July 7, 2016

Lawrence Livermore National Laboratory’s Laser Inertial Fusion Energy Endeavor

One of the missions of the Department of Energy’s Lawrence Livermore National Laboratory (LLNL) is to strengthen the security of the United States through the development and application of world-class science and technology.  In January 2014, LLNL’s Independent Audit and Ethics Department reported that from fiscal year (FY) 2008 through March 2013, LLNL expended nearly $60 million, mainly from indirect and discretionary funding sources, to initiate a series of projects to determine whether a Laser Inertial Fusion Energy (LIFE) power plant was feasible.  In FY 2011, the Department’s National Nuclear Security Administration directed LLNL not to expend Inertial Confinement Fusion program funds for LIFE activities.  In a letter sent to the Livermore Field Office Contracting Officer in May 2012, LLNL declared that no Inertial Confinement Fusion funds had been used on LIFE, and that LIFE activities had been funded through indirect pools such as Laboratory Directed Research and Development (LDRD), General and Administrative (G&A), and Program Management Charge.

While G&A expenditures for LIFE ended in FY 2013, LLNL continued to work on approved LIFE LDRD projects that had a 3-year scope ending in FY 2015.  We did not find any evidence that LLNL continued to fund LIFE activities after FY 2015.  However, we questioned approximately $23.3 million of LLNL’s expenditures for LIFE activities from FY 2008 through 2013.  Specifically, we determined that LLNL incurred G&A costs for independent research and development (R&D) activities outside its LDRD program, which is expressly unallowable under the terms of its management and operating contract.  LLNL’s management and operating contract only allows independent R&D expenditures through its LDRD program, which has congressionally mandated cost limitations.  In addition, LLNL incurred G&A costs for LIFE activities that we determined did not meet the definition of G&A costs and are therefore questionable.  

Due to inadequate controls and oversight, LLNL incurred approximately $23.3 million in questionable costs, including $1.6 million in cost questioned as expressly unallowable R&D, $17.7 million in “reduction to practice” costs questioned as potential R&D charges, and $4 million of questionable charges to G&A because they were not for the management and administrative support of the laboratory.  Without stringent controls and oversight over the authorization of activities to be included in the G&A pool, the risk of questionable G&A charges is increased.

Topic: Management & Administration