Audit Report: DOE-OIG-20-51

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July 20, 2020

Small Business Subcontracting Requirements for Prime Contractors at the Hanford Site

The Small Business Act, as amended, requires Federal agencies to ensure that a fair proportion of their total purchases, contracts, or subcontracts are with small business entities.  According to the Small Business Act, the Government should aid, counsel, assist, and protect the interests of small business entities.  The Department of Energy’s policy is to reinforce the goals of the Small Business Act by fostering a dynamic business environment for the small business community, promoting inclusiveness, creating jobs and strengthening the small business economy, encouraging new perspectives, and increasing small business access to Department opportunities.

Mission Support Alliance, LLC (MSA) and CH2M HILL Plateau Remediation Company (CHPRC) are Hanford Site prime contractors with contracts valued at $3.75 billion and $6.47 billion respectively, as of September 30, 2018.  MSA’s contract award date was April 2009 and CHPRC’s contract award date was June 2008.  MSA’s contract includes small business-related requirements limiting self-performed work scope to 60 percent of the total contract value and requires subcontracting to small business entities of at least 25 percent of the total contract value.  Similarly, CHPRC’s contract requires limiting self-performed work scope to 65 percent of the total contract value and requires subcontracting to small business entities of at least 17 percent of the total contract value.  Due to the Department’s emphasis on small business development, we initiated this audit to determine whether select Hanford Site prime contractors met their small business subcontracting requirements.

Of the two Hanford Site prime contractors we reviewed, we determined that MSA did not meet all of its contractual small business subcontracting requirements, while CHPRC may still be able to meet its requirements.  Although MSA reported meeting its contractual requirements, we found that MSA’s calculations were incorrect. 

Management concurred with our findings and recommendations, and proposed corrective actions are consistent with our recommendations. 

Topic: Subcontract Management