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Audit Report: IG-0412

October 20, 1997

Audit of the Contractor Incentive Program at the Nevada Operations Office

The Department of Energy (Department) is using performance-based contracts to address problems associated with its traditional management and operating contracts. Under this approach, contractor performance is to be evaluated against performance measures which are clearly stated, results-oriented, and established prior to performance. The performance measures, which reflect the Department's expectations of the contractor, are the basis for rewarding superior contractor performance through the use of incentive fees. The purpose of our audit was to determine whether performance-based contracting, as incorporated in the Bechtel Nevada Corporation (Bechtel) contract for the management of the Department's Nevada Test Sit