A Department of Energy Inspector General’s Office assessment released Wednesday raised questions about hundreds of thousands of dollars in costs claimed by URS-CH2M Oak Ridge (UCOR), the DOE cleanup manager for the Oak Ridge Reservation in Tennessee.
It also cited the contractor for not performing any cost-allowability audits for subcontractor work that totaled more than $250 million during UCOR’s first three years on the job – fiscal 2011, 2012, and 2013.
In response to questions, UCOR spokeswoman Ashley Hartman said the contractor had resolved all of its cost-claim issues by the time the report was released this week. Hartman added that UCOR expects to complete audits on all the subcontract work – covering not just the first three years, but also fiscal 2014, 2015, and 2016 – by the end of the calendar year.
The department’s IG routinely reviews the audits performed by managing contractors at agency sites around the U.S. to determine whether costs claimed under the contract are allowable and accounted for by internal audits.
The IG report said there was no indication that UCOR’s internal audits could not be relied upon, and said there were no general weaknesses with the cost-allowability audits. The Oak Ridge contractor’s audits “generally met” international auditing standards, the report stated.
The report said UCOR’s internal audits had questioned $404,252 of the costs claimed during the first three years of the contract, and of that amount $112,613 had not been resolved. Thus, the IG said it also questioned those costs and identified some weaknesses that needed to be corrected to help ensure that the contractor only collects allowable costs.
The IG team also raised questions about the accuracy of some conclusions drawn from the internal audits.
The report said UCOR had not always conducted audits of its subcontracts when costs incurred were a factor.
“We noted that UCOR’s internal audit had taken steps to provide some subcontract audit coverage using a risk-based approach; however, the subcontractor audit coverage provided by internal audit was limited,” the report stated.
“UCOR believes that the findings in the Inspector General’s report speak for themselves,” Hartman said, “and we support the audit’s conclusions. Prior to the release of the report, UCOR had corrected or resolved all unallowable or questionable (contractor) costs raised in the findings.”
She added: “All planned subcontract audits for FY 2011, as well as those scheduled for 2014 through 2016, will be completed by Dec. 31, 2016.”
The IG said it ultimately found that it could rely on UCOR’s internal audits. However, the report said there were instances in which the audit documents did not contain enough information to substantiate the conclusions.
The IG report listed five recommendations for improvements, and DOE Oak Ridge environmental manager Sue Cange concurred with those recommendations.
Among those recommendations was that all unresolved costs be resolved and that all unallowable costs be collected from UCOR. DOE’s Oak Ridge Office of Environmental Management instructed UCOR to have most of the issues resolved by mid-May.
Mike Koentop, executive officer of DOE’s Oak Ridge Environmental Management Office, said the federal agency was pleased with UCOR’s response to the issues raised by the Inspector General’s Office.
