Wednesday, November 30, 2005

Report claims UC had feds pay for charity donations

By Andy Lenderman The New Mexican |
November 30, 2005

A draft report questions whether the University of California should have charged the federal government $6 million that the school gave to a nonprofit charity.

A UC spokesman maintains the university has done nothing wrong.

A copy of the incomplete report first appeared Monday on an independent Web site where Los Alamos National Laboratory employees air concerns about the lab and the pending management change.

The report concerns the university’s management of the Los Alamos National Laboratory Foundation, a separate nonprofit group that gave about $3.47 million to schools, social programs and college scholarships last year in Northern New Mexico.

The draft apparently found its way to the Web site “LANL — The Real Story” on the same day it was issued by the U.S. Department of Energy’s Inspector General Office.


Full Story

The DOE is simply wrong on this one. The DOE IG office at LANL does not have a good record, and this won't help it.

Too bad they missed the real story of the LANL Foundation, which began in fraud and continues to waste tax payer funds. The fraud began with their 1023 filing with the IRS, which contains a number of outright lies. Too bad that the IRS doesn't care about such things... The ongoing problem is that the Foundation staff is "eating" $700K per year which should be going to the kids, and this is in direct violation of Appendix N of the contract.

Too bad the DOE didn't attack the real problem.
The underlying issue here is whether taxpayer money can be handed out as donations or contributions, whether the monies are going to a worthy cause or not isn't the real issue. The law is rather clear in this regard. Under Federal Aquisition Regulation, donations and contributions are "unallowable costs." For those interested, the URL for the FAR is:

The applicable section is 31.205-8, while section 52.242-3 addresses associated penalties.

Bottom line is taxpayer moneys aren't supposed to just be donated or dolled out for nothing in return.
I made the following comment under the original post on this IG draft... everyone in the media still blames UC and LANL, but not the DOE.

As I read this draft it looks like its was DOE that dropped the ball - by failing to execute the modification to the contract clearly making UC's contribution to the foundation an allowable cost - but as usually UC and LANL will be blamed. The draft report states...


"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.


Bottomline - the local DOE office did not keep their promise to UC, but I guess the IG doesn't get paid to fault other DOE employees, just the contractors.
There certainly has been a lot of concern over losing the current pension plan with the rebid process but after hearing about the $871 million in unreported bonuses, this info about the foundation and UC wanting to exempt its portion of the fee from gross receipts tax, one has to wonder if there is any money in the pension fund or if this is another Enron in the works. I know that some highly paid LANL manager who doesn't want to lose his/her salary will respond with some comment about how "Lockmart" is this or that, but I will take my chances as UC is a known quantity and has values that I do not support.
WhoseYourDaddy sez:

"Bottom line is taxpayer moneys aren't supposed to just be donated or dolled out for nothing in return."

You mean as was done for months on end during our shutdown? $357 million was doled out, by DOE's reckoning, for nothing in return.
Yeay, Pete! You da man!

Us DOE blokes hardly even noticed that we were getting less than usual for our $$ during those seven months.

I hear that the WFO customers were pissed, though.
doe guy - How much is the country getting from your 3 month shut down, I am sorry, your 3 month "strategic pause?"
Papa P,

You have me confused with the University of California. It was their own George P. Nanos who ordered the shutdown, and it was UC president Bob Dynes who implicitly supported that decision. I say "implicitly", because he never said "boo" about the matter for about 7 months. He just let his director run rampant.

Since you ask, however: What the country got in return was a $357 million bill, paid for the the US taxpayer. For that, the country got bupkis.

You might be interested to know that the University of California continues to pay this famous former lab director $235,000 more dollars per year to remain hidden from sight somewhere in the Pentagon.

More of your tax dollars at work.

However, perhaps you were referring to the next strategic pause for LANL, the one they will be enjoying as a result of the Los Alamos NNSA Area Office not being quite yet ready to handle the contract transition.

In which case, the tax payer can expect the same return on their dollar as they received from the last shutdown, only this time you will be able to credit NNSA for the wastage, instead of UC.
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