Audit Report: DOE-OIG-18-12

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December 22, 2017

Lawrence Livermore National Security, LLC, Costs Claimed under Department of Energy Contract No. DE-AC52-07NA27344 for Fiscal Year 2015

Lawrence Livermore National Laboratory is part of the Department of Energy’s National Nuclear Security Administration, which has national security responsibilities that include ensuring the safety, security, and reliability of the Nation’s nuclear weapons stockpile. National Nuclear Security Administration awarded a contract to Lawrence Livermore National Security, LLC (LLNS), to manage and operate Lawrence Livermore National Laboratory through September 2021.

LLNS is required by contract to account for all net expenditures accrued annually on its Statement of Costs Incurred and Claimed, to safeguard assets in its care, and to claim only allowable costs. During fiscal year (FY) 2015, LLNS incurred costs totaling $1,489,911,852.45.  Each year, the Office of Inspector General (OIG) selects one management and operating contractor to test the effectiveness of the internal audit group’s annual incurred cost audit.  Based on our audit, we questioned costs totaling $1,262,454.77, identified weaknesses in internal controls for which we were unable to quantify the monetary impact, and identified weaknesses in LLNS’ Internal Audit Services (Internal Audit) audit procedures. In particular, we questioned $1,257,828.48 of interagency agreement costs for lack of supporting documentation and $3,900.61 in other areas such as purchased materials and UniCard costs.  Except for the reported questioned costs and internal control weaknesses, nothing came to our attention to indicate that the other costs incurred by LLNS were not allowable.

We made recommendations in the report to ensure that unallowable costs and internal control weaknesses identified in this report are properly audited in future incurred cost audits. Management concurred with the report’s recommendations and has initiated corrective actions.

Topic: Management & Administration