Energy Department often fails to vet contractor past performance, watchdog finds

The Energy Department in the past two years had signed off on 20 percent of its sole-source contracts and financial assistance awards without evaluating contractor past performance, the department's inspector general reported in an audit released on Tuesday.

Energy processed some $89 billion in such awards between fiscal 2009 and 2010, including projects funded by the 2009 Recovery Act.

"The department had not always considered prior contractor performance nor completed contractor performance assessments in a timely manner for nonfacility contract and financial assistance awards," the audit said. "As such, the department had not ensured that it was making best value selections in competitive awards and in making contractor responsibility determinations for sole-source contracts."

After reviewing contractor performance assessment reports and a random sample of contract and financial assistance awards and closeouts, and after visiting three sites, auditors found that Energy managers could not demonstrate they had evaluated contractor prior performance in 104 of the 519 contracts and assistance awards studied.

Contract offices, the report says, failed to consult the governmentwide Excluded Parties List System to ensure that prospective contractors were not debarred in 8 percent of the sampled awards (though none of the awardees studied had been debarred). Finally, in 37 percent of the cases reviewed, Energy officials did not complete post-award contractor performance evaluations within the required 120 days after the evaluation period.

"With literally billions of dollars in taxpayer provided funds in play for department contracts, grants and financial assistance awards, procurement and program officials need all of the information they can gather to ensure that they make the best possible award decisions," the report said. "Developing meaningful post-award performance assessments and objective evaluations of contractor past performance prior to award are critical to ensuring that the government does business with companies that deliver quality goods and services on time and within budget and that the taxpayer's interests are protected."

The report notes that the Federal Acquisition Regulation and the Code of Federal Regulations require such contractor vetting, and that both the Government Accountability Office and the Office of Management and Budget have urged such precautionary practices.

Officials at one of the affected facilities, Energy's National Nuclear Security Administration's Albuquerque Complex, told auditors they thought "the signature of an appropriate federal contract professional on a sole source contract award provided sufficient evidence to support that an assessment of past performance had been performed." They also acknowledged a backlog of uncompleted evaluation reports.

Responding to a draft of the report, Energy officials generally agreed on best practices for vetting contractors' past performance. OMB, however, while agreeing with the finding and recommendations on contracts, "disagreed that contracting officers were required to review a prospective awardee's prior performance as part of the financial assistance selection process."