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Audit Report: IG-0487

October 31, 2000

The Restructure of Security Services by the Oak Ridge Operations Office

In Fiscal Year (FY) 1998, the Oak Ridge Operations Office (Operations Office) decided to restructure its security services in an effort to reduce cost, gain more administrative control, and to capitalize on the efficiencies associated with a centralized approach to security. This new approach was thoroughly vetted with senior Department officials at Headquarters. To achieve its objectives, in FY 2000 the Operations Office awarded a 3-year base term contract for security services valued at $218 million to Wackenhut Services, Incorporated (Wackenhut). In its analysis justifying the new approach, the Operations Office estimated that cost savings of approximately $5 million a year would result from this new security services contract. Yet, in fact, security costs increased from $78.4 million in FY 1999 to an estimated $92.1 million in FY 2000. In response to the increase in security service cost, the Acting Deputy Administrator for Defense Programs requested that the Office of Inspector General evaluate security costs at the Oak Ridge Reservation to determine why costs increased after the Operations Office restructured security services under the Wackenhut contract. The objective of the audit paralleled the request from Defense Programs.