August 8, 2013

Lawrence Livermore National Laboratory's Use of Time and Materials Subcontracts

The mission of Lawrence Livermore National Laboratory (Livermore) is to strengthen the United States' security through development and application of science and technology to enhance the Nation's defense, reduce the global threat from terrorism and weapons of mass destruction, and respond to scientific issues of national importance.  Livermore is operated by Lawrence Livermore National Security, LLC, for the Department of Energy's (Department) National Nuclear Security Administration (NNSA).  In accomplishing its mission, Livermore uses a variety of subcontracting types, including time and materials subcontracts. 

We found that Livermore had not always procured services through time and materials subcontracts in the most effective and efficient manner.  Our testing revealed that some sole source justifications were not fully supported as required by Federal regulations and internal policies and procedures.  Specifically, we found that Livermore had not fully justified sole source selection for 6 of 7 subcontracts included in our judgmental sample of 12 time and materials subcontracts.  We also found that in two of the sole source subcontracts, Livermore did not perform an adequate price analysis.  For instance, we determined that if Livermore had hired a Chief of Staff at a rate similar to the highest rate of another Livermore Chief of Staff, it could have saved about $533,423.  Further, we estimated that had Livermore performed a more thorough price analysis and reached an agreement for the lower rates at the beginning of the most recent construction subcontract, it could have saved about $390,739.  As a consequence, we could not determine and Livermore did not demonstrate that the decision to award these particular time and materials subcontracts was in the best interest of NNSA.

This report is one in a series of reports that the Office of Inspector General has issued highlighting concerns with subcontracting by the Department's management and operating contractors.  Management concurred with the report's recommendations and proposed corrective actions that were responsive to our recommendations.

Topic: Management & Administration