Monday, November 28, 2005

Draft IG Audit Report on UC Contributions to the Los Alamos National Laboratory Foundation

"The University did not make its annual contributions for educational outreach and
community investment to the Foundation in accordance with the funding sources
specified in contract requirements. Except for FYs 1998 and 1999, the University
inappropriately charged its annual contributions as an allowable General and
Administration expense to the Department instead of incurring the costs as a University
expense as required by the contract modification.


As a result, since FY 1998, the Department reimbursed the University $6 million for
unallowable contributions. Such funds could have been used for other Los Alamos
mission priorities."

Link to draft audit report

As I read this draft it looks like its was DOE that dropped the ball by failing to execute the modification to the contract - but as usually UC and LANL will be blamed.

"University officials charged the Department for their portion of the Foundation contributions because they believed the contract would be modified based on their proposal to make the contributions allowable costs. The official contract files indicate that the contract was modified in 1999, authorizing the University to make the annual contributions for FYs 1998 and 1999 allowable under the contract. However, the modification did not state that subsequent years' contributions would be allowable. According to Los Alamos Site Office counsel, it was unclear as to how the modification affected the subsequent years' contributions. We also contacted the contracting officer who issued the 1999 modification to determine if a modification making all contributions to the Foundation allowable costs was executed."

UC acted under an assumption that the contract had been changed to make this an allowable cost beyond FY 1999 - a reasonable assumption. I'd assume that in FY 2000 the UCOP/LANL bean counters said to themselves "well it was an allowable cost the last two years, I guess it still is." Oops wrong answer.

It seems strange that it would be an allowable cost two years and then not... so this looks like a reasonable call on the part of the UC bean counters. Most likely the ones actually doing the paperwork and submitting claims to DOE for reimbursement probably have never seen the exact language in the Contract Modification and only based their actions on what they did the previous two years.

Lastly, this report seems to have little criticism on the DOE bean counters who didn't challenge the cost's allow ability under the contract and reimbursed UC. If an incompetent cashier gives a customer too much change back, does the owner of the store ban the customer for keeping the change or fire the cashier for giving it to them.
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