Energy Management

In congressional testimony last year (GAO/T-RCED-92-41), GAO recommended that the Department of Energy (DOE) develop a system to ensure that uncosted obligations--commitments that DOE has made to contractors for goods and services that have yet to be delivered--are analyzed as part of its budget formation process. Since then, DOE has made significant strides towards effective evaluation of its uncosted balances as part of its budget preparation process. The absence of supporting accounting systems and unfamiliarity with the new definitions, however, have produced inaccuracies in the data included in DOE's first uncosted balances report. These inaccuracies limit the information's usefulness in making budget decisions. Developing the systems to accumulate the information in the format needed for this report would improve the reliability of the information reported. In addition, revising the definition of what should be reported as approved work scope could help spot delayed projects that have accumulated more funding than can be used effectively during the following fiscal year. DOE proposed using about $1 billion of the uncosted balances to meet fiscal year 1993 and 1994 budget needs. GAO believes, however, that the additional amounts of the uncosted balances could be used to reduce the budget amount needed for fiscal year 1994. In addition, procedures requiring the prompt release of encumbered amounts not needed to settle completed and terminated purchase orders and contracts would help ensure that such amounts are not reported as encumbrances in the future.

GAO found that: (1) DOE has made significant progress towards effectively evaluating its uncosted balances during its budget preparation process; (2) the new uncosted balances reporting system provides standardized categories for uncosted balances and allows DOE to analyze data to determine whether uncosted balances can be used to offset future budget requests; (3) data inaccuracies in the first uncosted balances report limited the usefulness of the information for making future budgetary decisions; (4) data inaccuracies resulted from a lack of supporting accounting systems, staff unfamiliarity with new definitions, and contractor reporting and estimating errors; (5) although DOE proposed using about $1 billion in uncosted balances to meet FY 1993 and 1994 budget needs, $326.9 million in additional program funds could be used to offset future budget needs; and (6) DOE could have made an additional $19.3 million available by reducing amounts for completed and terminated purchase orders at four DOE facilities.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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