November 25, 2014

Assessment of Audit Coverage of Cost Allowability for Bechtel Marine Propulsion Corporation During October 1, 2012, Through September 30, 2013, Under Department of Energy Contract No. DE-NR0000031



Bechtel Marine Propulsion Corporation (BMPC) was established solely to operate the Naval Nuclear Propulsion Program, which is a joint Navy−Department of Energy program responsible for the research, design, construction, operation, and maintenance of U.S. nuclear-powered warships. During the period of October 1, 2012, through September 30, 2013, BMPC expended and claimed over $924 million in costs incurred.

BMPC was required by its contract to account for all funds advanced by the Department annually on its Statement of Costs Incurred and Claimed, to safeguard assets in its care, and to claim only allowable costs. A Cooperative Audit Strategy makes efficient use of available resources to provide audit coverage of the allowability of incurred costs claimed by contractors.  Consistent with this strategy, BMPC's audit group and Federal auditors employed by the Naval Reactors Laboratory Field Office (NRLFO) provided audit coverage BMPC's incurred costs.

Based on our assessment, nothing came to our attention to indicate that the allowable cost-related audit work performed by the NRLFO auditors and the BMPC Audit Group did not meet generally accepted Government auditing standards and Institute of Internal Auditors standards, respectively, and could not be relied upon. In addition, we found BMPC had adequately addressed the subcontract audit concerns identified in our previous report.
 

Topic: Management & Administration