Audit Report on Management Controls over the Use of Service Contracts at the Office of River Protection
The Department of Energy's (Department) Office of River Protection (ORP) is responsible for the storage, treatment, and disposal of over 53 million gallons of highly radioactive waste from over 40 years of plutonium production at the Hanford Site. Because of the diversity, complexity, and large scope of its mission, coupled with its small staff, ORP told us that it has found it necessary to engage in service contracts to obtain consulting services, technical expertise, and support staff. Federal policy generally permits contractors to perform a wide range of support service activities, including, in most situations, the drafting of Government documents subject to the review and approval of Federal employees. Federal policy issued by the Office of Management and Budget, however, prohibits contractors from drafting agency responses to Congressional inquiries and reports issued by the Office of Inspector General and Government Accountability Office (GAO) because they are so closely related to the public interest and provide the appearance of private influence. To provide a majority of its needed services, ORP issued a Blanket Purchase Agreement to Project Assistance Corporation (PAC) in 2003. Through the Blanket Purchase Agreement, ORP acquired services in the areas of project management, risk assessment, program assessment, quality assurance, safety, cost and schedule estimating, budgeting and finance, and engineering. PAC has, in turn, subcontracted with various other firms to obtain some of the services needed by ORP. From 2005 to 2008, the total annual cost for the contract with PAC had grown from $4.7 million to $9.2 million. Because of the extent of the services provided and growing costs of the contract, we conducted this review to determine whether ORP appropriately administered its contract with the Project Assistance Corporation. Our review disclosed that, in some instances, ORP had not appropriately administered all work performed under the PAC contract. Specifically, ORP allowed PAC employees to perform work that was inherently governmental and created situations where a potential conflict of interest occurred. Specifically: (1) ORP assigned PAC employees responsibility for providing information and responses to Congressional inquiries and reports issued by the GAO and the Department of Energy's Office of Inspector General (OIG); and (2) PAC employees were also allowed to perform functions that created potential conflicts of interest. ORP permitted PAC employees, for example, to develop statements of work and approve funding of work to be performed under PAC's own contract. We concluded that these problems occurred, at least in part, because ORP had not established controls necessary to effectively administer the PAC contract. Federal procurement regulations recommended that agencies provide additional management controls over contractors whose work has the potential to influence the action of government officials. ORP, however, had not implemented the controls specifically recommended in Federal policy guidance for administering contracts, including: (1) Performing conflict of interest reviews; and (2) Separating contractor and Department employees either physically or organizationally. By not effectively administering its contract with PAC, ORP increased the risk that decisions based on work performed by the contractor may not have been made in the best interests of the Department. For example, ORP increased the risk that approved work would be unnecessary or too costly. As we also recently noted in our report on 'Management Challenges at the Department of Energy' (DOE/IG-0808, December 2008), contract administration issues such as those discussed in this report remain a significant vulnerability. Continued efforts to improve this area are vitally important since the risk that contractors receive payments for unallowable costs could also increase as the Department expands its contracting activities under the American Recovery and Reinvestment Act. To its credit, however, ORP has recognized that there are weaknesses in its oversight of the PAC contract and is in the process of taking certain corrective actions. ORP indicated that it had reassigned responsibility to a Federal employee for responding to Congressional requests, GAO reviews, and OIG reports, and, planned to physically separate PAC employees from their government counterparts. While positive, those actions do not sufficiently address the issues identified in our report. Accordingly, we have made several recommendations designed to strengthen internal controls over this area.
- Research Organization:
- DOEIG (USDOE Office of the Inspector General (IG))
- Sponsoring Organization:
- USDOE
- OSTI ID:
- 952610
- Report Number(s):
- OAS-M-09-02; TRN: US0902706
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
AUDITS
CONFLICTS OF INTEREST
CONGRESSIONAL INQUIRIES
CONTRACT MANAGEMENT
PERSONNEL
PLUTONIUM
PROCUREMENT
PROGRAM MANAGEMENT
QUALITY ASSURANCE
RADIOACTIVE WASTES
REGULATIONS
RISK ASSESSMENT
RIVERS
SAFETY
SCHEDULES
STORAGE
VULNERABILITY