As part of its Contract Reform effort, the Department of Energy (Department) acted to increase its use of fixed-price contracts. This shift was designed to increase the cost-effectiveness of operations. Since October 1994, the Office of Environmental Management (EM) has awarded a number of fixed-price contracts for environmental cleanup activities. In so doing, EM expected significant cost savings when compared to approaches previously employed by management and operating contractors. Accurately estimating those savings is crucial to contracting strategy and project funding decisions, as well as the Department's overall environmental cleanup strategy. The objective of our audit was to determine if the cost savings anticipated from the use of fixed-price contracts for environmental cleanup activities would be realized.