Pacific Northwest National Laboratory: Enhancements Needed to Strengthen Controls Over the Purchase Card Program
Highlights
The Pacific Northwest National Laboratory (PNNL) located in Richland, Washington, is a government-owned, contractor-operated Department of Energy (DOE) national laboratory. The Battelle Memorial Institute manages the lab under a costreimbursable contract with DOE. Battelle is paid a management fee to operate the lab and is reimbursed for all allowable costs charged to the contract. During the fall of 2002, the Federal Bureau of Investigation began investigating two Los Alamos National Laboratory employees for alleged misuse of lab credit cards. Other allegations of theft and misuse of government funds at Los Alamos soon followed. In light of the problems identified at Los Alamos, GAO was asked to review selected procurement and property management practices at two NNSA and two DOE contractor labs, including PNNL. This report summarizes the information provided during our June 14, 2004 briefing to staff of the House Committees on Science and Energy and Commerce on these issues as they relate to PNNL. Specifically, we reviewed PNNL's purchase card program and property management practices to determine whether (1) internal controls over the lab's purchase card (Pcard) program provided reasonable assurance that improper purchases would not occur or would be detected in the normal course of business, (2) purchase card expenditures made under the contract properly complied with lab policies and other applicable requirements and were reasonable in nature and amount and thus were allowable costs payable to the contractor under the contract, and (3) property controls over selected asset acquisitions provided reasonable assurance that accountable assets would be properly recorded and tracked. Our review covered selected transactions that occurred during fiscal year 2002 and the first half of fiscal year 2003 (October 1, 2001, through March 31, 2003), which were the most current data available when we requested the data for our review. This report also includes four recommendations for action--three related to actions needed to be taken by PNNL and one related to action needed to be taken by the DOE contracting officer for PNNL.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Energy | In order to address the issues identified in the review, the Secretary of Energy should direct the Pacific Northwest National Laboratory's Director to strengthen internal controls over the purchase card program and reduce the lab's vulnerability to improper, wasteful, and questionable purchases by canceling purchase card accounts for cardholders who also perform oversight functions over the purchase card program to help ensure appropriate independence and separation of duties between these functions. |
Closed – Implemented
In response to our recommendation, the Pacific Northwest National Laboratory management cancelled the purchase card account for the staff member with purchase card oversight responsibilities on June 7, 2004. This action will help establish appropriate separation of duties between cardholders and those with oversight responsibilities for the Pcard program.
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| Department of Energy | In order to address the issues identified in the review, the Secretary of Energy should direct the Pacific Northwest National Laboratory's Director to strengthen internal controls over the purchase card program and reduce the lab's vulnerability to improper, wasteful, and questionable purchases by establishing policies and procedures requiring that purchasers maintain a copy of the detailed sales receipt, invoice, or other independent support showing the description, quantity, and price of individual items purchased. |
Closed – Implemented
In response to our recommendation, Pacific Northwest National Laboratory issued a new policy to require purchasers to maintain a copy of the detailed sales receipts/invoices, which show item descriptions, quantity, and process. This should help ensure that cardholders maintain independent support for their Pcard transactions.
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| Department of Energy | In order to address the issues identified in the review, the Secretary of Energy should direct the Pacific Northwest National Laboratory's Director to strengthen internal controls over the purchase card program and reduce the lab's vulnerability to improper, wasteful, and questionable purchases by requiring approving officials, during their review of cardholder transaction documentation, to ensure that the cardholders obtained a sales receipt or invoice to support each purchase, and that the cardholder obtained and documented any required preapprovals before purchase. |
Closed – Implemented
In response to our recommendation, Pacific Northwest National Laboratory issued a policy requiring approving officials to ensure that purchases are backed by supporting documentation, such as detailed receipts and invoices and required preapprovals. This should help ensure that Pcard purchases are adequately supported and reviewed by approving officials.
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| Department of Energy | The Secretary of Energy should direct the DOE contracting officer for the lab to review the improper, wasteful, and questionable items we identified to determine whether any of these purchases should be repaid to DOE. |
Closed – Implemented
The DOE contracting officer reviewed the improper, wasteful, and questionable items we identified, and PNNL management made cost corrections to reimburse DOE for over $15,000 of transactions we questioned. In addition, PNNL management updated their policy to prohibit purchases of items such as gift certificates, gifts, and party favors---purchases we found in our sample. PNNL's updated policy also provides better guidance to Pcard users and approvers to help ensure that the Pcards are used for proper government purchases.
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