National Nuclear Security Administration: Additional Verification Checks Could Improve the Accuracy and Consistency of Reported Financial Data
Fast Facts
The contractors who run the National Nuclear Security Administration’s 8 sites—including its weapons plants and labs—track and report costs in different ways. However, Congress needs comparable cost information to provide oversight and to make budget decisions across these sites.
NNSA is continuing to make progress on implementing a common financial reporting system for its contractors. We found NNSA could do more to ensure that the data collected across contractors is accurate and consistent.
We made 4 recommendations to improve data accuracy.
A person with a magnifying glass and pencil reviewing a spreadsheet printout
Highlights
What GAO Found
The National Nuclear Security Administration (NNSA)—a separately organized agency within the Department of Energy (DOE)—is required to implement common financial reporting, to the extent practicable, across its sites to better understand the total costs of its programs. NNSA has taken additional steps to implement such reporting since January 2019 but faces challenges in fully implementing the effort (see table). For example, for fiscal years 2018 and 2019, NNSA used separate work breakdown structures—a method of dividing a project into successive levels of detail—to collect data for some offices. Without a common work breakdown structure, NNSA cannot ensure that it can collect reliable financial data across its sites. NNSA plans to assess the feasibility of implementing a common work breakdown structure, in response to GAO's January 2019 recommendation. In fiscal years 2018 and 2019, NNSA also faced challenges in collecting financial data from management and operating (M&O) contractors, including collecting complete data for all program offices. NNSA is working to resolve these issues.
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GAO Assessment of NNSA's Progress toward Implementing Common Financial Reporting |
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Steps |
Progress as of January 2020 |
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Identify an approach and develop a tool |
Completed |
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Develop a policy |
Completed |
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Establish common cost elements and definitions |
Completed |
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Identify and report costs for programs of record and base capabilities |
Identified programs and capabilities, but not all costs reported |
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Implement a common work breakdown structure |
Assessing feasibility in fiscal year 2020 |
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Collect financial data from contractors |
Collected data, with challenges |
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Publish and analyze data |
Published data, but did not perform NNSA-wide analysis |
Source: GAO analysis of NNSA information. | GAO-20-180
NNSA's approach to data collection provides limited assurance that the data collected for common financial reporting are accurate and consistent across the M&O contractors. At most sites, the M&O contractors track their financial data in a way that does not align with how NNSA requests the contractors report the data. M&O contractors use professional judgment to crosswalk, or map, the financial data from their business systems to the NNSA structures to report the data. NNSA's data quality checks on the M&O contractors' financial data focus on data formatting and ensuring the data match the agency's accounting system. NNSA does not have a process to verify whether the contractors accurately crosswalk their financial data. Under NNSA's financial integration policy, the program director for financial integration is to, among other things, execute a plan to improve cost analysis, comparability, and reporting consistency among programs and M&O contractors. By developing an internal process for NNSA to verify how the M&O contractors crosswalk their financial data to the work breakdown structures, NNSA will have better assurance that it is collecting accurate financial data that are comparable across the M&O contractors, that satisfy the needs of Congress and other stakeholders, and that address long-term issues with its ability to report the total costs of its programs.
Why GAO Did This Study
NNSA has long faced challenges in determining and comparing the costs of its programs, which are principally performed by M&O contractors across eight sites. Congress needs this information to provide effective oversight and make budgetary decisions. The National Defense Authorization Act for Fiscal Year 2017 required NNSA to implement a common financial reporting system, to the extent practicable, across all sites by December 2020. NNSA's efforts began in 2016 and are ongoing.
The Senate report accompanying a bill for the National Defense Authorization Act for Fiscal Year 2018 includes a provision for GAO to periodically review NNSA's implementation of common financial reporting. This is GAO's second report on this issue. This report examines (1) the steps NNSA has taken to implement common financial reporting since GAO's January 2019 report, and (2) the extent to which NNSA's approach to data collection aligns with the purpose of common financial reporting, including collecting accurate and consistent data from its M&O contractors. GAO reviewed NNSA documents about implementing common financial reporting, including policy and briefing documents, and interviewed NNSA officials and M&O contractor representatives.
Recommendations
GAO is making four recommendations, including that NNSA implement an internal process to verify the M&O contractors' crosswalks of their financial data to NNSA's work breakdown structures for reporting information. NNSA agreed with the four recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
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| National Nuclear Security Administration | The Program Director for Financial Integration, with input from NNSA's Office of Management and Budget and respective program offices, should establish and implement a work breakdown structure change control process for common financial reporting that ensures changes are approved by program office management, at a minimum; documented; and communicated to M&O contractors on a timely basis. (Recommendation 1) |
Closed – Implemented
NNSA updated its guide for the system that management and operating (M&O) contractors use to report financial data to include the work breakdown structure change control process that included a change request form and a board responsible for evaluating and approving changes. NNSA's program officials identify changes needed to the work breakdown structure and have the changes approved by their program's management before submitting those changes to the change control board for approval. NNSA sends the updated work breakdown structures to the M&O contractors for implementation.
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| National Nuclear Security Administration | The Program Director for Financial Integration should assess the extent to which M&O contractors make manual changes to their financial data to reconcile with STARS and determine whether it has an effect on the accuracy of the data collected for common financial reporting. (Recommendation 2) |
Closed – Implemented
NNSA completed a review of the extent to which management and operating (M&O) contractors make manual changes to their financial data and according to NNSA officials, did not identify a wide-spread issue across its sites that affected the accuracy of the data collected for common financial reporting. As of May 2021, NNSA is working with one of its M&O contractors on a solution to eliminate the need for making manual changes to their financial data going forward at the respective site.
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| National Nuclear Security Administration | The Program Director for Financial Integration should develop and implement an internal process for NNSA to verify how the M&O contractors crosswalk financial data from their systems to the appropriate NNSA work breakdown structure to ensure the reported data are accurate and consistent. (Recommendation 3) |
Open – Partially Addressed
NNSA completed a review of how NNSA M&O contractors crosswalk their financial data into the appropriate segments and activities in the NNSA work breakdown structure, but it has not done so for non-NNSA M&O contractors or documented its process for recurring reviews in its policy. NNSA officials plan to schedule meetings with all M&O contractors to review how they crosswalk the data to ensure the reported amounts are correct. NNSA plans to include this process in the planned update to its financial integration policy that, as of October 2023, has not been issued.
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| National Nuclear Security Administration | The Program Director for Financial Integration should develop and implement an internal process for NNSA to verify that the M&O contractors are consistently applying common cost element definitions at their sites and across the nuclear security enterprise. (Recommendation 4) |
Open – Partially Addressed
NNSA completed a review of how NNSA M&O contractors apply its common cost elements and definitions. NNSA plans to schedule meetings with each of the M&O contractors to verify that the contractors are consistently applying the definitions. NNSA plans to include this process in the planned update to its financial integration policy that, as of October 2023, has not been issued.
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