U.S. Department of Energy 

Office of Inspector General 

Office of Audit Services 

Audit Report 

Management Controls over 

Selected Facility Contractor 

Travel Expenses 

OAS-M-07-03 April 2007 
Department of Energy 

Washington, DC 20585 

April 26, 2007 

MEMORANDUM FOR THE PRINCIPAL DEPUTY ADNLINISTRATOR, NATIONAL 

NUCLEAR SECURITY ADMINISTRATION AND CHIEF 

WERATING OFFICER, OFFICE OF SCIENCE 

FROM: 

Assistant Inspector General 

for Financial, Technology and Corporate Audits 

Office of Inspector General 

INFORMATION: Audit Report on "Management Controls over 

Selected Facility Contractor Travel Expenses" 

BACKGROUND 

The Department of Energy (Department) relies on contractors to manage and operate its major 

I'acilities. Management contractors' business-related travel, which includes domestic and 

international trips to and from field sites to attend meetings and conferences and to perform 

research, represents a significant cost to the Department. In Fiscal Year (FY) 2006 contractors 

took over 192,000 trips and incurred total travel related costs of approximately $154 million. 

Prior revlews have disclosed problems with contractors' travel costs such as travelers not 

reducing per diem rates for meal costs included in conference fees, improperly categorizing 

trips and taking trips that were of questionable value to the Department. Because the 

Llcpartmenl has experienced problems in the past, we conducted this review to determine 

whether selected contractors were effectively managing domestic and foreign travel and related 

expenses. 

RESULTS OF AUDIT 

Our work at the Oak Ridge National Laboratory (Oak Ridge), BWXT Y- 12 (Y- 121, and Sandia 

National Laboratories (Sandia) disclosed that, at these sites, internal controls over contractor 

11-avel were generally adequate and travel expenses were reasonable. Based on an evaluatiori 01 

632 trlps across these three contractor sites, we determined that controls related to review of 

supporting documentat~on and approval of expense vouchers were functioning effectively. 

Overall, we noted that travel management procedures were generally efficient and consistent 

with applicable guidance. In particular: 

All three sites had automated systems for tracking and approving expense vouchers; 

Employees' expense vouchers were submitted for reimbursement in a timely manner 

and contained the necessary approvals and supporting documentation to ensure that 

claimed expenses were appropriate; 
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• With minor exceptions, expense vouchers reflected the use of the appropriate classes 

of air travel and car rental; 

• Employees at Y-12 and Oak Ridge adhered to the Federal Travel Regulation (FTR) 

per diem rates for reimbursement of meals and lodging expenses. Sandia, which the 

Department exempted from FTR requirements, realized savings over FTR specified 

rates by using "actual cost" methods; and, 

• The internal audit departments at these sites had also included travel expenses as part 

of their annual allowable cost reviews, a practice that helped ensure that unallowable 

travel costs were not charged to the Department. 

We also identified several minor problems and opportunities to strengthen certain internal 

controls. For a few trips at each site, claims for reimbursement did not clearly describe the 

purpose of travel and certain expenses were not adequately supported or were missing required 

justifications. At Sandia, we also identified three trips for which required authorizations for 

first class airline accommodations were missing from reimbursement reports. Unless 

specifically authorized, the cost of first class airfare is unallowable. In limited instances, we 

noted that Sandia travelers did not use the corporate travel agent to purchase airline tickets or 

did not use their corporate travel card for all business travel. The use of these contractor 

sponsored programs helps employees to, among other things, obtain discounted pricing. In 

addition to the minor exceptions mentioned above, we also noted an issue regarding the 

management of unused airline tickets at Sandia. 

Unused Airline Tickets

To maximize savings, all three sites required employees to purchase non-refundable airline 

tickets. Employees were sometimes reimbursed for the cost of these tickets before they 

completed their travel. For travel that was later cancelled, Oak Ridge and Y-12 managed and 

tracked the unused tickets to ensure they were used on subsequent travel. 

Our review of management practices in this area disclosed that Sandia lacked comprehensive 

procedures for managing and did not track all unused airline tickets. While Sandia reported that 

it had clarified its policy and procedural guidance in this area in response to a 2004 internal 

audit, our review demonstrated that additional controls are necessary. To illustrate, the 

corporate travel agent at Sandia issued its August 2006 report for all carriers except Southwest 

Airlines showing that 424 tickets valued at $181,997 were unused and unexpired. Although the 

monthly unused ticket reports were reviewed and e-mails were sent reminding travelers of their 

outstanding unused tickets, Sandia did not follow up to determine whether the tickets were 

eventually used for official business travel. 

Additionally, according to officials at Sandia, travelers used Southwest Airlines for over 50 

percent of their travel. No information on outstanding unused or unused expired Southwest 

Airlines tickets was provided by the corporate travel agent and Sandia did not have internal 

procedures to track these tickets. Given the extent of use of Southwest and the demonstrated 

frequency of unused tickets on other airlines, it is likely that the total value of unused tickets for 

this carrier could be significant.
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SUGGESTED ACTIONS

To address the issues outlined above, we suggest that the: 

1. Managers of the Oak Ridge Office, Y-12 Site Office and Sandia Site Office ensure 

that, for the management contractors under their purview, adequate descriptions of the 

purpose of travel are included in all reimbursement reports and that all expenses 

submitted for reimbursement are adequately supported and include all required 

justifications; 

2. Manager, Sandia Site Office, ensure that Sandia: 

a. Develops unused airline ticket status reports for all airlines to identify expired 

tickets, and tickets that have been unused or partially used for follow-up and to 

facilitate management of unused airline tickets; 

b. Strengthens its review and approval of travel reimbursements to ensure 

compliance with corporate requirements such as use of the corporate travel agent 

for travel arrangements and the use of corporate credit cards while in official 

travel status; and, 

c. Evaluates the adequacy of supporting documentation for all first class travel to 

ensure that costs are authorized and necessary. 

Details regarding each of the issues we identified were referred to the contractor for resolution. 

Contractor officials told us that they had initiated or completed corrective actions for the 

problems identified in this report. Since no recommendations are being made in this report, a 

formal response is not required. We appreciate the cooperation of the various Departmental 

elements and all the staff at the contractor sites during this effort. 

Attachment 

cc: Manager, Oak Ridge Office 

 Manager, Sandia Site Office 

 Manager, Y-12 Site Office 

 Acting Chief Financial Officer, CF-1 

 Team Leader, Audit Liaison, CF-1.2 

 Audit Liaison, MA-70 

 Director, Policy and Internal Controls Management, NA-66 

 Audit Liaison, SC-67 

 Audit Liaison, ORO 

 Audit Liaison, Sandia National Laboratories 
 Attachment 

SCOPE AND METHODOLOGY

This review was performed between September 2006 and March 2007 at the Oak Ridge 

National Laboratory (Oak Ridge) and BWXT Y-12 (Y-12) in Oak Ridge, Tennessee and the 

Sandia National Laboratories (Sandia) in Albuquerque, New Mexico. To accomplish our 

objective, we: 

• Reviewed contractor's travel policies and procedures and interviewed key personnel 

at each site; 

• Assessed the selected contractors' compliance with the applicable federal guidance, 

internal travel policies and Department of Energy (Department) contracts; 

• Tested random samples of travel documentation and related reports for Fiscal Year 

2006 at each location; and, 

• Reviewed reports provided by the Internal Audit departments for the past fiscal year. 

We validated the accuracy of computer data on which we relied by tracing it to source 

documents. The review was conducted in accordance with generally accepted Government 

auditing standards for performance audits and included tests of internal controls and 

compliance with laws and regulations to the extent necessary to satisfy the audit objective. 

Because our review was limited, it would not necessarily have disclosed all internal 

deficiencies that may have existed at the time of our audit. During the audit, we assessed the 

Department's compliance with the Government Performance and Results Act of 1993 and 

found no performance measures related to travel. We discussed the contents of this letter 

with Oak Ridge, Y-12 and Sandia representatives on March 15, 2007. The Department 

waived an exit conference.
 

IG Report No. OAS-M-07-03

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