September 25, 2013

Fiscal Year 2011 Work Performed Under the Work for Others Program at Sandia National Laboratories

The Department 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.  WFO agreements are also used as a mechanism through which industry can utilize expertise and facilities at Sandia National Laboratories (Sandia), a Federally Funded Research and Development Center. 

The Office of Inspector General contracted with KPMG, LLP (KPMG), to assess the internal control structure at Sandia and determine whether it is effective in achieving the current goals and objectives of the WFO Program.  KPMG identified several opportunities to strengthen controls cover WFO costs.  For instance, KPMG found that costs relating to Sandia's WFO support organizations were included in the general and administrative cost pool that was allocated to both WFO projects and other Department projects on an organization-wide basis, rather than using an allocation base that bears a more direct causal beneficial relationship to the support organizations' costs.  KPMG estimated that the Department would have an annual savings of approximately $2.3 million by implementing a separate indirect rate for these support organizations.   KPMG recommended that Sandia consider removing the WFO support organization costs from the general and administrative indirect cost pool, and establish a separate indirect cost pool for allocating these costs to WFO projects.  NNSA generally concurred with the findings and recommendations and proposed corrective actions that are responsive to our recommendations.

Topic: Management and Administration