Shell uses contractors for cleanup activities. The Army’s Process to Control Cost Sharing Has Weaknesses

The Army’s process to review cost sharing claims under its settlement agreement with Shell is insufficient to ensure that costs are documented and appropriate. Weaknesses in the process involve (1) documentation to support claims, (2) agreements to define which costs should be shared, (3) separation of duties for recording and reviewing shared costs, and (4) documentation of decisions on the treatment of capital assets and disposition of real estate. Our work showed that additional documentation is available in most cases and could have been reviewed by the Army. In some cases, the claims were partially documented, and in others, there was no documentation provided. We did not review the appropriateness of individual cost claims. However, the above examples further demonstrate that the Army has not ensured it has sufficient information to review shared costs. 1). Moreover, the Army and Shell staff who conduct the day-to-day operation of the shared cost system also review the shared costs annually. We will also make copies available to others on request. It “provides the process for the planning, selection, design, implementation, operation, and maintenance of response actions taken pursuant to CERCLA as the result of the release or threatened release of hazardous substances, pollutants or contaminants at or from the arsenal, including the public participation process.”

	The Army/Shell Rocky Mountain Arsenal Financial Manual

The Financial Manual describes the financial, accounting, and auditing procedures to be used for shared costs incurred in connection with arsenal cleanup. U.S. General Accounting Office P.O.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed cleanup costs claimed by Shell Oil Company and shared by Shell and the U.S. Army at Rocky Mountain Arsenal, Colorado, focusing on: (1) selected aspects of the processes that the Army uses to review cost claims under its settlement agreement with Shell; and (2) the adequacy of these processes.

What GAO Found

GAO found that: (1) the process the Army uses to review claims under its cost sharing for cleanup at the arsenal has not been sufficient to ensure that costs claimed by Shell are appropriate; (2) specifically, the review process does not always ensure that sufficient documentation is available to review claimed costs and formal agreements exist to define which costs should be shared; (3) the review process generally does not look at the detailed documentation supporting cost claims; (4) GAO's work showed in most cases further information was available, but in some cases it was not; (5) also, the review process does not have effective checks and balances, such as separation of key duties and responsibilities and independent reviews; (6) for example, staff associated on a daily basis with the shared cost system also conduct the annual assessment of the shared costs; and (7) the combination of limited documentation and inadequate controls places the government at the risk of paying for unwarranted charges.