Testimony 

Before the Committee on Energy and 

Natural Resources, U.S. Senate 

United States General Accounting Office 

GAO

For Release on Delivery 

Expected at 10:00 a.m. EDT 

Tuesday, May 18, 2004 DEPARTMENT OF 

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 
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 

nazzaror@gao.gov. 

Highlights of GAO-04-738T, testimony 

before the Committee on Energy and 

Natural Resources, United States Senate 

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. 

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. 
Page 1 GAO-04-738T 

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 

 1

Prime contracts are direct contracts between the government and a contractor. 

2

The 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. § 644(g)(2). 
Page 2 GAO-04-738T 

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 

 3

The 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. 

4

DOE awards new small business contracts through a procurement process that generally 

includes issuing a request for proposals, evaluating those proposals, and selecting a 

contractor. 

5

NNSA 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. 
Page 3 GAO-04-738T 

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: 

• 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. 

• 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 
Page 4 GAO-04-738T 

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. 

• 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. 
Page 5 GAO-04-738T 

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. 

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 

Background 
Page 6 GAO-04-738T 

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 

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 

 6

Small 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. 

•

Facility management contracts

(86 percent)

18.2

•

Source: DOE.

3.0

Dollars in billions

All other prime contracts

(14 percent)
Page 7 GAO-04-738T 

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. 

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 

 7

See appendix I for information on DOE’s prime and subcontract dollars directed to small 

businesses between 1990 and 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 
Page 8 GAO-04-738T 

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 

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 

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Percentage of DOE's contracting base

Fiscal year

DOE's Small-Business Prime Contracting Goals for Fiscal Years 2004 and 2005

Subcontract Dollars from DOE's Facilities Management Contractors 

counted towards small-business prime contracting goals

DOE Prime Contract Dollars Going to Small Business

Source: GAO analysis of DOE data.

0

5

10

15

20
Page 9 GAO-04-738T 

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

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. 

 8

These 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. 

Meeting the Long-term 

Goal of 23 Percent 

Requires Huge Increases in 

Small Business Prime 

Contracting 
Page 10 GAO-04-738T 

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. 

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-protégé 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.) 

DOE Has Near-term 

Plans But No 

Consistent Strategy 

for Achieving Longterm Small Business 

Contracting Goals 

Near-Term Plans Focus 

Primarily on Increasing 

Awards of Non-Facility 

Management Contracts to 

Small Businesses 
Page 11 GAO-04-738T 

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-protégé 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 
Page 12 GAO-04-738T 

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.) 
Page 13 GAO-04-738T 

Table 2: Status of Selected Procurements Redirecting Facility Management Contract Dollars to Small Business Prime 

Contracts 

Program office/site Nature of work 

Current facility 

management 

contractor Contract amount Status of procurement 

Fossil Energy 

Strategic Petroleum 

Reserve, Louisiana 

Construction management 

services 

DynMcDermott $26.5 million for 2 

years, plus three 1-

year options 

Contract awarded November 

2003 

Environmental Management 

Fast Flux Test 

Facility, Hanford, WA 

Decontamination, 

decommissioning, 

demolition, disposal of 

reactor waste 

Fluor Hanford $46.1 million per year, 

contract length not to 

exceed 8 years 

Request for proposals closed 

March 2004 

222-S Laboratory, 

Hanford, WA 

Laboratory analysis of tank 

waste samples 

CH2M Hill $10 million per year for 

5 years, plus five 

additional 1-year 

options 

Request for proposals closed 

March 2004 

Portsmouth, OH 1 contract for 

environmental remediation 

1 contract for infrastructure 

Bechtel Jacobs $273 million over 5 

years for remediation 

$129 million over 5 

years for infrastructure 

Request for proposals closed 

March 2004 

Paducah, KY 1 contract for 

environmental remediation 

1 contract for infrastructure 

Bechtel Jacobs $377 million over 5 

years for remediation 

$100 million over 5 

years for infrastructure 

Request for proposals closed 

March 2004 

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. 
Page 14 GAO-04-738T 

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). 

 9

Of 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. 

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 
Page 15 GAO-04-738T 

Figure 3: Projected Percentage of Facility Management Contract Dollars to Be Redirected to Small Business Prime Contracts 

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: 

• Both NNSA and Science officials are very concerned about the 

implications of setting aside for small businesses significant portions of 

0

5

10

15

20

25

2004200520062007200820092010201120122013201420152016201720182019202020212022

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.
Page 16 GAO-04-738T 

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. 
Page 17 GAO-04-738T 

• 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 20-

year 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 
Page 18 GAO-04-738T 

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. 

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, 

Potential Benefits of 

Increasing Small Business 

Prime Contracting 
Page 19 GAO-04-738T 

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 mentorprotégé 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. 

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. 

Potential Risks of 

Increasing Small Business 

Prime Contracting 
Page 20 GAO-04-738T 

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). 
Page 21 GAO-04-738T 

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). 
Page 22 GAO-04-738T 

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. 
Page 23 GAO-04-738T 

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 

Page 24 GAO-04-738T 

Millions of dollars 

Row 

no. Contract type 1990 1991 1992 1993 1994 1995 1996

1 Contracting basea $17,095.8 $18,628.6 $18,852.2 $18,392.5 $18,826.3 $17,177.4 $16,213.2

2 Facility management 

contracts 

13,790.2 15,592.5 15,798.2 14,970.0 15,788.0 14,240.1 13,127.7

3 All other prime contracts 3,305.5 3,036.1 3,054.0 3,422.5 3,038.3 2,937.3 3,085.5

4 Contracts to small businesses 3,047.2 3,211.8 3,162.3 3,578.8 3,616.2 3,441.8 3,001.1

5 Small business prime 

contracts 

500.9 529.8 578.8 512.7 508.1 484.5 434.9

6 Small business subcontracts 

awarded by prime contractors 

2,546.3 2,682.0 2,583.5 3,066.1 3,108.2 2,957.3 2,566.2

7 Small business 

subcontracts awarded by 

facility management 

contractors 

2,402.4 2,464.0 2,374.8 2,772.3 2,795.6 2,699.3 2,328.1

8 Small business 

subcontracts awarded by 

all other prime contractors 

144.0 217.9 208.7 293.9 312.5 258.0 238.1

9 Small and large business 

subcontracts awarded by prime 

contractors 

5,617.8 6,300.1 5,653.5 6,458.5 6,347.3 5,870.3 5,055.1

 

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 

facility management subcontracts (as a 

percent of contracting base)d

N/A 16.07 15.67 17.86 17.55 18.53 17.04

Small business prime and subcontracts 

(as a percent of contracting base)e

17.82 17.24 16.77 19.46 19.21 20.04 18.51

Small business subcontracts (as a 

percent of all subcontracts)f

45.33 42.57 45.70 47.47 48.97 50.38 50.76

Source: GAO analysis of DOE data. 

Appendix I: Department of Energy (DOE) 

Contract Dollars Directed to Small 

Businesses, Fiscal Years 1990–2003 
Appendix I: Department of Energy (DOE) 

Contract Dollars Directed to Small 

Businesses, Fiscal Years 1990-2003 

Page 25 GAO-04-738T 

 

Row 

no. Contract type 1997 1998 1999 2000 2001 2002 2003

1 Contracting basea $15,844.0 $15,117.5 $15,483.8 $17,067.9 $18,551.2 $19,170.9 $21,210.0

2 Facility management 

contracts 

13,844.4 13,226.6 13,487.8 14,079.1 14,756.4 15,671.7 18,189.1

3 All other prime contracts 1,999.6 1,890.9 1,995.9 2,988.8 3,794.7 3,499.2 3,020.9

4 Contracts to small businesses 3,173.4 3,033.5 3,225.3 2,805.1 3,539.9 4,241.9 4,382.2

5 Small business prime 

contracts 

460.9 442.6 472.9 486.8 509.5 555.7 847.2

6 Small business subcontracts 

awarded by prime contractors 

2,712.5 2,591.0 2,752.4 2,318.3 3,030.4 3,686.2 3,535.0

7 Small business 

subcontracts awarded by 

facility management 

contractors 

2,156.7 2,037.3 2,608.7 N/AbN/Ab N/AbN/Ab

8 Small business 

subcontracts awarded by 

all other prime contractors 

555.8 553.6 143.7 N/AbN/Ab N/AbN/Ab

9 Small and large business 

subcontracts awarded by prime 

contractors 

5,223.4 5,684.5 5,547.1 4,826.4 6,409.3 7,548.6 7,349.0

 

Small business prime contracts (as a 

percent of contracting base)c

2.91 2.93 3.05 2.85 2.75 2.90 3.99

Small business prime contracts and 

facility management subcontracts (as a 

percent of contracting base)d

16.52 16.40 19.90 N/A N/A N/A N/A

Small business prime and subcontracts 

(as a percent of contracting base)e

20.03 20.07 20.83 16.44 19.08 22.13 20.66

Small business subcontracts (as a 

percent of all subcontracts)f

51.93 45.58 49.62 48.03 47.28 48.83 48.10

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. 

a

DOE’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. 

b

For 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 

Page 26 GAO-04-738T 

c

We 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). 

d

For 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. 

e

We 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). 

f

We 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). 

(360439) 
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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 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm 

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800 

U.S. General Accounting Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548 

GAO’s Mission 

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Mail or Phone 

To Report Fraud, 

Waste, and Abuse in 

Federal Programs 

Public Affairs