Given years of delays in the Department of Energy’s audits of contractor costs for non-M&O contracts, DOE should develop a risk-based comprehensive plan to undertake the reviews, the Office of Inspector General said in a report released yesterday. The IG review focused on delays reviews by the Defense Contract Audit Agency on potential unallowable costs in non-M&O contracts, largely run by DOE’s Office of Environmental Management. “DCAA has been unable to meet the non-M&O contract audit needs of the Department and has asserted that it simply does not have the resources to meet all Department of Defense and civilian agency audit requests,” the IG report says. “As it pertains to the Department, this situation was exacerbated by the fact that the Department lacked a comprehensive strategy to ensure that non-M&O contractor costs were subjected to necessary audits.”
At the end of fiscal year 2014, DOE had more than 22 open M&O contract cost audits that covered $1.1 billion in questioned contractor costs, the IG report states. “Given the billions of dollars the Department invests in its non-M&O contractor and subcontractor base and the Department’s experience with the prevention and identification of unallowable costs incurred by its M&O contractors, there is every reason to conclude that the benefits of a comprehensive plan for providing necessary audit capacity outweigh the costs,” the report says.
The IG recommended DOE work with DCAA to “develop a risk-based approach for audit coverage of non-M&O contractor incurred costs,” the report states. “We also recommended it develop a comprehensive strategy to supplement DCAA’s audit coverage to ensure necessary and required audit of incurred costs until the backlog of DCAA audits can be eliminated.” DOE management “fundamentally agree” with the IG’s recommendations, DOE Office of Acquisition and Project Management Director Paul Bosco said in a management response, which notes efforts by DOE to push for audits despite the current challenges.
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