The federal Department of Energy is spending about 87 percent of its $11 billion budget on outside consultants and contractors who are performing most of its basic work, Sen. David Pryor (D-Ark.) said yesterday.

Pryor and Rep. Herbert E. Harris II (D-Va.) heard testmony in hearings yesterday that the Agency Department has 4,000 contracts with more than 200,000 contract workers -- nearly 10 times the agency's 21,000-member staff.

Pryor charged that this massive use of contractors has led to a "basic change in the way the government does its work . . . [The department's] reliance on contractors is so extreme that . . . it is hard to understand what, if anything, is left for federal employes to do."

Pryor and Harris, cochairmen of yesterday's hearings, said their congressional staff investigations showed that:

Contractors -- not government officials -- often prepare speeches and documents given by the officials in congressional testimony.

The Energy Department's filing system is in such disarray that the agency cannot produce the results of millions of dollars of contract work, and sometimes not even the contract document itself.

Contractors are often paid to produce their own "task orders," which describe what they are to do on a particular contract job.

The department is paying millions of dollars to big consulting firms that also work for oil and utility companies despite conflict-of-interest rules that the agency put into effect last year.

Citing what they described as a lack of accountability by contractors, Pryor and Harris said they will introduce in Congress later this week a consultant reform act seeking to increase disclosure by government consultants and to curb their role generally. i

In yesterday's joint hearing of the Senate subcommittee on civil service and general services and the House subcommittee on human resources, the Energy Department's chief financial officer, John A. Hewitt Jr., testified that the agency has taken strong new steps to curb what he said were "past, improper practices" regarding contractors.

"I am committed to institutionalizing the department's policy that contractors will not perform functions that government employes should perform," Hewitt said.

He said that new Energy Department rules calling for closer scrutiny of contract proposals resulted in 39 of 55 percent proposals being found not satisfactory.

"Some (proposals) did not clearly establish the need for a consulting service contract; (others) appeared to call for the contractor to perform functions" that Energy Department officials should perform, Hewitt said.

He did not say whether the 39 proposals were ultimately rewritten and approved, but he added: "A cynic might assert that (DOE officals and contractors) are merely choosing their words more carefully."

Harris asked Hewitt why TRW Energy Systems Planning Division, a consultant, had been allowed to write its own task order, or contract, on April 24 for an assessment of coal slurry pipelines.

Hewitt said he didn't know that that had happened. "I'm sure you can still find some examples" of practices that should not take place under the new department rules, Hewitt told Harris.

"I think they (contractors generally) are still doing just like they always did," Harris said.

Robert H. Shatz, TRW's vice president for the energy systems planning division, said after the hearing yesterday that he had not seen the testimony and could not comment specifically. But he said: "I don't think contractors should run DOE and I know they don't. DOE runs the contractors."

Pryor said that Planning Research Corp., a consultant, is hired to answer letters sent to Energy Department officials by members of Congress. He mentioned a draft letter the consultant prepared on Aug. 22, 1979, to be sent to Rep. Richard Ottinger (D-N.Y.).

Hewitt said he didn't know about such letters and said he has not signed any such letters prepared by outsiders.

A spokesman for Planning Research Corp. said after the hearing that the firm provides the department with "technical analysis" needed to answer letters. "We don't respond to political or policymaking-type questons," the spokesman said.

Pryor said the company and Booz-Allen & Hamilton Inc., another big consulting firm, do millions of dollars of contracting work for the Energy Department and, at the same time, Planning Research Corp. consults for oil companies and Booz-Allen for utility companies. The Energy Department plays a role in regulating both industries.

"This reliance persists despite the conflict-of-interest rules introduced by the department last year," Pryor said.

The company spokesman said: "We don't have any conflict of interest between DOE and the oil company (work) because the work is totally unrelated." Planning Research Corp. does solar analysis for DOE and mostly engineering and architectural work for the oil companies, the spokesman said.

Booz-Allen senior vice-president Eric Zausner said there is no conflict in working simultaneously on Energy Department solar programs and on load forecasting and other utility company projects. "We've never represented the utilities before DOE in any way," he said.

Pryor disclosed yesterday a Booz-Allen internal memorandum obtained by his staff as part of the contractor's "work product" paid for by DOE. The memo, from one Booz-Allen employe to another, told of attending a "solar jubilee" conference in Phoenix and stated that:

"The meeting was inspiring in terms of giving insight into possible business areas for (Booz-Allen)."

"This was paid for by the government," Pryor said.

Zausner said the Booz-Allen man who wrote the memo attended the meeting on his own vacation time and not at government expense. He said the memo "got in there by mistake" when the firm had to rush to provide "seven cartons of work product" to DOE in two days in preparation for yesterday's hearing.