	Management Controls Are in Place for Two of the Three NNSA Offices Administering Contracts for Nuclear Nonproliferation Projects

Two NNSA offices, NA-23 and NA-25, documented management controls  for almost all of their contracts that we reviewed; but the third office, NA- 24, could not provide us with the complete records necessary to document  these controls. Similarly, NA-23 and NA-25 provide their technical  reviewers and contract managers with procedural guidance that assists in  maintaining these controls, while NA-24 did not provide this type of  guidance. NA-23 and NA-25 Documented Management Controls for the Contracts We Reviewed

Two NNSA offices, NA-23 and NA-25, documented management controls  for most of their contracts that we reviewed. As shown in table 1, for eight  of the nine contracts we reviewed from these two offices, NA-23 staff and  national laboratory officials who manage NA-25’s contracts provided us  with complete records of deliverables and invoices as well as evidence that  technical reviewers and contract officers reviewed and approved  deliverables and invoices, respectively. Recommendations

To ensure that each NNSA office that we reviewed maintains complete  documentation of its management controls, we recommend that the  Secretary of Energy, working with the Administrator of the National  Nuclear Security Administration, require NNSA to take the following three  actions:  each NNSA office use formal, procedural guidance that clearly states   NNSA’s program managers maintain quick access to key contract  records such as deliverables and invoices that relate to management  controls, regardless of whether the records are located at a national  laboratory or headquarters; and  NNSA perform periodic reviews of its management control processes to  be certain that each program office’s management controls can be  documented and remain appropriate and effective. Agency Comments and Our Evaluation

We provided the Department of Energy’s National Nuclear Security  Administration (NNSA) with a draft of this report for its review and  comment. In most cases, they were  unable to do so. In addition,  the documentation that officials at the laboratory sent us on August 16,  2005, did not provide all the information that was missing. Scope and Methodology

To assess the effectiveness of the NNSA’s management controls of its  nonproliferation projects, we identified the three offices within NNSA that  currently oversee and manage the nonproliferation projects that fell within  the scope of our work: (1) the Office of Nuclear Risk Reduction  (designated by NNSA as NA-23), (2) the Office of Nonproliferation and  International Security (NA-24), and (3) the Office of International Material  Protection and Cooperation (NA-25). We focused  on identifying the controls implemented to ensure that former Soviet Union  partners meet contract terms before the invoices for the deliverables are  paid.
Why GAO Did This Study

The National Defense Authorization Act for FY 2004 mandated that we assess the management of threat reduction and nonproliferation programs that the Departments of Defense and Energy each administer. The objective of this report is to assess how the Department of Energy's National Nuclear Security Administration (NNSA) implements management controls, which we define here to be the processes ensuring that work done under a contract meets contract specifications and that payments go to contractors as intended.

What GAO Found

Two NNSA offices, the Office of Nuclear Risk Reduction (designated by NNSA as NA-23) and International Material Protection and Cooperation (NA- 25), documented management controls for almost all of their contracts that we reviewed, but the third office, the Office of Nonproliferation and International Security (NA-24), did not document controls for most of their contracts because they could not provide the required documentation. More specifically, for eight of the nine NA-23 and NA-25 contracts we reviewed, the NA-23 headquarters staff and the laboratory staff that manage the contracts for NA-25 provided to us complete records of deliverables and invoices, as well as evidence that technical officials reviewed and approved the deliverables and contract officers reviewed and approved the invoices. (For the ninth contract, NA-25 provided us with incomplete documentation of its controls.) In addition, NA-23 and NA-25 each apply procedural guidance that assists managers in maintaining these controls. However, according to an NNSA official, none of the three offices currently perform periodic reviews to ensure their existing management controls remain appropriate. In contrast, we were unable to determine if NA-24 implements management controls because, for seven of the nine contracts we reviewed, the documentation it provided to us was in most cases either incomplete or it provided no clear audit trail that we could follow. (Documentation was complete for the eighth and ninth contracts.) The types of documents that were missing varied across and within some contracts. In addition, NA-24 does not provide its contract managers with procedural guidance on how to maintain its management controls, nor does it perform a periodic review of its controls to ensure the controls are effective and appropriate.