During the fiscal year, the Office of Management and Budget (OMB) apportions the appropriations to DOE. To examine the effectiveness of DOE’s approach for identifying the carryover balances that exceed the requirements of the Department’s programs and may be available to reduce the request for new obligational authority, we first reviewed DOE’s process for tracking and reporting on carryover balances and any analysis by DOE of what causes unobligated balances and uncosted obligations. DOE Lacks an Effective Approach for Analyzing Carryover Balances

In formulating a budget request, DOE officials do not use a standard, effective approach for identifying excess carryover balances. Instead, DOE relies on broad estimates of potentially excess balances in its individual programs. DOE’s required annual report on the status of uncosted obligations is limited and not used to propose how much in carryover balances should be used. The report is limited because it does not (1) provide detailed analysis of all of the sources of carryover balances—namely, uncosted obligations at DOE’s nonintegrated contractors and unobligated balances; (2) accurately identify the available balances; and (3) provide relevant information that can be used for consideration in formulating the budget. Furthermore, DOE had unobligated balances of $3.6 billion at the start of fiscal year 1995. However, the Office of Waste Management, within DOE’s Environmental Management program, has undertaken an effort to determine the “proper” or “right” amount of uncosted obligations. The office has established separate benchmarks for funding operating activities, capital equipment procurements, and construction projects. Some programs have developed fairly accurate cost-tracking and estimating systems. Expanding on the efforts already being explored could lead to a process that establishes goals for each program for all of the carryover balances (including unobligated balances) needed to meet its unique requirements, projects the carryover balances for the beginning of the new fiscal year’s budget on the basis of each program’s cost estimates and cost history, and focuses analysis on justifying any differences between a program’s goals and the projected balances in order to identify the balances that exceed the program’s requirements and are thus available to reduce DOE’s budget request.
Why GAO Did This Study

GAO reviewed the Department of Energy's (DOE) approach for identifying carryover balances from previous years' budgets that may be available to reduce budget requests for new fiscal years.

What GAO Found

GAO found that: (1) DOE does not use a uniform, effective method of identifying carryover balances; (2) DOE makes separate, general estimates of excess funds in its individual programs; (3) some DOE programs have reduced their carryover balance while others have allowed their carryover balances to increase; (4) the DOE annual report on uncosted obligations is not used to identify potential carryover balances because it does not identify all of the carryover balances, identify all of the uncosted obligations that are available to reduce DOE budget request, or include enough information to be useful during the formulation of DOE budget; (5) within DOE, the Office of Waste Management has studied the operations of DOE programs and developed standard expectations for their levels of uncosted obligations; (6) the Office of Waste Management has determined that balances in excess of one month's worth of operating activities funding may indicate carryover balances and should be investigated; (7) within DOE, the Office of the Chief Financial Officer has suggested estimating the uncosted obligations at the start of each fiscal year using estimates of yearly costs or past costs; and (8) the various plans developed in DOE have not been implemented departmentwide and would need to be altered to fit individual programs.