A senior manager at the Department of Energy approved above-market contactor executive salaries without proper authority, the department’s inspector general has said.
Energy awarded a $2.2 billion contract to undo industrial pollution at the East Tennessee Technology Park, Oak Ridge, Tenn., and Energy’s Oak Ridge Office was responsible for oversight of the contract, including analyzing and performing market analyses to assess the reasonableness of the proposed contractor executive salaries.
The IG found that without proper authority, a former senior management official approved 10 contractor executive salaries that exceeded market salary rates calculated by the HR office. It said the issues it found were the result of several contributing factors, including inconsistently applied guidance related to the process for setting salaries.
As a result DoE could incur an excessive cost of $3.45 million for the 10 executives over the five-year contract, and the IG said that the department should take action to ensure contractor executive salaries are reasonable, consistent with local market compensation rates, and are developed using established DoE procedures – especially given current budgetary pressures.
Management generally agreed and proposed corrective actions to address inconsistently applied guidance, improve the contractor executive salary setting process, and better control salary costs.
