Energy Department’s National Lab Logs Over $160 Million in Questioned Costs

(RealClearWire)—A Department of Energy lab in Illinois logged over $160 million in questioned costs due to lost invoices, excessive reimbursements, and holiday pay, according to a recent audit by the agency’s inspector general.

The audit examined costs incurred in 2018 by Fermi Research Alliance LLC, the contractor that operates the Fermi National Accelerator Lab near Batavia, Illinois. The Energy Department owns the lab, which receives millions in funding from the federal government. The lab also received $260 million from the Inflation Reduction Act of 2022.

The inspector general’s audit found that costs claimed by the contractor were not always allowable or reasonable. The inspector general questioned $160 million in indirect costs as unsupported, $15 million in subcontract costs as unresolved (pending an audit), and $2.5 million as unsupported, unallowable, or unreasonable.

Specifically, the inspector general had many concerning findings. They include Fermi Research Alliance’s loss of over $2.4 million in vendor invoices, unreasonable subsistence reimbursements to visiting scientists and researchers in excess of $30,000, and excessive holiday pay exceeding $50,000. He also found that Fermi Research Alliance was not in compliance with federal cost-accounting standards.

The Energy Department’s inspector general concluded: “These issues could result in the department reimbursing [Fermi Research Alliance] for costs that were unallowable, not allocable, or unreasonable.”

This mismanagement directly impairs the Energy Department’s mission, the audit found, since these questionable expenditures could have gone toward further research efforts at the lab by purchasing more equipment or hiring more researchers.

The waste was completely preventable by enforcing accounting standards and frequently auditing to ensure they are met, the audit found, but instead lax oversight meant these issues went undiscovered for five years.