GAO: DOE’s Inspector General needs better audit cost estimates

The Government Accountability Office (GAO) said last week the Department of Energy’s Office of Inspector General needs better cost estimates for audits of DOE’s big contractors.

Four years ago, DOE’s Office of Inspector General (OIG) set up an Incurred Cost Audits Division in order to get a better handle on management and operating (M&O) contractors.

GAO, which serves as a congressional watchdog, said such audits are a big deal given that DOE spends billions annually on prime contractors.

“In 2019, we reported that more than $3 billion in subcontract costs, awarded by DOE’s 24 largest contractors, the majority of which were M&Os, had not been audited as required, and some of these costs were beyond the 6-year window to recover them if unallowable,” GAO said in the July 24 report.

But OIG’s initial estimate from 2021 that it would need $18.7 million per year for the effort “substantially underestimated the resources needed,” GAO said in a summary of the report. By comparison in its fiscal 2025 justification the OIG estimated it would need $43.7 million.

“GAO recommends that the DOE Inspector General develop life cycle cost estimates of all relevant alternatives for conducting incurred cost audits,” according to the GAO report issued last week.

OIG said, in its official comments included in the GAO report, it largely agrees with the GAO findings and its recommendation for improving the process. “In recent years we have revised our estimates and sought additional resources to account for the increases in the number and value of M&O contracts,” OIG said.

A copy of the full report is available here.