almost 90 
percent of these fiscal year 2005 contracting dollars--or about 80 
percent of DOE's entire budget--were directed to DOE's "facility 
management contractors" that carry out most of the department's mission-
related activities. 

For over a decade, GAO, DOE's Office of Inspector General, and others 
have criticized DOE's contracting practices, particularly for 
inadequate management and oversight, and for failure to hold its 
contractors accountable for results. The poor performance of DOE's 
contractors has led to schedule delays and cost increases on many of 
the department's major projects. Since 1990, such problems have led us 
to designate DOE contract management--defined broadly to include both 
contract administration and management of major projects--as a high- 
risk area for fraud, waste, abuse, and mismanagement. 

DOE's contracting activities are governed by federal law and 
regulations, including the Federal Acquisition Regulation and the 
Department of Energy Acquisition Regulation. These regulations and 
related DOE guidance outline the steps that should be followed in 
planning and carrying out the process of awarding its contracts. 
Furthermore, federal law generally requires that federal agencies use 
full and open competition in selecting a contractor, as part of the 
process for ensuring the best value to the government. However, there 
are certain exceptions to this requirement, such as an urgent need to 
obtain the goods or services, when DOE may award a contract without 
full and open competition. 

Awarding competitive contracts includes a series of required steps that 
generally involve planning the contract award process, soliciting 
proposals from private companies and/or public organizations, and 
evaluating those proposals to select the company that will provide the 
goods or services at the best value to the government. Planning the 
contract award process generally involves identifying needed goods or 
services and the best approach for obtaining them. DOE guidance 
generally requires a formal written plan for carrying out this process 
for contracts valued at $5 million or greater. The plan must describe 
the overall strategy for obtaining the goods or services, including the 
planned approach for soliciting and evaluating proposals. Key decisions 
outlined in the plan include whether to target the solicitation to 
small businesses and what factors to consider in evaluating proposals 
submitted by companies. 

Although federal regulations do not specify how long the contract award 
process should take, the regulations state that the purpose of planning 
the contract award process is to ensure that the government obtains the 
needed goods or services in the most effective, economical, and timely 
manner. Therefore, written plans for carrying out the award process 
must include milestones for completing the steps in the process, such 
as when the agency plans to solicit and evaluate proposals and make the 
award. Developing and adhering to these schedules can help ensure that 
the department conducts the process efficiently and can help companies 
make informed business decisions regarding the allocation of their 
resources and whether to compete for a contract. 

In addition to specifying how the contract award process should be 
carried out, the laws and regulations that govern contracting with the 
federal government are designed to ensure that federal contracts are 
awarded fairly. On occasion, companies that bid on government contracts 
may believe that a contract has been or is about to be awarded 
improperly. These companies may attempt to informally resolve concerns 
with the contracting officer, file a protest with the federal agency 
awarding the contract, or file a formal bid protest with the U.S. Court 
of Federal Claims or GAO.[Footnote 1] In deciding bid protests, the 
essential issue is whether the agency making the award has complied 
with federal laws and regulations that govern contracting. 

Several of DOE's recent contract awards have taken much longer than 
anticipated and have been subject to bid protests. In this context, you 
asked us to review how DOE plans for and carries out its contract 
awards. This report discusses (1) the extent to which DOE adhered to 
its planned dates for awarding contracts and the factors contributing 
to any delays, (2) the impacts of any delays in awarding contracts, and 
(3) the extent to which DOE has taken steps to address delays in its 
contract award process. 

To determine DOE's timeliness in awarding its contracts and the factors 
contributing to delays, we analyzed file documents from a 
nonprobability sample of contracts valued at $5 million or greater that 
DOE awarded during fiscal years 2002 through 2005. To obtain this 
sample, we selected contracts for goods and services that were awarded 
by DOE's three largest component organizations--the Offices of 
Environmental Management and Science and the National Nuclear Security 
Administration (NNSA)--and from field locations with high levels of 
contracting activity. The contracts sampled from these field locations 
comprised about 73 percent of total contracting dollars for new awards 
of $5 million or greater during fiscal years 2002 through 2005. To 
determine whether the contract awards had been delayed, we compared the 
planned award date specified in DOE's schedule for awarding the 
contract with the date the contract was actually awarded. Federal 
regulations stress the importance of timeliness in awarding contracts, 
but do not establish specific timeliness standards or measures. 
Therefore, we used adherence to the milestones established in the 
written plan as a consistent measure of timeliness and one indicator of 
how well the contract award process was being managed. To determine the 
overall length of time for a contract award, we generally compared the 
date the written plan for the contract award was approved with the date 
that the contract was awarded. For the contracts included in our sample 
for review, we also obtained and analyzed information on bid protests 
filed with GAO. To determine the extent to which DOE has taken steps to 
address any delays, we interviewed officials at DOE headquarters and 
six of the field locations that were involved in contract awards. In 
addition, we reviewed agency policies and guidance on its contract 
award process, as well as documentation on any efforts to improve the 
process. A more detailed description of our scope and methodology is 
presented in appendix I. We performed our work between July 2005 and 
June 2006 in accordance with generally accepted government auditing 
standards. 

Results in Brief: 

DOE awarded most of the contracts we reviewed months to years later 
than the planned award dates. In fiscal years 2002 through 2005, DOE 
awarded 131 contracts valued at $5 million or greater; the 31 of these 
contracts we reviewed were affiliated with DOE's three largest 
component organizations and represented about 73 percent of the dollars 
awarded. Specifically, none of the 24 competitive contracts was awarded 
by the planned date specified in DOE's schedule for carrying out the 
contract award process. DOE awarded one of these contracts less than 1 
month after the planned award date but awarded the remaining 23 
contracts between several weeks and 4-1/2 years after the planned award 
date. In contrast, of the 7 contracts DOE awarded without competition, 
6 contracts were awarded on time or nearly so, with the remaining 
contract awarded 2 months late. DOE encountered delays throughout the 
contract award process for various reasons. For example: 

* DOE took over 4 years to successfully award a $1.6 billion contract 
for nuclear waste cleanup services at DOE's Hanford site in Washington 
after revising and reissuing a solicitation in response to a bid 
protest. 

* DOE was 4 months behind its scheduled award date for two contracts 
for the conceptual design of a waste processing facility at the 
Savannah River site. The delay occurred because the department decided 
to enter into discussions with companies after proposals were 
submitted, even though DOE had not allowed any time for this activity 
in its schedule for carrying out the contract award. 

* DOE was 4 months late in awarding a contract to manage and operate 
the Berkeley National Laboratory because it took longer than expected 
to obtain approval of the draft solicitation from DOE headquarters 
officials. 

It is unclear the extent to which delays in the contracts that we 
reviewed could have been avoided, or were due to factors beyond DOE's 
control. However, some delays were clearly avoidable, such as when DOE 
took corrective action in response to bid protests because the 
department failed to follow its contract award process. 

Delays in awarding contracts could increase costs to both DOE and the 
companies that are competing for the work and could also affect the 
willingness of companies to compete for future DOE contracts. Because 
the department does not track its costs for awarding individual 
contracts, it was not feasible for us to quantify the impact of delays 
on DOE's costs. However, DOE headquarters procurement and program 
officials acknowledge that there may be additional costs associated 
with contract awards that experience delays and added that companies 
competing for these contracts could face increased costs as the process 
takes longer than expected. Specifically, in addition to investing time 
and resources in developing proposals, once a company submits a 
proposal to DOE, the company is generally required to ensure that the 
key personnel identified in the proposal continue to be available until 
the decision is made and the contract awarded. For example, according 
to file documents for a contract to provide infrastructure services at 
DOE's Paducah, Kentucky, site, several of the companies competing for 
that contract told DOE that--in addition to the high costs of preparing 
a proposal--there were costs associated with retaining key personnel 
during the year-long delay that occurred before DOE awarded the 
contract. Increased costs and the length of time it takes DOE to award 
a contract also have the potential to affect competition for future DOE 
work. Although DOE officials who oversee the contracting process told 
us that they have not yet seen a decline in the number of companies 
competing for contracts, they agree that this is a potential concern. 

In July 2005, when we began our work, officials overseeing DOE's 
contract award process generally were not taking steps to address 
delays in awarding those contracts. One of the main reasons that DOE 
was not addressing the delays was that DOE's performance data measured 
only the final steps in the contract award process and indicated that 
most of the contracts were being awarded in a timely manner. In late 
2005, partly in response to criticisms from GAO and others, DOE began 
to take steps to improve its contract award process. These efforts 
involved (1) an initiative with the Office of Management and Budget to 
address the GAO determination since 1990 that DOE's contract management 
has been at high risk for fraud, waste, abuse, and mismanagement; (2) a 
restructuring of DOE's Office of Environmental Management to increase 
the focus on planning and management of contract awards; and (3) 
specific steps by NNSA and DOE's Office of Procurement and Assistance 
Management to implement improved measures of the timeliness of the 
contract award process. Although these efforts are constructive and 
helpful, we have two main concerns that could limit DOE's effectiveness 
in improving the timeliness of contract awards. First, the efforts do 
not reflect a comprehensive approach within the department to improve 
the timeliness of contract awards. Various programs and organizations 
within DOE are initiating these efforts, and we found that some of 
DOE's contracts were excluded from the improvements. Second, as DOE 
implements more comprehensive measures of timeliness and analyzes the 
resulting performance data to identify the causes of delays, DOE 
currently does not have a systematic way to develop and disseminate 
best practices or lessons learned, despite the fact that federal 
regulations require agencies to implement knowledge-sharing procedures. 
Instead, department officials who oversee contracting efforts said that 
best practices and lessons learned are sometimes shared informally 
during the contract award process or at conferences. However, officials 
who plan and carry out contract awards said that the information was 
sometimes not available to them or may have come too late in the award 
process to be beneficial. 

To help ensure that DOE's contract award process is efficient and 
effective and that DOE is obtaining the best value for the government, 
we are recommending that DOE take steps to (1) develop more accurate 
and comprehensive performance measures for the timeliness of its 
contract awards and (2) establish a consistent system for identifying 
and sharing lessons learned and best practices on contract awards. 

DOE generally agreed with our recommendations and outlined steps that 
the department has taken or will take in response. However, DOE raised 
concerns about (1) using a nonprobability sample to draw conclusions 
about DOE's contracting practices, (2) our description of contracts 
awarded later than planned as delayed, and (3) our statement that DOE's 
performance measures for timeliness were incomplete. We believe our 
sampling methodology was appropriate because the 31 contracts in our 
nonprobability sample represented about 73 percent of the total dollars 
DOE awarded during the 4-year period for contracts valued at $5 million 
or greater. Furthermore, our report does not use the sample results to 
make overall statements about DOE's contracting practices. Regarding 
our description of contracts awarded later than planned as delayed, 
federal regulations emphasize the importance of timeliness in awarding 
contracts, and we believe that awarding contracts later than planned is 
accurately characterized as a delay. Regarding the completeness of 
DOE's performance measures for timeliness in awarding contracts, we 
continue to believe that DOE's performance measures could be improved 
by being applied to all contracts for which a written plan and schedule 
are required. 

Background: 

DOE has numerous sites and facilities around the country where the 
department carries out its missions, including developing, maintaining, 
and securing the nation's nuclear weapons capability; cleaning up the 
nuclear and hazardous wastes resulting from more than 50 years of 
weapons production; and conducting basic energy and scientific 
research, such as mapping the human genome. DOE relies on contractors 
to operate its facilities and accomplish its missions. This mission 
work is carried out under the direction of NNSA and DOE's program 
offices, including the Offices of Environmental Management and Science. 

The Federal Acquisition Regulation provides the basic guidelines that 
all federal agencies must follow in planning for and carrying out the 
process for awarding contracts. DOE, like most federal agencies, has 
supplemental regulations that it has set forth in the Department of 
Energy Acquisition Regulation to recognize requirements unique to the 
department, such as maintaining nuclear safety and security. 
Furthermore, in the mid-1990s, DOE's Office of Procurement and 
Assistance Management developed the DOE Acquisition Guide that provides 
further information on contract award planning activities, including 
meeting federal requirements for competition, establishing evaluation 
criteria, and selecting the appropriate contract type. 

In planning and carrying out competition and award of contracts, there 
are three main phases, and each phase generally includes several steps. 

* Planning. This phase involves identifying the mission need for the 
contract, alternatives for obtaining the goods or services, estimated 
costs, and any program or technical risks. Federal regulations state 
that the agency should use an integrated team approach--involving all 
personnel responsible for significant aspects of the contract award 
process--to developing the plan and associated milestone schedule. The 
plan should also identify the appropriate contract type for the work, 
considering the alternatives and risks. In addition, a selection 
official is designated, and an evaluation board is formed to carry out 
the contract award process. 

* Developing the solicitation. Generally, the evaluation board, with 
input from technical and other advisors, develops a statement of work 
for the contract and criteria that will be used to evaluate proposals 
submitted by companies. During this phase, DOE may also do market 
research to determine if sources capable of meeting the agency's needs 
exist. Finally, DOE issues the request for proposals that describes the 
work to be done, provides instructions to companies on how and when to 
submit their proposals, and describes the criteria that will be used to 
evaluate the proposals and select a contractor. 

* Evaluating proposals and awarding the contract. Once proposals are 
received, the evaluation board evaluates the proposals against the 
established criteria. Evaluation criteria may differ for each contract, 
but generally include factors such as a company's proposed technical 
approach; past performance on DOE, other federal agency, and commercial 
contracts; the proposed cost; and the qualifications of the key 
personnel identified in the proposal. During this phase, DOE may 
determine that it is necessary to hold discussions with individual 
companies about issues raised during the evaluation of their proposals. 
Based on a written report of the evaluation board that outlines the 
strengths and weaknesses of each proposal, the selection official 
should select a proposal that represents the best value for the 
government. The DOE contracting officer, who has generally provided 
contracting support to the evaluation team, then awards the 
contract.[Footnote 2] 

The Competition in Contracting Act of 1984 provides statutory authority 
for GAO to decide cases involving bid protests. GAO's bid protest 
decisions address specific allegations raised by unsuccessful companies 
claiming that particular contracting actions were contrary to federal 
laws and regulations. A bid protest may be filed by an "interested 
party," defined as an actual or prospective bidder or offeror with a 
direct economic interest in the contract. Unless the protest is 
dismissed at the outset because it is procedurally or substantively 
defective, such as if the protest was not filed in a timely manner, the 
contracting agency is required to file a report with GAO responding to 
the protest. GAO will consider the facts and legal issues raised and is 
required to resolve the protest not later than 100 days from the date 
the protest was filed, either by sustaining the protest and 
recommending that the agency take corrective action, or by denying or 
dismissing the protest.[Footnote 3] 

DOE's Office of Procurement and Assistance Management and NNSA's Office 
of Acquisition and Supply Management establish policies and guidance 
for awarding contracts according to federal and departmental 
regulations. Officials from DOE's programs, such as NNSA and the 
Offices of Environmental Management and Science, usually manage the 
contract planning and award process since they are most knowledgeable 
about the work needed and are ultimately responsible for managing the 
work and overseeing the contracts. Other organizations within DOE work 
with the program officials to plan and carry out the contract award 
process by providing contracting, legal, and technical advice and 
assistance. DOE's Offices of General Counsel and Procurement and 
Assistance Management review, evaluate, and approve key documents 
during the entire process, such as the initial plan for the contract 
award process and the request for proposals. 

Delays Occurred in Most of the Contract Awards We Reviewed: 

Most of DOE's 31 contract awards that we reviewed experienced delays 
when comparing the planned and actual award dates for the contracts. 
The 24 contracts awarded with competition faced delays of months to 
years; of the 7 contracts awarded without competition, 6 were awarded 
on time or nearly so. Delays occurred throughout the contract award 
process due to factors such as time spent repeating steps of the 
process to resolve a company's formal protest, or because of 
unanticipated complications that affected DOE's ability to adhere to 
the planned schedule. 

DOE Experienced Delays of Months to Years in Awarding Its Contracts: 

For the 31 contracts we reviewed, most were awarded months to years 
after the planned award date. To determine whether contract awards were 
delayed, we compared the planned award date with the date DOE actually 
made the award. None of the 24 competitive contracts we reviewed was 
awarded according to DOE's planned schedule, and nearly all were 
delayed by months or years. Only 1 of these competitive contract awards 
was made within 1 month of the planned award date. The remaining awards 
experienced more lengthy delays of from 2 months to over 2 years. In 
contrast, delays were less prevalent among the noncompetitive contract 
awards included in our sample. Six of these 7 contracts were awarded on 
time or within 1 month of the planned award date. The other contract 
was awarded 2 months late.[Footnote 4] (See fig. 1.) 

Figure 1: DOE's Timeliness in Awarding 31 Contracts from Fiscal Years 
2002 through 2005: 

[See PDF for image] 

Source: GAO analysis of DOE contract files. 

[End of figure] 

Noncompetitive contracts were awarded in a more timely manner, in part, 
because the federal regulations for noncompetitive contract awards are 
different and involve fewer steps. Thus, DOE officials could shorten or 
eliminate parts of the process in which delays typically occurred on 
the competitively awarded contracts we reviewed. For example, for a 
noncompetitively awarded contract, DOE would not need to evaluate 
multiple proposals because it had already identified a company with the 
qualifications and experience necessary to perform the work. DOE 
generally awarded the seven contracts we reviewed without competition 
because of an urgent need to obtain the goods and services and to 
ensure that the contractors could start work quickly. This is 
consistent with one of the exceptions to the requirement for full and 
open competition allowed by federal regulations. Nevertheless, since 
federal regulations generally require that agencies use full and open 
competition, the contracts awarded competitively better reflect the 
timeliness of DOE's overall contract award process. 

The schedules for the contract awards we reviewed showed that DOE 
planned to take from about 1 month to up to 2 years to award its 
contracts. Variation in the length of the planned schedule may depend 
on several characteristics of the contract award process, such as 
whether or not the contract was awarded competitively or 
noncompetitively, the dollar value of the award, or the complexity of 
the work. DOE officials indicated that facility management contracts 
tend to be more complex and, therefore, can take longer and could be 
more prone to delay, but we found some facility management contract 
awards were less delayed than some smaller dollar value, more 
straightforward contract awards. For example, the $4.8 billion facility 
management contract to operate the Idaho National Laboratory took just 
over 1 year to award and was delayed about 4 months, while a $5 million 
administrative support services contract at the Savannah River site 
took almost 2 years to award and was awarded 1-1/2 years later than the 
planned award date. 

Delays Occurred Because DOE Had to Modify Its Approach after Beginning 
the Contract Award Process: 

Delays in awarding contracts occurred when DOE modified its approach 
after the start of the contract award process. DOE frequently had to 
modify its approach to take corrective action in response to bid 
protests, or because DOE took more time than planned to evaluate 
proposals, hold discussions with companies that had submitted 
proposals, or obtain headquarters approval for key documents. 

Taking corrective action due to bid protests. One cause of delay for 
DOE's contract awards was the time the department spent reworking 
portions of the process in response to companies that filed bid 
protests with GAO.[Footnote 5] Companies generally filed protests 
because they believed that DOE had violated federal acquisition 
regulations in carrying out the contract award process, most typically 
in evaluating or soliciting proposals. Rework in response to a bid 
protest was initiated in one of two ways: (1) GAO found fundamental 
flaws in the contract award process, sustained the company's protest, 
and recommended that DOE take corrective action or (2) DOE initiated 
corrective action after conducting an assessment of the validity of the 
company's protest, without waiting for a formal GAO decision. In either 
case, rework can include canceling or revising the solicitation, 
reevaluating proposals, or accepting proposals from firms that were 
previously excluded from the competition. 

Rework resulting from corrective action can significantly delay the 
contract award. For the 31 contracts we reviewed, 10 resulted in bid 
protests filed with GAO. Protests on 8 of these were denied or 
dismissed by GAO, or withdrawn by the protestor.[Footnote 6] DOE agreed 
to take corrective action on the remaining 2, once as a result of a 
protest being sustained by GAO, and once before GAO issued a decision. 
Delays due to such corrective action added up to 2 years to the 
contract award process. For example, a contract worth $1.6 billion to 
clean up the River Corridor area at DOE's Hanford, Washington, site was 
delayed more than 1-1/2 years while DOE took corrective action in 
response to a bid protest. GAO sustained a bid protest on the initial 
award because DOE failed to properly apply its criteria for evaluating 
the cost proposals. In response, DOE revised and reissued the 
solicitation, evaluated new proposals, and selected a new contractor 
about 2-1/2 years after the initial planned award date.[Footnote 7] In 
another example, a NNSA contract award for administrative support 
services was delayed almost 2 years when NNSA took corrective action in 
response to a bid protest. Corrective action involved revising and 
reissuing the solicitation. However, the NNSA evaluation board then had 
difficulties completing cost evaluations of the revised proposals, 
adding more time to the process, and finally awarded contracts to all 
three companies almost 2 years later than the planned award date. 

Evaluating proposals. DOE generally estimated between 1 and 6 months to 
review and evaluate proposals for its competitive contract awards. 
However, for the 24 competitively awarded contracts we reviewed, it 
took on average 5 months longer than planned for this part of the 
process, accounting for over half of the overall delay in carrying out 
the process. For example, DOE was planning to award multiple contracts 
to provide environmental remediation and deactivation of facilities 
across the DOE complex. DOE estimated that it would receive about 20 
proposals and allowed about 3 months for evaluating the proposals and 
selecting the contractors. The department actually received more than 
100 proposals and was delayed over 9 months, in part, due to the amount 
of additional time required to review the larger than expected number 
of proposals. In another example, the Savannah River Operations Office 
allowed about 8 weeks to evaluate proposals for an administrative 
support services contract at the site. However, the evaluation board 
encountered several difficulties during the evaluation process, 
including concerns about the wide range of the cost estimates in the 
proposals. These concerns necessitated a more detailed cost evaluation, 
resulting in the evaluation taking 5 months longer than 
planned.[Footnote 8] 

Holding discussions with companies submitting proposals. For eight of 
the contracts we reviewed, DOE had to modify its approach to holding 
discussions. In some cases, the planned schedule did not include any 
time for discussions and, in other cases, the time DOE took to discuss 
proposals with the companies submitting them exceeded the time 
estimated in the plan. For these contracts, actual time to discuss 
proposals exceeded the planned time by an average of 3 months. For 
example, two contracts for conceptual design of a waste processing 
facility at the Savannah River site were awarded 4 months late because 
DOE initially intended to make the contract awards without discussions 
and, therefore, did not plan time in the original schedule for this 
part of the process. However, after the contracting process was under 
way, the department decided it was necessary to conduct discussions on 
the proposals because none of the companies had provided all of the 
cost and pricing data necessary to fully evaluate the proposals. 
Similarly, a contract for medical services for the Hanford site was 
delayed more than 5 months, in part because the department held 
discussions with companies concerning their cost proposals and 
technical approach but did not plan for this activity in the schedule. 

Obtaining headquarters approval of key documents. Awarding of DOE 
contracts was also delayed due to obtaining headquarters approval of 
key documents. In five contract awards we reviewed,[Footnote 9] delays 
in obtaining the required review and approval from DOE headquarters 
officials caused an average 5-month delay in contract award. For 
example, for a contract to manage and operate DOE's Berkeley National 
Laboratory, DOE allowed 1 month for headquarters review and approval of 
the draft solicitation. However, headquarters review and approval took 
5 months, partly due to the complexities of competing a contract that 
had been in place for decades. As a result, the contract award was 4 
months late. In another example, the Oak Ridge Operations Office 
allowed 1 month for headquarters review and approval of a solicitation 
for a contract for medical isotope production. However, headquarters 
review and concurrence took about 1 year longer than anticipated 
because of additional requests for information from the Congress on 
DOE's strategy for going forward with the work under this contract. 
Overall, the contract award was delayed nearly 2 years due to this 
lengthy review and the need for extensive discussions during the 
evaluation phase with companies that had submitted proposals. 

It is unclear the extent to which these delays in awarding contracts 
were avoidable. At times, delays in the process appeared to be outside 
DOE's control and, therefore, more difficult to anticipate and manage, 
such as difficulty obtaining funding or to address concerns raised by 
the Congress or other stakeholders. For example, a $562 million 
contract for facilities and services to stabilize the department's 
depleted uranium hexafluoride inventory at Portsmouth and Paducah was 
delayed after the Office of Management and Budget, late in the process, 
raised concerns about the need to build facilities at both locations. 
Dealing with this issue contributed to the delay of the contract 
award.[Footnote 10] While external factors such as this can impact the 
planned schedule, some delays are clearly avoidable, such as when DOE 
had to take corrective action in response to bid protests because the 
department failed to follow its contract award process. In such cases, 
better management and oversight of the contract award process would 
provide opportunities for improvement. According to the Director of 
DOE's Office of Procurement and Assistance Management, DOE cannot plan 
for all possible events when developing a schedule for a contract award 
process and must respond to changing circumstances and incorporate 
additional steps into the award process when necessary. 

Delays in Awarding Contracts Could Increase Costs to the Government and 
Industry and Affect Future Competition: 

Delays in awarding contracts could increase costs both to DOE and the 
companies that are competing for the potential contracts and could also 
affect whether companies are willing to compete for DOE contracts in 
the future. Specifically, awarding a contract months or years after the 
date anticipated in the contract award schedule could increase the 
overall costs to the government. DOE staff involved in a contract award 
may include officials from the program offices, such as the Offices of 
Environmental Management or Science; contracting and legal specialists; 
and nuclear safety and regulatory experts. Both salary and travel costs 
associated with keeping these integrated teams together for the 
duration of the contract award process can be significant. However, 
these costs cannot be readily quantified since the department does not 
accumulate or track the costs associated with individual contract 
awards. Nevertheless, DOE officials acknowledge that there may be 
additional costs associated with contract awards that are delayed. The 
added time and resources spent on delayed contract awards may impact 
the department's ability to meet its management and oversight 
responsibilities, including planning for and carrying out other 
contract awards. 

According to DOE officials, prolonged delays in awarding contracts 
could also increase costs for companies that are submitting proposals. 
Companies competing for DOE contracts invest considerable time and 
resources in developing their proposals. However, since companies 
generally consider their proposal costs to be proprietary information, 
we could not quantify those costs. For DOE's contracts, once companies 
submit proposals, DOE generally requires the companies to ensure that 
key personnel identified in the proposals continue to be available 
until the award decision has been made. If a contract award is delayed, 
companies may have to keep key personnel available for months or even 
years, which could increase their costs and/or represent a possible 
lost opportunity to the companies since those key personnel may not be 
available for other work. For example, our review of file documents 
found that several small businesses competing for a contract to provide 
infrastructure services at DOE's Paducah, Kentucky, site expressed 
frustration over the costs of keeping key personnel available while DOE 
took nearly 1 year after the planned award date to complete the process 
and award the contract. 

The length of time and increased costs to carry out a contract award 
may also discourage some companies from competing for DOE work, thus 
potentially affecting the extent of competition in the future. Ensuring 
adequate competition for contracts can help obtain the best value for 
the government. According to DOE officials who oversee the contracting 
process, they have not seen a decline in the number of companies 
willing to compete for DOE's contracts, but the officials agree that 
this is a potential concern, and it has been a concern in the past. For 
example, a January 2001 report that analyzed the contractor base for 
DOE's environmental cleanup work stated that the number of companies 
that were both willing and able to compete for major remediation 
contracts had declined over the past several years.[Footnote 11] The 
report concluded, among other things, that promoting competition among 
a large number of qualified companies was crucial to getting the best 
value for the government and accomplishing the environmental cleanup 
mission. Therefore, anything that could reduce the pool of potential 
companies competing for DOE's work, such as an inefficient contract 
award process, would not be in the department's best interest of 
fostering full and open competition for its work. 

Efforts to Address the Causes of Delays Are in Early Stages, but 
Concerns Remain about the Potential Effectiveness of DOE's Planned 
Actions: 

When we began our review in July 2005, DOE officials generally were not 
addressing delays in awarding contracts because DOE's data was showing 
that its contracts were being awarded in a timely manner. However, 
since late 2005, DOE has been implementing three main efforts to 
improve its contracting, partly in response to criticism by GAO and 
others. These efforts include (1) an initiative to address the DOE 
contracting weaknesses that led GAO to designate the area as high risk 
for fraud, waste, abuse, or mismanagement; (2) a plan to restructure 
DOE's Office of Environmental Management to focus more attention on the 
contract award process; and (3) steps by NNSA and DOE's Office of 
Procurement and Assistance Management to improve performance measures 
on the timeliness of contract awards. While these improvement efforts 
appear to be constructive and may also help to address delays in 
awarding contracts, we have two remaining concerns related to the 
timeliness of DOE's contract awards. First, the efforts do not reflect 
a comprehensive approach within the department to improve the 
timeliness of contract awards. Second, even if DOE uses improved 
performance data to identify the causes of delays in awarding its 
contracts, the department does not have a systematic method to develop 
and disseminate best practices and lessons learned. 

DOE Was Not Addressing Delays Because Incomplete Performance Data 
Indicated Contracts Were Awarded in a Timely Manner: 

When we began our work in July 2005, DOE officials generally were not 
taking steps to address the causes of delays in awarding contracts. One 
of the main reasons for this was that DOE's performance data was 
generally showing its contracts were being awarded in a timely manner. 
Although our analysis uncovered delays in most of the 31 contract 
awards valued at $5 million or greater from fiscal years 2002 through 
2005 that we reviewed, DOE's performance data for the same period 
showed that most of its contract awards were timely. For example, the 
data for fiscal years 2003 and 2004 showed that, respectively, 88 and 
86 percent of the contract awards were timely. According to DOE's 
performance measures, a timely award meant that DOE had awarded the 
contracts within 150 days after receiving proposals from companies. An 
official from the Office of Procurement and Assistance Management who 
manages the performance data said that the department used 150 days as 
a timeliness standard because it represented a realistic yet 
challenging time frame for awarding the contracts.[Footnote 12] 

However, DOE's performance data did not provide a complete picture of 
the department's timeliness in awarding its contracts for two reasons. 
First, the data for those years did not include all of the contract 
award process. Instead, the performance data DOE used measured only the 
timeliness in carrying out the final stage of the process (the 
evaluation phase), from the point at which DOE received the proposals 
through contract award. Consequently, the performance data excluded the 
earlier steps of the process, from planning the contract award through 
the process of soliciting proposals from interested companies. For the 
24 competitively awarded contracts valued at $5 million or greater we 
reviewed, the excluded steps accounted for over half of the total time 
that DOE typically spent awarding its contracts. As a result, some of 
DOE's contract awards may appear timely, when, in fact, DOE awarded the 
contracts weeks or months after the planned award date. For example, in 
fiscal year 2003, DOE awarded a contract for laundry services at the 
Hanford site in Washington about 2 months after its planned award date. 
However, DOE considered the contract award to have been timely because 
the department was able to award the contract within 150 days of 
receiving proposals. 

Officials from the Office of Procurement and Assistance Management said 
DOE's timeliness data are intended to measure the performance of 
contracting staff. Therefore, the officials said that the timeliness 
measure includes only the evaluation phase of the contract award 
process because that is the aspect of the process that would more 
likely be under the direct control of the contracting staff. Prior to 
the evaluation phase, officials said that contracting staff generally 
rely on program staff to develop key information, such as a description 
of the work to be carried out under the contract. Furthermore, 
according to DOE's guidance, program office staff are generally 
responsible for planning the contract award process. However, we found 
that DOE's contracting staff were generally involved throughout the 
entire contract award process as part of an integrated team approach. 
Furthermore, it is unclear to what extent contracting staff have direct 
control over any phase of the process. 

Second, DOE's performance data were incomplete because data on DOE's 
facility management contracts were excluded. For example, in fiscal 
year 2005, DOE competitively awarded seven facility management 
contracts valued at a total of about $10.4 billion. However, DOE 
excluded the data on these facility management contracts from its 
performance measures for timeliness. DOE officials from the Office of 
Procurement and Assistance Management said they excluded the facility 
management contracts from the department's performance data because 
those contracts are particularly complicated to award. Unlike the 
contracts included in the performance measures for timeliness, the 
department could not determine an appropriate timeliness standard for 
the facility management contracts. As a result of excluding the 
facility management contracts, the performance data for fiscal year 
2005 did not reflect the department's timeliness in awarding about 97 
percent of the nearly $11 billion in contracts that the department 
awarded that year. 

In contrast to DOE's approach, we measured the department's timeliness 
in awarding its contracts by comparing the planned award dates with the 
dates DOE actually awarded the contracts. We used the planned award 
date as the standard for determining whether contracts were awarded in 
a timely manner, rather than comparing the time it took DOE to award 
the contract after proposals were received with a fixed standard, such 
as 150 days. A fixed standard is arbitrary because the actual time 
needed to carry out a contract award process can differ greatly for 
legitimate reasons, depending on the circumstances of each individual 
contract award. Furthermore, in doing so, we included the facility 
management contracts because those contracts can represent a 
significant portion of the total value of DOE's contract awards. 

DOE Recently Began Three Main Efforts to Improve Its Process for 
Awarding Contracts: 

Since late 2005, DOE has initiated three new efforts to improve its 
contracting processes. DOE is implementing these actions as part of its 
continuing efforts to improve its contracting processes and, in part, 
because of long-standing criticisms by GAO and others. Since 1990, GAO 
has designated DOE's contract management, including project management, 
as an area at high risk for fraud, waste, abuse, and mismanagement. Our 
reviews have uncovered weaknesses in DOE's management and oversight of 
its contracts which, in some cases, have undermined DOE's ability to 
carry out its missions or dramatically increased its costs.[Footnote 
13] More recently, criticisms have included the frequency of delays in 
awarding contracts and the need for reforms. For example, in 
congressional testimony in November 2005 and March 2006, the Assistant 
Secretary for Environmental Management cited the need for improvements 
in the department's contract award practices. Furthermore, conferences 
on DOE environmental cleanup issues held in February and October 2005 
and attended by DOE and contractor officials included presentations 
calling for a reevaluation of DOE's contract award process. 

DOE's recent efforts to improve its contracting include the following: 

* Initiative to address DOE's high-risk contracting practices. In 
November 2005, DOE drafted a plan aimed at improving the department's 
contract and project management, including management of the contract 
award process. DOE developed the plan in response to an effort by the 
Office of Management and Budget that requires agencies to address areas 
identified by GAO as high risk for fraud, waste, abuse, or 
mismanagement. Actions included in the plan to improve the contract 
award process include conducting better oversight of the planning 
process, maximizing competition for contracts, and ensuring that 
contracts allow DOE to properly hold contractors accountable for their 
performance. To date, DOE has developed performance measures and 
targets for the focus areas in its action plan, as well as target dates 
for implementing the plan. As part of this initiative, in February 
2006, DOE began to increase the frequency of training for new 
evaluation boards and selection officials and to provide this training 
at the beginning of the planning process. Although this plan does not 
specifically address the timeliness of contract awards, the overall 
effort to improve contracting and project management could help 
identify and address underlying causes for delays in awarding 
contracts. 

* Initiative to restructure DOE's Office of Environmental Management. 
Also in late 2005, the Assistant Secretary for Environmental Management 
announced plans to restructure the headquarters-based administrative 
functions within his program office. According to officials in the 
Office of Environmental Management, the reorganization is aimed, in 
part, at improving contract and project management by bringing these 
functions together under a new Deputy Assistant Secretary for 
Acquisition and Project Management. As the reorganization is 
implemented, the Office of Environmental Management, at the request of 
a congressional subcommittee, has also commissioned the National 
Academy of Public Administration to undertake a general management 
review of the program, including reviewing the program office's 
policies and processes for awarding contracts and providing advice on 
improving their effectiveness. As the study progresses, DOE will 
receive interim reports and recommendations on how to implement the 
reorganization and increase its effectiveness, which may also result in 
improving the timeliness of contract awards. 

* Initiative to improve performance data on contract timeliness. NNSA 
and DOE are implementing separate efforts to help them track contract 
awards against the planned dates for carrying out the process. NNSA's 
effort is focused on a recently implemented data system that will help 
its contracting staff track ongoing contract awards against a detailed 
schedule of milestones. The requirement to input a detailed milestone 
schedule at the beginning of the contract award process applies to all 
of NNSA's contracts, regardless of their dollar value. As staff carry 
out the process, the system will record the dates on which key steps 
were completed and document any delays from the schedule. The system 
also allows the contracting officials to generate reports on the status 
of ongoing contract awards, as well as analyze data on existing 
contract awards for evidence of systemic delays or other problems. As 
of April 2006, the data system was operational, and NNSA contracting 
officials have started using this milestone information to manage 
ongoing contract awards. 

Similarly, in March 2006, DOE's Office of Procurement and Assistance 
Management began implementing plans to track the timeliness of DOE's 
facility management or other high-visibility contracts against a 
detailed milestone schedule. According to the Director of the Office of 
Procurement and Assistance Management, representatives from his office, 
as well as other department officials responsible for awarding facility 
management contracts, will work to develop a realistic, but 
challenging, milestone schedule for carrying out the award process. 
According to the Director, revised DOE guidance will recommend that 
planning for a new facility management contract should begin no later 
than 2 years prior to the expiration of an existing contract. Once the 
milestone schedule has been established, his office will then track the 
contract award process to compare planned and actual key dates and 
provide monthly updates to the Deputy Secretary. As of April 2006, DOE 
had established schedules for the current and upcoming facility 
management contract awards, began monitoring the progress against those 
schedules, and began submitting monthly status reports to the Deputy 
Secretary. 

DOE's efforts to improve its contracting are generally in the early 
stages of being planned or implemented, and not all of the efforts 
specifically address the timeliness of contract awards. Nevertheless, 
we believe these initiatives are a constructive step towards addressing 
long-standing weaknesses in the department's contracting and improving 
its contract awards. As the department addresses the weaknesses and 
takes steps to improve its contracting, improved efficiency and 
effectiveness could also result in fewer delays in awarding contracts. 
However, as discussed below, we are concerned that the efforts may fall 
short in two main respects, which could limit the department's 
effectiveness in improving the timeliness of contract awards. 

Lack of a Comprehensive Approach to Improvement Efforts and 
Inconsistent Practices for Communicating Lessons Learned May Limit the 
Effectiveness of DOE's Efforts: 

Standards for a well-functioning contract award process come from 
federal acquisition regulations and GAO's framework for assessing the 
process at federal agencies. The framework integrates the views of 
federal government and industry experts on the characteristics and 
practices of a well-functioning contract award and management process, 
and it draws upon decades of experience within GAO in analyzing 
contracts and contracting organizations.[Footnote 14] Among the 
standards for a well-functioning contract award process set forth by 
the framework and regulations are that federal agencies should use 
knowledge from prior contract awards to assess the effectiveness of the 
contracting process and, in the interest of continuous improvement, 
have a systematic means for instituting best practices and lessons 
learned. DOE's improvement initiatives, as they apply to the timeliness 
of contract awards, appear to fall short in both respects. 

First, DOE has not ensured that the efforts to develop better data on 
the timeliness of contract awards will include all of the department's 
contract awards that require a written plan and schedule. While DOE and 
NNSA's efforts to develop better timeliness data will include all of 
the department's facility management contracts, as well as NNSA's other 
contract awards, the rest of DOE's contracts may not be included. This 
could be a considerable portion of DOE's contracts valued at $5 million 
or greater. For example, of the contracts that the department awarded 
in fiscal years 2002 through 2005, nearly one-quarter of the total 
contract value, or $3.9 billion, may not have been included in DOE's 
improvement efforts. These contracts may be excluded because they were 
neither facility management contracts, other DOE high-visibility 
contracts, nor contracts awarded by NNSA. The Director of DOE's Office 
of Procurement and Assistance Management said that the tracking against 
milestone schedules includes only contracts that represent significant 
risk or are critical to carrying out DOE's programs or missions. For 
example, the contracts that are currently being tracked include 
facility management contracts, other large cleanup contracts, and 
contracts that may also be of particular interest to headquarters, such 
as those for guard services. The Director added that it is not the 
intent of this effort to monitor the progress of all ongoing contract 
awards of $5 million or greater, and that he would expect contracting 
officers in the field locations to be accountable for contracts within 
their approval authority. Nevertheless, we believe that efforts to 
develop better timeliness data should include all contracts valued at 
$5 million or greater because DOE guidance generally requires written 
plans and schedules for these contracts. 

Second, the department has neither had a systematic approach for 
instituting best practices or lessons learned in its contract award 
process, nor is it clear that the department's efforts will result in a 
more systematic approach in the future. As DOE develops better data on 
the timeliness of its contract awards and analyzes the data to identify 
and address systemic problems or underlying causes of delays, the 
department will be developing useful information that could help ensure 
that future contract awards benefit from the best practices or lessons 
learned. Moreover, federal regulations require agencies to have a 
process for ensuring that lessons learned are developed and used in 
planning future contract awards.[Footnote 15] 

Based on federal regulations and GAO's framework, standards for a well- 
functioning contract award process would include a systematic approach 
for identifying and communicating lessons learned and best practices. 
Such an approach would include activities such as routinely evaluating 
performance data across a broad range of contracts to identify the 
extent to which the contract award process went well or encountered 
problems. In doing so, DOE would then look for trends or systemic 
problems and investigate the underlying causes. A systematic approach 
would also include a mechanism to ensure this information is readily 
available, in order to help officials who plan and carry out contract 
awards do so more efficiently. 

We did find some examples in which best practices and lessons learned 
were identified and in some cases shared within the department, but we 
did not find a systematic approach for doing so. For example, in a 
recent DOE evaluation of the problems that occurred in awarding 
contracts for environmental cleanup and infrastructure services at its 
facilities in Portsmouth, Ohio, and Paducah, Kentucky, DOE's review 
confirmed that poor planning and management of the process caused 
delays of 6 months to 1 year in awarding the contracts. Some of the 
factors mentioned were lack of timely management direction in key 
areas, a lengthy headquarters review and approval process, and 
unrealistic schedules for the awards. However, DOE concluded that the 
factors leading to the delays were not typical for DOE's contracts and 
did not represent a systemic problem. Therefore, DOE did not 
communicate the information as a systemic problem. In contrast, our 
analysis of 31 contracts valued at $5 million or greater indicated that 
these types of causes for delays were commonplace. 

In addition, best practices or lessons learned have been communicated 
at training sessions and presentations to staff carrying out contract 
awards, such as those offered by DOE's Office of General Counsel. 
According to the DOE attorney who has led a number of them, the 
sessions are generally aimed at helping staff carry out the contract 
award process effectively and in accordance with federal regulations 
and DOE guidance. This may increase the department's ability to avoid 
successful bid protests. Best practices or lessons learned have also 
been shared at annual procurement directors' conferences held for 
officials who oversee the contract award process, with the most recent 
conference in October 2005 covering topics such as proper documentation 
of decisions made during the contract award process. 

However, several DOE officials that were responsible for contract 
awards said that these best practices or lessons learned were not 
consistently available or may have come too late in the planning for 
the contract award to be very beneficial. The officials added that 
there was no centralized source within DOE for best practices, but they 
could obtain lessons learned by contacting others within the department 
who had recently awarded contracts. For example, an official from the 
Office of Environmental Management said that, in planning the contract 
award process for DOE's Savannah River site near Aiken, South Carolina, 
she traveled to DOE's offices in Idaho Falls to meet with officials 
there who had just awarded contracts for environmental cleanup at the 
site, and management and operation of the Idaho National Laboratory. 
While she said the meetings were beneficial and she obtained lessons 
learned documents, she saw this process as the only way to obtain best 
practices or lessons learned from those contract awards. As another 
example, this same DOE official conducted a recent contract award 
process, and said she would have benefited from early training on how 
to properly document decisions made while evaluating the proposals that 
were submitted. She added that the training was not made readily 
available, and it was not mandatory. After submitting draft documents 
for headquarters review, she eventually received helpful information on 
how to improve the documentation, but this would have been more 
beneficial earlier in the process. 

Conclusions: 

DOE relies on contractors to carry out its environmental cleanup, 
scientific research, nuclear weapons management, and other missions 
vital to national health, safety, and security. Our analysis of the 
contracts we reviewed showed that DOE experienced delays in awarding 
many of these contracts to carry out its critical missions. It is 
unclear the extent to which these delays may have been avoidable with 
better oversight or management, but at least some of the delays were 
avoidable, such as when DOE had to rework parts of the contract award 
process to correct errors. While DOE eventually awarded these 
contracts, a contract award process that takes too long runs the risk 
of undermining the department's efforts to obtain needed goods or 
services at the best value for the government. As DOE goes forward with 
its efforts to improve its contract award process, it will be important 
to ensure that performance measures address the timeliness of all of 
the department's contract awards that require written plans and 
schedules, and that lessons learned and best practices are consistently 
shared with DOE staff that will plan for and carry out future contract 
awards. Improving the department's performance in awarding contracts is 
an important part of ensuring that DOE's contracts provide the best 
value to the government. 

Recommendations for Executive Action: 

To help ensure that DOE's contract award process for contracts that 
require a written plan and schedule is efficient and effective and that 
DOE is obtaining the best value for the government, we recommend that 
the Secretary of Energy take the following two actions: 

* Ensure that performance measures for the timeliness of the 
department's contract awards include the entire contract award process 
from planning to contract award and include all of the department's 
contracts that require a written plan and schedule. 

* Establish a more systematic way of identifying lessons learned from 
past and current contract awards and sharing those lessons and best 
practices with the staff involved in planning and managing the 
department's efforts to award its contracts. 

Agency Comments and Our Evaluation: 

We provided a draft of the report to DOE for review and comment. In 
written comments, the Director of the Office of Management generally 
agreed with our recommendations, but questioned whether we intended the 
recommendations to apply to all of the department's contracts. We 
modified the wording to clarify that our recommendations apply only to 
those contracts that require a written plan and schedule. In addition, 
DOE raised concerns about our nonprobability sample, our 
characterization of contract awards as delayed, and our view that DOE's 
existing performance measures were incomplete. 

Regarding our sampling methodology, DOE said that the results of our 
nonprobability sample should not be used to reach overall conclusions 
about DOE's contracting practices because the 31 contracts we reviewed 
represented less than 1 percent of the 5,000 contracts DOE awarded 
during fiscal years 2002 through 2005 and were not representative of 
the entire group of contracts. However, we believe DOE has 
mischaracterized our scope and methodology. First, we did not derive 
the sample of 31 contracts from the 5,000 total contracts that DOE 
awarded during the period. Instead, we focused our efforts on the 131 
contracts awarded by DOE that were valued at $5 million or greater 
because such contracts generally required a written plan, including 
estimated dates. The 31 contracts we reviewed represented about 73 
percent of the total dollar value of those 131 contract awards valued 
at $5 million or greater during the period and about 24 percent of the 
total number of these larger contract awards. Furthermore, our report 
clearly states that the results of a nonprobability sample cannot be 
used to make inferences about a population, and we did not draw 
conclusions about DOE's overall contracting processes based on the 
sample results. 

DOE also took exception to our characterization of contract awards as 
delayed and our use of the department's originally planned award date 
as an indication of timeliness. DOE said that the milestone schedule 
developed in the written plan is an internal planning tool that may 
change over time, and the department cannot factor in a schedule 
contingency for every possible event. However, as we reported, federal 
regulations state that the purpose of planning the contract award 
process is to ensure that the government obtains the needed goods and 
services in the most effective, economical, and timely manner. The 
regulations stress the importance of timeliness in awarding contracts 
and require that written plans for carrying out the contract award 
process include milestones for completing the steps in the process. 
Adherence to the milestones established in the written plan provides a 
consistent measure of timeliness and is one indicator of how well the 
contract award process is being managed. In addition, our report 
clearly states that some of the contracts DOE awarded later than 
planned were subject to external events and complications beyond DOE's 
immediate control and recognizes that DOE's milestone schedule cannot 
anticipate all possible events. Even so, we continue to believe that 
better management and oversight of the contract award process, 
including tracking actual against planned dates in the milestone 
schedule, could have prevented lengthy delays in awarding some of the 
contracts we reviewed. 

In an attachment to its letter, DOE also disagreed with our conclusions 
that the department's performance measures for timeliness in awarding 
contracts were incomplete and, as a result, the department was not 
addressing delays in awarding contracts. As we reported, DOE has stated 
that its timeliness measures were intended to evaluate the performance 
of contracting staff and thus included only the parts of the contract 
award process under their direct control. DOE also said the department 
had been addressing delays in awarding contracts through its lessons 
learned process. We continue to believe that DOE's performance measures 
for timeliness in awarding contracts could be improved by being more 
comprehensive. DOE's performance measures included only the evaluation 
phase of the contract award process and excluded the facility 
management contracts, which represent a significant percentage of DOE's 
overall contracting dollars. We also believe that DOE was generally not 
addressing these delays before our review began. The three initiatives 
DOE started in late 2005--to address GAO's high-risk designation for 
DOE's contract management, to restructure the Office of Environmental 
Management, and to improve performance data on contract timeliness-- 
were the main efforts the department identified as steps to address 
delays in awarding contracts. 

DOE also provided technical comments in an attachment to the letter, 
which we have incorporated and summarized as appropriate. DOE's 
comments on our draft report are included in appendix II. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the Secretary of Energy. We will also make copies available to 
others on request. In addition, the report will be available at no 
charge on the GAO Web site at [Hyperlink, http://www.gao.gov]. 

If you or your staff have any questions on this report, please contact 
me at (202) 512-3841 or aloisee@gao.gov. Contact points for our Offices 
of Congressional Relations and Public Affairs may be found on the last 
page of this report. GAO staff who made major contributions to this 
report are listed in appendix III. 

Sincerely yours, 

Signed by: 

Gene Aloise: 
Director, Natural Resources and Environment: 

[End of section] 

Appendix I: Scope and Methodology: 

In response to a congressional request, we determined (1) the extent to 
which the Department of Energy (DOE) adhered to its planned dates for 
awarding contracts and the factors contributing to any delays, (2) the 
impacts of any delays in awarding contracts, and (3) the extent to 
which DOE has taken steps to address delays in its contract award 
process. To conduct our work, we analyzed contracts valued at $5 
million or greater from multiple DOE locations and interviewed 
contracting and program officials at DOE headquarters and field 
locations. We also reviewed federal laws and regulations on 
contracting, agency policies and guidance, GAO guidance on bid 
protests, and standards for assessing DOE's management and oversight of 
its contract award process. 

To determine the extent to which DOE adhered to its planned dates for 
awarding contracts, we analyzed 31 contracts from seven DOE locations 
that (1) were affiliated with the department's three largest component 
organizations--the Office of Environmental Management, Office of 
Science, and the National Nuclear Security Administration--and (2) had 
awarded a large share of the department's contracts valued at $5 
million or greater in fiscal years 2002 through 2005, including 
facility management contracts.[Footnote 16] We focused on the three 
largest component organizations because they comprised over 80 percent 
of DOE's annual budget and because they were affiliated with about two- 
thirds of the locations departmentwide that had awarded contracts in 
the four fiscal years we reviewed. We considered the four most recent 
fiscal years, 2002 through 2005, in the scope of our study to help 
ensure that the results reflected DOE's recent activity, while 
increasing the number of contracts that could potentially be selected 
for analysis. 

In fiscal years 2002 through 2005, the department awarded over 130 
contracts valued at $5 million or greater, for a total value of about 
$16.3 billion. From seven DOE locations, we selected a nonprobability 
sample of 31 of these contracts, accounting for about $11.9 billion, or 
73 percent, of the $16.3 billion (see table 1).[Footnote 17] Contracts 
in our sample ranged in value from about $5.5 million to $4.8 billion, 
and they included 7 of the 8 facility management contracts that the 
department competitively awarded during the four fiscal years we 
studied.[Footnote 18] In selecting our sample, we analyzed DOE contract 
award data to identify locations that had awarded a large share of the 
department's contracts in fiscal years 2002 through 2005. To verify the 
completeness and accuracy of contract award data, we interviewed 
knowledgeable DOE officials at the locations we visited (six of the 
seven field locations from which we selected contracts). On the basis 
of our checks, we determined that these data were sufficiently reliable 
for identifying DOE locations with a large share of contracts. 

Table 1: Value of DOE Contracts Selected in the Nonprobability Sample, 
by Location: 

Location providing contract information: Albuquerque Service Center, N. 
Mex; 
Affiliation: NNSA; 
Value of contracts, $5 million or greater: $282,094,471; 
Value of contracts, as a percentage of the total value for all of the 
department's contracts, $5 million or greater: 1.7. 

Location providing contract information: Chicago Service Center, Ill; 
Affiliation: Science; 
Value of contracts, $5 million or greater: 826,878,347; 
Value of contracts, as a percentage of the total value for all of the 
department's contracts, $5 million or greater: 5.1. 

Location providing contract information: Idaho Operations Office, 
Idaho; 
Affiliation: EM and Nuclear Energy; 
Value of contracts, $5 million or greater: 7,798,881,546; 
Value of contracts, as a percentage of the total value for all of the 
department's contracts, $5 million or greater: 48.0. 

Location providing contract information: Oak Ridge Operations Office, 
Tenn; 
Affiliation: EM, NNSA, Science; 
Value of contracts, $5 million or greater: 121,239,623; 
Value of contracts, as a percentage of the total value for all of the 
department's contracts, $5 million or greater: 0.7. 

Location providing contract information: Portsmouth & Paducah Project 
Office, Lexington, Ky; 
Affiliation: EM; 
Value of contracts, $5 million or greater: 792,227,652; 
Value of contracts, as a percentage of the total value for all of the 
department's contracts, $5 million or greater: 4.9. 

Location providing contract information: Richland Operations Office, 
Wash; 
Affiliation: EM; 
Value of contracts, $5 million or greater: 1,606,499,515; 
Value of contracts, as a percentage of the total value for all of the 
department's contracts, $5 million or greater: 9.9. 

Location providing contract information: Savannah River Operations 
Office, S.C; 
Affiliation: EM and NNSA; 
Value of contracts, $5 million or greater: 460,033,679; 
Value of contracts, as a percentage of the total value for all of the 
department's contracts, $5 million or greater: 2.8. 

Location providing contract information: Total for contracts selected 
in the nonprobability sample; 
Value of contracts, $5 million or greater: $11,887,854,833; 
Value of contracts, as a percentage of the total value for all of the 
department's contracts, $5 million or greater: 73.1. 

Location providing contract information: Total for contracts not 
selected in the nonprobability sample; 
Value of contracts, $5 million or greater: $4,371,971,440; 
Value of contracts, as a percentage of the total value for all of the 
department's contracts, $5 million or greater: 26.9. 

Location providing contract information: Total for all of the 
department's contracts; 
Value of contracts, $5 million or greater: $16,259,826,273; 
Value of contracts, as a percentage of the total value for all of the 
department's contracts, $5 million or greater: 100.0. 

Source: GAO analysis of DOE data. 

Notes: Affiliation refers to the department's component organizations-
-such as the Office of Environmental Management (EM), the Office of 
Science, or the National Nuclear Security Administration (NNSA)-- 
overseeing work at the locations we contacted. 

Contracting data in the table reflects contracts that were awarded in 
fiscal years 2002 through 2005 through a competitive or noncompetitive 
process. It does not include contracts awarded prior to fiscal year 
2002 that the department took action to renew or extend in fiscal years 
2002 through 2005, beyond the initial period of performance, because 
extending an existing contract eliminates the opportunity for such a 
process to occur. 

[End of table] 

To determine whether DOE adhered to its planned dates for awarding the 
contracts in our nonprobability sample, we used contract file 
documents, obtained from the seven locations, to identify and then 
compare the planned and actual contract award dates. We considered 
contracts to be delayed if the actual award date was later than the 
planned award date. In most cases, we identified the planned award date 
in DOE's schedule for completing key steps of the contract award 
process that DOE included in its formal written plan for awarding the 
contract. Because DOE guidance generally requires a plan and schedule 
when awarding contracts valued at $5 million or greater, the schedules 
in the written plan generally provided a consistent source for the 
planned award date. However, for 9 of the 31 contracts in our sample, 
we had to obtain the planned award date from another source because the 
associated plan and/or schedule was missing from the contract file. In 
these cases, we obtained the planned award date from references in 
other required file documents, such as the document used to justify 
noncompetitive awards or presentations by officials involved in 
awarding the contract. Similarly, for nearly all of the 31 contracts in 
our sample, we identified the actual award date from the award date 
written on the signed contract.[Footnote 19] However, for 2 of the 31 
contracts, the signed contract was not available in the contract file, 
and we instead obtained the award date from the data system DOE uses to 
track its contract awards. 

In addition to determining whether the 31 contracts in our 
nonprobability sample were awarded by the planned date, we used 
contract file documents to calculate how long it took DOE to make the 
awards. We did so by calculating the elapsed time from the date DOE 
initiated the contract award process to the date it awarded the 
contract. For 23 contracts, we used the date of the formal written plan 
for carrying out the contract award process as the date DOE initiated 
the process.[Footnote 20] Although some planning steps typically 
preceded the preparation of the written plan, documentation of the 
steps was generally not consistently available in the contract files we 
reviewed. In contrast, the formal written plan was a required and more 
consistently available source. However, for 8 of the 31 contracts in 
our sample, we had to obtain the initiation date of the contract award 
process from a source other than the date of the written plan because 
the plan was undated or missing from the contract file. In these cases, 
we used contract file documents prepared during the early steps of the 
contract award process, such as correspondence from DOE officials 
approving the start of the process. 

Furthermore, we identified some of the reasons for delays DOE 
experienced in awarding contracts in our sample, in part, by contacting 
DOE officials involved in awarding the contract. We also reviewed 
contract file documents, such as meeting records and the descriptions 
of the contract award process included in key documents generated 
during the contract award process. When contract file documents were 
used to determine the causes of delays, two analysts involved in this 
study independently reviewed the documents to verify that the causes 
were reasonably identified. 

To further identify causes for delays, we analyzed documentation from 
bid protests filed with GAO in fiscal years 2002 through 2005, in 
addition to the bid protest guidance issued by GAO's Office of General 
Counsel. We analyzed this documentation because it could potentially 
describe problems encountered by DOE during the contract award process. 
In correcting any problems, DOE may have repeated steps in the process, 
eventually delaying the contract award. When bid protest documents were 
used to determine whether (1) the contract award being protested was 
also in our sample of contracts that we analyzed for delays or (2) 
corrective action was agreed to by DOE or recommended by GAO as a 
result of the protest, two analysts involved in this study 
independently reviewed the documents to verify that the causes were 
reasonably identified. 

To determine overall impacts of any delays in awarding DOE's contracts, 
as well as the extent to which the department has taken steps to 
address the delays, we interviewed headquarters contracting officials 
from the Office of Procurement and Assistance Management, as well as 
contracting and program officials from the department's three largest 
DOE component organizations, and officials from the Office of 
Engineering and Construction Management, who oversee planning and 
management of capital projects. Also, we interviewed contracting and 
program officials at six of the seven field locations from which we 
selected contracts for our nonprobability sample as follows:[Footnote 
21] 

* Albuquerque Service Center (NNSA), New Mexico; 

* Idaho Operations Office (EM and Nuclear Energy), Idaho; 

* Oak Ridge Operations Office (EM, Science, NNSA), Tennessee; 

* Portsmouth and Paducah Project Office (EM), Lexington, Kentucky; 

* Richland Operations Office (EM), Washington; and: 

* Savannah River Operations Office (EM and NNSA), South Carolina. 

Furthermore, for contracts in our sample, we analyzed file documents 
for evidence of adverse impacts upon companies competing for the work 
resulting from any delays in carrying out the contract award process. 
We examined transcripts from some debriefing sessions that DOE held 
with companies after awarding the contract, as well as other documents, 
such as correspondence from companies or their representatives. To 
further understand the impacts of delays, we also examined documents 
related to DOE's contract award for environmental cleanup of its 
Paducah, Kentucky, site, even though this contract was not part of our 
sample. DOE's Office of Procurement and Assistance Management provided 
us with its analysis of lessons learned and the factors that delayed 
this contract award. We reviewed the contract file documents to better 
understand the context of this analysis. However, we excluded the 
contract from our sample because DOE awarded it in fiscal year 2006 
and, therefore, it did not fit our selection criteria. As a result, we 
did not include the contract in calculations or figures showing the 
extent of delays in awarding DOE contracts. 

In addition, we reviewed federal and DOE regulations that govern 
contracting, DOE policy and guidance on contracting, and documents on 
the department's assessment of its performance in carrying out its 
contract awards. We also reviewed GAO's Framework for Assessing the 
Acquisition Function at Federal Agencies for determining the 
effectiveness of DOE's management and oversight of the contract award 
process. 

We conducted our work from July 2005 to June 2006 in accordance with 
generally accepted government auditing standards. 

[End of section] 

Appendix II: Comments from the Department of Energy: 

Department of Energy: 
Washington, DC 20585: 

Jun 23 2006: 

Mr. Gene Aloise: 
Director, Natural Resources and Environment: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Aloise: 

We have reviewed the draft Government Accountability Office (GAO) 
report entitled "DOE Contracting --Better Performance Measures and 
Management Needed to Address Delays in Awarding Contracts" (GAO-06- 
722). We appreciate that the report recognizes the Department of 
Energy's (DOE) improvements in areas related to improving contract and 
project management. 

The draft GAO report specifically recognizes improvements in DOE's 
management of contracts. For example, it notes: (1) an initiative with 
the Office of Management and Budget to address the GAO's identification 
of DOE's contract management as a "high risk" area; (2) a restructuring 
of DOE's Office of Environmental Management to increase the focus on 
planning and management of contract awards; and (3) specific steps by 
the National Nuclear Security Administration's and DOE's Office of 
Procurement and Assistance Management to implement improved measures of 
the timeliness of the contract award process. One of the Department's 
recent improvements is tailored source evaluation board training that 
includes the latest guidance, policy and lessons-learned for the 
conduct of the Department's major competitive procurements. 

The draft GAO report states that the GAO analyzed contracts "from a non-
probability sample of contracts valued at $5 million or greater, that 
DOE awarded during fiscal years 2002 through 2005." The draft report 
acknowledges that a non-probability sample is one from which no 
inference can be made from the sample to the general population (DOE 
contracting). However, the report then draws conclusions from this 
sample regarding the timeliness of the Department's procurements and 
the factors contributing to a perceived lack of timeliness. 
Additionally, the GAO reviewed only 31 contracts out of over 5,000 
contract awards for the period of fiscal years 2002 through 2005. This 
represents less than 0.62% of the Department's procurement awards. 
Considering the fact that (1) the sample contained a number of 
contracts which did not meet projected award dates because of factors 
well beyond the control of the Department, (2) the sample size was 
insignificant, and (3) accurate inferences from a non-probability 
sample are not possible, DOE believes that the draft report's 
conclusions, about the health of the Department's contracting based on 
this sample, are unsupported. 

The draft report characterizes certain of the Department's procurements 
inappropriately as "delayed" and overly focuses on schedule timelines 
rather than on the resulting quality of the procurements. The 
Department believes that the GAO's use of the originally planned award 
date to determine timeliness does not, in and of itself, provide a 
meaningful measure of timeliness because it does not consider the 
external forces on the procurement, and the assumptions and conditions 
which changed over time. Lack of compliance with a procurement's 
originally planned timelines is not necessarily an indicator of a 
poorly run procurement. The original schedule is a internal planning 
tool which may change over time as conditions and reality change. 

The GAO's characterization that DOE is remiss because certain of its 
contracts were not awarded by the originally projected award dates is 
not accurate. Those originally planned award dates were reasonable 
projections based on the best information and assumptions at the time 
but did not include all possible contingencies which might affect the 
eventual award date. A number of the contract awards characterized by 
the GAO as "delayed" occurred after the projected award date because of 
circumstances beyond the direct control of the Department. Such 
circumstances were Congressional intervention, redirection by the 
Office of Management and Budget, the necessity to conduct discussions 
with offerors, protests, changes in requirements, lack of funding, 
changing site conditions, significantly higher number of proposals than 
could be reasonably expected, etc. 

For instance, the report suggests that the Department erred by not 
including discussions in the planned schedule or in taking longer to 
hold discussions than anticipated in its planning documents. The 
Department, as do other Federal agencies, frequently reserves the right 
to award a competition without discussions if the situation permits 
consistent with Federal regulations and GAO case law. FAR 15.306(d)(2) 
states that "The primary objective of discussions is to maximize the 
Government's ability to obtain best value, based on the requirement and 
the evaluation factors set forth in the solicitation." Often, it is 
impossible to determine if discussions will be required or the extent 
of the discussions until the proposals are evaluated. If the 
competitive situation provides that discussions are not required, i.e., 
the Department has determined that it can obtain the best value without 
discussions, then discussions will not be held. However, it is 
frequently impossible to determine at the planning stage of a 
procurement if it will be necessary to hold discussions. 

DOE believes that rigorous, but realistic, acquisition schedules best 
serve the program mission needs and are the most effective tool to 
manage the acquisition cycle. Including contingencies for all possible 
procurement activities would result in a less disciplined approach in 
meeting acquisition objectives. The unintended consequence of GAO's 
conclusions would be overly protracted and less rigorous schedules. 

The report provides two recommendations to the Secretary of Energy to 
help ensure that the Department's contract award process is efficient 
and effective and that DOE obtains the best value for the Government 
to: (1) ensure that performance measures for the timeliness of the 
Department's contract awards include the entire contract award process 
from planning to contract award and include all of the Department's 
contracts; and (2) establish a more systematic way of identifying 
lessons learned from past and current contract awards and sharing those 
lessons and best practices with the staff involved in planning and 
managing the Department's efforts to award its contracts. 

Because of the importance of the subject matter, the beneficial nature 
of the GAO's suggestions, and the Department's commitment to continuous 
improvement in this area, DOE generally agrees with the draft report's 
recommendations. The Department concurs with the report's 
recommendations with the following comments: 

1. GAO Recommendation: Ensure that performance measures for the 
timeliness of the department's contract awards include the entire 
contract award process from planning to contract award and include all 
of the department's contracts. 

DOE Comment: The Department already measures timeliness on the 
significant majority of its contracts for those aspects of the award 
process over which acquisition officials have substantial control. 
Furthermore, the Department measures timeliness from planning through 
award for those major contracts which, because of dollar amount, 
complexity or visibility, merit closer scrutiny. Nonetheless, the DOE 
will: 

a. continue to track and monitor its management and operating and other 
critical contracts from planning through award in order to identify 
challenges under these procurements wherever possible; 

b. review DOE's Balanced Scorecard (BSC) to determine if it would be 
appropriate to: (1) expand the Procurement Action Lead Time (PALT) 
measure to include earlier stages in the procurement cycle, and (2) 
extend the BSC PALT measure to compass a greater population of the 
Department's contracts; and: 

c. review and benchmark other agencies' PALT measures for possible 
application to DOE. 

The Department is not aware of any Federal agencies that measure and 
track the timeliness of the "entire contract award process" (from 
planning through award) for 100% of its contracts. The Department would 
greatly appreciate it if the GAO would advise DOE of such an agency so 
that the Department can review and evaluate that agency's approach. 

2. GAO Recommendation: Establish a more systematic way of identifying 
lessons learned from past and current contract awards and sharing those 
lessons and best practices with the staff involved in planning and 
managing the department's efforts to award its contracts. 

DOE Comment: The Department continuously identifies lessons-learned and 
shares them with DOE staff. Such lessons-learned and best practices are 
regularly disseminated in the form of Procurement Directors 
teleconferences, Procurement Policy Advisory Group meetings, various 
training sessions, the DOE Acquisition Guide, DOE Acquisition Letters, 
the DOE Professionals Homepage, procurement action reviews and myriad 
other forums. Recent on-going Source Evaluation Board training 
conducted in the field provided procurement and technical staff with 
current policy, the latest guidance and lessons-learned from analysis 
of past DOE competitive procurements. Although the Department believes 
that it has aggressively communicated lessons-learned as they have been 
identified, DOE will: 

a. continue reporting to senior management on the status of the 
Department's major procurements, 

b. continue training source evaluation boards on the proper conduct of 
competitive procurements, 

c. examine opportunities internally to better identify and disseminate 
lessons-learned and best practices, and: 

d. benchmark other agencies to ascertain better ways to identify and 
disseminate lessons-learned and best practices. 

Additional comments and corrections on the draft report are attached 
for your consideration. The Department appreciates the GAO's 
recommendations and will consider them in our future improvement 
efforts. The Department requests that its full comments including the 
enclosure be included in the GAO's final report. 

Sincerely, 

Signed by: 

Ingrid Kolb: 
Director: 
Office of Management: 

Enclosure: 

cc: 

A. Scott Geary, Contract Administration Division: 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Gene Aloise (202) 512-3841 or aloisee@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Bill Swick, Assistant 
Director; Carole Blackwell, Nora Boretti, Kevin Jackson, Greg Marchand, 
Alison O'Neill, Jeff Rueckhaus, and Gretchen Snoey made key 
contributions to this report. 

(360606): 

FOOTNOTES 

[1] During fiscal year 2005, there were more than 1,356 bid protests 
filed with GAO, compared with less than 70 with the U.S. Court of 
Federal Claims. According to a DOE Associate General Counsel, DOE also 
has significantly fewer bid protests filed in the U.S. Court of Federal 
Claims than with GAO. The DOE official added that there had been less 
than 10 of these protests filed over the last decade. Furthermore, DOE 
neither lost any bid protest cases in this court during fiscal years 
2002 through 2005, nor did the department take corrective action in 
response to any cases filed with the court. 

[2] After the contract has been awarded, DOE notifies both the 
successful and unsuccessful companies and, upon request, conducts 
"debriefings" on how their proposals were evaluated. 

[3] Between fiscal years 2002 and 2005, a total of 5,397 bid protests 
were filed with GAO, or an average of about 1,300 per year. Of the 
cases resolved by a GAO decision on the merits, about 20 percent 
resulted in a sustained decision. 

[4] While the sample of contract awards reviewed did not allow us to 
generalize to all of DOE's contract awards, they represent about 73 
percent of the department's total contracting dollars for awards of $5 
million or greater during fiscal years 2002 through 2005. Further 
information on our scope and methodology is presented in appendix I. 

[5] During fiscal years 2002 through 2005, of DOE's more than 5,000 
contract awards, 39 were subject to bid protests filed with GAO. Of 
these, 24--or about 60 percent--were denied or dismissed by GAO or 
withdrawn by the company that filed the protest before GAO reached a 
decision. For the remaining 15 bid protests, DOE took corrective 
action, in response to a sustained decision in two cases and before GAO 
reached a decision in the other 13 cases. 

[6] For the 8 bid protests that did not result in corrective action, 
the bid protest process did not cause a delay in the date of the 
contract award. However, starting the work under the new contract may 
have been deferred until the bid protest was resolved. 

[7] As part of taking corrective action on this bid protest, DOE had to 
revise the statement of work and issue a new solicitation. This was 
necessary because the incumbent contractor had continued to perform 
cleanup work under the existing contract, leaving less work to be 
accomplished under the new contract. 

[8] In addition, there were three bid protests filed with GAO during 
this contract award process, with DOE taking corrective action based on 
the first two protests. Overall, the final contract award was delayed 1-
1/2 years. 

[9] Lack of consistent file documentation on headquarters review and 
approval dates made it difficult to determine exactly how many contract 
awards were delayed for this reason. 

[10] Congress eventually passed legislation that became effective on 
August 2, 2002, requiring DOE to award the contract for facilities at 
both locations within 30 days. See Pub. L. No. 107-206, 116 Stat. 820, 
§ 502 (2002). The contract was awarded on August 29, 2002. 

[11] U.S. Department of Energy, Contract Reform and Privatization 
Project Office, Analysis of the DOE Contractor Base: Readiness, 
Willingness, Profitability and Trends--A Focus on the Environmental 
Management Program (Washington, D.C.: January 2001). 

[12] DOE's performance data for fiscal years 2003 through 2005 included 
contracts valued at $100,000 or greater that DOE had awarded through a 
competitive process. The fiscal year 2002 data included competitive 
contracts with values between $1 million and $25 million. The data from 
the 4-year period did not include the department's facility management 
contracts. 

[13] For additional information see GAO, Contract Reform: DOE Has Made 
Progress, but Actions Needed to Ensure Initiatives Have Improved 
Results, GAO-02-798 (Washington, D.C.: Sept. 13, 2002); GAO, Department 
of Energy: Further Actions Are Needed to Strengthen Contract Management 
for Major Projects, GAO-05-123 (Washington, D.C.: Mar. 18, 2005); GAO, 
Nuclear Waste: Absence of Key Management Reforms on Hanford's Cleanup 
Project Adds to Challenges of Achieving Cost and Schedule Goals, GAO- 
04-611 (Washington, D.C.: June 9, 2004); and GAO, Hanford Waste 
Treatment Plant: Contractor and DOE Management Problems Have Led to 
Higher Costs, Construction Delays, and Safety Concerns, GAO-06-602T 
(Washington, D.C.: Apr. 6, 2006). 

[14] GAO, Framework for Assessing the Acquisition Function at Federal 
Agencies, GAO-05-218G (Washington, D.C.: Sept. 2005). 

[15] FAR Part 7.103(r) requires agency heads to implement processes for 
ensuring that knowledge gained from prior acquisitions is used to 
further refine requirements and acquisition strategies for future 
contract awards. 

[16] Because our study focused on DOE's process for awarding contracts, 
we only looked at new contracts awarded during the four fiscal years 
through a competitive or noncompetitive process. Our study did not 
include contracts awarded prior to fiscal year 2002 that the department 
renewed or extended in fiscal years 2002 through 2005 beyond the 
initial period of performance. We did not include such contracts 
because extending an existing contract eliminates the opportunity for a 
competitive or noncompetitive award process to occur. 

In addition, 3 of the 31 contracts in our sample actually represent 
multiple contract awards resulting from a single contract award 
process. For example, a contract award process carried out by DOE's 
Savannah River location resulted in simultaneous award of 22 contracts 
for environmental cleanup services. In defining our sample, we 
represented such awards as a single contract in order to avoid 
potentially overstating the extent to which the contracts we reviewed 
had experienced delays. 

[17] Results from nonprobability samples cannot be used to make 
inferences about a population. This is because, in a nonprobability 
sample, some elements in the population being studied have no chance or 
an unknown chance of being selected in the sample. 

[18] For certain types of contracts, in which the exact quantity of 
goods or services needed during the period of performance is unknown at 
the time of award, DOE may establish a maximum value for the contract. 
We included six such contracts in our nonprobability sample that had a 
maximum value of $5 million or greater. However, in determining the 
total value of the contracts in our nonprobability sample, we 
calculated the value of these six contracts as $0. We did so because 
DOE reports the value of such contracts as $0, rather than reporting 
the maximum value established at the time of the award. Accordingly, 
the value of these contracts would also be $0 in DOE's calculation of 
the total value of its contracts in fiscal years 2002 through 2005. We 
relied on DOE's calculation in order to determine the percentage of the 
total value of DOE's contracts that was represented by our 
nonprobability sample. As a result, we remained consistent with DOE's 
methodology, rather than potentially overstating the value of the 
contracts in our sample by including the maximum value. 

[19] For 4 of the 31 contracts in our sample, the department initially 
awarded an interim contract, known as a letter contract, until issuing 
a finalized contract at a later date. In these cases, we used the 
letter contract date as the date of the award. According to officials 
from DOE's Office of Procurement and Assistance Management and NNSA's 
Office of Acquisition and Supply Management, letter contracts were 
seldom used, but sometimes necessary, for awarding contracts and 
starting the work more quickly. The officials also said that most of 
the contents of the letter contracts are final except, most typically, 
contract price, which is determined in the finalized version. 

[20] DOE guidance from 2004 on preparing the required plans for 
carrying out the remaining steps of the contract award process suggests 
that the plan include a publication date for the plan, as well as 
approval signatures and dates. For 19 of the 31 contracts in our 
sample, we used the plans' publication date as the date DOE initiated 
the contract award process. In four cases, in which the publication 
date was not available, we used the date of the earliest approval 
signature. In the remaining cases, in which neither of these dates were 
available, we used the plan approval date listed in the plan's schedule 
of dates for the process, or other sources. In addition, where only a 
month and year were referenced, and we could not determine the full 
date of a plan through any contract file documents reviewed in our 
study, we assumed the action to be completed on the fifteenth day of 
the month. 

[21] Although we obtained file documentation for one of the 31 
contracts in our nonprobability sample from DOE's Chicago Service 
Center, we did not contact officials at that location because we spoke 
instead with a headquarters Office of Science official involved with 
the contract award process. 

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