Secretary Richardson
Announces Initiative to Improve
Contractor Accountability and Performance
(From a 05/19/00 DOE Press Release)
Secretary of Energy Bill Richardson today announced a
broad initiative designed to boost contractor performance management throughout the
department. The initiative includes strengthening the department's ability to sanction
poor contractor performance and reward outstanding performance and gives the Secretary of
Energy the authority to direct the removal of a senior contract manager who is performing
poorly. It also includes an annual review by the Secretary of Energy with the chief
executive officer of key contractor organizations.
"The Energy Department administers over 30 facility
management contracts worth over $50 billion that extend over the next decade," said
Secretary Richardson. "This department is accountable to the American public for its
performance and we must do better than we are today. We need to get everyone focused on
key goals and objectives and hold everyone accountable -- replacing chronic poor
performers and rewarding those who are doing well."
For the last several years, the department has worked to
reform its contractor performance management in a number of ways, including implementing
performance based contracting which ties sanctions and rewards to progress against annual
contract performance measures. While this effort has seen some success, problems remain.
For example, fees are not always aligned with performance goals and as a result some
contractors have earned high fees without commensurate results. In addition, there have
not been clear and consistent criterion used to make decisions on whether to extend
contracts under option provisions and there has been inadequate linkage of performance
standards with the department's strategic planning.
Secretary Richardson's initiative, requires greater
responsibility and accountability from both the department's senior managers and its
contractors. Major provisions include:
- conducting an annual performance review by the Secretary
with the chief executive officers of key contractor organizations;
- ensuring that performance fees will be paid in full when
earned or withheld when performance objectives are not met;
- adding a contract clause to all facility management
contracts that permits the Secretary of Energy to direct a contractor to remove its top
manager for failure to perform;
- adding a contract clause to all facility management
contracts to ensure that performance bonuses paid by contractors to its key managers are
dependent on the achievement of contract performance objectives; and
- expanding the Chief Operating Officer "watch
list" to include marginal or poor performing contractors. A project or contractor
that is placed on the watch list is subject to more frequent reporting and closer scrutiny
until performance improves or the contract is terminated;
- requiring contract performance objectives to be linked to
the department's strategic plan;
- holding federal senior executives accountable for
effective contractor management through their own performance plans;
- conducting a briefing for the Secretary of Energy on major
projects that will review the past award fees, past performance and discuss criterion for
next year's award fee determination; and
- informing the Secretary of Energy of contractor
performance assessments and proposed performance awards prior to their awarding.
The new procedures build on recent changes in the Energy
Department's facilities management contracts which have resulted in increased competition,
greater contractor financial responsibility and increased performance risk. It also builds
on the changes Secretary Richardson put in place last year when he reorganized the
department's program management structure to ensure clear lines of accountability and
responsibility in program management and overhauled the department's project management
system.
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