Energy Management:

Additional Uncosted Balances Could Be Used to Meet Future Budget Needs

RCED-94-26: Published: Oct 26, 1993. Publicly Released: Oct 26, 1993.

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GAO reviewed the Department of Energy's (DOE) uncosted obligations, focusing on: (1) the accuracy of new uncosted obligation information; and (2) whether uncosted obligations resulting from program delays, cancellations, and downsizing could be used to offset the DOE fiscal year (FY) 1994 budget request.

GAO found that: (1) DOE has made significant progress towards effectively evaluating its uncosted balances during its budget preparation process; (2) the new uncosted balances reporting system provides standardized categories for uncosted balances and allows DOE to analyze data to determine whether uncosted balances can be used to offset future budget requests; (3) data inaccuracies in the first uncosted balances report limited the usefulness of the information for making future budgetary decisions; (4) data inaccuracies resulted from a lack of supporting accounting systems, staff unfamiliarity with new definitions, and contractor reporting and estimating errors; (5) although DOE proposed using about $1 billion in uncosted balances to meet FY 1993 and 1994 budget needs, $326.9 million in additional program funds could be used to offset future budget needs; and (6) DOE could have made an additional $19.3 million available by reducing amounts for completed and terminated purchase orders at four DOE facilities.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Further reviews of DOE's uncosted obligations have led to the conclusion that the usefulness of DOE's uncosted reporting system is limited not only by the inaccuracies in the data but also because the information becomes available too late in the development of DOE's proposed budget to be useful in identifying potential budget offsets.

    Recommendation: The Secretary of Energy should develop measures to improve the usefulness of the information provided in the new uncosted balances reporting system by requiring contractors to develop systems that will account for outstanding encumbrances at the program level to provide the information needed for these reports and reduce the need for estimates.

    Agency Affected: Department of Energy

  2. Status: Closed - Not Implemented

    Comments: Because subsequent reviews of DOE's uncosted obligations have questioned the overall usefulness of DOE's uncosted reporting system for the development of DOE's proposed budget, efforts to improve the accuracy of the information reported have less importance.

    Recommendation: The Secretary of Energy should develop measures to improve the usefulness of the information provided in the new uncosted balances reporting system by clarifying the approved work scope definition by describing the type of DOE approval needed for capital equipment and construction funds to be reported in this category.

    Agency Affected: Department of Energy

  3. Status: Closed - Implemented

    Comments: DOE agreed that there was a problem with the timeliness of the Department's contract closeouts, in part because of the time needed to obtain indirect expense closeout audits. In September 1994, DOE initiated a 3-year pilot program allowing quick closeout procedures (under which the contracting officer can negotiate the final indirect expenses in lieu of formal audits) to be used for all contracts involving indirect cost reimbursements of $1 million or less per year.

    Recommendation: The Secretary of Energy should develop measures to improve the usefulness of the information provided in the new uncosted balances reporting system by establishing procedures for contracting officers to estimate the funds needed to settle completed and terminated purchase orders and contracts and deobligate the remaining amounts no longer needed.

    Agency Affected: Department of Energy

 

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