Summary

The Department of Energy's (DOE) contract management, including contractors' overhead costs, continues to be a topic of concern to both the agency and Congress. GAO has been examining overhead costs billed by Westinghouse, the contractor in charge of DOE's facilities at the Savannah River Site in South Carolina. This fact sheet provides information on overhead costs (1) budgeted under Westinghouse's contract for fiscal year 1993 and the allocation of these costs to Westinghouse's various organizational units at Savannah River and (2) budgeted and incurred by Savannah River's Environmental Restoration Program, including overhead costs distributed to certain environmental restoration projects.

GAO found that: (1) DOE budgeted about $2.1 billion in FY 1993 for its contractor to operate the site; (2) the contractor distributes general and administrative site support overhead costs on the basis of the proportion of employees assigned to the divisions compared to the number of contractor employees at the site; (3) the contractor distributes division overhead costs to each department within a division on the basis of the proportion of employees assigned to the department compared to the number of employees in the division; (4) department overhead costs are included in government employee hourly labor rates; (5) capital program overhead amounts do not include all indirect costs that are part of the operating program; (6) the Environmental Restoration Program's projected overhead costs are about $19 million, or about 33 percent of the DOE FY 1993 budget; (7) DOE subcontractors' costs are direct costs for specific environmental restoration activities; and (8) overhead costs assigned to individual projects vary and are influenced by the amount of costs recorded and the number of employees assigned to individual projects.