U S Government Accountability Office

National Nuclear Security Administration U S Government Accountability Office

" NNSA, a semiautonomous agency within DOE, oversees the nation's nuclear security programs. M& O contractors manage NNSA's facilities, including its national security laboratories--Lawrence Livermore, Los Alamos, and Sandia. Each year, M& O contractors spend billions of dollars to manage and operate these laboratories. Costs include both direct costs-which can be identified with a specific objective or program-and indirect costs, such as management, administrative, and facility costs. Federal Cost Accounting Standards give M& O contractors flexibility in how costs are classified as direct or indirect and allocated to programs. GAO was asked to review M& O contractor indirect cost management. GAO examined (1) whether laboratory M& O contractors' practices differ for allocating indirect costs and, if so, how; (2) the extent to which NNSA ensures that laboratory M& O contractors' allocated indirect costs are accurate; and (3) the extent to which NNSA ensures that laboratory M& O contractors' indirect costs are reasonable. GAO reviewed NNSA and laboratory M& O contractor data and documents and spoke with DOE and NNSA officials and M& O contractors. "