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DOE Management: Funds for Maintaining Contractors' Operations Could Be Reduced and Better Controlled

RCED-94-27 Published: Oct 25, 1993. Publicly Released: Oct 25, 1993.
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Highlights

GAO reviewed the amount of prefinancing that the Department of Energy (DOE) obligates to its management and operating (M&O) contractors, focusing on whether: (1) current prefinancing funding levels are appropriate; and (2) prefinancing funding controls adequately ensure that funds are being used for their intended purpose.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Energy To minimize the need for prefinancing funds and to better control any such funds, the Secretary of Energy should justify all prefinancing funds for M&O contractors. Such justification should, at a minimum: (1) be based on a detailed analysis of the number of days contractors would likely be without funding at the beginning of the fiscal year; and (2) clearly show that other funds would not be available to maintain facility operations in the event of a funding lapse. Prefinancing funds that cannot be adequately justified should be eliminated.
Closed – Implemented
DOE has taken actions to reduce prefinancing amounts. DOE has reduced prefinancing by $168 million (from $218 million to $50 million) since GAO issued this report. Further, DOE expects that most, if not all, of the remaining prefinancing funds will be eliminated as a result of ongoing budget reductions. In this regard, Congress has directed DOE to use nearly $1 billion of carryover funds--of which prefinancing is a part--to fund fiscal year 1996 programs.
Department of Energy To minimize the need for prefinancing funds and to better control any such funds, the Secretary of Energy should, for all prefinancing funds that are adequately justified, establish controls that ensure that the funds: (1) are readily identifiable; and (2) used only for their intended purpose.
Closed – Not Implemented
DOE has agreed with this recommendation; however, since prefinancing funds are being eliminated this recommendation is no longer applicable.

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Topics

Budget authorityBudget obligationsContract administrationContractor paymentsCost analysisFinancial managementForward fundingFunds managementInternal controlsObligated budget balances