Financial Management: DOE and NNSA Have Opportunities to Improve Management of Carryover Balances

What GAO Discovered

The Division of Energy’s (DOE) Business office of Environmental Administration (EM) and the National Nuclear Protection Administration (NNSA) oversee the cleanup of DOE’s legacy websites and the procedure of the nuclear protection organization, respectively. Most resources that Congress appropriates to EM and NNSA remain offered for obligation right until they are expended (costed). Balances not obligated or costed can usually be carried more than to future fiscal years, but these carryover balances can accumulate beyond the minimum desired to support plans, tying up resources that could be set to other works by using.

GAO reviewed 5 locations connected to EM’s and NNSA’s administration of carryover balances:

Finances structures and spending budget execution processes. EM and NNSA execute cash dependable with congressional route that buildings their appropriations into courses, projects, and functions (PPA). Nonetheless, the expanding period of continuing resolutions has affected EM’s and NNSA’s capacity to proficiently execute money and has contributed to carryover balances accumulating over and above what might be anticipated.

Amounts and ages of carryover balances at the conclude of fiscal year 2021. EM had about $3.2 billion in complete carryover balances, and NNSA experienced about $10.9 billion. Whilst the the vast majority of these balances have been built obtainable until expended, only 1.4 per cent of the total $14.1 billion was appropriated more than 5 years back, indicating that EM and NNSA have usually ensured that older resources ended up put in just before newer cash.

Methods for determining uncosted balances that warrant increased scrutiny, and the amounts of these balances at the end of fiscal calendar year 2021. DOE and NNSA have applied benchmarks, or thresholds, since 1996 to keep an eye on uncosted balances for working actions. DOE files point out that 12 months-close balances exceeding these thresholds warrant greater scrutiny. At the close of fiscal yr 2021, EM and NNSA experienced about $3.5 billion in such uncosted balances. EM and NNSA also experienced $3.1 billion in uncosted balances for line-product building assignments. On the other hand, according to DOE, line-merchandise construction initiatives are not issue to the thresholds and really should be examined on a circumstance-by-scenario basis.

Drivers of uncosted balances in extra of thresholds, and steps taken to regulate these balances. A amount of drivers contribute to uncosted balances in excessive of thresholds. Some motorists, these as continuing resolutions or larger-than-asked for appropriations, could completely explain an surplus harmony. Nonetheless, other individuals, such as unanticipated changes in function scope or method execution problems or delays, may perhaps not entirely describe an excess equilibrium. EM and NNSA periodically overview these balances and have in some cases taken actions to take care of them, such as searching for to reprogram excess money to PPAs with larger require, decreasing upcoming fiscal years’ price range requests, and modifying contract scope.

Limits to thresholds, and steerage applied to take care of excessive uncosted balances. GAO identified 5 limitations:

  • Thresholds, and how they need to be applied, are not obviously documented, major to cases of inconsistent application.
  • Bases for two thresholds produced just after 1996 are not nicely justified, impacting irrespective of whether they are reputable indicators.
  • EM and NNSA have not periodically reviewed thresholds to ensure that fundamental assumptions—for illustration, that appropriations will be timely—have not changed, influencing their reliability.
  • EM and NNSA have not documented a process to guide assessments of, and justifications for, balances in extra of thresholds, so it is unclear no matter if the businesses continuously determine that balances in excessive of thresholds are warranted.
  • No steering exists on how staff members really should use facts about excessive uncosted balances all through the funds formulation process to make sure that DOE ideas to price tag excessive balances or redirect money to regions of need to have.

The thresholds serve as equipment to watch DOE’s money effectiveness. Consequently, it is crucial that the thresholds operate properly as indicators in identifying balances that warrant greater scrutiny and that DOE plainly documents direction for their use.

Why GAO Did This Research

Congress has expected DOE to publicly report on carryover balances and has shown desire in being familiar with how DOE identifies and displays these balances. A committee report accompanying the Senate invoice for the Countrywide Protection Authorization Act for Fiscal Year 2021 included a provision for GAO to assessment EM’s and NNSA’s management of carryover balances.

GAO examined DOE and NNSA spending budget execution and economic management paperwork and analyzed fiscal facts as of the stop of fiscal year 2021 for each EM appropriation account and NNSA’s Weapons Things to do and Protection Nuclear Nonproliferation appropriation accounts. GAO interviewed agency officers about how EM and NNSA handle excess uncosted balances and take into account them when building foreseeable future funding requests.

Minnie Arwood

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