GOVERNMENT ACCOUNTABILITY OFFICE
GAO publishes report on DOE need to strengthen subcontracting oversight
ECA Staff | 3/12/2019
GAO found that in fiscal year 2016, 28 entities participated the Department of Energy/s (DOE) and its National Nuclear Security Administration's (NNSA) 24 largest prime contracts, which totaled $23.6 billion of DOE's nearly $30 billion fiscal year 2016 obligations. About $6.9 (nearly 30%) of those obligations went to thousands of subcontractors.
GAO found that it can be difficult to track changes in the ownership of parties to the contracts and to understand the relationships between parties. Furthermore, GAO found that more than $3.4 billion in subcontract costs had not been audited as required over the last 10 years, and that DOE has not clarified which subcontracts should be audited and what an audit should entail.
GAO made a series of six recommendations to address these issues:
- DOE should clearly define which subcontracts should be audited, how an audit is defined, and how to meet subcontract audit requirements.
- DOE should develop documented procedures or guidance that requires DOE's local offices to monitor the contractor's progress in completing required subcontract audits in a manner that ensures unallowable costs can be recovered within the 6-year limitation period in the Contract Disputes Act.
- DOE should review the differences in the frequency of DOE's accounting system reviews and approvals and develop guidance that includes criteria to determine the appropriate frequency of such reviews for prime contracts.
- DOE should require local officials to independently review subcontractor ownership information as part of DOE consent reviews and assess potential conflicts of interest to ensure contractors are mitigating them.
- DOE should require local offices to periodically reevaluate consent review thresholds.
- DOE should require contracting officers to include assessments of the contractors' management of subcontractors as part of annual Performance Evaluation and Measurement Plans, as appropriate.
Read the full GAO report HERE.
GAO also published an new, interactive graphic that visualizes the relationships between DOE's parties to prime contracts, prime contractors, and subcontractors for fiscal year 2016.
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