Office of Inspector General audit report on the U.S. Department of Energy`s management of Associated Western Universities grant programs

The Department of Energy (DOE), recognizing the need to maintain a strong science and engineering base at a time when enrollments in these disciplines were declining, implemented several educational programs. Among these were educational programs to provide faculty and students of US colleges and universities with energy-related training and research experience. Associated Western Universities (AWU), a nonprofit organization, administered post-secondary educational programs for DOE through grants and, occasionally, subcontracts. The objectives of the audit were to determine whether: (1) DOE was achieving its goal of enhancing US science and engineering education and (2) AWU was appropriately accumulating and classifying its costs. It was found that DOE was not fully achieving its objective of enhancing science and engineering education for students of US colleges and universities. In addition, it was found that AWU had not complied with cost principles for nonprofit organizations as required under the terms of the grants. Specifically, AWU misclassified a $13,000 overrun of direct program cost as indirect cost, incurred $40,000 of idle facility costs that were unallowable under the terms of the grant, misclassified indirect costs as direct costs, and claimed reimbursement for consultant costs that were inappropriate under the terms of the consulting contract. These discrepancies resulted in $53,000 of questionable costs, as well as costs having been charged to the Office of Energy Research (ER) grant that should have been charged to the Richland and Idaho grants. The authors recommended that the Managers of the Richland and Idaho Operations offices take actions to ensure that the objectives of DOE`s educational programs are met. In addition, they recommended that the Manager, Idaho Operations Office, direct the Contracting Officer to have AWU comply with the appropriate cost principles for nonprofit organizations