Audit Report: DOE-OIG-22-06

November 15, 2021

Subcontract Administration at Lawrence Berkeley National Laboratory

The Regents of the University of California (UC) have managed and operated Lawrence Berkeley National Laboratory (LBNL) under contract with the Department of Energy and its predecessors since 1943.  LBNL conducts unclassified research across a broad range of scientific disciplines and is increasingly undergoing construction activities to support the continued growth of its missions and programs.  Due to the increasing number of construction activities at LBNL, we initiated this audit to determine whether the UC administered construction subcontracts for LBNL in accordance with applicable regulations and policies.  We found that the UC did not administer construction subcontracts for LBNL in accordance with applicable regulations and policies.  Specifically, we found that 16 of the largest construction subcontracts totaling over $139 million were misclassified in the UC procurement system.  In addition, we identified 46 contract modifications where the UC did not ensure that price reasonableness analyses were conducted prior to authorizing increased subcontract costs.  Further, we found one subcontract that contained flexibly-priced elements that was not included for audit consideration.  We also found that the UC did not accurately or independently identify three construction subcontracts that were subject to audit with reimbursable direct cost components over $1 million.  Finally, we identified six payment vouchers that did not include supporting documents for costs claimed by subcontractors.  Therefore, we questioned costs totaling $805,225 for lack of supporting documentation.  The issues we identified occurred, in part, because of a lack of oversight in the UC’s administration of subcontracts.  Management concurred with six of the seven recommendations and identified responsive corrective actions to address the reported issues.  However, management nonconcurred with one recommendation.