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Special Report: OAS-L-12-04

April 19, 2012

Questioned, Unresolved, and Potentially Unallowable Costs Incurred by Los Alamos National Laboratory during Fiscal Years 2008 and 2009

Since June 2006, Los Alamos National Security, LLC, has operated the Los Alamos National Laboratory (Los Alamos) for the Department of Energy's National Nuclear Security Administration (NNSA).  Los Alamos incurred and claimed costs of $1.8 billion in Fiscal Year (FY) 2008 and $1.9 billion in FY 2009.  We identified approximately $2 million in questioned and unresolved costs claimed by Los Alamos during FYs 2008 and 2009.  The majority of these costs concerned labor charges that Los Alamos' Internal Audit found either did not benefit NNSA or did not comply with the contract's allowable cost provisions.  We also identified more than $437 million in subcontract costs that were unresolved pending audit or review by Internal Audit.  Further, we questioned whether Los Alamos' subcontract audit strategy provided sufficient coverage to ensure that only allowable costs were paid with NNSA funds.  Finally, the NNSA's Field Chief Financial Officer signed a qualified approval of Los Alamos' FYs 2008 and 2009 Statements of Costs Incurred and Claimed, noting concerns about mischarging that may result in unallowable costs being charged to the Government and other control issues that may impede the identification of unallowable costs.

Topic: Management & Administration