oversight

Contract Reform: DOE's Policies and Practices in Competing Research Laboratory Contracts

Published by the Government Accountability Office on 2003-07-10.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                             United States General Accounting Office

GAO                          Testimony
                             Before the Subcommittee on Energy,
                             Committee on Science, House of
                             Representatives

For Release on Delivery
Expected at 10:00 a.m. EDT
Thursday, July 10, 2003
                             CONTRACT REFORM
                             DOE’s Policies and
                             Practices in Competing
                             Research Laboratory
                             Contracts
                             Statement of Robin M. Nazzaro, Director,
                             Natural Resources and Environment




GAO-03-932T
                                                July 10, 2003


                                                CONTRACT REFORM

                                                DOE's Policies and Practices in
Highlights of GAO-03-932T, testimony            Competing Research Laboratory
before the Subcommittee on Energy,
Committee on Science, House of                  Contracts
Representatives




DOE is the largest civilian-                    DOE has competed its research laboratory contracts in three main situations—
contracting agency in the federal               when the contractor operating the laboratory is a for-profit entity, when mission
government, and relies primarily on             changes warrant a review of the capabilities of other potential contractors, or
contractors to operate its sites and            when the incumbent contractor’s performance is unsatisfactory. DOE guidance
carry out its diverse missions. For             requires that to extend a contract noncompetitively, the department must
fiscal year 2003, DOE will spend                present a convincing case for doing so to the Secretary of Energy. Among other
about 90 percent of its total annual            things, DOE must certify that competing the contract is not in the best interests
budget, or $19.8 billion, on                    of the government and must describe the incumbent contractor’s past successful
contracts, including $9.4 billion to            performance.
operate 16 of its research
laboratories (called federally                  Of the 16 research laboratory contracts currently in place, DOE has competed 6.
funded research and development                 The remaining 10 contracts have not been competed since the contractors began
centers). Since 1990, GAO has                   operating the sites--in some cases, since the 1940s. DOE recently decided to
identified DOE’s contract                       compete 2 of the 10 contracts that had never before been competed—contracts
management as high-risk for fraud,              to operate the Los Alamos National Laboratory in New Mexico and the Argonne
waste, abuse, and mismanagement.                West Laboratory, located at the Idaho National Laboratory. DOE decided to
In 1994, DOE began reforming its                compete the Los Alamos contract because of concerns about the contractor’s
contracting practices to, among
                                                performance, and to compete the Argonne West contract as part of an overall
other things, improve contractor
                                                effort to separate the Idaho National Laboratory’s nuclear energy research
performance and accountability. As
                                                mission from the environmental cleanup mission at the Idaho site.
part of that effort, DOE has at
times used competition in awarding
                                                Competing contracts is one of several mechanisms DOE can use to address
contracts to manage and operate its
                                                contractor performance problems or strengthen contract management.
research laboratories. In
                                                However, just competing a contract does not ensure that contractor
September 2002, GAO reported on
                                                performance will improve. Other aspects of DOE’s contract reform initiative
the status of contract reform
                                                intended to improve contractor performance included greater use of fixed-price
efforts in DOE. (Contract Reform:
DOE Has Made Progress, but                      contracts instead of cost-reimbursement contracts and establishing or
Actions Needed to Ensure                        strengthening performance-based incentives in existing contracts. In addition,
Initiatives Have Improved                       GAO has reported that DOE must (1) effectively oversee its contractors’
Results) [Sep. 2002, GAO-02-798]                activities in carrying out projects and (2) use appropriate outcome measures to
                                                assess overall results and apply lessons learned to continually improve its
This testimony discusses some                   contracting practices. GAO’s recent evaluation of DOE’s contract reform efforts
of the findings in that report. GAO             indicates that DOE is still working to put these management practices and
was asked to testify on DOE’s                   outcome measures in place.
rationale for deciding whether to
compete a laboratory research
contract, the extent to which DOE
has competed these contracts, and
the role of competition and other
mechanisms in improving
contractor performance.


www.gao.gov/cgi-bin/getrpt?GAO-03-932T.

To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Robin M.
Nazzaro (202) 512-3841 or
nazzaror@gao.gov.
Madam Chairman and Members of the Subcommittee:

We are pleased to be here today to discuss the Department of Energy’s
(DOE) use of competition and other mechanisms to help ensure effective
contractor performance in managing and operating its research
laboratories. DOE is the largest civilian-contracting agency in the federal
government, relying primarily on contractors to operate its sites and carry
out its diverse missions. These missions include not only conducting
research but also maintaining the nuclear weapons stockpile, and cleaning
up radioactive and hazardous waste. For fiscal year 2003, DOE will spend
about 90 percent of its total annual budget, or $19.8 billion, on contracts,
including $9.4 billion to operate 16 of its research laboratories.

For over a decade, we, DOE’s Office of Inspector General, and others have
criticized DOE’s contracting practices, including its failure to hold its
contractors accountable for results. DOE’s longstanding approach had
been to develop a broadly defined statement of work, provide
considerable direction to the contractor, and reimburse virtually all costs.
This approach placed limited emphasis on cost control or accountability
for results. Furthermore, poor contractor performance 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 projects—as a high-risk area for fraud, waste, abuse,
and mismanagement.

In 1994, DOE began its contract reform initiative to improve contractors’
performance. Through this initiative DOE intended, among other things, to
strengthen contracting practices, hold contractors more accountable for
their performance, and demonstrate progress in achieving the agency’s
missions. DOE implemented numerous changes, such as performance
based-contracts with results-oriented measures and a greater use of
competition in awarding contracts, including contracts to manage and
operate its research laboratories known as Federally Funded Research
and Development Centers (FFRDC). According to the Federal Acquisition
Regulation, FFRDCs are entities that engage in activities sponsored by a
government agency or agencies to conduct or manage basic or applied
research and development. Contracts to operate such facilities differ from
other contracts because the government contemplates a long-term
relationship with the FFRDC contractor and the contractor has access to
government data, employees, and facilities beyond that common in a
normal contractual relationship.



Page 1                                   GAO-03-932T DOE Laboratory Contracts
    My testimony today will discuss (1) DOE’s rationale for deciding whether
    to compete a FFRDC contract, (2) the extent to which DOE has competed
    these contracts, and (3) the role of competition and other mechanisms in
    improving contractor performance. Although we have not conducted a
    review solely related to FFRDC contracts, our past work on DOE’s
    contract reform initiative, especially our September 2002 report,1 focused
    in part on DOE’s use of competition as a tool to improve contractor
    performance, including the contractors that manage and operate DOE’s
    laboratories. My testimony today is based on the findings in that report as
    well as related information we have developed as part of our ongoing
    oversight of DOE’s contracting activities.

    In summary we found the following:

•   DOE has competed its FFRDC contracts in three main situations: when the
    contractor operating the laboratory is a for-profit entity, when mission
    changes warrant a review of the capabilities of other potential contractors,
    or when the incumbent contractor’s performance is unsatisfactory. DOE
    guidance on contracting reflects a strong emphasis on competition that
    exists, in part, as a result of its contract reform initiative. Statutes and
    regulations give DOE considerable flexibility in deciding whether to
    compete or noncompetitively extend a FFRDC contract. However, for
    noncompetitive extensions, DOE guidance requires the department to
    present a convincing case to the Secretary. Among other things, DOE must
    certify that competing the contract is not in the best interests of the
    government and must describe the incumbent contractor’s past successful
    performance.

•   Of the 16 FFRDC contracts in place, DOE has competed 6. It has not
    competed the remaining 10 contracts since the contractors began
    operating the sites—in some cases, since the 1940s. DOE recently decided
    to compete 2 of the 10 contracts that had never before been competed—
    contracts to operate the Los Alamos National Laboratory in New Mexico
    and the Argonne West Laboratory, located at the Idaho National
    Laboratory. DOE decided to compete the (1) Los Alamos contract because
    of concerns about the contractor’s performance and (2) Argonne West
    contract as part of an overall effort to separate the Idaho National
    Laboratory’s ongoing research mission from the environmental cleanup



    1
     U.S. General Accounting Office, Contract Reform: DOE Has Made Progress, but Actions
    Needed to Ensure Initiatives Have Improved Results, GAO-02-798 (Washington, D.C.:
    Sept. 13, 2002).



    Page 2                                        GAO-03-932T DOE Laboratory Contracts
                 mission at the Idaho site.

             •   Competing contracts is one of several mechanisms DOE can use to
                 address contractor performance problems or strengthen contract
                 management. However, just competing a contract does not ensure that
                 contractor performance will improve. Other aspects of DOE’s contract
                 reform initiative intended to improve contractor performance included
                 greater use of fixed-price contracts instead of cost-reimbursement
                 contracts and establishing or strengthening performance-based incentives
                 in existing contracts. In addition, we have reported that DOE must (1)
                 effectively oversee its contractors’ activities in carrying out projects and
                 (2) use appropriate outcome measures to assess overall results and apply
                 lessons learned to continually improve its contracting practices. Our
                 recent evaluation of DOE’s contract reform efforts indicates that DOE is
                 still working to put these management practices and outcome measures in
                 place.


                 DOE has a large complex of sites around the country dedicated to
Background       supporting its missions: sites that were used to produce or process
                 materials and components for nuclear weapons and laboratories that
                 conduct research on nuclear weapons, defense issues, basic science, and
                 other topics. These sites and laboratories are often located on
                 government-owned property and facilities, but are usually operated by
                 organizations under contract to DOE, including universities or university
                 groups, non-profit organizations, or other commercial entities.

                 DOE contracting activities are governed by federal laws and regulations.
                 Although federal laws generally require federal agencies to use
                 competition in selecting a contractor, until the mid-1990s, DOE contracts
                 for the management and operation of its sites generally fit within an
                 exception that allowed for the use of noncompetitive procedures. Those
                 contracts were subject to regulation that established noncompetitive
                 extensions of contracts with incumbent contractors as the norm and
                 permitted competition only when it appeared likely that the competition
                 would result in improved cost or contractor performance and would not
                 be contrary to the government’s best interests. In the mid-1990s, DOE
                 began a series of contracting reforms to improve its contractors’
                 performance. A key factor of that initiative has been the increasing use of
                 competition as a way to select management and operating contractors for
                 DOE sites. Although DOE initially focused the increased use of
                 competition on its contracts with for-profit organizations, the laboratories



                 Page 3                                   GAO-03-932T DOE Laboratory Contracts
                      operated by universities and other nonprofit organizations have not been
                      completely insulated from these changes.

                      Contract administration in DOE is carried out by the program offices, with
                      guidance and direction from DOE’s Office of Procurement and Assistance
                      Management. The management and operating contracts at DOE’s FFRDC
                      laboratories are administered primarily by the National Nuclear Security
                      Administration, a semi-autonomous agency within DOE; or DOE’s Offices
                      of Science, Environmental Management, or Nuclear Energy, Science, and
                      Technology.


                      DOE has had three main reasons for competing its FFRDC contracts
DOE Has Competed      instead of extending the contracts noncompetitively: when the contractor
FFRDC Contracts for   operating the laboratory is a for-profit entity, when mission changes
                      warrant a review of the capabilities of other potential contractors, or when
Three Main Reasons    the incumbent contractor’s performance is unsatisfactory. Without one of
                      these conditions, DOE has generally extended these contracts without
                      competition.

                      DOE has considerable flexibility in deciding whether to compete a
                      management and operating contract for one of its FFRDC laboratories.
                      Although federal procurement law specifies a clear preference for
                      competition in awarding government contracts, the Competition in
                      Contracting Act of 1984 provided for certain conditions under which full
                      and open competition is not required. One of these noncompetitive
                      conditions occurs when awarding the contract to a particular source is
                      necessary to establish or maintain an essential engineering, research, or
                      development capability to be provided by an educational or other
                      nonprofit institution or a FFRDC.

                      The Federal Acquisition Regulation, which implements federal law,
                      defines government-wide policy and requirements for FFRDCs, including
                      the establishment, use, review, and termination of the FFRDC relationship.
                      Under this regulation (1) there must be a written agreement of
                      sponsorship between the government and the FFRDC; (2) the sponsoring
                      governmental agency must justify its use of the FFRDC; (3) before
                      extending the agreement or contract with the FFRDC, the government
                      agency must conduct a comprehensive review of the use and need for the
                      FFRDC; and (4) when the need for the FFRDC no longer exists, the agency
                      may transfer sponsorship to another government agency or phase out the
                      FFRDC.



                      Page 4                                   GAO-03-932T DOE Laboratory Contracts
    DOE’s 1996 acquisition guidance describes the procedures DOE program
    offices must follow to support any recommendation for a non-competitive
    extension of any major site contract, including a FFRDC contract. This
    guidance indicates a clear preference for competition and requires DOE
    program offices to make a convincing case to the Secretary before a
    noncompetitive contract extension is allowed. This preference for
    competition is an outcome of DOE’s contract reform initiative, which
    concluded that DOE needed to expand the use of competition in awarding
    or renewing contracts. Among other things, the 1996 guidance specifies
    that, before a noncompetitive contract extension can occur, DOE must
    provide

•   a certification that full and open competition is not in the best interest of
    the department,

•   a detailed description of the incumbent contractor’s past performance,

•   an outline of the principal issues and/or significant changes to be
    negotiated in the contract extension, and

•   in the case of FFRDCs, a showing of the continued need for the research
    and development center in accordance with criteria established in the
    Federal Acquisition Regulation.

    In November 2000, DOE’s Office of Procurement and Assistance
    Management issued additional guidance on how to evaluate an incumbent
    contractor’s past performance when deciding whether to extend or
    compete an existing contract. The guidance states that DOE contracting
    officers must review an incumbent contractor’s overall performance
    including technical, administrative, and cost factors, and it outlines the
    information required to support the performance review and the expected
    composition of the evaluation team. When reporting the results of a
    performance evaluation, the team should address all significant areas of
    performance and highlight the incumbent contractor’s strengths and
    weaknesses. The evaluation team’s report serves as the basis for
    determining whether extending a contract is in the best interests of the
    government and is subject to review and concurrence by the responsible
    assistant secretary and DOE’s Procurement Executive.




    Page 5                                    GAO-03-932T DOE Laboratory Contracts
                       In September 2002, we reported that DOE had taken several steps to
DOE Has Competed       expand competition for its site management and operating FFRDC
or Plans to Compete    contracts. First, DOE reassessed which sites it should continue to
                       designate as federally funded research and development centers. As a
Half of Its 16 FFRDC   result of the reassessment, DOE removed 6 of the 22 sites from the FFRDC
Contracts              designation. DOE subsequently competed the contracts for two of these—
                       the Knolls and Bettis Atomic Power Laboratories in New York and
                       Pennsylvania. DOE restructured the other four contracts and, because of
                       the more limited scope of activities, no longer regards them as major site
                       contracts. The six site contracts that DOE has dropped from FFRDC status
                       since 1992 are listed in table 1.

                       Table 1: Sites Where DOE Has Eliminated the FFRDC Designation

                                                                                         Year FFRDC status
                        Site                                                                    terminated
                        Bettis Atomic Power Laboratory, Pennsylvania                                  1992
                        Hanford Engineering Development Laboratory,                                   1992
                        Washington
                        Inhalation Toxicology Research Institute, New Mexico                           1995
                        Energy Technology Engineering Center, California                               1995
                        Knolls Atomic Power Laboratory, New York                                       1992
                        Oak Ridge Institute of Science and Education,                                  1999
                        Tennessee
                       Source: GAO analysis of DOE data.



                       For the 16 remaining FFRDC contracts that DOE sponsors, DOE has
                       competed 6 of them and is planning to compete two additional contracts
                       in 2004 and 2005. The 16 current FFRDC sites and the competitive status
                       of the site contract are shown in table 2.




                       Page 6                                         GAO-03-932T DOE Laboratory Contracts
Table 2: DOE’s FFRDC Sites and Contract Status

 Site                                                             Site contractor                  Contract status
 Sites with contracts that have not been competed:
 Ames National Laboratory, Iowa                                   Iowa State University            Initiated in 1943.
 Argonne National Laboratory, Illinois                            University of Chicago            Initiated in 1946. DOE plans to
                                                                                                   compete the Argonne West
                                                                                                   (Idaho) portion of the contract
                                                                                                   in 2004.
 Fermi National Laboratory, Illinois                              Universities Research            Initiated in 1967.
                                                                  Association
 Jefferson Laboratory, Virginia                                   Southeastern Universities        Initiated in 1984.
                                                                  Research Association
 Lawrence Berkeley National Laboratory, California                University of California         Initiated in 1947.
 Lawrence Livermore National Laboratory, California               University of California         Initiated in 1952.
 Los Alamos National Laboratory, New Mexico                       University of California         Initiated in 1943. DOE plans to
                                                                                                   compete the contract in 2005.
 Pacific Northwest National Laboratory, Washington                Battelle Memorial Institute      Initiated in 1964.
 Princeton Plasma Physics Laboratory, New Jersey                  Princeton University             Initiated in 1975.
 Stanford Linear Accelerator Facility, California                 Stanford University              Initiated in 1976.
 Sites with competed contracts:
 Brookhaven National Laboratory, New York                         Brookhaven Science Associates Competed in 1997.
 Idaho National Engineering and Environmental Laboratory, Idaho   Bechtel BWTX Idaho, LLC       Competed in 1999. DOE plans
                                                                                                to restructure the site contract
                                                                                                and compete it in 2004.
 National Renewable Energy Laboratory, Colorado                   Midwest Research Institute    Competed in 1998.
 Oak Ridge National Laboratory, Tennessee                         UT-Battelle, LLC              Competed in 1999.
 Sandia National Laboratory, New Mexico                           Sandia Corporation            Competed in 1993.
 Savannah River Site, South Carolina                              Westinghouse Savannah River   Competed in 1996.
                                                                  Company
Source: GAO analysis of DOE data.

                                           DOE’s decision to compete the six FFRDC sites shown in table 2 is
                                           consistent with the department’s overall policy on determining when
                                           competition is appropriate. For example, DOE competed the contract for
                                           the Brookhaven National Laboratory in 1997, after terminating the
                                           previous contract for unsatisfactory performance by the incumbent
                                           contractor. DOE competed the contract for the National Renewable
                                           Energy Laboratory in 1998 to incorporate additional private sector
                                           expertise into the management team for the site. This competition resulted
                                           from an expanded mission at the site to develop innovative renewable
                                           energy and energy efficient technologies and to incorporate these
                                           technologies into cost effective new products. For the remaining four
                                           FFRDC contracts that DOE has competed, the operator of the laboratory
                                           was a for-profit entity.




                                           Page 7                                          GAO-03-932T DOE Laboratory Contracts
When DOE has decided not to compete its FFRDC contracts but to extend
them noncompetitively, its decisions have not been without controversy.
For example, in 2001, DOE extended the management and operating
contracts with the University of California for the Los Alamos and
Lawrence Livermore National Laboratories. The University of California
has operated these sites for 50 years or more and has been the sites’ only
contractor. In recent years, we and others have documented significant
problems with laboratory operations and management at these two
laboratories—particularly in the areas of safeguards, security, and project
management.2 Congressional committees and others have called for DOE
to compete these contracts. Until recently, however, DOE did not compete
them. Instead, DOE chose to address the performance problems using
contract mechanisms, such as specific performance measures and interim
performance assessments. In our September 2002 report, we commented
that if the University of California did not make significant improvements
in its performance, DOE may need to reconsider its decision not to
compete the contracts.

In April 2003, the Secretary of Energy decided to open the Los Alamos
National Laboratory contract to competition when the current contract
expires in September 2005. The Secretary made this decision based on
“systemic management failures” that came to light in 2002. The
management failures included inadequate controls over employees’ use of
government credit cards, inadequate property controls and apparent theft
of government property, and the firing of investigators attempting to
identify the extent of management problems at the laboratory.

DOE has also decided to restructure the FFRDC contracts supporting
work at the Idaho National Laboratory. Currently the laboratory has two
FFRDC contracts—(1) a site management contract that includes activities
ranging from waste cleanup to facility operations activities and (2) a
contract to operate Argonne National Laboratory, which includes the
Argonne West facility at the Idaho site. DOE plans to restructure the two
contracts so that one focuses on the nuclear energy research mission and



2
 For, example, see U.S. General Accounting Office, Department of Energy: Key Factors
Underlying Security Problems at DOE Facilities, GAO/T-RCED-99-159 (Washington, D.C.:
Apr. 20, 1999); U.S. General Accounting Office, Nuclear Security: Improvements Needed in
DOE’s Safeguards and Security Oversight, GAO/RCED-00-62 (Washington, D.C.: Feb. 24,
2000); and A Special Investigative Panel, President’s Foreign Intelligence Advisory Board,
Science at its Best, Security at its Worst: A Report on Security Problems of the U.S.
Department of Energy (Washington, D.C.: June 1999).



Page 8                                          GAO-03-932T DOE Laboratory Contracts
the other focuses on the cleanup mission at the site. DOE also plans to
include the activities at Argonne West in the contract competition for the
site’s research mission and to remove the Argonne West scope of work
from DOE’s existing contract with the University of Chicago to operate
Argonne National Laboratory. DOE believes this contract restructuring
will help revitalize the nuclear energy research mission at the Idaho Site
and accelerate the environmental cleanup.

DOE is continuing to examine the nature of its relationship with FFRDC
contractors and the implications of that relationship for its contracting
approach. DOE established FFRDCs in part to gain the benefits of having a
long-term association with the research community beyond that available
with a normal contractual relationship. However, more recent events are
causing DOE to rethink its approach. As discussed above, DOE has been
criticized for not competing laboratory contracts where the contractors
are performing poorly. Furthermore, annual provisions in the Energy and
Water Development Appropriations Acts since fiscal year 1998 have
required DOE to compete the award and extension of management and
operating contracts, including FFRDC contracts, unless the Secretary
waives the requirement and notifies the Subcommittees on Energy and
Water of the House Committee on Appropriations 60 days before contract
award.

Given these concerns, in 2003 the Secretary of Energy commissioned an
independent panel to determine what criteria DOE should consider when
deciding whether to extend or compete a laboratory management and
operating contract. The panel is expected to help DOE determine, among
other things, the conditions under which competition for laboratory
contracts is appropriate, the appropriate criteria for deciding to compete
or extend laboratory contracts, the benefits and disadvantages derived
from competing laboratory contracts, and whether different standards and
decision criteria should apply depending on whether the contractor is non-
profit, an educational institution, an academic consortium, or a
commercial entity.




Page 9                                   GAO-03-932T DOE Laboratory Contracts
                      Competing contracts is one of several mechanisms DOE can use to
Competing Its         address contractor performance problems or strengthen contract
Contracts Is One of   management. However, competing a contract does not ensure that
                      contractor performance will improve. Other steps DOE has taken as part
Several Mechanisms    of its contract reform initiative to address contractor performance issues
DOE Has to Address    include changing the type of contract, such as from a cost-reimbursement
                      to a fixed-price contract, or establishing or strengthening performance-
Contractor            based incentives in the contract. For example, in September 2002, we
Performance, but      reported that DOE now requires performance-based contracts at all of its
Effective Oversight   major sites. DOE has also increased over time the proportion of
                      contractors’ fees tied to achieving those performance objectives. However,
and Improved          DOE has struggled to develop effective performance measures and
Outcome Measures      continues to modify and test various performance measures that more
                      directly link performance incentives to a site’s strategic objectives.
Are Also Needed
                      Even these changes to DOE’s contracts do not by themselves ensure that
                      contractor performance will improve. We have reported that DOE must
                      also (1) effectively oversee its contractors’ activities in carrying out
                      projects and (2) use appropriate outcome measures to assess overall
                      results and apply lessons learned to continually improve its contracting
                      practices. Effectively overseeing contractor activities involves, among
                      other things, ensuring that appropriate and effective project management
                      principles and practices are being used. Since June 1999, DOE has been
                      working to implement recommendations by the National Research Council
                      on how to improve project management at DOE. In 2003, the National
                      Research Council reported that DOE has made progress in improving its
                      management of projects but that effective management of projects was not
                      fully in place.

                      Regarding the use of outcome measures to assess overall results, in
                      September 2002, we reported that DOE did not have outcome measures or
                      data that could be used to assess the overall results of its contract reform
                      initiatives. We recommended that DOE develop an approach to its reform
                      initiatives, including its contracting and project management initiatives,
                      that is more consistent with the best practices of high-performing
                      organizations. DOE is still working to put a best-practices approach in
                      place.

                      As we reported in 2001, improving an organization’s performance can be
                      difficult, especially in an organization like DOE, which has three main




                      Page 10                                  GAO-03-932T DOE Laboratory Contracts
                  interrelated impediments to improvement—diverse missions, a confusing
                  organizational structure, and a weak culture of accountability.3 However,
                  DOE expects to spend hundreds of billions of dollars in future years on
                  missions important to the well-being of the American people, such as
                  ensuring the safety and reliability of our nuclear weapon stockpile.
                  Therefore, the department has compelling reasons to ensure that it has in
                  place an effective set of contracting and management practices and
                  controls.


                  Thank you, Madam Chairman and Members of the Subcommittee. This
                  concludes my testimony. I would be pleased to respond to any questions
                  that you may have.


                  For further information on this testimony, please contact Ms. Robin
Contacts and      Nazzaro at (202) 512-3841. Individuals making key contributions to this
Acknowledgments   testimony included Carole Blackwell, Bob Crystal, Doreen Feldman, Molly
                  Laster, Carol Shulman, Stan Stenersen, and Bill Swick.




                  3
                   U.S. General Accounting Office, Department of Energy: Fundamental Reassessment
                  Needed to Address Major Mission, Structure, and Accountability Problems, GAO-02-51
                  (Washington, D.C.: Dec. 21, 2001).



(360367)
                  Page 11                                       GAO-03-932T DOE Laboratory Contracts
This is a work of the U.S. government and is not subject to copyright protection in the
United States. It may be reproduced and distributed in its entirety without further
permission from GAO. However, because this work may contain copyrighted images or
other material, permission from the copyright holder may be necessary if you wish to
reproduce this material separately.
                         The General Accounting Office, the audit, evaluation and investigative arm of
GAO’s Mission            Congress, exists to support Congress in meeting its constitutional
                         responsibilities and to help improve the performance and accountability of the
                         federal government for the American people. GAO examines the use of public
                         funds; evaluates federal programs and policies; and provides analyses,
                         recommendations, and other assistance to help Congress make informed
                         oversight, policy, and funding decisions. GAO’s commitment to good
                         government is reflected in its core values of accountability, integrity, and
                         reliability.


                         The fastest and easiest way to obtain copies of GAO documents at no cost is
Obtaining Copies of      through the Internet. GAO’s Web site (www.gao.gov) contains abstracts and full-
GAO Reports and          text files of current reports and testimony and an expanding archive of older
                         products. The Web site features a search engine to help you locate documents
Testimony                using key words and phrases. You can print these documents in their entirety,
                         including charts and other graphics.

                         Each day, GAO issues a list of newly released reports, testimony, and
                         correspondence. GAO posts this list, known as “Today’s Reports,” on its Web
                         site daily. The list contains links to the full-text document files. To have GAO e-
                         mail this list to you every afternoon, go to www.gao.gov and select “Subscribe to
                         e-mail alerts” under the “Order GAO Products” heading.


Order by Mail or Phone   The first copy of each printed report is free. Additional copies are $2 each. A
                         check or money order should be made out to the Superintendent of Documents.
                         GAO also accepts VISA and Mastercard. Orders for 100 or more copies mailed to
                         a single address are discounted 25 percent. Orders should be sent to:

                         U.S. General Accounting Office
                         441 G Street NW, Room LM
                         Washington, D.C. 20548

                         To order by Phone:    Voice:     (202) 512-6000
                                               TDD:       (202) 512-2537
                                               Fax:       (202) 512-6061


                         Contact:
To Report Fraud,
                         Web site: www.gao.gov/fraudnet/fraudnet.htm
Waste, and Abuse in      E-mail: fraudnet@gao.gov
Federal Programs         Automated answering system: (800) 424-5454 or (202) 512-7470


                         Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800
Public Affairs           U.S. General Accounting Office, 441 G Street NW, Room 7149
                         Washington, D.C. 20548