Chris Schneidmiller
WC Monitor
7/24/2015
A Department of Energy office incorrectly allowed the managing contractor at the Savannah River Site in South Carolina to reallocate funds from one cleanup project to three others in violation of federal directives, according to a DOE Inspector General’s Office report released on Wednesday. The report also found that contractor Savannah River Nuclear Solutions (SRNS) used about $155,000 in American Recovery and Reinvestment Act funds for entertainment and other “questionable costs.”
At issue are $1.4 billion in Recovery Act funding the DOE Office of Environmental Management (EM) split between four remediation projects at the nuclear reservation: Transuranic and Solid Waste; P&R Area; Site-wide, Soil, and Groundwater; and M&D Area.
In January 2013, an unidentified complainant told the IG that “SRNS had inappropriately used Recovery Act funds,” according to the report. “The complainant alleged that after performance fee had been paid for one project, SRNS improperly revised accounting entries that reduced the amount of fee for that project and then reallocated the fee to the other three projects. The complainant also alleged that specific questionable costs were charged to Recovery Act projects.”
The IG confirmed the claims and determined that DOE failed to follow Office of Management and Budget guidelines that the funds allocated to each specific project be used only for that project. Specifically, SRNS redirected roughly $17.8 million from a Transuranic and Solid Waste project performance fee for fiscal 2011 to the three other programs.
“By reducing and reallocating accounting entries, SRNS made it appear that funds were available to perform additional work in the Transuranic and Solid Waste project and, in fact, additional work was performed,” the IG found. “However, the funds were not actually available because SRNS had previously expended the funds as fee for the Transuranic and Solid Waste project. As a result, the financial systems at that time showed that funds allocated by OMB for the other three projects were, in essence, used to pay the fee associated with the Transuranic and Solid Waste project.”
Upon guidance from the DOE chief financial officer and general counsel that it had authorized the funds redistribution in error, the DOE Savannah River Operations Office took two steps to address the matter, according to the report: “First, federal officials identified objective performance fee to be reallocated to the appropriate projects”; the contracting officer for Savannah River also received the OK from the department’s general counsel for “recasting” according to performance risk a fixed fee SRNS received for “adding Recovery Act terms into the contract rather than for specific projects.”
Nonetheless, after the fixes, Savannah River was expected to need another $17 million beyond the obligated Recovery Act funding level for the Transuranic and Solid Waste cleanup project, along with $2.4 million for the M&D Area work. Savannah River Nuclear Services completed the Recovery Act-funded projects by July 2013.
The IG also confirmed inappropriate use of Recovery Act funds by SRNS: $30,000 in labor and travel expenses connected to training of executives, $95,000 for a celebration of the end of the P&A Area project, $26,000 for billboards highlighting the “Enterprise SRS” vision, and $4,000 for commemorative coins. The total $155,000 was ultimately pulled from Recovery Act funding accounts and charged to separate accounts, with the Recovery Act money to be returned to the Department of the Treasury.
With the aim of ensuring funds are used correctly going forward at Savannah River, the IG recommended DOE make clear specifically from which source project costs and fees are to be paid, and sufficiently charge those expenses to the appropriate source during the entirety of the project.
The Office of Environmental Management rejected the determination that SRNS had breached controls on use of the Recovery Act funding, the IG report said. “They stated that the Operations Office mistakenly gave incorrect guidance to SRNS, but the Department caught the mistake and corrected it, thus ensuring that Recovery Act funds were spent in accordance with funds control requirements.”
In response to the IG’s recommendations, EM said the Savannah River Operations Office has and will continue to obey federal funds control guidance. The Operations Office has also provided appropriate training to personnel regarding “internal controls and appropriations law,” according to the response, while EM’s budget office has augmented its internal controls to precent misuse of funds at the Savannah River Site.
Contacted about the report, the Savannah River Operations Office referred Weapons Complex Monitor to its formal response to the IG report. The DOE Inspector General’s Office and Savannah River Nuclear Solutions had not responded to requests for comment on the report by press time.
