The Department of Energy’s worker advocacy office made millions of dollars in improper and questionable payments to contractors because of deficient controls, the Government Accountability Office has said.
The Energy Employees Occupational Illness Compensation program helps former contractor employees file state workers’ compensation claims for illnesses that could be linked to exposure to toxic substances during their employment, but DoE did not establish an effective control environment over payments to contractors or overall contract costs, according to GAO-06-547.
It said that because the department lacked an effective review and approval process for contractor invoices, it had no assurance that goods and services billed had actually been received.
Energy did not carry out proper oversight of the Space and Naval Warfare Systems Center, New Orleans, which was responsible for reviewing and approving invoices on the largest contract, the report said.
It said DoE also failed to keep track of equipment purchased by contractors, that subcontractor agreements — representing nearly $15 million in program charges — were not adequately assessed, and that overall contract costs were not sufficiently monitored or properly reported.
GAO identified $26.4 million in dodgy payments for contractor costs that included employees billing in improper labor categories, the inappropriate use of fully burdened labor rates for subcontracted labor, and add-on charges to other direct costs and base fees that were out of line with contract terms, the report said.
It said the payments represent nearly a third of the $92 million in total program funds spent through September 2005, noting that the percentage may be higher.
