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Audit Report: IG-0829

October 26, 2009

Work for Others Performed by the Department of Energy for the Department of Defense

Pursuant to the Atomic Energy Act of 1954, as amended, and the Economy Act of 1932, the Department of Energy and its semi-autonomous National Nuclear Security Administration (NNSA) provide research and technical assistance to other Federal agencies on a reimbursable, full cost recovery basis through the Work for Others (WFO) program. For the vast majority of WFO technical projects, Department Federal officials furnish administrative project oversight while the actual detailed scientific or technical work is completed by the Department's "management and operating" contractors. These contractors are awarded a special contract type specifically created under the Federal Acquisition Regulation to manage and operate Department sites and facilities, including sophisticated laboratories and technical centers, on a government-owned, contractor-operated basis. With annual expenditures exceeding $1 billion, the Department of Defense (DoD) is one of the Department's largest WFO customers. Work performed for DoD at the Department's national laboratories and other facilities includes highly technical research in areas such as nuclear weapons systems, counter-terrorism, and in-theater troop support. The National Defense Authorization Act for Fiscal Year (FY) 2009, required the Inspectors General of the DoD and the Department to review procurement methods to determine whether the Department complied with DoD procurement requirements and/or whether alternative procurement policies were in place. In response, we focused our review on projects performed by NNSA because it completes the vast majority (approximately $900 million in FY 2008) of the Department's work for DoD. As part of this effort, and, at the specific request of the DoD Office of Inspector General (DoD OIG), we identified the universe of WFO technical projects that received new funding in the fourth quarter of FY 2008 at NNSA sites. We independently reviewed a judgmental sample of 11 projects selected by the DoD OIG to meet the objectives of this audit.

Topic: Management and Administration