March 17, 2014

GAO QUESTIONS EFFECTIVENESS OF NEW DOE COST REPORTING INITIATIVE

By ExchangeMonitor

A Department of Energy initiative to standardize the reporting of indirect costs across the weapons complex has generated data that is too broad, and might not be useful for improving the management of the weapons complex, a recently released Government Accountability Office report said. The report released Friday, “Laboratories’ Indirect Cost Management Has Improved, but Additional Opportunities Exist,” notes that the Institutional Cost Reporting initiative has created a standardized report of some costs, but it said DOE and National Nuclear Security Administration officials are unsure how the data will be used. The Institutional Cost Reporting initiative “may provide only limited improvements because the data will continue to only be reported at an aggregate level,” the GAO said in its report, pointing out that the data being generated is so broad—like maintenance and central administrative support—that additional research would be needed to explain differences between various sites. “For example, if costs for an activity such as maintenance are significantly higher at one laboratory than another, further research would be needed to determine if the difference is due to efficiency or differences in mission, condition of infrastructure, location, or other reasons,” the GAO said.The GAO said indirect costs account for about half of the budgets of the NNSA’s three nuclear weapons laboratories, and the Congressional watchdog agency has raised issues with cost reporting inconsistencies in years passed.

The GAO also rapped the NNSA for not having a regularized schedule of audits of cost reporting practices at its sites, noting that there is confusion among DOE, NNSA and Inspector General officials regarding when audits should take place. “In the absence of formal, periodic risk assessments, NNSA may not have a well-documented basis for its decisions regarding the type, timing, and extent of future monitoring or oversight,” the GAO said. The GAO also noted that efforts by site contractors to benchmark costs across the industry are not regulated by the NNSA, raising questions about potential management decisions. “Without more consistent and comparable benchmarking, NNSA will likely lack useful data about costs across the laboratories, as well as in the private sector, that could inform cost management decisions at the laboratories and identify areas for cost savings,” the GAO said. In a response to the report, the NNSA said it generally concurred with the GAO’s findings, and emphasized that it was taking steps to correct the issues.

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