U.S. Government Study Hits Department of Energy Over Contracting Goals
Jun 28 - Journal Record - Oklahoma City
Small businesses haven't been getting their fair share of subcontracts from contractors working with the federal Department of Energy, according to a study by the U.S. Government Accountability Office.
The DOE is the largest civilian contracting agency in the federal government,
spending $22.4 billion on contracts in fiscal 2004. The majority of that amount,
nearly $19 billion, went for large facility management contracts for managing
DOE's laboratories, production facilities, and environment restoration sites.
Federal regulations stipulate that DOE's facility management contractors in
turn subcontract with small businesses as much as possible. Working with the
Small Business Administration, DOE's Small Business Office set a goal of having
50 percent of its total subcontracting dollars be directed to small businesses
each year.
In Oklahoma, Southwestern Power Administration serves as the state's DOE
procurement office, with 49 active awards valued at $29.7 million, as of Sept.
30, 2004. Calls to the administration Monday were not returned.
In fiscal year 2004, DOE's 34 facility management contractors worldwide
subcontracted out about $6.5 billion, $3.3 billion of which went to small
businesses, according to the report.
Though on first blush it appears the contractors are meeting their 50 percent
goal, the GAO study found that a number of contractors are artificially limiting
the number of subcontracts they include in their reports, thereby inflating the
percentage of subcontracts for small businesses. The study also found DOE wasn't
verifying that the contractors were following the proper reporting guidelines.
Of 13 facilities management contractors examined in the study, 12 contractors
reported they had achieved the agency's goal for subcontracting with small
businesses. However, the study found that eight of the 12 did not include all
appropriate subcontracts in their reporting. When the reporting guidelines were
followed properly, only four contractors were found to have met the goal.
Because the data showed that the department was meeting its subcontracting
goals, DOE officials were not inclined to closely monitor contractors' practices
for calculating their subcontracting goals and achievements, reads the study.
When problems came to light in 2002, DOE's Small Business Office issued
information to clarify the reporting requirements, but the department never
followed up to see if the guidelines were being followed, the report shows.
These oversight problems occurred, in part, because DOE has not clearly
defined the roles, responsibilities, and needed interaction of the various
headquarters and field organizations, reads the study.
But the regional offices of the Small Business Administration are closely
monitoring the situation, said John Bateman, area director for government
contracts for the SBA region that includes Oklahoma, Texas, Louisiana, Arkansas,
New Mexico and Colorado.
I have enforcement people that go out and call on them and say, let's see
your books and see how you're doing on your goals, said Bateman.
The goal of 50 percent is a bit high, said Bateman. And some contractors doom
themselves to failure by bidding contracts so low they can't make a profit and
meet all of their obligations