Department of Energy: Achieving Small Business Prime Contracting
Goals Involves Both Potential Benefits and Risks (18-MAY-04,
GAO-04-738T).
Under the Small Business Reauthorization Act of 1997, the federal
government has a goal of awarding at least 23 percent of prime,
or direct, contracting dollars to small businesses each fiscal
year. The Department of Energy (DOE), like other federal
agencies, shares in the responsibility for meeting this goal. In
fiscal year 2003, DOE spent $21.6 billion on prime contracts.
More than 80 percent of this amount was spent on facility
management contracts to manage and operate DOE's sites. Before
1999, DOE included subcontracts awarded by its facility
management contractors when calculating its small business prime
contracting achievements. In 1999, however, the Office of Federal
Procurement Policy determined that DOE could no longer do so.
This testimony discusses (1) the effect of the 1999 policy change
on the amount of prime contract dollars that DOE will be required
to direct to small businesses, (2) the steps that DOE has taken
or plans to take to achieve its small business contracting goals,
and (3) the likely implications for DOE's programs resulting from
these changes.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-04-738T
ACCNO: A10092
TITLE: Department of Energy: Achieving Small Business Prime
Contracting Goals Involves Both Potential Benefits and Risks
DATE: 05/18/2004
SUBJECT: Contract administration
Federal procurement
Federal procurement policy
Program evaluation
Small business
Small business contractors
Strategic planning
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO Product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
******************************************************************
GAO-04-738T
United States General Accounting Office
GAO Testimony
Before the Committee on Energy and
Natural Resources, U.S. Senate
For Release on Delivery
Expected at 10:00 a.m. EDT DEPARTMENT OF
Tuesday, May 18, 2004
ENERGY
Achieving Small Business Prime Contracting Goals Involves Both Potential
Benefits and Risks
Statement of Robin M. Nazzaro, Director Natural Resources and Environment
GAO-04-738T
Highlights of GAO-04-738T, testimony before the Committee on Energy and
Natural Resources, United States Senate
Under the Small Business Reauthorization Act of 1997, the federal
government has a goal of awarding at least 23 percent of prime, or direct,
contracting dollars to small businesses each fiscal year. The Department
of Energy (DOE), like other federal agencies, shares in the responsibility
for meeting this goal. In fiscal year 2003, DOE spent $21.6 billion on
prime contracts. More than 80 percent of this amount was spent on facility
management contracts to manage and operate DOE's sites.
Before 1999, DOE included subcontracts awarded by its facility management
contractors when calculating its small business prime contracting
achievements. In 1999, however, the Office of Federal Procurement Policy
determined that DOE could no longer do so.
This testimony discusses (1) the effect of the 1999 policy change on the
amount of prime contract dollars that DOE will be required to direct to
small businesses, (2) the steps that DOE has taken or plans to take to
achieve its small business contracting goals, and (3) the likely
implications for DOE's programs resulting from these changes.
www.gao.gov/cgi-bin/getrpt?GAO-04-738T.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Robin M. Nazzaro, (202)
512-3841 or [email protected].
May 18, 2004
DEPARTMENT OF ENERGY
Achieving Small Business Prime Contracting Goals Involves Both Potential
Benefits and Risks
To meet its share of federal goals, DOE would need to direct significantly
more prime contracting dollars to small businesses. If it is to reach its
near-term goals of 5.06 percent in fiscal year 2004, and 5.50 percent in
fiscal year 2005, DOE must direct to small businesses an additional $226
million and $319 million, respectively, over the $847 million it directed
to small businesses in fiscal year 2003. Achieving a long-term goal of
directing 23 percent of prime contracting dollars to small businesses
would require DOE to contract with small businesses at about 6 times its
current rate. Such an increase is about equal to the combined annual
budgets for Los Alamos and Sandia-the two largest national laboratories.
To address its near-term small business prime contracting goals, DOE has
improved its outreach efforts and has redirected to small businesses some
contract dollars not associated with facility management contracts. DOE
has also begun to review facility management contracts up for renewal to
identify work that could be redirected to small business prime contracts.
Achieving a long-term goal of 23 percent is much more problematic.
Notably, DOE's three largest offices-the National Nuclear Security
Administration (NNSA), Environmental Management (EM), and Science-have
differing views as to what extent facility management contract work can be
redirected to small businesses without having a negative impact on
accomplishing their missions. EM is in favor of doing so if redirecting
the work is consistent with its accelerated cleanup strategy. NNSA and
Science officials express concern that redirecting work now done by
facility management contractors could jeopardize critical research
missions at the laboratories.
DOE's efforts to increase small business prime contracting involve both
potential benefits and risks, which depend on the eventual goal DOE
attempts to achieve. The potential benefits to DOE of increased small
business prime contracting include increasing the pool of potential
contractors, which could result in better competition and better prices
for the government; finding new and innovative approaches to the work
developed by small businesses; and providing experiences to small
businesses to allow them to better compete for other federal contracts.
The potential risks include integrating and coordinating the work of a
greater number of contractors at a site in a safe, secure, and effective
manner, and having adequate federal resources for effective contract
management and oversight-areas that already pose significant challenges
for DOE. In addition, DOE's efforts to increase small business prime
contracting may cause its facility management contractors to reduce the
amount of subcontracting that they direct to local and regional small
businesses.
DOE largely agreed with the information in this testimony. However, it
disagreed with GAO's characterization of DOE's long-term small business
prime contracting goal and its strategy to achieve it. GAO believes that
both the longterm goal and DOE's strategy have been accurately described.
Mr. Chairman and Members of the Committee:
I am pleased to be here today to discuss the Department of Energy's (DOE)
efforts to increase its direct contracting with small businesses. The
Small Business Act, as amended by the Small Business Reauthorization Act
of 1997, established a government-wide goal of directing at least 23
percent of prime contracting dollars to small businesses each fiscal
year.1 DOE, like other federal agencies, shares in the responsibility for
meeting this goal. Contracting is particularly significant at DOE, which
spends more on contracting than any other civilian agency in the federal
government. More than 90 percent of DOE's total fiscal year 2003 budget,
or $21.6 billion, was spent on prime contracts. The majority of this
amount-$18.2 billion, or more than 80 percent of the contracting
dollars-was spent on 37 large contracts for the management of DOE's
laboratories, production facilities, and environmental restoration sites.
As a group, these contracts are referred to as facility management
contracts. Under these facility management contracts, a contractor is
responsible for performing, managing, and integrating the work at a DOE
site, often subcontracting specific portions of the work to other
businesses.
DOE's approach to reporting its small business prime contracting dollars
has been affected by a change in federal policy concerning whether
subcontracts with small businesses can in certain situations be counted
toward achieving small business prime contracting goals. For most of the
1990s, DOE included in its calculations of small business prime
contracting achievements the subcontracts awarded to small businesses by
its facility management contractors. The Office of Federal Procurement
Policy2 had allowed DOE to include these subcontracts because of DOE's
unique reliance on facility management contractors to operate its
facilities and carry out its missions. In 1999, however, the Office of
Federal Procurement Policy determined that to ensure consistent reporting
of achievements across the federal government, DOE could no longer include
1Prime contracts are direct contracts between the government and a
contractor.
2The Office of Federal Procurement Policy within the Office of Management
and Budget, in
addition to issuing policy letters, has the responsibility for resolving
any disagreements
between the Small Business Administration and another federal agency on
small business
prime contracting goals.
15 U.S.C. S: 644(g)(2).
the subcontracts under facility management contracts when calculating the
percentage of prime contracting dollars awarded to small businesses.3
You asked us to examine what has happened as a result of this policy
change. My testimony will discuss (1) the effect of the 1999 policy change
on the amount of prime contracting dollars that DOE will be required to
direct to small businesses, (2) the steps that DOE has taken or plans to
take to achieve its small business contracting goals, and (3) the likely
implications for DOE's programs, if any, resulting from these changes.
My testimony is based on a review of DOE small business contracting goals
and achievements from fiscal year 1990 through fiscal year 2003. Our work
included a review of DOE's plans to achieve its near-term goals and the
projected incremental increases needed to achieve long-term goals. These
goals were developed by DOE's Office of Small and Disadvantaged Business
Utilization (referred to in this testimony as DOE's Small Business Office)
within its Office of Economic Impact and Diversity. We also reviewed
documentation provided by DOE and the Small Business Administration (SBA),
and completed and current procurements for new small business prime
contracts.4 We interviewed DOE and contractor officials at DOE
headquarters and selected sites, as well as national and regional small
business associations and advocacy groups. Our scope included DOE's three
largest offices-the National Nuclear Security Administration (NNSA)5, and
the Offices of Environmental Management (EM) and Science-that account for
about 70 percent of DOE's annual budget. We conducted our review from
February 2004 through May 2004 in accordance with generally accepted
government auditing standards. Our review included a data reliability
assessment on DOE's small business prime contracting and subcontracting
results for fiscal years 1990 through 2003. These data are being used
primarily for context. Our assessment of
3The Office of Federal Procurement Policy stated that for fiscal year 2000
and beyond, contracts awarded by DOE's facility management contractors
should instead be counted toward DOE's small business subcontracting
goals.
4DOE awards new small business contracts through a procurement process
that generally includes issuing a request for proposals, evaluating those
proposals, and selecting a contractor.
5NNSA is a separately organized agency within DOE, with its own
procurement organization and program offices such as Defense Programs and
Defense Nuclear Nonproliferation. Program offices referred to in this
testimony generally include NNSA and its program offices as well as DOE's
program offices of Environmental Management and Science.
DOE's prime contracting data determined that the data are sufficiently
reliable for the purposes of this testimony. Although we are not as
confident of the reliability of the subcontracting data as reported to DOE
by its facility management contractors, we determined that these are the
only data available and they are sufficiently reliable for the
observations presented in this testimony.
In summary, we found the following:
o To comply with the 1999 federal policy change and to achieve federal
small business prime contracting goals, DOE would need to direct
significantly more prime contracting dollars to small businesses. To
achieve DOE's near-term small business prime contracting goals of 5.06
percent in fiscal year 2004, and 5.50 percent in fiscal year 2005, DOE
will have to direct an additional $226 million in fiscal year 2004, and
$319 million in fiscal year 2005, above the roughly four percent of prime
contracting dollars directed to small businesses in fiscal year 2003. The
long-term goal of 23 percent in small business prime contracting
represents a level significantly beyond what DOE has ever achieved-about 6
times the $847 million directed to small businesses in fiscal year 2003.
Placed in the context of DOE's current contracting base, such an increase
would represent an amount approximately equal to the annual budgets of the
two largest laboratories-Los Alamos and Sandia National Laboratories.
o DOE has taken steps to increase its near-term small business prime
contracting, but has no consistent strategy for reaching the eventual goal
of directing 23 percent of its prime contracting dollars to small
businesses. To achieve the near-term goals, DOE has focused primarily on
improving outreach to the small business community and directing
additional contract dollars to small businesses from procurements not
associated with facility management contracts. In addition, as certain
facility management contracts are due for renewal, DOE, and especially EM,
has begun identifying potential work that could be redirected in the form
of small business prime contracts. In the longer term, it is less clear
how, or if, DOE intends to achieve an eventual goal of 23 percent small
business prime contracting. In 2002, DOE's Small Business Office prepared
a 20-year plan outlining when and how the department would achieve the 23
percent small business prime contracting goal. Since DOE's facility
management contracts represent about 80 percent of its total contract
dollars, the department cannot mathematically achieve the 23 percent goal
without redirecting some of those dollars to small business prime
contracts. Although the 20-year plan proposed that eventually DOE would
redirect about a fifth of its
facility management contract dollars to small business prime contracts, it
provides no details as to which offices would provide those dollars. DOE's
three largest offices have differing views as to how much of the work that
is done by facility management contractors can be redirected to small
businesses without jeopardizing the department's missions. While the EM
program has begun to move work from its facility management contracts and
redirect these dollars to small business prime contracts, EM officials
said that doing so must be consistent with the overall strategy of
accelerating cleanup at DOE sites and must be at a level that can be
effectively managed by EM contract and project management staff. In
contrast, officials in the two offices that oversee DOE's research
laboratories-NNSA and Science-said that their programs are less able to
redirect significant segments of their work from facility management
contracts to small businesses without jeopardizing critical research
missions. DOE has not reconciled these differing views into a consistent
strategy for achieving its long-term small business contracting goals.
o The implications of increasing small business prime contracts depend
on the eventual goals that DOE attempts to achieve. Given the contrasting
views of DOE's three largest offices, it is not clear if DOE as a whole
will commit to the incremental increases that would eventually lead to a
23 percent rate of prime contracting to small businesses. Regardless of
how far DOE moves in the direction of providing more prime contracting
dollars for small businesses, efforts to increase small business prime
contracting involve both potential benefits and risks. In addition to
helping the federal government meet the overall goal of 23 percent prime
contracting, potential benefits include increasing the pool of possible
contractors, which could result in better competition and perhaps better
prices for the government; finding new and innovative approaches developed
by small businesses; and providing experiences to small businesses that
could enhance their capacity to compete for other federal contracts. The
potential risks associated with increasing the number of small business
prime contracts include difficulties integrating and coordinating the
activities of a greater number of prime contractors at a site to ensure
safe, secure, and effective operations and having adequate federal
resources for effective contract management and oversight-two areas that
continue to be a challenge for DOE. Furthermore, DOE's efforts to increase
small business prime contracting may cause facility management contractors
to reduce the amount of subcontracting dollars that they direct to local
and regional small businesses.
We discussed a draft of this testimony with DOE officials representing
DOE's Small Business Office, procurement organizations, NNSA, EM, and
Science. DOE officials generally agreed with the information and
observations presented in the testimony, with two exceptions. First, DOE
said that it disagreed with our statement that DOE has no consistent
strategy for reaching an eventual goal of directing 23 percent of its
prime contracting dollars to small businesses. DOE argued that its 20-year
plan, its annual goal-setting process with SBA, and the individual goal
setting that occurs within NNSA and the program offices collectively
represented a consistent strategy. We disagree. Although DOE has a 20-year
plan that projects incremental increases in small business prime
contracting up to 23 percent by 2022, no strategy is in place that defines
how DOE will achieve this goal, identifies what the contributions of the
various DOE organizational components will be, or reconciles the differing
views within DOE as to what would be an appropriate level of small
business prime contracting. Second, DOE said that we have mischaracterized
its 23 percent small business prime contracting goal as an eventual
long-term goal, while DOE views it as a goal that it may or may not agree
to, based on its annual negotiations with SBA. We believe we have
appropriately described DOE's goal and we stated that it is not clear if
DOE will commit to the incremental increases that would lead to achieving
the goal. Finally, DOE suggested technical corrections, which we
incorporated as appropriate.
Background DOE has about 50 major sites around the country where the
department carries out its missions, including developing, maintaining,
and securing the nation's nuclear weapons capability; cleaning up the
nuclear and hazardous wastes resulting from more than 50 years of weapons
production; and conducting basic energy and scientific research, such as
mapping the human genome. This mission work is carried out under the
direction of NNSA and DOE's program offices.
With a workforce of 16,000 federal employees and more than 100,000
contractor employees, DOE relies primarily on contractors to manage and
operate its facilities and to accomplish its missions. In addition to
accomplishing DOE's core mission work, managing and operating the sites
involves a broad range of support activities, such as information
technology, safety, security, and purchase of products and services.
The Small Business Act, as amended by the Small Business Reauthorization
Act of 1997, directed the President to establish the goal that not less
than 23 percent of the federal government's prime contracting
dollars would be directed to small businesses each fiscal year. SBA is
charged with working with federal agencies to establish agency small
business contracting goals that, in the aggregate, meet or exceed the 23
percent government-wide goal. SBA negotiates an annual goal with each
agency based on the overall amount of contracting in the agency
(contracting base) and the agency's past achievements.6 SBA guidelines for
setting individual agency goals specify that certain types of federal
spending should not be included in the contracting base. These exclusions
include items such as grants, purchases from mandatory sources, or
contracts for work done internationally for which U.S. small businesses
would not be competing. For fiscal year 2003, excluding such items
resulted in a DOE contracting base of about $21 billion subject to the
small business prime contracting goal. As figure 1 shows, facility
management contracts account for more than 80 percent of this amount.
Figure 1: Components of DOE's Fiscal Year 2003 Contracting Base
Dollars in billions
Facility management contracts (86 percent)
All other prime contracts (14 percent)
Source: DOE.
DOE's Small Business Office negotiates annual small business contracting
goals with SBA, coordinates outreach efforts with the small business
community, and works with NNSA and DOE's program offices to establish
6Small Business Administration officials said that it is important that
the three largest federal contracting agencies-the Department of Defense,
the National Aeronautics and Space Administration, and DOE-meet the 23
percent goal in order for the governmentwide goal to be achieved.
and monitor annual goals for small business contracting. DOE's Office of
Procurement and Assistance Management and NNSA's Office of Acquisition and
Supply Management establish policies and guidance for conducting
procurements according to federal and departmental regulations, and
maintain the information systems on the department's prime contracts,
including annual dollars provided to each contract. NNSA and DOE's program
offices, such as EM and Science, are responsible for identifying
opportunities for small business contracting and providing program
oversight and direction to the contractors.
Since the 1999 federal policy change, DOE can no longer include
subcontracts of its facility management contractors when calculating the
department's small business prime contracting goals. As a result, to
achieve even its near-term small business prime contracting goals, DOE
will have to direct more prime contracting dollars to small businesses
than it ever has in the past. Further, meeting a long-term goal of 23
percent small business prime contracting would represent an achievement
far beyond what DOE has ever reached-about 6 times the $847 million that
it directed to small businesses in fiscal year 2003.
Unprecedented Levels of Small Business Prime Contracting Necessary for DOE to
Meet Future Goals
Meeting Near-term Goals Requires More Small Business Prime Contracting
Dollars Than Previously Achieved
Now that DOE's facility management subcontracts can no longer be counted
toward achieving its small business prime contracting goals, achieving its
near-term goals for fiscal years 2004 and 2005, will require DOE to expand
the amount of prime contracting dollars it provides directly to small
businesses. The department has a goal of directing to small business prime
contracts 5.06 percent of its contracting base in fiscal year 2004, and
5.50 percent of its contracting base in fiscal year 2005. These goals
surpass any of DOE's small business prime contracting achievements prior
to fiscal year 2004. As figure 2 shows, the percentage of prime
contracting dollars DOE directed to small businesses in any year since
1996 ranges from 2.68 percent to 3.99 percent. During 1991 through 1999,
when DOE could include in its achievements those dollars going to small
business subcontractors of facility management contractors, as well as
dollars going directly to small business prime contractors, DOE's reported
percentages of prime contracting dollars awarded to small businesses
ranged from 15.7 percent to 19.9 percent.7 However, most of
7See appendix I for information on DOE's prime and subcontract dollars
directed to small businesses between 1990 and 2003.
the reported achievements during those years came from facility management
subcontracting dollars going to small businesses. The remainder of the
reported achievements came from prime contracts to small businesses for
work not associated with facility management contracts.
Figure 2: DOE's Reported Small Business Prime Contracting Achievements for
Fiscal Years 1996 through 2003 and Goals for Fiscal Years 2004 and 2005
Percentage of DOE's contracting base
20
15
10
5
0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Fiscal year
DOE Prime Contract Dollars Going to Small Business
Subcontract Dollars from DOE's Facilities Management Contractors counted
towards small-business prime contracting goals
DOE's Small-Business Prime Contracting Goals for Fiscal Years 2004 and
2005
Source: GAO analysis of DOE data.
Note: For fiscal years 2000 through 2003, DOE did not include facility
management subcontracting dollars in calculating small business prime
contracting achievements. Therefore, facility management subcontracting is
not shown in figure 2 for those years.
Meeting the small-business prime contracting goals in fiscal years 2004
and 2005 will require DOE to achieve a substantial increase over the $847
million in prime contracting dollars that DOE provided directly to small
businesses in fiscal year 2003. To meet its fiscal year 2004 goal, DOE
will need to direct an additional $226 million, or 26.7 percent, over the
2003 amount. Meeting the department's 2005 goal will require directing
$319 million more than in 2003, an increase of 37.7 percent over 2003
levels.8
Meeting the Long-term Goal of 23 Percent Requires Huge Increases in Small
Business Prime Contracting
Although achieving DOE's near-term small business prime contracting goals
for fiscal years 2004 and 2005 will not be easy, the long-term goal of 23
percent would require an achievement far beyond what DOE has accomplished
in the past. SBA expects DOE to achieve a small business prime contracting
goal at least on par with the federal goal of 23 percent. DOE's response
has been to formulate a plan for gradual compliance. In 2002, DOE's Small
Business Office submitted a plan to SBA to achieve the 23 percent goal in
20 years, by the year 2022.
According to this 20-year plan, DOE would increase its level of small
business prime contracting by about 1 percentage point per year to achieve
the 23 percent goal by 2022. To achieve this goal, the department would
need to increase its small business prime contracting to about $5 billion,
or 6 times its 2003 achievement. Put in terms of DOE's current contracting
base, the additional amount of contracting dollars necessary to achieve
the 23 percent goal approximately equals the combined annual budgets of
the facility management contracts for the two largest laboratories-Los
Alamos and Sandia National Laboratories.
Meeting the 23 percent goal under DOE's current contracting approach means
that a substantial portion of dollars now included in facility management
contracts would have to be redirected to small business prime contracts,
resulting in more prime contracts for DOE to manage. Redirecting these
dollars would be necessary because prime contracts not associated with
facility management generally account for less than 20 percent of DOE's
total prime contract dollars. Therefore, even if all the dollars not
associated with facility management contracts were directed to small
businesses, the total amount would be insufficient to meet the 23 percent
small business prime contracting goal.
8These estimates assume that the contracting base-or the amount of
contracting dollars used to calculate achievements-remains the same for
fiscal years 2004 and 2005 as it was in fiscal year 2003.
DOE Has Near-term Plans But No Consistent Strategy for Achieving Longterm
Small Business Contracting Goals
Although DOE has an agreed upon organizational strategy to achieve its
near-term small business prime contracting goals, a consistent view does
not prevail within the department on whether or how to reach the eventual
goal of directing 23 percent of prime contracting dollars to small
businesses. To achieve the near-term goals of 5.06 of prime contracting
dollars to small businesses in fiscal year 2004, and 5.50 percent in
fiscal year 2005, DOE has focused primarily on improving outreach to the
small business community, directing more of the dollars not associated
with facility management contracts toward small businesses, and beginning
to redirect selected facility management contract activities to small
business prime contracts. It is less clear, however, how DOE intends to
achieve the eventual long-term goal of 23 percent small business prime
contracting. DOE's Small Business Office's 20-year plan calls for
redirecting about 20 percent of facility management contract dollars to
small business prime contracts but provides no details as to how NNSA and
the program offices, such as EM and Science, would implement the plan.
Officials in these offices have differing views as to how much of the work
done by their facility management contractors can be redirected to small
businesses without jeopardizing critical agency missions.
Near-Term Plans Focus Primarily on Increasing Awards of Non-Facility
Management Contracts to Small Businesses
DOE's plan for achieving its near-term small business prime contracting
goals focuses primarily on directing more of the dollars not associated
with facility management contracts to small businesses. To increase the
percentage of such dollars going to small businesses, DOE has expanded its
outreach to the small business community, notifying small businesses of
contracting opportunities and preparing them to compete for these
contracts. DOE's Small Business Office has developed a variety of outreach
and capacity-building activities designed to assist small businesses in
competing for DOE prime contracts. For example, DOE's Small Business
Office fosters mentor-protege relationships between small businesses and
DOE's large prime contractors to help the small businesses expand their
expertise. In addition to these department-wide efforts, offices such as
NNSA and EM have also developed outreach activities, generally related to
specific prime contract opportunities (see table 1 for examples.)
Table 1: Examples of Outreach Efforts by DOE's Small Business Office and Program
Offices
Approach Description
Small Business Office efforts
Marketing and outreach Educate and inform small businesses about the
contracting opportunities at DOE.
Provide a listing of potential prime and subcontracting opportunities for
the next 3 years. These potential opportunities for small businesses are
organized by program office or state and are posted on the Small Business
Office's Web site.
Sponsor annual conferences, workshops, procurement fairs, and seminars for
the small business community.
Mentor-protege relationship Foster long-term business relationships
between small business entities and DOE prime contractors in order to
increase the overall number of these small business entities that can
successfully compete for DOE contract and subcontract awards.
Small business advisory team Established an advisory group consisting of
small business trade associations, chambers of commerce, and other federal
agencies to provide advice and guidance to the Small Business Office on
small business programs and activities. Purposes of the group include
identifying best practices and exploring business models that promote
outreach and interaction with the small business community.
Program Office efforts
Teaming workshops Sponsor meetings of small and large businesses to
discuss upcoming requests for proposals to encourage formation of teams
that combine the advantages of small and large businesses, or combine the
different strengths of several small businesses, for proposed new prime
contracts (NNSA and EM).
Market research Conduct market research before issuing a request for
proposals for a new contract not associated with facility management to
identify whether small businesses exist with capabilities in specific
performance areas (NNSA, EM, and Science).
Database of small businesses Build a database of interested small
businesses to identify highly skilled small businesses that meet program
requirements (NNSA).
Source: GAO analysis of DOE information.
In addition to its outreach efforts, DOE has taken steps in two other
major areas. First, it has established internal requirements that it
believes will help make progress toward achieving its small business prime
contracting goals. These internal requirements were part of a 14-item plan
of action included in the 20-year plan. The plan of action includes
reviews of upcoming contracts to identify work activities that could
potentially be awarded to small businesses, and regular monitoring of DOE
program level and agency-wide achievements toward DOE's annual goals. For
example, each year DOE's Small Business Office requires each program
office to develop a small business plan that reflects the program's goals
for increasing prime contracts with small businesses. These program plans
are used to develop DOE's overall small business contracting goals, and
DOE's Small Business Office tracks progress toward these goals quarterly.
Second, DOE has modified some of its procurement processes to eliminate
certain barriers for small businesses, such as bonding requirements, and
to
help small businesses minimize the cost of developing proposals. For
example, DOE has limited the amount of documentation that small businesses
are required to submit in response to a request for proposals to 50 pages
instead of volumes of supporting documentation.
To achieve the near-term small business prime contracting goals in fiscal
years 2004 and 2005, DOE is concentrating primarily on contracts not
associated with facility management, because doing so does not involve
significant changes in the way the department does business. For contracts
not associated with facility management, as new work is identified or
existing contracts come up for renewal, DOE sets them aside for small
businesses and awards them as small business prime contracts whenever
possible. For example, the information technology support contract for DOE
headquarters came up for renewal in January 2002. DOE determined that this
contract, which was held by a large business, could be carried out by a
small business. The new contract, for a 5-year term with a total value of
$409 million, was awarded in January 2003, to a team that included a
consortium of 10 small businesses.
NNSA and the program offices have also focused primarily on procurements
not associated with their facility management contracts. NNSA, EM, and
Science officials issued policy letters stressing the importance of
directing contracts for activities not associated with facility management
to small businesses to the maximum extent possible. For example, for any
upcoming contract not associated with facility management, program office
personnel must first conduct market research to determine if any small
businesses are capable of performing all or parts of the work and have the
necessary qualifications to do so. If the program office finds two small
businesses capable of doing the work, the policy requires the contract or
parts of the contract to be "set aside" from unrestricted competition and
instead generally be made available for a more restricted competition
among small businesses. Any exceptions to this policy must be approved by
the head of the program office.
Although in the near term DOE is concentrating primarily on contracts not
associated with facility management, it has also begun to look at certain
facility management contracts as they come up for renewal to identify
potential work that could be made available to small businesses. DOE's
Offices of EM and Fossil Energy have identified several specific
activities that had been within a facility management contractor's scope
of work and have set those activities aside for small business prime
contracts. (See table 2 for examples.)
Table 2: Status of Selected Procurements Redirecting Facility Management
Contract Dollars to Small Business Prime Contracts
Current facility
management Program office/site Nature of work contractor Contract amount
Status of procurement
Fossil Energy
Strategic Petroleum Construction management DynMcDermott $26.5 million for
2 Contract awarded November Reserve, Louisiana services years, plus three
1-2003
year options
Environmental Management
Fluor $46.1 Request for
Fast Flux Test Decontamination, Hanford million per proposals closed
year,
Facility, contract
Hanford, WA decommissioning, length not March 2004
to
demolition, disposal exceed 8
of years
reactor waste
222-S Laboratory analysis of $10 million per Request for
Laboratory, tank CH2M Hill year for proposals
closed
Hanford, WA waste samples 5 years, plus five March 2004
additional 1-year
options
1 contract for Bechtel Request for
Portsmouth, OH Jacobs $273 million over 5 proposals
closed
environmental remediation years for March 2004
remediation
1 contract for $129 million over 5
infrastructure
years for
infrastructure
1 contract for Bechtel Request for
Paducah, KY Jacobs $377 million over 5 proposals
closed
environmental remediation years for March 2004
remediation
1 contract for $100 million over 5
infrastructure
years for
infrastructure
Source: GAO analysis of DOE information.
Of the examples shown in table 2, the procurement at the Strategic
Petroleum Reserve in Louisiana is the only one that DOE has completed so
far. According to DOE officials with the Office of Fossil Energy, when the
facility management contract was nearing the end of its term, DOE's Small
Business Office asked the program office to look for opportunities for
small business prime contracts. DOE officials at the Strategic Petroleum
Reserve said they identified a number of construction projects that could
be performed by small businesses, and awarded several prime contracts to
small businesses for this work. DOE officials then decided to remove all
the construction management work from the facility management contract for
the site so that a new small business prime contractor for construction
management could then award and manage subcontracts for individual
construction projects. According to DOE's contracting officer at the
Strategic Petroleum Reserve, having the new prime contractor responsible
for awarding and managing the contracts will reduce the amount of
additional work required by DOE procurement and program personnel. The
prime contract was awarded in November 2003.
DOE's Small Business Office and Program Offices Have Different Views on
the Extent to Which Facility Management Contract Dollars Can Be Redirected
to Small Business
While DOE's Small Business Office and the three largest offices have a
consistent approach to their near-term goals-primarily focusing on
increasing small business prime contracting by using dollars not
associated with facility management contracts-a consistent view does not
prevail in the department on whether or how to achieve the eventual goal
of directing 23 percent of prime contracting dollars to small businesses.
DOE's Small Business Office's plan to achieve the long-term small business
prime contracting goals has two main components. The first is to continue
increasing the small business share of contract dollars not associated
with facility management contracts. For any new contracts not associated
with facility management, DOE has a stated preference to set aside those
contracts for small businesses where possible. The three largest offices
have been consistent in their efforts to do so. However, even this portion
of DOE's contracting base (about 20 percent of total contract dollars) is
not immediately available for small business prime contracts. For example,
many of the contracts not associated with facility management cover
multiple years, so only a portion of these contracts are up for award or
renewal in a given year.9 In addition, some contracts for work not
associated with facility management may not be available for award to
small businesses, for example, if market research determines that there
are not at least two small businesses capable of performing all or parts
of the work in an upcoming procurement.
Because of the limited amount of contracting dollars for work not
associated with facility management, the second component of DOE's Small
Business Office's long-term plan is to redirect dollars now going to
facility management contracts to small business prime contracts. DOE's
20-year plan calls for increasing dollars redirected from facility
management contracts to small business prime contracts from less than 1
percent in 2003 to about 20 percent by 2022 (see figure 3).
9Of the $3.4 billion in contracting dollars not associated with facility
management contracts in fiscal year 2003, only about $672 million, or 20
percent, was available to award as new contracts. The remaining $2.7
billion was annual funding for existing contracts.
Figure 3: Projected Percentage of Facility Management Contract Dollars to Be
Redirected to Small Business Prime Contracts
25 2004 2005
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2022
Fiscal year
Projected percentage of facility management contract dollars to be
redirected to small business prime contracts in fiscal years 2004 through
2022
Source: GAO analysis of DOE data.
Note: The actual percentage of facility management contract dollars
redirected to small business prime contracts between fiscal years 1990 and
2003 was less than one percent.
Nevertheless, DOE does not have a consistent strategy in place to
accomplish its plan for redirecting dollars from its facility management
contracts to small business prime contracts. Officials in NNSA, EM, and
Science have considerably different views about the feasibility of
redirecting significant amounts of funding from their facility management
contracts to small businesses. For example:
o Both NNSA and Science officials are very concerned about the
implications of setting aside for small businesses significant portions of
the dollars now going to facility management contractors that operate the
weapons and research laboratories. NNSA and Science officials' concerns
stem from the large scale of laboratory operations, the integrated nature
of the mission and mission support work, and the complexity and critical
importance of the laboratory missions. These officials said that
fragmenting mission activities among several contractors at the research
laboratories, whether the contractors were large or small businesses, was
inadvisable. Therefore, according to NNSA's Director of Acquisition and
Supply Management and Science's Director of Grants and Contracts, NNSA and
Science may never achieve a 23 percent small business prime contracting
level because doing so would be inconsistent with accomplishing their
missions safely, securely, and effectively.
Despite the reluctance to fragment core mission activities, NNSA and
Science officials said they would explore opportunities to contract
separately with small businesses for mission support functions at the
laboratories if those mission support functions were not closely
integrated with the laboratories' core missions.10 For example, NNSA is
analyzing its own purchases of goods and services, such as computer
hardware, software, and staffing services, as well as similar purchases by
its facility management contractors. NNSA is assessing the feasibility of
purchasing these items in bulk under a prime contract, rather than
multiple separate contracts. An NNSA official said that NNSA is not trying
to increase its small business prime contracting numbers by becoming a
purchasing agent for its facility management contractors, but rather
combining similar requirements as a way to possibly increase NNSA's level
of prime contracting to small business. On the basis of this analysis,
NNSA is pursuing three potential opportunities, valued at about $80
million, involving technical services and services to provide temporary
staff, and is exploring other opportunities.
10Although the facility management contracts for the laboratories
distinguish between core mission work and mission support functions,
individual laboratories may differ from one another in the extent to which
a specific activity is regarded as an integral part of accomplishing the
mission. At some of DOE's laboratories, for example, information
technology provides a support function that could potentially be separated
from the facility management contract and awarded to small business
without jeopardizing the mission; such a separation is being proposed at
the Office of Science's Oak Ridge National Laboratory in Tennessee. In
contrast, NNSA officials have said that information technology at NNSA's
weapons laboratories represents an integral part of simulated testing and
certification of the nation's nuclear weapons stockpile and cannot be
separated from the mission work without jeopardizing the results.
o By contrast, EM officials were more optimistic about the potential
role of small businesses in accomplishing its core missions. The Assistant
Secretary for EM said that part of its initiative to accelerate the
cleanup of DOE sites involves greater use of alternatives to traditional
facility management contracts, including removing work from facility
management contracts and setting that work aside for small businesses. The
Assistant Secretary said that these small business procurements are part
of EM's overall strategy to clean up sites more quickly and at a lower
cost to the government, not just to increase the amount of small business
prime contracting.
EM is also developing a complex-wide contracting arrangement, called
indefinite delivery/indefinite quantity, which will result in prime
contracts with both large and small businesses for smaller-scale cleanup
activities. According to EM's Director of Acquisition Management, the
multiple contracts awarded under this initiative will allow EM sites
nationwide to quickly purchase cleanup services from small and large
businesses without having to conduct a separate procurement, which can
take months to complete. Instead, either EM or the facility management
contractor will be able to simply write a task order against these
existing contracts.
Finally, it is unclear to what extent EM can expand its use of small
business prime contracts to accomplish its core missions. According to the
Assistant Secretary, the main constraint is the ability of EM staff to
effectively oversee those contracts, not the availability of qualified
small businesses to perform the work. The Assistant Secretary said that EM
is proceeding carefully to ensure that effective management and oversight
will occur; that cost, schedule, and technical standards are met; and that
safety and security issues are adequately addressed.
Since DOE is in the early stages of implementing a long-term strategy to
redirect facility management contracting dollars to small businesses, the
implications of increased small business prime contracting are still
relatively uncertain. However, the implications depend heavily on the
extent to which DOE agrees, in its negotiations with SBA, to meet the 23
percent small business prime contracting goal. Given the differences we
heard in the approaches of the three largest offices, it is not clear if
DOE will commit to the incremental increases that would eventually lead to
a 23 percent rate of prime contracting to small businesses, as detailed in
the 20year schedule prepared by DOE's Small Business Office. Absent more
specific direction from Congress or the executive branch, DOE's eventual
Potential Benefits and Risks of Increased Small Business Prime Contracting
Depend on the Goal that DOE Tries to Achieve
commitment to a particular small business prime contracting goal appears
to rest heavily on whether the department will be willing to change its
approach to contracting for activities at the science and weapons
laboratories, its environmental cleanup work, or both. Regardless of the
extent to which DOE directs more prime contracting dollars to small
businesses, efforts to increase small business prime contracting involve
potential benefits as well as potential risks.
Potential Benefits of Increasing Small Business Prime Contracting
An overarching benefit of increasing small business prime contracting is
that DOE would be helping to carry out the President's small business
agenda and would be contributing to the federal government's overall goal
of directing 23 percent of prime contracting dollars to small businesses.
Beyond contributing to this overall effort, DOE's Small Business Office
and procurement officials explained that the benefits included increased
competition, greater innovation, and enhanced small business capacity.
One example of increased competition can be seen in EM's program. DOE's
efforts to increase small business contracting have resulted in new
procurements with narrower scope. In the past, EM has been concerned about
the limited pool of potential contractors for large cleanup projects,
sometimes receiving only two proposals on multibillion dollar
procurements. By structuring the cleanup work into smaller contracts and
opening them to individual small businesses or small business teams, EM
expects to attract more potential bidders. One of EM's current
procurements is for cleanup work at the Fast Flux Test Facility at the
Hanford site in Washington state. Currently included in a facility
management contract, EM is in the process of redirecting this work as a
small business set-aside. EM officials said that in the response to the
request for proposals for this project, with an estimated contract amount
of $46 million per year for up to 8 years, DOE received proposals from
several small business teams. According to EM officials, increased
competition from a larger pool of potential contractors could result in
better prices for the government. However, since the contracts for the
current small business procurements have not yet been awarded, it is too
soon to tell whether better prices will be realized.
In addition to increased competition, DOE procurement and program office
officials believe that small businesses may bring new ideas and innovative
approaches to the work. For example, as part of its accelerated cleanup
strategy, EM has been looking for better and faster ways to accomplish
cleanup at its sites and facilities. According to EM officials,
expanding the pool of potential contractors for cleanup projects may
increase the potential for new technology and ideas.11
Increasing small business prime contracting can also provide small
businesses with the experience necessary to compete for other federal
prime contracts. According to small business associations and advocacy
groups that we contacted, a direct contracting relationship with DOE
provides small businesses with more challenging work and better
opportunities to grow and expand their businesses. The use of
mentorprotege arrangements or teaming with other small or large businesses
also provides opportunities for growth and economic development. For
example, an owner of a small construction company in New Mexico told us
that his business had successfully teamed with a large construction
company for several projects and that his small company was now the senior
member of that team and was competing for DOE prime contracts.
Potential Risks of Increasing Small Business Prime Contracting
DOE's long-term strategy for achieving a 23-percent small business prime
contracting goal includes redirecting a substantial amount of facility
management contract dollars to small business prime contracts. DOE
procurement and program officials acknowledge that doing so would
significantly increase the number of prime contracts DOE would have to
manage. Increasing DOE's number of prime contracts, whether these are with
small or large businesses, could create problems with integrating and
coordinating the efforts of more contractors at a site, as well as create
problems with contract management and oversight. In addition, DOE's
efforts to increase small business prime contracting could inadvertently
reduce the amount of small business subcontracting directed to local and
regional small businesses.
Increasing the number of prime contracts at a site raises concerns about
integration, coordination, and accountability. If a facility management
contractor has primary responsibility for accomplishing work at the site,
that contractor is also accountable for integrating the efforts of
multiple subcontractors to ensure that the mission work is accomplished.
In
11To assist in the development of new technologies, EM as well as other
program offices with research and development programs provide funding for
two small business grant programs managed by the Office of Science. The
Small Business Innovation Research Program and the Small Business
Technology Transfer Program, with combined funding of more than $100
million in fiscal year 2003, encourage the development of new
technologies, including those dealing with environmental cleanup.
addition, the facility management contractor has the responsibility for
ensuring that all contractor and subcontractor employees at the site
comply with DOE safety and security standards. If the work done by the
facility management contractor becomes fragmented and spread among
multiple prime contracts, DOE may need to carry out these integration
functions, which places more oversight responsibilities on federal program
and project management personnel. If the number of prime contractors at a
site increases significantly, the challenges associated with integrating
and coordinating the activities also increase. Both DOE and facility
management contractor officials have expressed concerns about successfully
integrating and coordinating the efforts of an increased number of prime
contractors at a site. Ensuring that all work is performed in accordance
with DOE safety and security standards is a significant concern,
especially given the continuing challenges that the department faces in
these two areas.12
To begin to address the constraint of having a limited number of federal
employees to perform coordination and integration functions, DOE is
considering awarding small business prime contracts but then having the
facility management contractors at the sites manage and oversee the work.
As some facility management contracts are extended or awarded, DOE
includes a provision that specifically allows the department to identify
and redirect work within the facility management contract to a small
business prime contract. The provision also allows DOE to request the
facility management contractor to manage and oversee the work. Since the
work that DOE would redirect is generally already being done by a facility
management subcontractor, the only actual change is the contractual
relationship. In fiscal year 2003, NNSA started using this arrangement for
facilities and infrastructure restoration projects at the Sandia National
Laboratory in New Mexico. NNSA awarded prime contracts-$100,000 in fiscal
year 2003 and an estimated $3 million in fiscal year 2004-to small
businesses for some of these projects. Although it is too soon to fully
assess the implications of this arrangement, facility management
12For information on safety and security challenges, see U.S. General
Accounting Office, Major Management Challenges and Program Risks:
Department of Energy, GAO-03-100 (Washington, D.C.: Jan. 2003); Department
of Energy, Management Challenges at the Department of Energy, DOE/IG-0626
(Washington, D.C.: Nov. 12, 2003); U.S. General Accounting Office,
Department of Energy: Mission Support Challenges Remain at Los Alamos and
Lawrence Livermore National Laboratories, GAO-04-370 (Washington, D.C.:
Feb. 27, 2004); and U.S. General Accounting Office, Nuclear Security: DOE
Must Address Significant Issues to Meet the Requirements of the New Design
Basis Threat, GAO-04-701T (Washington, D.C.: Apr. 27, 2004).
contractor officials at the Sandia laboratory have expressed concern that
it could confuse the lines of authority and accountability at the site,
because the contractual relationship is not consistent with the daily
management and oversight of the activities being performed. In prior work,
we have also expressed concerns about confusing the lines of authority,
which can make it difficult to hold contractors accountable for
performance.13
Regarding contract management and oversight, increasing the number of
prime contracts with DOE could place further strain on DOE's procurement
and program oversight personnel. DOE's reliance on contractors to operate
its facilities and carry out its missions, coupled with the department's
history of inadequate contractor management and oversight, led us in 1990
to designate DOE contract management as a highrisk area vulnerable to
fraud, waste, abuse, and mismanagement. This high-risk designation is
still in effect. GAO and others have stated that one of the contributing
factors to DOE's inadequate oversight of its contractors has been a
shortage of personnel with the right skills to perform these functions.
Although DOE has over the past several years made progress in training and
certifying its procurement and project management personnel, DOE
procurement and program officials said that the overall number of
available personnel has not grown, and has significantly decreased in
NNSA. More prime contracts would create additional work for federal
employees in two phases: managing the procurement process by requesting
and evaluating proposals to award a contract, and overseeing the work of
the contractor to ensure that performance is acceptable. DOE officials at
headquarters and at the sites we visited expressed concerns that
significantly increasing the number of prime contracts could reduce the
ability to adequately oversee and evaluate contractor performance.
While headquarters and site office officials in the EM program acknowledge
the potential risks that additional prime contracts can create in both
integrating work activities at a site and contract management and
oversight, they are pursuing ways to mitigate those risks. To address
concerns about sitewide integration of safety and security, DOE officials
13U.S. General Accounting Office, Department of Energy: Fundamental
Reassessment Needed to Address Major Mission, Structure, and
Accountability Problems, GAO-02-51 (Washington, D.C.: Dec. 21, 2001).
at Hanford plan to use contract language and incentives to encourage the
site's new small business prime contractors and the facility management
contractors to work together. To earn potential incentive fees under this
proposed arrangement, for example, all prime contractors will have to
cooperate in such areas as safety and security. But, since these are new
approaches and the small business prime contracts have yet to be awarded,
the extent to which these steps will mitigate the potential risks is
unknown. To lessen the impact of additional prime contracts on procurement
and program personnel, EM officials said they intend to use a contract for
small business procurements that has a well-defined statement of work and
that ties incentive fees to accomplishing the contract's stated final goal
rather than to interim steps. According to EM's Director of Acquisition
Management, administering such contracts generally may require less
federal involvement, although EM will also have to train its staff on the
most effective way to manage these contracts.
In addition to the potential risks discussed above, DOE and contractor
officials, as well as representatives of small business advocacy groups,
raised concerns about DOE's efforts to increase small business prime
contracting. One concern expressed was that such efforts could
inadvertently result in less total contracting dollars directed to the
small business community. Procurement regulations require that all
facility management contractors have a small business subcontracting plan
and facility management contractors must generally negotiate annual small
business subcontracting goals with the department. However, if work is
removed from a facility management contract, the facility management
contractor may negotiate lower subcontracting goals with the department
and then subcontract less of the remaining work to small businesses. Since
the efforts to redirect facility management contract dollars to small
businesses is in its early stages, no data are yet available to validate
this concern.
A related concern is that if DOE removes work from a facility management
contract and sets that work aside for a small business procurement, there
may be fewer contracting dollars available to local and regional small
businesses. This could occur because DOE's facility management contractors
generally are not required to follow federal regulations in their
procurements, but instead comply with "best business practices." In doing
so, a facility management contractor can restrict a competition for its
subcontracts to the local small business community. In contrast, DOE must
generally open up its procurements to nationwide competition, which may
result in fewer contracts going to local and regional small businesses.
Again, no data are yet available to validate this concern.
Finally, representatives of some small business advocacy groups told us
that some small businesses would rather have a subcontract with a facility
management contractor than a prime contract with DOE. This is because
facility management contractors generally have fewer administrative
requirements and a less burdensome and faster procurement process.
It is not clear to what extent these potential risks will affect DOE's
ability to carry out its missions in a safe, secure, and effective manner.
The impact on DOE's missions of increasing small business prime contracts
will depend both on the total number of new prime contracts awarded and on
how well the department manages the contractors and the work. The stakes
are high as DOE attempts to contribute to the federal government's goal of
increasing the prime contracting dollars directed to the small business
community, while striving to accomplish its missions efficiently and
effectively.
This concludes my testimony. I would be pleased to respond to any
questions that you may have.
Contacts and Acknowledgments
For further information on this testimony, please contact Ms. Robin
Nazzaro at (202) 512-3841. Individuals making key contributions to this
testimony included Carole Blackwell, Ellen W. Chu, Matt Coco, Doreen
Feldman, Jeff Rueckhaus, Stan Stenersen, and Bill Swick.
Appendix I: Department of Energy (DOE) Contract Dollars Directed to Small
Businesses, Fiscal Years 1990-2003
Millions of dollars
Row
no. Contract 1990 1991 1992 1993 1994 1995 1996
type
aContracting $17,095.8 $18,628.6 $18,852.2 $18,392.5 $18,826.3 $17,177.4 $16,213.2
base
Facility 13,790.2 15,592.5 15,798.2 14,970.0 15,788.0 14,240.1 13,127.7
management
contracts
All other
prime 3,305.5 3,036.1 3,054.0 3,422.5 3,038.3 2,937.3 3,085.5
contracts
Contracts to
small 3,047.2 3,211.8 3,162.3 3,578.8 3,616.2 3,441.8 3,001.1
businesses
Small
business 500.9 529.8 578.8 512.7 508.1 484.5 434.9
prime
contracts
Small
business
subcontracts 2,546.3 2,682.0 2,583.5 3,066.1 3,108.2 2,957.3 2,566.2
awarded by
prime
contractors
Small business 2,402.4 2,464.0 2,374.8 2,772.3 2,795.6 2,699.3 2,328.1
subcontracts
awarded by
facility
management
contractors
Small business 144.0 217.9 208.7 293.9 312.5 258.0 238.1
subcontracts
awarded by
all other prime
contractors
Small and large
business 5,617.8 6,300.1 5,653.5 6,458.5 6,347.3 5,870.3 5,055.1
subcontracts
awarded by prime
contractors
Small business prime contracts (as a percent of contracting base)c
2.93 2.84 3.07 2.79 2.70 2.82 2.68 Small business prime contracts and N/A 16.07
15.67 17.86 17.55 18.53 17.04
facility management subcontracts (as a percent of contracting base)d
Small business prime and 17.82 17.24 16.77 19.46 19.21 20.04 18.51
subcontracts
(as a percent of contracting
base)e
Small business subcontracts (as 45.33 42.57 45.70 47.47 48.97 50.38 50.76
a
percent of all subcontracts)f
Source: GAO analysis of DOE data.
Appendix I: Department of Energy (DOE) Contract Dollars Directed to Small
Businesses, Fiscal Years 1990-2003
Row
no. Contract 1997 1998 1999 2000 2001 2002 2003
type
aContracting $15,844.0 $15,117.5 $15,483.8 $17,067.9 $18,551.2 $19,170.9 $21,210.0
base
Facility 13,844.4 13,226.6 13,487.8 14,079.1 14,756.4 15,671.7 18,189.1
management
contracts
All other
prime 1,999.6 1,890.9 1,995.9 2,988.8 3,794.7 3,499.2 3,020.9
contracts
Contracts to
small 3,173.4 3,033.5 3,225.3 2,805.1 3,539.9 4,241.9 4,382.2
businesses
Small
business 460.9 442.6 472.9 486.8 509.5 555.7 847.2
prime
contracts
Small
business
subcontracts 2,712.5 2,591.0 2,752.4 2,318.3 3,030.4 3,686.2 3,535.0
awarded by
prime
contractors
Small business 2,156.7 2,037.3 2,608.7 N/Ab N/Ab N/Ab N/Ab
subcontracts awarded by
facility management
contractors
Small business 555.8 553.6 143.7 N/Ab N/Ab N/Ab N/Ab
subcontracts
awarded by
all other prime
contractors
Small and large
business 5,223.4 5,684.5 5,547.1 4,826.4 6,409.3 7,548.6 7,349.0
subcontracts
awarded by prime
contractors
Small business
prime contracts
(as a 2.91 2.93 3.05 2.85 2.75 2.90 3.99
percent of
contracting base)c
Small business
prime contracts 16.52 16.40 19.90
and N/A N/A N/A N/A
facility
management
subcontracts (as a
percent of
contracting base)d
Small business
prime and 20.03 20.07 20.83 16.44 19.08 22.13 20.66
subcontracts
(as a percent of
contracting base)e
Small business 51.93 45.58 49.62 48.03 47.28 48.83 48.10
subcontracts (as a
percent of all
subcontracts)f
Note: Dollars in the table are expressed in current-year (unadjusted)
dollars and include DOE prime contracts valued at $25,000 or more that are
tracked in DOE data systems. Prime contracts awarded by another federal
agency but funded by DOE are excluded from the table. Subcontract dollars
are included only for contractors who are required to report on their
small business subcontracting activities.
aDOE's contracting base includes dollars that can potentially be directed
to U.S. small businesses, excluding, under Small Business Administration
(SBA) guidelines, dollars that cannot go to small business prime
contracts, such as grants and purchases from mandatory or foreign sources.
bFor fiscal years 2000 through 2003, DOE did not account separately for
subcontract dollars going to small businesses from facility management
prime contractors versus those from all of its other prime contractors.
Appendix I: Department of Energy (DOE) Contract Dollars Directed to Small
Businesses, Fiscal Years 1990-2003
cWe calculated the percentage of DOE's contract dollars going to small
business prime contracts by dividing small business prime contract dollars
(row 5) by the contracting base (row 1).
dFor fiscal years 1991 through 1999, DOE's annual small business prime
contracting achievements, as reported to SBA, included DOE subcontracts
awarded to small businesses by its facility management contractors, as
well as prime contracts awarded directly to small businesses. To calculate
small business prime contracting achievements for these 9 years, we
therefore added rows 5 and 7 and divided the sum by row 1. We did not do
this calculation for fiscal years 1990 and 2000 through 2003 because small
business subcontracts from facility management contractors did not "count"
in those years toward small business achievement percentages.
eWe calculated the overall percentage of DOE's contract dollars going to
small businesses-via both prime contracts and subcontracts-by dividing
DOE's contract dollars to small businesses (row 4) by the contracting base
(row 1).
fWe calculated the percentage of total subcontracting dollars going to
small business by dividing small business subcontract dollars from prime
contractors (row 6) by total subcontract dollars going to small and large
businesses (row 9).
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.
GAO's Mission
Obtaining Copies of GAO Reports and Testimony
The General Accounting Office, the audit, evaluation and investigative arm
of Congress, exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability of
the federal government for the American people. GAO examines the use of
public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO's commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
The fastest and easiest way to obtain copies of GAO documents at no cost
is through the Internet. GAO's Web site (www.gao.gov) contains abstracts
and fulltext files of current reports and testimony and an expanding
archive of older products. The Web site features a search engine to help
you locate documents using key words and phrases. You can print these
documents in their entirety, including charts and other graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as "Today's Reports," on its
Web site daily. The list contains links to the full-text document files.
To have GAO e-mail this list to you every afternoon, go to www.gao.gov and
select "Subscribe to e-mail alerts" under the "Order GAO Products"
heading.
Order by Mail or Phone The first copy of each printed report is free.
Additional copies are $2 each. A check or money order should be made out
to the Superintendent of Documents. GAO also accepts VISA and Mastercard.
Orders for 100 or more copies mailed to a single address are discounted 25
percent. Orders should be sent to:
U.S. General Accounting Office 441 G Street NW, Room LM Washington, D.C.
20548
To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061
To Report Fraud, Contact: Web site: www.gao.gov/fraudnet/fraudnet.htm
Waste, and Abuse in E-mail: [email protected]
Federal Programs Automated answering system: (800) 424-5454 or (202)
512-7470
Jeff Nelligan, Managing Director, [email protected] (202) 512-4800
Public Affairs U.S. General Accounting Office, 441 G Street NW, Room 7149
Washington, D.C. 20548
*** End of document. ***