Energy Management

This fact sheet provides information on costs that the Department of Energy's (DOE) management and operating contractor, Martin Marietta Energy Systems, incurred while running DOE's facilities at Oak Ridge, Tennessee; Paducah, Kentucky; and Portsmouth, Ohio. Martin Marietta has two contracts with DOE, one involving Oak Ridge and the other involving the Kentucky and Ohio facilities. GAO identified some limited instances in which costs incurred were determined to be unallowable, including Martin Marietta employee memberships in trade, business, and professional organizations. Compared with the more than $1.8 billion spent on the two contracts in fiscal year 1991, however, the amounts of the unallowable costs were relatively small, and either DOE or Martin Marietta plans to take appropriate corrective action. GAO also found that the most recent allowability-of-costs report, an examination of fiscal year 1991 costs prepared by Martin Marietta's internal audit staff, included a broad discussion of unallowable cost issues and identified some unallowable costs. The two previous reports did not identify any unallowable costs. Further, Martin Marietta gave GAO data showing that it had incurred more than $2.2 million in costs to run DOE facilities in 1992 that had not been charged to the government because Martin Marietta considered them unallowable. These costs included relocation expenses, community relations expenses, incentive compensation for executives, country club dues, and entertainment costs. Also, in fiscal year 1991, Martin Marietta charged more than $320,000 in allowable recreational costs, including $7,300 for golf balls and $20,000 for a Christmas party.

GAO found that: (1) the amount of identified unallowable costs for membership fees, miscellaneous costs charged to contracts, recreational activities, and travel expenditures have decreased; (2) the contractor's internal audit staff had increased its oversight in detecting and refunding unallowable costs, including loan origination fees and relocation and meal expenses; and (3) operational costs which the contractor did not charge the government totalled $2.2 million and included payments for relocation, community relations, incentive compensation for executives, country club dues, and entertainment.