Department of Energy: Status of DOE's Property Management Program (Fact
Sheet, 04/07/94, GAO/RCED-94-154FS).
This fact sheet provides information on the management of Energy
Department (DOE) property by the 20 major contractors involved in
defense-related activities. GAO focuses on (1) the amount of missing
property being reported to DOE by these contractors in their most recent
property inventory reports, (2) the extent to which DOE has approved
contractors' property management systems, and (3) examples of weaknesses
reported in the most recent DOE review of the contractors' property
management systems.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-94-154FS
TITLE: Department of Energy: Status of DOE's Property Management
Program
DATE: 04/07/94
SUBJECT: Federal property management
Property losses
Government owned equipment
Contract monitoring
Research and development facilities
Inventory control systems
Accountability
Contractor responsibility
Contractor performance
GOCO
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Cover
================================================================ COVER
Report to the Chairman, Environment, Energy, and Natural Resources
Subcommittee, Committee on Government Operations, House of
Representatives
April 1994
DEPARTMENT OF ENERGY - STATUS OF
DOE'S PROPERTY MANAGEMENT PROGRAM
GAO/RCED-94-154FS
Status of DOE's Property Management Program
Abbreviations
=============================================================== ABBREV
DOE - Department of Energy
GAO - General Accounting Office
Letter
=============================================================== LETTER
B-256705
April 7, 1994
The Honorable Mike Synar
Chairman, Environment, Energy, and
Natural Resources Subcommittee
Committee on Government Operations
House of Representatives
Dear Mr. Chairman:
In response to your request, this fact sheet provides information on
the management of Department of Energy (DOE)-owned property by the 20
major contractors involved in defense-related activities.\1 As agreed
with your office, we focused our review on identifying (1) the amount
of missing property being reported to DOE by these contractors in
their most recent property inventory reports, (2) the extent to which
contractors' property management systems have been approved by DOE,
and (3) examples of weaknesses reported in the most recent DOE review
of the contractors' property management systems.
In summary, these 20 contractors reported missing property totaling
about $74.2 million in their most recent property inventory reports
to DOE. This amount, however, is probably understated for two
reasons. First, reviews conducted by us and DOE's Inspector General
on certain of these contractors' property management systems
concluded that a higher amount of property may be missing than
reported by the contractors. Specifically, in our report on the
Rocky Flats Plant, we found that in addition to the $12.8 million in
missing property reported by the contractor, the contractor could not
physically locate another $16.5 million in property.\2 As pointed out
in that report, some of this latter property may have to be
classified as missing. In another report on the Los Alamos National
Laboratory, DOE's Inspector General concluded that millions of
dollars more in property may be missing than reported in the latest
inventory.\3 Second, at least two of the contractors included in this
review conducted only partial inventories. Therefore, the missing
property totals reported by those contractors represent only what is
missing from the property they inventoried.
Of the 20 contractors we reviewed, only 7 had property management
systems that were approved by DOE as of January 31, 1994.\4 Of the
remaining contractors' systems, seven systems were conditionally
approved (i.e., deficiencies exist that must be corrected within an
established time frame), five remained unapproved, and one was
disapproved. DOE's approval represents a determination that the
contractor's system will adequately protect, maintain, utilize, and
dispose of government property in accordance with federal and DOE
property management regulations.
The Department, in reviewing the 20 contractors' property management
systems, made over 400 recommendations. Some of these
recommendations were aimed at fixing significant problems. For
instance, in reviewing one contractor, DOE found that items such as
copy paper, fluorescent light bulbs, truck mufflers, among others,
were being scheduled for surplus sale while the contractor was buying
new similar items from vendors. In a review of another contractor,
DOE found that significant errors existed in the property inventory
reports to DOE and that the value and volume of property in the
possession of the contractor were significantly overstated. We
further noted that for 10 of the 20 contractors included in our
review, DOE had not completed its review on schedule.
This fact sheet contains three sections. Section 1 lists the missing
property totals shown in the contractors' most recent property
inventory reports. Section 2 lists the extent to which DOE had
approved the contractors' property management systems as of January
31, 1994. Section 3 lists examples of weaknesses reported in the
latest DOE review of the contractors' property management systems.
--------------------
\1 DOE-owned property, as discussed in this fact sheet, is property
of any kind or type that is DOE-owned or -rented or -leased in the
custody of DOE's contractors, excluding real property such as land or
buildings; special source material, such as tritium; and petroleum.
\2 See Department Of Energy: The Property Management System at the
Rocky Flats Plant Is Inadequate (GAO/RCED-94-77, Mar. 1, 1994).
\3 See Audit of Personal Property Management at Los Alamos National
Laboratory (DOE/IG-0338, Dec. 1993).
\4 DOE regulations require DOE to review and approve or disapprove a
contractor's property management system within the first year of the
contract and every 3 years thereafter.
AGENCY COMMENTS AND ACTIONS
------------------------------------------------------------ Letter :1
As you requested, we did not obtain written agency comments on a
draft of this fact sheet. However, we discussed the facts presented
with the director and staff of DOE's Office of Contractor Management
and Administration and have included their comments where
appropriate. In their comments, these officials stressed that the
Department is committed to improving its controls over contractors'
property management systems by increasing headquarters oversight of
this function. The officials pointed out that evidence of that
commitment can be seen in the establishment of their office in June
1992 to tighten DOE's stewardship over contractors' property
management systems and the numerous initiatives the Department has
undertaken.
Those initiatives include (1) headquarters independent validation of
DOE field offices' oversight activities, (2) a strengthened DOE
surveillance program of contractors, (3) a centralized personal
property tracking system to catalog the findings from each review and
track corrective actions, and (4) the requirement for a "root cause"
analysis to be performed for each deficiency found during a property
review. According to DOE officials, the increased emphasis the
Department has placed on property management and the need for its
contractors to establish reliable property data bases may have
contributed to the significant amount of lost or missing property
shown by this fact sheet.
We recognize that DOE is taking action to improve contractors'
property management activities. However, we also believe that much
needs to be done, as evidenced by the over 400 recommendations made
from DOE's reviews of contractors. Furthermore, in our recent report
on Rocky Flats' property management, we pointed out that serious
problems with the plant's property tracking data base and management
system continue to exist.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :2
We conducted this review during the period January through March
1994. To develop this fact sheet, we obtained property inventory
reports for the 20 major contractors involved in defense-related
activities from the DOE field offices having responsibility for those
contractors. We did not independently verify the missing property
amounts shown in those reports. However, we did compare some of the
data with data in other DOE sources of information, including
property amounts shown on DOE's Financial Information System. We
also examined DOE property management regulations and DOE
headquarters' reviews of DOE field offices' property management
activities. We obtained data on the status of and the latest DOE
review of each contractor's property management system from DOE's
Office of Contractor Management and Administration. We verified the
accuracy of these data with selected DOE field offices. Furthermore,
we reviewed DOE Office of Inspector General reports issued on
contractors' property management activities.
---------------------------------------------------------- Letter :2.1
As arranged with your office, unless you publicly announce its
contents earlier, we plan no further distribution of this fact sheet
until 30 days from the date of this letter. At that time, we will
send copies of this fact sheet to the Secretary of Energy,
appropriate congressional committees, and other interested parties.
If you have any additional questions or if we can be of further
assistance, please contact me at (202) 512-3841. Major contributors
to this fact sheet are listed in appendix I.
Sincerely yours,
Victor S. Rezendes
Director, Energy and Science Issues
MISSING PROPERTY AMOUNTS SHOWN IN
THE MOST RECENT PROPERTY INVENTORY
REPORTS
============================================================ Chapter 1
Date of Amount of
most missing property
recent (acquisition
DOE office/plant (contractor) inventory cost)
------------------------------ ---------- ----------------
Albuquerque
------------------------------------------------------------
Kansas City Plant
(Allied Signal)
Sensitive 1993 $ 446
Capital 1991 714,632
============================================================
Subtotal 715,078
Los Alamos National
Laboratory
(University of California)
Sensitive 1993 1,076,085
Capital 1993 7,951,459
Noncapital 1993 3,406,953
============================================================
Subtotal 12,434,497\a
Mound Facility
(EG&G Mound Applied
Technologies)
Sensitive 1993 836
Capital 1993 155,118
============================================================
Subtotal 155,954
Pantex Plant
(Mason & Hanger-Silas Mason
Company)
Sensitive 1992 14,980
Capital 1991 18,713
Noncapital 1991 13,028
============================================================
Subtotal 46,721
Pinellas Plant
(Martin Marietta Specialty
Components)
Sensitive 1993 150
Capital 1993 40,434
Noncapital 1991 587,175
============================================================
Subtotal 627,759
Sandia National Laboratories
(Martin Marietta Corporation)
Sensitive 1992 1,085,989
Capital 1992 3,926,364
Noncapital 1990 613,301
============================================================
Subtotal 5,625,654
Idaho
------------------------------------------------------------
Idaho Chemical Processing
Plant
(Westinghouse Idaho Nuclear
Company)
Sensitive 1993 3,373
Capital 1992 52,380
============================================================
Subtotal 55,753
Idaho National Engineering
Laboratory
(EG&G Idaho, Inc.)
Sensitive 1993 767,495\b
Capital 1993 408,682
============================================================
Subtotal 1,176,177
Nevada
------------------------------------------------------------
Timing, Firing, and Scientific
Support
(EG&G Energy Measurements,
Inc.)
Sensitive 1993 29,069\b
Capital 1993 133,581
Noncapital 1993 51,544
============================================================
Subtotal 214,194
Weapons Test Support Services
(Reynolds Electrical and
Engineering Co., Inc.)
Sensitive 1993 (included below)
Noncapital 1993 6,143,906
Capital 1993 11,986,002
============================================================
Subtotal 18,129,908\c
Oak Ridge
------------------------------------------------------------
Construction Services
(M-K Ferguson Company)
Sensitive 1993 45,480
Capital 1993 180,676
============================================================
Subtotal 226,156
Fernald
(FERMCO)
Sensitive 1993 432,787
Capital 1993 1,949,195
Noncapital 1993 14,828
============================================================
Subtotal 2,396,810
K-25 Plant
(Martin Marietta Energy
Systems, Inc.)
Sensitive 1993 74,194
Capital 1993 2,840
============================================================
Subtotal 77,034
Y-12 Plant
(Martin Marietta Energy
Systems, Inc.)
Sensitive 1993 306,258
Capital 1993 283,226
============================================================
Subtotal 589,484
Richland
------------------------------------------------------------
Hanford Site
(Westinghouse Hanford
Company)
Sensitive 1993 19,296
Capital 1993 131,397
Noncapital 1993 0
============================================================
Subtotal 150,693
Pacific Northwest
Laboratories
(Battelle Memorial Institute)
Sensitive 1993 77,072
Capital 1993 198,999
============================================================
Subtotal 276,071
Rocky Flats
------------------------------------------------------------
Rocky Flats Plant
(EG&G -Rocky Flats, Inc.)
Sensitive 1993 3,125,749
Capital 1993 5,283,654
Noncapital 1993 4,384,844
============================================================
Subtotal 12,794,247\d
San Francisco
------------------------------------------------------------
Lawrence Berkeley Laboratory
(University of California)
Sensitive 1992 (included below)
Capital 1992 1,690,875
============================================================
Subtotal 1,690,875
Lawrence Livermore National
Laboratory
(University of California)
Sensitive 1992 182,961
Capital 1992 5,433,482
============================================================
Subtotal 5,616,443
Savannah River
------------------------------------------------------------
Savannah River Laboratory and
Plant
(Westinghouse Savannah River
Company)
Sensitive 1992 (included below)
Noncapital 1992 6,452,864
Capital 1992 7,516,356
============================================================
Subtotal 13,969,220\e
============================================================
Total $74,218,770
------------------------------------------------------------
Note: Department of Energy (DOE) property is placed in basically
three categories. Sensitive property means those items of property
that are susceptible to being appropriated for personal use or that
can be readily converted to cash. Examples are firearms,
photographic equipment, binoculars, tape recorders, calculators, and
power tools. DOE regulations require that a sensitive-item inventory
be conducted annually. Capital property means property items that
have a unit acquisition cost of $5,000 or more and an anticipated
service life in excess of 2 years and have the potential for
maintaining their integrity as capital items, i.e., not expendable
due to use. Examples are lathes and vehicles. DOE regulations
require that a capital-item inventory be conducted every 2 years.
Noncapital property means those items of property with an acquisition
cost of less than $5,000 that do not meet the definition of sensitive
property. DOE regulations do not require that a noncapital inventory
be conducted although some DOE contractors have conducted them
anyway.
\a The Inspector General's December 1993 report determined that Los
Alamos may not be able to account for $100 million in property.
\b The contractor conducted only a partial inventory of property for
that fiscal year.
\c The missing property amounts also include amounts for property
that was excessed, buried, or cannibalized.
\d Our March 1994 report determined that the contractor could also
not physically locate another $16.5 million in property and may have
to classify some of this property as missing.
\e As we were processing this fact sheet, DOE Savannah River
officials told us that they recently conducted a partial review of
the plant's 1992 inventory and believe that, based on this review,
the plant's missing property total included some property that was
excessed, buried, or cannibalized.
EXTENT TO WHICH DOE HAS APPROVED
THE CONTRACTORS' PROPERTY
MANAGEMENT SYSTEMS (AS OF JANUARY
31, 1994)
============================================================ Chapter 2
DOE system
DOE office/plant (contractor) approval status\
---------------------------------------- ------------------
Albuquerque
------------------------------------------------------------
Kansas City Plant Conditionally
(Allied Signal) approved\a
Los Alamos National Laboratory Disapproved
(University of California)
Mound Facility Unapproved\b
(EG&G Mound Applied
Technologies)
Pantex Plant Unapproved\b
(Mason & Hanger-Silas Mason
Company)
Pinellas Plant Unapproved\b
(Martin Marietta Specialty
Components)
Sandia National Laboratories Unapproved\c
(Martin Marietta
Corporation)
Idaho
------------------------------------------------------------
Idaho Chemical Processing Plant Approved
(Westinghouse Idaho Nuclear
Company)
Idaho National Engineering Laboratory Approved
(EG&G Idaho, Inc.)
Nevada
------------------------------------------------------------
Timing, Firing, and Scientific Support Conditionally
(EG&G Energy Measurements, approved\a
Inc.)
Weapons Test Support Services Conditionally
(Reynolds Electrical and approved\a
Engineering Co., Inc.)
Oak Ridge
------------------------------------------------------------
Construction Services Conditionally
(M-K Ferguson Company) approved\a
Fernald Approved
(FERMCO)
K-25 Plant Approved
(Martin Marietta Energy
Systems, Inc.)
Y-12 Plant Conditionally
(Martin Marietta Energy approved\a
Systems, Inc.)
Richland
------------------------------------------------------------
Hanford Site Approved
(Westinghouse Hanford
Company)
Pacific Northwest Laboratories Conditionally
(Battelle Memorial approved\a
Institute)
Rocky Flats
------------------------------------------------------------
Rocky Flats Plant Unapproved\d
(EG&G-Rocky Flats, Inc.)
San Francisco
------------------------------------------------------------
Lawrence Berkeley Laboratory Approved
(University of California)
Lawrence Livermore National Approved
Laboratory
(University of California)
Savannah River
------------------------------------------------------------
Savannah River Laboratory Conditionally
and Plant approved\a
(Westinghouse Savannah
River Company)
------------------------------------------------------------
\a Conditionally approved--The contractor's property management
system has been reviewed by DOE and determined to have deficiencies
that must be corrected within an established time frame.
\b A DOE review has been completed, but a DOE system
approval/disapproval determination is overdue.
\c A DOE system approval/disapproval determination is not yet
overdue. The contractor (Martin Marietta) is within the first year
of the start of the contract. DOE regulations require DOE to review
and approve or disapprove the contractor's property management system
within the first year of the contract and every 3 years thereafter.
Prior to Martin Marietta, AT&T was the contractor at the Sandia
National Laboratories, and, as of September 1993, AT&T had an
unapproved property management system.
\d A DOE review has not been done, and a DOE system
approval/disapproval determination is overdue.
RESULTS OF DOE REVIEWS OF
CONTRACTORS' PROPERTY MANAGEMENT
SYSTEMS
============================================================ Chapter 3
Date of DOE's
last
review--number of
DOE office/plant recommendations Examples of weaknesses identified in
(contractor) made review report
------------------ ------------------ ----------------------------------------
Albuquerque
--------------------------------------------------------------------------------
Kansas City Plant 2/91--31\a A tremendous backlog of property has
(Allied Signal) been received but had not been tagged.
Using a check off list to perform
physical inventories, rather than bar
code scanners, was determined to be
unacceptable.
Los Alamos 5/93--10 The significant losses of sensitive
National items appears to indicate a lack of
Laboratory adequate physical protection or
(University of responsible oversight. The office
California) responsible for performing physical
inventories was not providing other
affected organizations with the results
of inventory findings to enable them to
perform trend analyses and/or initiate
corrective actions.
Mound 1/92--9\a During inventory verification, DOE noted
(EG&G Mound that many property items were not tag-
Applied identified. The system for tracking
Technologies) property on loan to others did not
properly reflect the actual location of
the property.
Pantex 9/92--17\a Numerous items of equipment were
(Mason & Hanger- untagged during physical inventory.
Silas Mason Several items of property have more
Company) than one property control tag.
Pinellas 7/92--18 Numerous property management procedures
(Martin Marietta needed updating. A formal internal
Specialty training program has not been
Components) established for the property management
staff.
Sandia National 3/91--5\a According to DOE, it is currently
Laboratories impossible to determine with any
(AT&T when the accuracy how many property items are on
review was done) loan. It could not be determined for
completed subcontracts if the
subcontractors still had residual DOE
property that had not been returned or
officially disposed of.
Idaho
--------------------------------------------------------------------------------
Idaho Chemical 4/92--9 The contractor is not including DOE in
Processing Plant the distribution of its reports on
(Westinghouse lost, damaged, or destroyed property.
Idaho Nuclear The plant's policy and procedure that
Company) provide guidance for physical
inventories do not require that
inventories be conducted or tested by
independent parties.
Idaho National 4/92--15 Subcontract administrators are not
Engineering requiring that subcontractors submit
Laboratory annual reports of government property
(EG&G Idaho, in their possession. The contractor's
Inc.) property management manual does not
include requirements for tagging
sensitive property.
Nevada
--------------------------------------------------------------------------------
Timing, Firing, 2/93--10 Physical inventory reports for outlying
and Scientific locations indicate that items were not
Support being inventoried according to the
(EG&G Energy schedule set forth in DOE regulations.
Measurements, Property management personnel were
Inc.) receiving little or no relevant
training in personal property
management other than internally
conducted property management
workshops.
Weapons Test 10/92--28 DOE has not been provided with a
Support Services schedule for the implementation of a
(Reynolds viable bar code property control
Electrical and system. A review of the training
Engineering Co., records for selected property
Inc.) management personnel showed that none
of the individuals had ever attended
formal, documented, inventory
management training.
Oak Ridge
--------------------------------------------------------------------------------
Construction 2/92--9 A majority of accountable property items
Services received within the last year are not
(M-K Ferguson in the inventory data base. Three of 20
Company) sensitive items randomly selected to
verify location were missing, which
represents a potential loss ratio of 15
percent.
Fernald 7/90--8\a The contractor has not provided copies
(Westinghouse of inventory write-offs, i.e., lost,
when the review damaged, or destroyed property, to DOE
was done) on a regular basis. A spot inspection
of sensitive property, such as hand
tools, noted that the tools had no
government identification.
K-25 3/93--9\a Eight of 20 sensitive items randomly
(Martin Marietta selected to verify location could not
Energy Systems, be found, which represents a potential
Inc.) loss ratio of 40 percent. Items such as
copy paper, fluorescent light bulbs,
truck mufflers, etc., are being
scheduled for surplus sale while the
contractor was buying new, similar
items from vendors.
Y-12 8/93--21\a Heavy equipment, office furnishings,
(Martin Marietta materials, and machines not designed
Energy Systems, for outside use are being left outside
Inc.) unprotected. Property management
personnel are receiving little or no
relevant training in property
management.
Richland
--------------------------------------------------------------------------------
Hanford Site 2/91--49 There are significant errors in the
(Westinghouse property inventory reports to DOE and a
Hanford Company) significant overstatement of the value
and volume of personal property in the
possession of the contractor. Over 40
percent of all capital-and sensitive-
tagged property has not been
inventoried within the time frames
required by DOE regulations.
Pacific Northwest 12/92--16 An inventory of special equipment, such
Laboratories as office equipment, photographic
(Battelle equipment, radio equipment, and
Memorial automotive equipment, has not been
Institute) conducted since FY 1989. A review of a
sample of capital item records revealed
that there are errors in certain data
fields indicating that some
organizations are still not reporting
or updating changes in key data
elements.
Rocky Flats
--------------------------------------------------------------------------------
Rocky Flats Plant 4/89--30\a The contractor has an antiquated
(Rockwell property control system that is
International approximately 30 years old. It lacks
when the review sufficient data and capability to
was done) provide for an effective property
management program. Plant policies and
procedures do not address the
individual responsibility of employees
to ensure the proper control, use, and
protection of government property,
including the prompt reporting of lost
or stolen property.
San Francisco
--------------------------------------------------------------------------------
Lawrence Berkeley 5/93--20 In most cases, it did not appear that
Laboratory subcontractors were being monitored to
(University of ensure that government property was
California) being properly controlled. Property
management policies and procedures
needed improvements to ensure
compliance with the contract terms and
DOE property management regulations.
Lawrence Livermore 8/92--34\a Property items were in storage for more
National than 3 years without adequate
Laboratory justification or correct level of
(University of approval authority. Items that are not
California) tagged are not being investigated.
Savannah River
--------------------------------------------------------------------------------
Savannah River 9/93--73\a Of the property items sampled for
Laboratory and inventory, 34 percent either were
Plant physically unlocated or lacking
(Westinghouse disposition documentation. Reports of
Savannah River lost, damaged, or destroyed property
Company) are not being submitted to DOE in all
instances.
--------------------------------------------------------------------------------
\a The last DOE review listed in this section was not completed on
schedule.
MAJOR CONTRIBUTORS TO THIS FACT
SHEET
=========================================================== Appendix I
RESOURCES, COMMUNITY, AND
ECONOMIC DEVELOPMENT DIVISION,
WASHINGTON, D.C.
--------------------------------------------------------- Appendix I:1
Jim Wells, Associate Director
William F. Fenzel, Assistant Director
Robert J. Baney, Evaluator-in-Charge