Generally, Federal employees are prohibited from becoming involved in contractor employee personnel matters such as hiring and terminating personnel, supervising contractor employees and assigning tasks to contractor employees that, by Federal regulation, can only be performed by Federal employees. The Office of Inspector General received a complaint alleging that a Department management official within the Office of Nuclear Energy (NE) may have violated Federal regulations and procurement guidelines regarding preferential treatment of a contractor employee, to include involvement in contractor hiring decisions relating to that employee. We did not substantiate the allegation that a NE manager violated Federal regulations and procurement guidelines involving contractor hiring decisions. While we found that the subject of the allegation had taken certain actions on behalf of a particular contract individual, it did not appear, based on information gathered during the course of our inspection and after consultation with the Department's Office of the General Counsel, that the NE manager violated Federal regulations or procurement guidelines. We did note, however, that the actions taken by the NE manager may have caused others to perceive that the manager acted improperly. No formal recommendation was made to management. However, we suggested that steps be taken to ensure strict compliance with recently published guidance on Federal officials' involvement in contractor hiring decisions.