"We must take strong exception to the conclusions of this particular report," Nanos said. "We believe the laboratory's operations related to meal and travel costs, and the operation of its Audits and Assessments function, are consistent with its contract. We also believe we have been consistent with the requirements of federal travel regulations and other federal requirements and guidance for allowable and unallowable costs."
"Over the last several months, the laboratory has been the subject of numerous audits, investigations and reviews, including those by the Inspector General," Nanos continued. "For the most part, we have accepted their general conclusions and promptly implemented corrective measures. We will continue to do so in our effort to improve laboratory business practices. We do, however, disagree with the conclusions of this report."
Following are the laboratory's responses to specific areas within the audit report:
Laboratory financial systems
While we have formally disagreed with a large number of findings within the IG report, we do recognize that there are needed enhancements to our systems of internal controls. The job we are engaged in now is to ensure that one-year from today there are no challenges to the Laboratory's stewardship of financial resources.
Meal Costs
Laboratory meal policies are consistent with the contract and with those of other M&O contractors in the DOE system. The laboratory believes the primary-purpose test was met-that the meal or refreshments were an integral part of the meeting and that the costs were reasonably incurred and are allowable under the contract.
However, we are anxious to work with NNSA to provide every assurance that we have effective contractor systems. We will review the laboratory's meal guidance with NNSA and make such revisions as are deemed appropriate in consideration of best business practices.
Travel Costs
In accordance with its contract, the laboratory follows the Federal Travel Regulations for lodging reimbursement.
The laboratory requires a conference registration receipt in those cases that payment is made to an individual; where conference registration is paid directly by laboratory check, we accept the cancelled check as the receipt. We believe this practice is consistent with federal travel regulations.
While we believe the costs were reasonably incurred and are allowable under the contract, we will review our practices with NNSA and make needed revisions to ensure best business practices.
Audits and Assessments Function
With respect to the IG's findings about the audit function, while we disagree that its costs should be disallowed, the concerns identified in the audit report are among the issues the University of California and the laboratory have already recognized and addressed. As a result, a number of actions that are recommended are already accomplished and/or are the subject of ongoing efforts that are supported by sustainable processes.
The University and the laboratory clearly recognize the need for a strong internal audit function, as evidenced by the actions taken since January. These include a series of aggressive steps by the University Auditor, who has assumed management of the Laboratory's internal audit function, that are designed to ensure that it meets the highest professional standards for independence and performance including timely and thorough investigations of all allegations of wrong doing.
Contract worker award, employee morale activities
The University and the Laboratory concur with the IG finding.
The Los Alamos Area Office, which oversees the laboratory for DOE and NNSA, is the final arbiter of allowable or unallowable cost.
Los Alamos enhances global security by ensuring the safety and reliability of the U.S. nuclear stockpile, developing technologies to reduce threats from weapons of mass destruction, and solving problems related to energy, environment, infrastructure, health and national security concerns.
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Los Alamos National Laboratory, a multidisciplinary research institution engaged in strategic science on behalf of national security, is operated by Los Alamos National Security, LLC, a team composed of Bechtel National, the University of California, The Babcock & Wilcox Company, and Washington Group International for the Department of Energy's National Nuclear Security Administration.
Los Alamos enhances national security by ensuring the safety and reliability of the U.S. nuclear stockpile, developing technologies to reduce threats from weapons of mass destruction, and solving problems related to energy, environment, infrastructure, health, and global security concerns.