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Audit Report: IG-0887

May 15, 2013

The Use of Staff Augmentation Subcontracts at the National Nuclear Security Administration's Mixed Oxide Fuel Fabrication Facility

Shaw AREVA MOX Services, LLC (MOX Services) is responsible for the design and construction of the National Nuclear Security Administration's (NNSA) nearly $5 billion Mixed Oxide Fuel Fabrication Facility (MOX Project) at the Savannah River Site near Aiken, South Carolina.   The facility will remove impurities from surplus weapons-grade plutonium and mix it with depleted uranium oxide to form fuel pellets for commercial nuclear power reactors.  
 
MOX Services used staff augmentation subcontracts to fill professional, technical and administrative support service positions on an as-needed basis on the MOX Project.  According to MOX Services officials, a shortage of qualified personnel in the local area necessitated the use of "temporary" subcontract employees.  The Office of Inspector General received a complaint alleging a variety of problems involving temporary living expenses, overtime hours, as well as the appropriateness of staff augmentation labor rates. 

We substantiated the allegation that MOX Services billed and NNSA reimbursed payments to subcontractors for excessive temporary living expenses.  Specifically, since January 2007, MOX Services was reimbursed about $3.7 million for inappropriate temporary living expenses for staff augmentation employment.  Additionally, we did not substantiate the allegations concerning the pricing and payment of regular and overtime hours for staff augmentation subcontracts from Fiscal Years 2007 through 2011. 

These excessive and unnecessary costs occurred, at least in part, because MOX Services eliminated the portion of its policy that limited the cost and duration of staff augmentation subcontract employee temporary living expenses.  This was compounded by the fact that NNSA had not effectively monitored MOX Services' management of the staff augmentation subcontracts.  In response, NNSA management concurred with the report's recommendations and identified actions it had taken or planned to improve management of the temporary living expense component of staff augmentation subcontracts at the MOX Project. 

TOPIC: Management & Administration