Office of Inspector General report on audit of selected hazardous waste remedial actions program costs

In 1986, the Department of Energy (Department) entered into a work-for-others agreement with the Department of the Air Force (Air Force) to provide technical assistance in support of environmental compliance issues. Lockheed Martin Energy System`s (Energy Systems) Hazardous Waste Remedial Actions Program (HAZWRAP) supported the Department in fulfilling its responsibilities to the Air Force. The objective of this audit was to determine if costs charged to selected HAZWRAP customers were in accordance with Department regulations and the terms of the Air Force`s interagency agreement. Energy Systems did not properly manage and account for costs claimed under its interagency agreements for HAZWRAP. Specifically, Energy Systems transferred costs among accounts to avoid overruns and to use the maximum funds authorized by HAZWRAP customers. By avoiding cost overruns, Energy Systems hoped to receive higher award fees from the Department. As a result of its actions, Energy Systems mischarged one HAZWRAP customer by $504,750. It was recommended that the Manager, Oak Ridge Operations Office: (1) direct Energy Systems to ensure that existing management controls are adhered to and that adequate management controls are maintained; (2) determine the allowability of $504,750 in questioned costs, recover the appropriate amount from Energy Systems, and refund mischarged amounts to the appropriate customers; and (3) perform a ``for cause`` review of the Work-for-Others Program to identify, recover, and refund amounts received by Energy Systems as the result of improper cost transfers. Management concurred with the finding and recommendations and agreed to take appropriate action