In fiscal year 1978, the Department of Energy awarded about 5,000 contracts totaling over $8,5 billion, more than any other Federal agency. The department's procurement system is not operating effectively and efficiently, in GAO's opinion. The department lacks assurance that it is contracting for goods and services which are actually required and that acceptable goods and services are obtained at the lowest possible price. About 55 percent of all the department's obligations susceptible to competition in fiscal year 1978 were awarded noncompetitively. Because the department's procurement office appears to be stressing its role as a service organization at the expense of adhering to sound procurement practices, GAO believes that energy personnel would benefit from a reeducation process which would focus on the proper procurement roles and responsibilities of the department's various activities. GAO recommends that the department should take action to ensure that competition for department contracts is maximized and that sole-source contracts, task order contracts, quick-reaction work-order master contracts, and contract ratifications are used only as exceptions to normal contracting practices. Furthermore, specific guidelines should be established to more explicitly delineate the types of management tasks which are not acceptable for contractors to perform. Finally, to ensure that sound procurement practices are folloiwed and will continue to be followed, the Sectretary of Energy should direct that a department-wide review be made of contracting policies and require that these practices be periodically monitored. A brief list of abbreviations is provided. (Author abstract modified)