Sandia National Laboratories (Sandia) subcontracts with various suppliers for services not available at the Laboratories. The Office of Inspector General received an anonymous complaint alleging that: (1) Sandia hired former employees as consultants at salaries exceeding what they were paid prior to retirement; and (2) one former employee was brought back through an independent consulting company for over a decade. It was also alleged that Sandia officials responsible for approving certain hiring actions were adept at circumventing rules and regulations. We substantiated the allegations. Specifically, in eight cases we reviewed, Sandia acquired the services of former employees and paid them a higher hourly rate than the employees received prior to retiring. In addition, one former employee worked as a consultant over a period of 10 years under two separate 5-year subcontracts. While neither of these conditions violated any Federal guidelines, we did find that the practices we observed violated internal Sandia policies regarding the employment of former employees. It should be noted that Sandia has been concerned about the use of former employees as contractors and has explored ways of limiting the employment of former employees as consultants, service contractors or staff augmentation employees. As a result, Sandia revised its policy to limit, among other things, work hours and the overall period of performance. However, as demonstrated in our report, it is clear that under current policy the period of performance of former employees hired as consultants can be extended for significant periods, potentially muting Sandia's intent to limit the use of former employees. Because no violations of Federal or Departmental policy were found, no formal recommendations were made.