December 21, 2021
Subcontract Administration at the Kansas City National Security Campus
The Kansas City National Security Campus is the lead production site providing over 80 percent of the non-nuclear components that go into U.S. nuclear weapons. From fiscal year (FY) 2015 through FY 2019, the Kansas City National Security Campus was managed by Honeywell Federal Manufacturing & Technologies, LLC (Honeywell) under cost-reimbursement management and operating contracts. From FY 2015 through FY 2019, Honeywell subcontract records totaled approximately $2.72 billion. Given the significant total value of subcontracts, we conducted this audit to determine whether Honeywell administered subcontracts for the Kansas City National Security Campus in accordance with applicable regulations and policies. We determined that Honeywell allowed a third-party audit firm to perform reviews of subcontract costs, instead of audits as required, in the Honeywell contracts. We also identified 17 percent of subcontract records that were misclassified and excluded from audit, as well as both unresolved costs of $88,391,364.18 and questioned costs of $142,638.49. The issues we identified occurred, in part, because Honeywell did not always administer subcontracts in accordance with applicable regulations and policies. Management nonconcurred (or nonconcurred as written) with five of eight recommendations. However, management concurred (or concurred in principle) with three recommendations. Additionally, management’s actions were generally not responsive to our recommendations.