Department of Energy: Implementation and Use of Other Transactions Authority Provided in the Energy Policy Act of 2005

Since the Department of Energy (DOE) was established in 1977, one of its missions has been to promote the nation's energy security through research, development, and demonstration of advanced technologies for meeting future energy demands and diversifying the nation's energy portfolio. As part of this mission, DOE's Office of Energy Efficiency and Renewable Energy conducts research, development, and demonstration activities in partnership with industry to advance a diverse supply of clean power technologies. The fiscal year 2008 budget for these activities was $1.7 billion. The Energy Policy Act of 2005, the first comprehensive energy legislation in more than a decade, includes provisions to address the nation's long-term energy challenges. Key goals of the act include diversifying the nation's energy supply by promoting alternative and renewable sources of energy and by investing in science and technology. Provisions in the act promote the use of solar and wind power, establish a loan-guarantee program to encourage private investment in new energy technologies, and authorize demonstration projects for producing ethanol from cellulosic sources such as forest residues, agricultural residues, and scrap wood. To provide DOE with more flexibility to enter into agreements with private-sector entities, section 1007 of the Energy Policy Act of 2005 gave the Secretary of Energy the ability to use "other transactions authority." This authority, similar to that previously authorized for the Departments of Defense and Homeland Security, allows an agency to enter into agreements "other than" standard contracts, grants, and cooperative agreements. Agreements under this authority would not be subject to the Federal Acquisition Regulation or certain other federal laws governing contracts. Therefore, the other transactions authority could provide for more flexible terms and conditions, thereby enhancing the federal government's ability to acquire cutting-edge science and technology by attracting contractors that had not typically pursued government contracts. DOE may use this authority to help bring new ideas and innovations to fruition, to attract nontraditional government contractors, and to advance the department's energy security mission. The Energy Policy Act of 2005 required DOE to issue proposed guidelines for the use of this authority by November 8, 2005 (no later than 90 days after enactment), and specified that the department could not use the authority until the final guidelines were published. DOE's authority to enter into these transactions terminates on September 30, 2010. The act further required that GAO report on the department's use of other transactions authority, including DOE's ability to attract nontraditional government contractors (defined as those who have not had a contract or other agreement with the federal government for at least 1 year before the proposed contract). This report and our previous discussions and communications with your staff fulfill that directive, addressing (1) the steps DOE has taken to implement other transactions authority, including the safeguards established, and (2) the extent to which using this authority has enabled DOE to attract nontraditional government contractors.