Title X of the Energy Policy Act of 1992 authorized U.S. Department of Energy (DOE) to reimburse licensees of 1 thorium and 13 uranium processing sites (Figure 1) for a portion of their remedial action costs attributable to the sale of source material to the Federal government.
The amount eligible for reimbursement is determined by applying a Federal Reimbursement Ratio which is based on the amount of source material sold to the Federal government.
Under the Title X Program, DOE receives claims from U.S. Nuclear Regulatory Commission (NRC) or Agreement State licensees annually, conducts technical reviews and financial audits of the claims to determine the amount allowable for reimbursement, reimburses each licensee, and tracks amount paid, disallowed, and owed in a running ledger.
Early in the Program, DOE selected the Defense Contract Audit Agency (DCAA) to perform financial audits of the Title X claims. DCAA and DOE signed a Memorandum of Understanding establishing the respective responsibilities of each agency. DOE and DCAA typically conduct the technical review and financial audits concurrently, with DOE responsible for the final claim reimbursement determination.
In May 2011, the Title X claim review and audit function was transferred from the DOE Office of Environmental Management (EM) to the Office of Legacy Management (LM.)
2011/2012 Claims and Audits
During the past year, LM received six licensee claim submittals totaling $40.8 million and conducted preliminary reviews to identify deficiencies requiring correction before formal audit of the claims. One licensee was given an extension of the submittal date due to having a new project manager who was unfamiliar with the Title X Program and claim submittal requirements.
LM Title X staff then coordinated with the licensees and regional offices of the DCAA to schedule and conduct onsite audits of each claim. LM reviewed each claim from a technical perspective. This review included conducting site visits to observe remediated areas and verify that work was performed as stated in the claim. LM also reviewed various records to determine whether work performed was required by the site license or remedial action plan. DCAA focused on the financial part of each claim by reviewing licensee financial records and accounting processes, including invoices, time sheets, the general ledger, subcontracts, and work orders. Reconciliation of technical and financial questions continued among the licensees, LM staff, and DCAA auditors for several months on two of the more complex audits. Then, DCAA issued a written opinion to LM on each claim, including recommendations of any costs ineligible for reimbursement.
Based on the technical review and the DCAA audit, Title X staff made a final determination of any nonreimbursable costs claimed by each licensee. Of the $20.78 million eligible for reimbursement (after individual reimbursement ratios were applied), the Program decided that approximately $1.2 million was ineligible for reimbursement.
LM staff then provided written notification to each licensee of the amount eligible for reimbursement and summarized why certain costs were ineligible. Funds were inadequate to cover all reimbursements; reimbursement shortfalls were identified and tracked in EM Title X Program accounting. Shortfalls will be paid as funding allows. Funding allowed for prorated reimbursements of approximately $15 million, with an additional $4.5 million owed by DOE. The amount available for reimbursement each year depends on what is appropriated by Congress.
Earlier this year, EM announced in the Federal Register the acceptance of claims for remedial action performed in 2011. In late April, LM received seven claims with potentially $18 million in reimbursements if all costs are approved. The Title X Program has no funding to make any reimbursements for these claims. However, in August 2012, limited funding was received for the Program to conduct claim audits, thus allowing the Title X Program to keep current on the adequacy of submitted claims.
For these new claims, LM formalized the Program’s preliminary review function. Six of the seven licensees have subsequently been asked to submit additional claim information so that audits can be performed. LM requested verification for some claims that all work performed was required under NRC or Agreement State direction or approved remediation license amendments. One licensee had inadequate scope for the work performed under the claim, and two did not adequately tie the work performed to specific requirements. All licensees have now responded acceptably.
The Title X Program will be using EM Consolidated Business Center financial staff to conduct four of the audits in late 2012 to early 2013. The staff is familiar with the Title X protocol for financial audits and also supported the Title X Program this past year to resolve financial audit questions on two of the more complex claims.
Title X Program Improvements
During the last year, LM implemented numerous improvements to the Title X Program.
To bring the Program into conformance with LM recordkeeping protocols, a records file index was created. Over 54 boxes of hard copy Program records were organized and electronically cataloged with the support of LM records management staff.
To assure consistency among the Title X Program financial audits, LM initiated discussions with DCAA to reduce the number of auditing offices from three to one. This approach, which was used early in the
Title X Program, would have potentially resulted in lower audit costs and led to additional audit efficiencies. The lack of funding for DCAA to conduct all seven audits this year will lead to a single DCAA office performing the financial audits. Discussions will resume if additional DCAA offices are used in the future.
LM provided lessons learned to the licensees after completion of audits last year. Recommendations included improving future claims by providing better technical descriptions of the work performed and providing any newly revised reclamation plans or regulator direction authorizing remediation. Licensees were also reminded of the importance of having formal subcontracts or work orders, as compared to informal or poorly documented direction to longstanding site consultants.
LM also improved the individual licensee statements of accounts that provide the Program’s ledger of claim amounts requested, amounts determined to be reimbursable, reimbursements paid, reimbursement shortfalls, etc. With assistance from LM financial staff, spreadsheet calculations were simplified, the amount of data requiring manual input was lessened, and spreadsheet linkage was identified and improvements planned. These accounting statements feed into the Title X Program Annual Report and Program Summary accounting spreadsheets maintained by EM.
Finally, in early fiscal year 2013, LM will conduct a management review of the Title X Program to identify additional efficiencies and improve the rigor of the technical review of claims. Other topics to be covered include the review of the financial audit function, completing the Statements of Account spreadsheet linkage, developing a technical review protocol, and whether to update the Program guidance document.
LM’s new responsibilities for the Title X Program fit well with its responsibility for performing long-term surveillance and maintenance (LTS&M) at uranium mill sites transferred to LM under the Uranium Mill Tailings Radiation Control Act, Title II. Three of the uranium sites are already part of the LTS&M program, and LM will eventually take responsibility for the other nine as remediation is completed. Additionally, LM may manage the records for the one thorium site in the Title X Program. For the sites still to transfer, LM participation in the Title X Program gives it an early view of what types of responsibilities it expects to have for the sites in the future.