Nuclear Security:

DOE Oversight of Livermore's Property Management System Is Inadequate

RCED-90-122: Published: Apr 18, 1990. Publicly Released: Jul 3, 1990.

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Pursuant to a congressional request, GAO determined the extent of property losses at the Department of Energy's (DOE) Lawrence Livermore National Laboratory (LLNL) and assessed the adequacy of LLNL controls over government-owned property.

GAO found that: (1) LLNL could not account for or locate a substantial number of government-owned items in its custody; (2) an internal inventory determined that the missing property had an acquisition value of over $45 million; (3) LLNL had lost accountability over about 14 percent of certain high-value theft-prone items, worth about $2 million when acquired; and (4) despite the substantial number of missing items, the contract between DOE and the LLNL contractor protected the contractor against liability for such losses. GAO also found that: (1) LLNL property controls did not ensure that government-owned property was adequately safeguarded against theft, unauthorized use, or loss; (2) LLNL had no policies and procedures for controlling items with an acquisition cost below $1,000 and gathered no consistent data on those items, which made it difficult to identify how many items LLNL bought; (3) LLNL did not independently verify government-owned inventories of precious metals that were in the custody of subcontractors, making it difficult for LLNL to verify reported consumption of the metals; (4) DOE did not provide adequate oversight of the LLNL property management system and allowed the contractor to prescribe the terms of the contract; (5) DOE neither required LLNL to conform with DOE property management regulations nor approved the LLNL property management system; and (6) DOE did not develop or provide guidance to LLNL spelling out the criteria for performance of property management functions.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOE agreed with the recommendation. Contract negotiations began in the fall of 1991 and DOE officials have indicated they will try to get the standard property clause in the new contract. The University of California renewal contracts were signed on November 20, 1992. The new contracts include the standard DEAR Property Management clause (DEAR 970.5204-21).

    Recommendation: To improve oversight of the LLNL property management system, the Secretary of Energy should direct the San Francisco Operations Office Manager to include its standard property management provision in the contract with the University of California when the contract is renegotiated in 1992.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: DOE agreed with the recommendation. Subparts 1, 2, and 3 of the recommendation have been completed. Subpart 4 is a moot point because non-capital equipment is no longer accounted for. However, the missing non-capital items were analyzed to determine if there were any property management problems requiring attention.

    Recommendation: To improve oversight of the LLNL property management system, the Secretary of Energy should direct the San Francisco Operations Office Manager to correct the deficiencies identified during its appraisals of the LLNL property management system, as well as those internal control weaknesses GAO identified during this review. These include, among other things, the need to: (1) tag, mark, or otherwise identify as government property all items of equipment that the laboratory requires for use in its weapons and energy research and development programs; (2) independently verify the consumption of precious metals, such as gold and platinum, held by laboratory employees and precious metal inventories held by laboratory subcontractors; (3) establish and implement physical controls to prevent laboratory employees and subcontractors from removing government property from the laboratory without proper authorization; and (4) establish a loss ratio standard for all non-capital equipment.

    Agency Affected: Department of Energy

  3. Status: Closed - Implemented

    Comments: DOE agreed with the recommendation. The DOE San Francisco field office worked closely with the laboratory in developing the mutually agreed to property management system, including the definition of terms.

    Recommendation: To improve oversight of the LLNL property management system, the Secretary of Energy should direct the San Francisco Operations Officer Manager to clearly define, in conjunction with LLNL, written terms and provisions of the agreed-upon mutually approved system.

    Agency Affected: Department of Energy

  4. Status: Closed - Implemented

    Comments: DOE agreed with the recommendation. The DOE San Francisco field office worked closely with the laboratory in developing the mutually agreed to property management system. The document contains all necessary criteria to perform all property management functions necessary.

    Recommendation: To improve oversight of the LLNL property management system, the Secretary of Energy should direct the San Francisco Operations Office Manager to develop and provide written guidance to the laboratory, spelling out the criteria for performance or property management functions.

    Agency Affected: Department of Energy

  5. Status: Closed - Implemented

    Comments: DOE agreed with the recommendation. DOE performed a line-by-line analysis of the laboratory's property management policies and procedures manual to ensure it was consistent with federal and departmental property management regulations. Further, DOE is tracking and following up with the laboratory on all open audit findings on a quarterly basis.

    Recommendation: To improve oversight of the LLNL property management system, the Secretary of Energy should direct the San Francisco Operations Office Manager to identify areas, including internal control weaknesses, in the laboratory's current property management system that do not provide the same level of protection for government-owned property as that which is provided by federal and departmental regulation. Following identification of those weaknesses, the San Francisco Operations Office, should, as required by regulation, advise the laboratory of the deficiencies that need to be corrected, and establish an agreed upon time frame for mutually resolving and completing the corrective actions.

    Agency Affected: Department of Energy

  6. Status: Closed - Implemented

    Comments: DOE agreed with the recommendation. Property management instructions were given to the laboratory and incorporated into the laboratory's property management policies and procedures manual. The laboratory is using the manual as a basis for managing the government owned property at the laboratory.

    Recommendation: To enhance accountability over government-owned property at LLNL, the Secretary of Energy should direct the San Francisco Operations Office Manager to provide appropriate written directives to the University of California to safeguard and protect government property in the university's possession or custody as provided for in the current contract.

    Agency Affected: Department of Energy

  7. Status: Closed - Implemented

    Comments: Contract negotiations began in the fall of 1991. DOE officials have indicated that they will attempt to expand the accountability of the university for property losses. The DOE San Francisco Field Office directed LLNL to develop and implement appropriate procedures. The DEAR-970 property management clause was included as a negotiable item for contract renewal in 1992.

    Recommendation: To enhance accountability over government-owned property at LLNL, the Secretary of Energy should direct the San Francisco Operations Office Manager to modify the contract with the university in 1992 by identifying additional circumstances under which the contractor will be held liable for the loss of government-owned property in its custody.

    Agency Affected: Department of Energy

 

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