Information Report on “Audit Coverage of Subcontract Costs for Lawrence Livermore National Security, LLC from October 1, 2013, to September 30, 2014, and from October 1, 2015, to September 30, 2017”
April 12, 2021
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April 7, 2021
Since October 2007, Lawrence Livermore National Security, LLC (LLNS) managed and operated Lawrence Livermore National Laboratory (LLNL) under contract with the Department of Energy’s National Nuclear Security Administration (NNSA). LLNL has national security responsibilities that include ensuring the safety, security, and reliability of the Nation’s nuclear weapons stockpile. During the period from October 1, 2013, through September 30, 2014, and from October 1, 2015, through September 30, 2017, LLNS incurred and claimed costs totaling $4,702,519,282.99. Of these costs, LLNL incurred $1.3 billion in subcontract costs through various contract award types, such as cost reimbursable, fixed price, time and material, labor hour, and memo purchase orders.
LLNS’ contract was modified in 2013, allowing the conduct of audits or reviews of its subcontractors when costs incurred were a factor in determining the amount payable to a subcontractor. LLNS received approval through a Department of Energy Acquisition Regulation (DEAR) deviation to conduct audits or compliance reviews on subcontractor costs at their discretion, and in consultation with the Livermore Field Office. In our prior audits and assessments, we did not look at the appropriateness of the DEAR deviation in making a determination on whether or not to rely on Internal Audit’s work; we simply relied on the DEAR deviation when assessing the risk-based approach. However, due to the small percentage of subcontract costs actually audited during the scope of this assessment, we took a closer look at the appropriateness of the deviation.
On February 19, 2021, NNSA Senior Procurement Executive approved the revocation of the deviation clause to ensure that the requirement for LLNS to conduct audits on its subcontractors be restored in the contract. Based upon the actions taken by NNSA and LLNS, any discussion and recommendations that were made in the Office of Inspector General’s draft assessment review were removed and not presented in this report.
The Office of Inspector General is providing this informational report in lieu of a final assessment report because the concerns we identified during that review were fully addressed by NNSA prior to issuance.