Contract Reform Still on the Front Burner

When Energy Department Secretary Bill Richardson announced he would pursue further management reforms in March, high on the list once again was contract management, an issue that continues to pose significant challenges for the agency. In January 1999, the General Accounting Office declared DOE's contract management a "high-risk area" needing close observation.

Agency officials launched reforms in 1994 to boost competition in the awarding of contracts. Since then, the agency has competed 28 major contracts worth more than $40 billion to manage and operate agency facilities across the nation.

Nevertheless, Richardson said further reforms were needed. In May, he unveiled the Improve Contractor Accountability and Performance initiative, which includes:

• Having the DOE Secretary conduct annual performance reviews with chief executive officers of key contractor organizations;
• Adding a clause to all facility management contracts permitting the Secretary to direct a contractor to remove its top manager for poor performance;
• Holding DOE senior executives accountable for good contractor management through their own performance plans; and
• Notifying the Secretary of contractor performance assessments and proposed performance awards before they are paid.
  

Ensuring that these reforms stay on course will be challenging given that more than 50 percent of the procurement workforce will be eligible to retire within five years, notes Richard Hopf, DOE deputy assistant secretary for procurement. DOE is working with companies such as Federal Express and Oracle to create career development programs for those who remain, but tight resources mean recruitment will remain a challenge. "Budget restrictions still limit the procurement community's ability to replace skills lost in downsizing and bring new blood into the organization," he says.

This year, DOE is competing several major contracts, including one to operate the Waste Isolation Pilot Plant in Carlsbad, N.M., where DOE disposes of nuclear waste. Current operator Westinghouse (which was purchased by BNFL Inc. and Morrison Knudsen in March 1999) did not have to compete for its original contract in 1985, but because of recent reforms must compete to win renewal of the contract, which expires Sept. 30. Fluor Daniel Environmental Management Corp. will be in a similar position when its contract to manage the Fernald Environmental Management Project in Ohio expires Nov. 30. Other major management and operating contracts being competed this year include those for the Oak Ridge Y-12 Plant in Tennessee, the Knolls Atomic Power Laboratory in New York and the Yucca Mountain Repository in Nevada.

DOE officials requested $18.9 billion in funding for fiscal 2001, nearly $1.6 billion more than this year's appropriation. About a third would go to restoring contaminated land and managing toxic wastes left behind by nuclear weapons production during the Cold War.

Another third of DOE's budget would go to national security programs that focus on maintaining the security and reliability of the nation's nuclear weapons stockpile, as well as to those that reduce nuclear proliferation and the spread of other weapons of mass destruction worldwide. These activities are now managed by a semi-autonomous agency within DOE called the National Nuclear Security Administration. Congress ordered the agency created in the National Defense Authorization Act for fiscal 2000 after alleged security lapses were uncovered at the Los Alamos National Laboratory in New Mexico, where top-secret information on nuclear warhead technology is stored.

The remainder of DOE's budget would support science programs and energy research and development.