Saturday, February 26, 2005

Report: UC overpaid to run labs

Report: UC overpaid to run labs

Diana Heil | The New Mexican
February 26, 2005

By the end of September, the federal government will have paid $30 million more than necessary over five years for the University of California to operate three national laboratories, according to a recent audit report from the Department of Energy's inspector general.

"These funds could have been used to expand the scientific programs of the laboratories or to address other pressing ... needs," the report states.

Recouping the money might not be easy.

For one thing, the federal government signed a contract that allowed UC to get reimbursed for academic-related expenses, such as student recruitment, faculty home loans and university capital projects. "Reimbursement of such expenses is prohibited under federal cost principles," according to the audit.

If the contract had been written to exclude such items, DOE could have saved about $8 million over the five-year contract period, according to the audit. But as it was written, UC is getting more than its fair share of federal reimbursements for office expenses, the audit said.

The University of California operates Los Alamos, Lawrence Livermore and Lawrence Berkeley laboratories. The Office of the Vice President for Laboratory Management receives federal money to oversee the management contracts.

Calculation errors -- which went unnoticed by the Energy Department's financial analyst -- will cost the government another $21 million in unnecessary expenses, according to the audit.

The government also reimbursed UC for $880,000 worth of unallowable expenses, such as student recruitment.

The Inspector General wants the Energy Department to seek to recover some of the money. The Energy Department's contracting officers are reviewing questioned costs and will determine what amount, if any, UC must repay.

"We're examining the report and all the options available to us," Bryan Wilkes, spokesman for the Energy Department's National Nuclear Security Administration, said. "We have people trying to determine what the situation is."

UC isn't expecting a big bill, however. Ron Nelson, who heads contract administration for UC, said the university will return a few thousand dollars. Its own review showed the university had charged some office expenses to the wrong accounts, he said.

In other cases, the university's routine accounting practices caused some confusion, and the university will modify its accounting methods, he said.

Nelson noted some lab-related activities do take place on campuses. Teasing out who benefited from the university's facilities, equipment and programs can be difficult, he said. These are central expenses the institution is absorbing.

Nuclear Watch of New Mexico, a citizens group, said the Energy Department has been a poor steward of taxpayer money. "Two ex-lab employees have just been sentenced to prison for stealing $300,000 from taxpayers. Now a preliminary audit by the DOE Inspector General has determined UC has been paid $30 million in unallowable costs, making the felons' illegal gains look like chump change," Nuclear Watch of New Mexico director Jay Coghlan said.

He hopes the Energy Department will take swift action to determine what the university must pay back.

"Further," Coghlan said, "any confirmed fiscal irregularities should strongly and negatively impact UC's chances for future management of LANL. There's already been too much funny money up on the Hill."

In the report, auditors reviewed a total of five contracts -- two of which UC does not manage -- and found the Energy Department agreed to provide fees, payments or reimbursements for office expenses that were not adequately documented, not properly calculated or simply not allowed.
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Copyright 2004 Santa Fe New Mexican

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By Khalil Spencer (Submitted: 02/26/2005 7:05 am )

Were these academic expenses lab-related? One would expect a national lab to have academically related expenses, right? Without more information, I'm not convinced that this isn't just another "spend a dollar to collect a dime" audit, and I've seen that before.

"These funds could have been used to expand the scientific programs of the laboratories or to address other pressing ... needs," or more likely, hiring more auditors.

By Don Nickell (Submitted: 02/26/2005 6:36 am )

If this wasn’t so ludicrous it would be funny, the scenario that a TV show could use. It seems to be a “tail wagging the dog” situation, guess which is the “dog”. My bitch about losing medical insurance just because I moved from NM to ID is minuscule by comparison!

If anyone has doubts that DOE doesn't want UC to get the contract, this
article should end them. The timing of this audit release from DOE is no
coincidence. It all seems to be part of a plan to create a very lucrative
$60 million a year contract for running LANL and then turn this contract over
to a for-profit, hard-driving, private company. Even if UC partners and wins
the contract, UC will be controlling LANL in name only. The real managers
will be their private, for-profit partner.
Its always refreshing to hear from the DOE IG, a political attack dog using the lanuage of psuedo accounting to ferret out and destroy whatever currently displeases it's masters.
UC is controlling LANL in name only right now. Look at their silence over the last 7 months. And why should UC want the contract? The government signed contracts with them that now DOE realizes they should not have signed. Now the DOE wants their money back. And DOE signed 4 other contracts of the same type. It seems to me DOE needs to recover the money from the folks they hired who generated the contracts and quit complaining about UC.
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