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Department of Energy

DOE01: Improve Environmental Contract Management

Background

The Environmental Restoration and Waste Management Program (EM) at the Department of Energy (DOE) was created in 1989 and has grown to comprise one-third of the total DOE budget. The EM program is responsible for two primary tasks: (1) managing the safe storage and disposal of radioactive, hazardous, and solid waste at DOE sites; and (2) cleaning up the environmental pollution at these same sites.

EM's fiscal year 1993 budget is $5.5 billion, much of which is spent on contracts (in fiscal year 1992, 67 percent of the total budget was expended on contracts). A former Assistant Secretary estimated that, due to wasteful and inefficient expenditures of funds, the program was operating at 60 to 65 percent efficiency.(1) If this is the case, the program could waste $2 billion this year. Given that the program is estimated to cost $200 billion over 30 years, as much as $70 billion could be saved if the current course is changed. Many of these inefficiencies could be eliminated through improved contract structures and management of contractors. DOE is sensitive to the need for change in contract management and has begun a wholesale review of DOE contracting practices.(2)

DOE generally executes its environmental programs using management and operating contractors (M&Os) and environmental restoration management contractors (ERMCs). M&Os are general contractors who have traditionally been hired to manage DOE's defense production mission. M&Os are unique to DOE; they are issued a letter of credit that allows them to draw funds directly from the Treasury, and they are granted considerable latitude in deciding how to manage a DOE facility. Part of their management responsibility includes the provision of environmental restoration services at DOE weapons, research, and laboratory facilities that are still in operation.

The ERMC is a new contracting concept that was put into place in late 1992. ERMCs are general contractors with specific environmental expertise; they exclusively manage environmental restoration at DOE weapons production facilities that have been closed (Hanford Reservation near Richland, Washington, and the former Feed Materials Production Center in Fernald, Ohio).(3) Only the ERMC at Fernald is currently in place and operating. The ERMC contracting mechanism is still very new. It was devised to bring contractors with cleanup expertise into the DOE system, reduce potential conflict of interest, improve management control of the environmental restoration program, reduce cleanup costs, enhance technology exchange throughout the environmental restoration program, and facilitate a more timely restoration of DOE facilities.(4)

Under both of these contract mechanisms (the M&Os and the ERMCs), contractors are paid on a cost-plus-award fee basis, whereby DOE covers all the contractors' costs and, in addition, pays them an award fee (a percentage of the total cost) based on their performance in meeting DOE requirements.(5) The award fee is not only based on the total cost incurred by the prime or management contractor, but also on total costs incurred by every subcontractor. The more layering of subcontractors, therefore, the more advantageous it is to the management contractor.

Although the M&O contracting mechanism has been generally successful at promoting preeminent research and development, the contracts have been criticized by DOE program officials, the Office of Management and Budget (OMB), the General Accounting Office (GAO), and Congress. The contracts have been excessively expensive and difficult to control because of their lack of accountability and DOE's traditionally lenient approach to M & O management. M&Os have been found to be minimally accountable because performance measures and criteria in the contracts are vague and subjective. Additional weaknesses in M&O contracting include the use of sole-source, cost-plus-award-fee subcontracts, non-standard contract clauses that hamper DOE's ability to correct contractor abuses, and inadequate auditing, cost accounting, and cost estimating mechanisms to oversee the M&Os. Furthermore, DOE lacks sufficient personnel to properly oversee the M&Os. The lack of oversight personnel is especially acute in EM, as the program has fewer total staff per program dollar than any other DOE program, including defense production and nuclear energy.(6)

Specifically with regard to environmental management, M&O contractors are perceived as not having adequate incentives to ensure rapid cleanups. There is also some concern that DOE should not be using the very contractors who created the pollution, and that many M&Os have insufficient cleanup expertise to address the problem. Further, because DOE has had such a close relationship with its M&Os, it has been quite difficult to seek expertise beyond the M&O community. For example, DOE is involved in approving salary levels, benefit packages, and, in some cases, retirement plans for M&O personnel. In terminating a contract with an M&O, DOE not only has to close out the contract but has to make provisions for terminating its involvement in the M&O's operating processes as well. Even when an M&O contract is terminated, it is replaced by another M&O, thereby preserving the staff and operating procedures. There is, therefore, great administrative difficulty and little incentive to seek expertise beyond the M&O community. DOE should ultimately be able to access the growing environmental expertise available outside the DOE weapons production complex and introduce more competition among contractors for environmental restoration work.

The ERMC was developed to correct some of the problems associated with the M&Os. Primarily, the ERMC was supposed to reduce contracting costs 15 to 20 percent by using more fixed-price subcontracts and by reducing labor costs. Program management and contractor performance were to be improved by using a single contractor responsible for cleanup and by setting up clear delineations of responsibility and authority. The ERMC was also intended to speed site restoration by using contractors who could focus exclusively on cleanup, were provided with incentives for rapid cleanup, and could apply their Resource Conservation and Recovery Act (RCRA) and Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) experience.

Although several concerns have been raised about the ERMCs, this contract mechanism has been in place at Fernald for only nine months. It is too early to know whether the ERMC concept will remedy the weaknesses that it was intended to address.(7)

Contracting for environmental services under both the M&Os and the ERMCs is hampered by a number of general conditions. Many of the concerns regarding contracting at DOE are related to oversight and management of the contractors. EM has difficulty performing requisite management and oversight functions as it has too few staff with, in some cases, insufficient technical capability to ensure contractor performance. EM has far fewer federal employees overseeing program dollars, contracts, and contract employees than other programs in DOE and other programs doing comparable work. For example, in fiscal year 1993, EM will have 1,780 employees overseeing 37,000 contract employees, a ratio of one federal employee to 21 contract employees. By contrast, the Environmental Protection Agency (EPA), as a whole, employs 17,500 federal employees who oversee 9,000 to 10,000 contract employees, a ratio of approximately two federal employees for one contract employee.(8)

EM also has significantly less staff per program dollar than any other DOE program or comparable program in other agencies. For example, in EM there is $3 million in program funding for every federal employee versus approximately $2.35 million dollars per federal employee in the DOE defense production program and $300,000 per federal employee at EPA.(9) An interagency review by OMB and the U.S. Army Corps of Engineers (Corps) cited the lack of EM personnel with the appropriate skills as a primary reason for high contract costs.(10) Secretary of Energy Hazel O'Leary states, "These disparities [in federal-to-contractor employee ratios] are, I believe, a significant factor in the department's weaknesses in program and contract manage-ment. Most fundamentally, they impede our ability to give adequate direction to our contractors and ensure that this direction is followed."(11)

The current DOE cost-plus-award-fee contracts are expensive and may be inappropriate for the purchase of all environmental services. Because there is little financial exposure for the contractor and few penalties for poor performance, these contracts also provide little incentive to control costs. Other agencies, such as the Corps, the Navy, the Air Force, and EPA, use a mix of fixed price and cost-plus- award-fee contracts to pay for their environmental services.

Furthermore, the award fee is intended to reflect the relative risk associated with a service and provide an incentive for the private sector to perform a task. The new Assistant Secretary for EM questioned the applicability of the current award fee system by saying that the weights for judging contractor performance seem arbitrary, and that the subjectivity of the process is problematic.(12) GAO was similarly critical of the award fee incentive system in a 1992 report.(13)

With regard to ensuring contractor performance, DOE contracts for environmental services contain general work statements that do not adequately define the terms and conditions of the work to be done, do not lay out strong performance objectives, and do not shift the risk of poor performance to the contractor.(14) The new Assistant Secretary for the EM program has already voiced concerns about DOE's ability to measure contractor performance and the level of information that DOE is given with which to make decisions about millions of dollars in awards. The Assistant Secretary also described the decisionmaking process for evaluating contractor performance as deeply troubled.(15)

DOE's contracting practices have also been criticized for their lack of incentives to safeguard worker safety and health. Under the DOE cost-plus-award-fee system, 51 percent of the variable fee is to be awarded on the basis of contractor performance in environment, safety, and health, yet studies show that the award fee contracting provisions are not functioning as they should be. A report by the Occupational Safety and Health Administration (OSHA) stated that M&Os have avoided being penalized for not meeting health and safety standards by negotiating higher base fees.(16) In 1990, at the Nevada Test Site, the contractor was rated average in its environment, safety, and health performance. Theoretically, this rating should have resulted in a lower award fee. The DOE Inspector General found, however, that DOE field personnel adjusted the maximum fees so that the contractor could receive fees similar to those previously received even with a lower performance rating.(17)

DOE has some difficulty defining a scope of work and providing accurate cost estimates for environmental restoration contracts. This is due in part to the lack of agreement on future site uses and acceptable cleanup standards. It is exacerbated by the fact the DOE lacks sufficient numbers of trained cost engineers and estimators. EM relies on the contractors to do their own cost estimates but does not have enough staff or expertise to review the contractors' estimates.(18) For example, a joint study by EPA Region 10 and the State of Washington Department of Ecology found that one DOE employee at the DOE Richland Operations Office had to review contractor cost estimates for 325 projects within a two- week period.(19)

In those cases where DOE was able to review a contractor's cost estimates with a "check estimate," the department found unnecessarily high estimates. For example, for the Oak Ridge/K-25 site solar pond cleanup, the contractor's cost estimate to DOE was $157 million, while the DOE program office estimate was $50 million to $70 million.(20) DOE's inability to review contractor cost estimates with its own "check estimates" means missed opportunities for cost savings. Furthermore, DOE cost estimators in some cases do not have sufficient training or expertise to perform reliable cost estimates. In 1992, an audit by the Corps of Engineers found that: . . . DOE's estimated costs were higher than the Corps estimates for comparable environmental restoration and waste management projects. Specifically, after a detailed evaluation of nearly $1 billion (18 percent of the EM program), costs were found to be higher than the amounts the Corps would expect to pay for the same work by 42 percent. The primary difference in the estimates can be attributed to overhead and administrative costs that may be saved through changes in management and contracting procedures.(21)

DOE has a cost estimation mechanism in place that is currently underused. Each field office is equipped with a local cost estimating guide designed to standardize cost estimating in the region. The guides are not consistently used, and often the contractors develop and rely upon their own cost estimating handbooks. The Corps, which has experience performing hazardous waste remediation work (although no experience performing radioactive waste cleanup), is generally recognized for its proficient cost estimating capabilities.(22) All cost estimates at the Corps are prepared in-house by a multi-talented technical team, which includes cost estimators and environmental engineers. The Corps also uses an automated cost estimating software package that allows for consistency in the collection of baseline data.

DOE officials originally intended to control overall costs by reducing labor costs under the ERMC system. However, both ERMC requests for proposals contain provisions that salary levels at the sites will not change. Furthermore, both ERMCs will be required to hire as much of the old M&O's workforces as they can effectively employ at current salary and benefit levels. This has occurred despite the fact that the ERMCs will require a work force with different skills.(23)

It appears that DOE has yet to achieve the optimum balance in the allocation of responsibilities between its headquarters and field operations. This problem was recog-nized early by Secretary O'Leary and is being addressed at headquarters by a recent realignment of functions and responsibil-ities. Many decisions regarding contracts and environmental policy must travel up and down the chain of command for headquarters input.(24) The ratio of headquarters versus field employees needs to be reexamined to implement the Secretary's operating philosophies.

Actions

1. DOE should introduce competition and innovation in contracting for environmental cleanup services.

DOE should allow for true competition among environmental cleanup contractors and the M&Os in bidding for DOE environmental remediation and management work. In ensuring that it exercises fair, open, and competitive contracting, DOE will be able to attract the most qualified companies (whether they are M&Os, ERMCs, or others) in the field of environmental restoration and management to perform the work in the most effective and efficient manner possible. Furthermore, all environmental restoration work should be awarded on a cost reimbursement basis rather than with a letter of credit. To ensure the above-mentioned conditions at the sites that EM does not control, environmental restoration and management work should be separated out from the M&Os.

2. DOE should enhance the management of its waste management and environmental restoration contracts by providing qualified on-site DOE personnel to assume greater environmental project management and project design responsibilities.

For DOE to adequately manage its contractors and ensure competitive and innovative contracting, the EM program at DOE should build capable, technically trained teams of DOE personnel who work at DOE cleanup sites. Adequate authority to manage and oversee the site coupled with clear accountability should be delegated to these teams from DOE headquarters. As the federal presence is increased in EM tasks, care needs to be taken to clearly delineate federal and contractor responsibilities for decisionmaking and accountability. Consistent with priorities cited by the new DOE leadership, the EM program should reexamine the distribution of responsibilities and personnel between headquarters and the field.(25)

3. DOE should adopt measures to reduce costs. To maintain management convenience and minimize transition time between the various phases of a cleanup at very large sites, as well as achieve economies of scope and scale, it appears that it would be prudent to remain with a single management contractor. At smaller sites, however, it might be appropriate to have several special-purpose contractors working under federal management. Whatever the arrangement might be, in order to manage costs, it will be important to distinguish the methods of contracting for various services. For example, site characterization and site assessment services should be purchased on a cost-plus-award-fee basis due to the relative uncertainty of this kind of work. Other relatively finite and discrete services such as landlord functions (grass-cutting, janitorial services) and actual remediation services (moving earth, pouring concrete, digging wells) should be purchased on a firm, fixed-price basis. To guard against excessive overhead charges (which accumulate when they are applied to each subcontractor), DOE should devise a policy clearly stating when to emphasize subcontracting and when to emphasize direct services from the contractor.

4. DOE should build tangible, outcome-oriented performance measures into its environmental restoration contracts to ensure objective, measurable assessments of contractor performance.

Positive and negative incentive fee criteria should be built into environmental management contracts. DOE could furnish the contractor with interim payments that are contingent upon the outcome of the contractor's work. Fees would reward contractors who exceeded contract specifications, but contractors would have to reimburse the department if the work did not meet specifications.

5. For the award of such environmental restoration contracts and the disbursement of fees, DOE should put more emphasis upon the contractors' record for ensuring worker safety and health.

Management systems and oversight controls in contracts should include accountability, monitoring, feedback reporting, and oversight of performance to ensure that safety and health requirements are implemented and adhered to.

6. To control costs, DOE's waste management and the environmental restoration programs should build a reliable methodology for estimating costs that is applied uniformly at all EM sites.

Although DOE has gone to considerable lengths to build its cost estimating capabilities, it needs to continue efforts to develop and implement effective cost estimating methodologies. The programs should issue a directive (followed up with prompt promulgation of a formal order) requiring that the local cost estimating guide be used by all DOE contractors in the region. Where necessary, DOE should work with the Corps and EPA to revise the cost estimating guides so that they provide a consistent system for measuring the thoroughness of project definition, the degree of technological complexity, the variety and type of contaminated media and contaminants present, and contingencies and escalation rates.(26) To build contract management capability throughout the EM program, environmental program managers, in addition to contract officers, should receive contract training.

7. DOE should build capable cost estimating and cost engineering teams at each DOE site who will be able to proficiently determine the contractors' scope of work and review cost estimates. One possible means of building such capability might be through the Corps of Engineers. Currently, the Corps has extensive experience in estimating contract costs for hazardous waste remediation and construction and, furthermore, is attempting to "downsize." Experienced senior Corps cost estimators could be loaned or transferred to DOE and given the task of building cost-estimating teams at individual DOE sites.

8. For those environmental services that are paid for on a cost-plus-award or a cost-plus-fixed fee award basis, DOE should perform systematic and timely audits on costs incurred by every contractor to verify that costs charged are legitimate and reimbursable. DOE signed a Memorandum of Understanding with the Defense Contract Audit Agency (DCAA), whereby DCAA performs the majority of cost-incurred audits for DOE on non-M&O contracts and M&O subcontractors. If environmental restoration and management contracts are separated from the M&Os and awarded on a cost-plus-award fee or other basis, responsibility for auditing will fall to DCAA.(27)

9. DOE should reevaluate the merits of requiring environmental restoration contractors to hire as many of the former M&O's staff, at current salary and benefit levels, as they can effectively employ.

DOE should use the existing contractor work force for those positions that are similar in nature and retrain employees to the maximum extent possible. DOE should, however, verify that its contractor work force strategy maximizes the effective application of worker skills to skill requirements in order to ensure successful environmental restoration.

10. DOE should examine options to increase the ratio of federal workers to contract employees to improve management and oversight and control costs.

DOE should determine whether its current personnel ceiling can be raised in exchange for reductions in contractor funding, or if contractor positions can simply be converted into federal positions. On the whole, it is cheaper to perform certain functions using federal employees than it is through contract employees. For example, on average, a DOE contract employee costs $120,000 a year versus $90,000 per DOE employee, including salary and benefits. Equalizing the ratio between federal employees and contractors, especially out in the field, could improve contractor management and ensure that DOE activities are being administered by the appropriate people, and will save money in the process.

Implications

These actions move DOE toward a more active role in planning and managing environmental restoration at a DOE site. The speed of cleanup should increase by delegating authority to the field, the quality of decisions and oversight should improve by building technically capable oversight teams, and rising costs should be mitigated with accurate cost estimating procedures and credible DOE oversight.

Fiscal Impact

The environmental cleanup program at DOE is estimated to cost $200 billion over 30 years. This number, however, is subject to change given that DOE still has not ascertained the full extent of the contamination at its sites.

Beginning in 1989, the program's budget allocation increased at a rate of 30 percent a year or more. The President's 1994 budget plan calls for a 3 percent real growth in EM's budget authority beginning in 1995. The EM program will have to make considerable adjustments and achieve significant efficiencies to accomplish its mission within this budget scenario. The NPR recommenda-tions on sitewide future land use planning and on contract management elsewhere in this report should help the department achieve these efficiencies.

Recommendations DOE01 and DOE02, "Incorporate Land Use Planning in Cleanup, should be implemented together," and it is difficult to estimate savings for each recommendation individually. Taken as a whole, however, these recommendations should achieve collective savings through:

--- competition among environmental contractors;

--- a reduction of fees and overhead in environmental contracting;

--- increases in productivity;

--- enhanced management and oversight of contractors;

--- cost control and cost reduction through better cost estimation of environmental services;

--- increased use of federal employees in place of contractors; and

--- a remedial decisionmaking process based on reasoned land use assumptions.

Viewed as a reform package, contracting reform and sitewide future land use planning could achieve a 15 to 25 percent cost savings over five years. In other words, within the limits of their resources, the EM program at DOE should become 15 to 25 percent more efficient in administering the cleanup program over five years. In essence, the above changes should enable DOE to perform more cleanup more effectively for each dollar spent and potentially mitigate the escalation of costs for the whole environmental restoration and waste management program.

Endnotes

1. Pasternak, Douglas, and Peter Cary, "A $200 Billion Scandal," U.S. News and World Report (December 14, 1992), p. 34; "Frustrated Duffy Reviews DOE Cleanup," Inside Energy (November 18, 1992); and U.S. Congress, House Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce, "Contracting at the Department of Energy," opening statement of the Honorable John D. Dingell, May 26, 1993.

2. U.S. Congress, House, Committee on Energy and Commerce, Subcommittee on Oversight and Investigations, "Contract Management and Administration at the Department of Energy," statement by Hazel O'Leary, Secretary of Energy, May 26, 1993.

3. The ERMC at Fernald, Ohio, has been in place for about a year. The ERMC at the Hanford Reservation is currently under protest and is therefore not yet in place. Furthermore, the Hanford ERMC will do remediation work only, while the M&O will continue to manage the site. At Fernald, the ERMC is responsible for both environmental remediation and site management.

4. Federal Register, Vol. 55, No. 211 (October 31, 1990), p. 45, 845.

5. ERMCs are paid on a reimbursement basis rather than through a letter of credit.

6. Dingell, "Contracting at the Department of Energy," opening statement; Pasternak and Cary, pp. 34- 46; U.S. Department of Energy (DOE), Analysis of Findings from the First Sixteen Tiger Team Assessments, DOE/EH-0191 (Washington, D.C., May 1991); U.S. General Accounting Office (GAO), Energy Management: Vulnerability of DOE's Contracting to Waste, Fraud, Abuse, and Mismanagement, GAO/RCED-92-101 (Washington, D.C.: U.S. General Accounting Office [GAO], April 1992); U.S. General Accounting Office, Energy Management: Types of Allowable and Unallowable Costs Incurred Under Two DOE Contracts, GAO/RCED-93-76FS (Washington, D.C.: GAO, January 1993); and U.S. General Accounting Office, Nuclear Health and Safety: Corrective Actions on Tiger Teams' Findings Progressing Slower Than Planned, GAO/RCED-93-66 (Washington, D.C.: GAO, March 1993).

7. U.S. General Accounting Office, DOE Management: Impediments to Environmental Restoration Management Contracting, GAO/RCED-92-244 (Washington, D.C.: GAO, August 1992); and U.S. Congress, House Committee on Armed Services, "Managing the Environmental Cleanup of DOE's Nuclear Weapons Complex," testimony by Victor S. Rezendes, Department of Energy Defense Nuclear Facilities Panel, Washington, D.C., April 1991, pp. 7-11.

8. These figures do not include contractors working under EPA Construction Grants Program (water works construction) or personnel working on EPA initiatives funded through cooperative agreements.

9. Data provided by the Office of Management and Budget.

10. Interagency Review Group (Army Corps of Engineers, Department of Defense, Department of Energy, Environmental Protection Agency, Department of Justice, Office of Management and Budget), Interagency Review of the Department of Energy Environmental Restoration and Waste Management Program, Final Report (Washington, D.C., April 29, 1992), p. iv.

11. U.S. Congress, House, Committee on Energy and Commerce, Subcommittee on Oversight and Investigations, statement by Hazel O'Leary, p. 18.

12. Lobsenz, George, "Grumbly Takes Stock, Sees Need for Changes," The Energy Daily (Washington, D.C., July 19, 1993), p. 3.

13. GAO, DOE Management, p. 8.

14. GAO, Energy Management (1992), pp. 15-18, 21.

15. Lobsenz, p. 3.

16. U.S. Department of Labor, Occupational Safety and Health Administration, Evaluation of the U.S. Department of Energy's Occupational Safety and Health Program for Its Government-Owned Contractor- Operated Facilities (Washington, D.C., December 1990). For example, the M&O contractor at Oak Ridge, Tennessee, increased the amount of the award fee that it received in 1992 compared to 1991, even though its performance in the environmental safety and health fields had declined. It did so by increasing its base fee. See also, "IG Report Criticizes Field Office Management," Weapons Complex Monitor (Washington, D.C., June 22, 1992); and U.S. Congress, Office of Technology Assessment (OTA), Hazards Ahead: Managing Cleanup Worker Health and Safety at the Nuclear Weapons Complex (Washington, D.C., February 1993), p. 64.

17. OTA, Hazards Ahead, p. 64.

18. Interagency Review Group, p. iv.

19. U.S. General Accounting Office, Nuclear Health and Safety: More Can Be Done to Better Control Environmental Restoration Costs, GAO/RCED-92-71 (Washington, D.C.: GAO, April 1992), p. 37.

20. Ibid., p. 36.

21. U.S. Department of the Army, Army Corps of Engineers, Supplemental Report on Cost Estimates (Washington, D.C., April 29, 1992), p. i; see also, U.S. Congress, Office of Technology Assessment, Complex Cleanup: The Environmental Legacy of Nuclear Weapons (Washington, D.C., February 1991) pp. 55-59.

22. Due to its experience in estimating costs for environmental remediation work, the Corps was given the responsibility by an Interagency Group (IAG) of senior administration officials concerned with environmental cleanup issues to do a detailed cost analysis of the DOE's 1993 budget request for environmental restoration and waste management.

23. GAO, DOE Management, p. 8.

24. Some of these management problems have been documented by DOE's Tiger Team Assessments performed on the Environment, Safety and Health programs at DOE's plants and facilities; see also DOE, Analysis of Findings from the First Sixteen Tiger Team Assessments, Appendix F, p. 3. See also, GAO, Nuclear Health and Safety: Corrective Actions on Tiger Teams' Findings Progressing Slower Than Planned.

25. U.S. Congress, House, Committee on Science, Space, and Technology, statement by Thomas P. Grumbly, Assistant Secretary for Subcommittee on Energy Environmental Restoration and Waste Management, U.S. Department of Energy, July 15, 1993, pp. 9-10.

26. See Interagency Review Group, p. v; and GAO, Nuclear Health and Safety: More Can Be Done to Better Control Environmental Restoration Costs, p. 35.

27. Interviews with DOE personnel have indicated that DCAA is generally prompt and accurate in its audits. In addition, a congressional subcommittee report shows that DCAA auditors can unearth substantial cost savings, as they return approximately $25 for every dollar spent on their salaries. U.S. Congress, House, Committee on Energy and Commerce, Subcommittee on Oversight and Investigation, Government Contract Mismanagement (Washington, D.C., December 3, 1992), p. 102-166. The ERMC at Fernald is an exception to this arrangement. The DOE Inspector General's office has staff on-site at Fernald; therefore, the DCAA will perform cost-incurred audits on corporate and home office expenses only. The Office of the Inspector General will be responsible for performing a traditional cost-incurred audit.

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