Audit Report 

Resolution of Significant Finding 

Investigation Recommendations 

DOE/IG- November 2002 

U.S. Department of Energy 

Office of Inspector General 

Office of Audit Services 

Recovery of Costs for the Proprietary 

Use of the Advanced Photon Source 

DOE/IG-0753 January 2007 
Department of Energy 

Washing<~n, DC 20585 

January 11, 2007 

MEMORANDUM FOR TEE SECRETARY 

FROM: Greg +?* y . ne man 

Inspector General 

SUBJECT: INFORMATION: Audit Report on "Recovery of Costs for the 

Proprietary Use of the Advanced Photon Source1' 

BACKGROUND 

The Department of Energy is responsible for the operation of the Advanced Photon 

Source, a light source user facility at the Argonne National Laboratory. The facility was, 

until recently, operated for the Department by the University of Chicago. It is currently 

operated by UChicago Argonne, LLC. Using x-ray beams from the Advanced Photon 

Source, scientists conduct leading-edge research in areas such as material science, 

biology, physics and chemistry. The Advanced Photon Source was completed in 1995 at 

a cost of $467 million, and it was constructed to operate at an optimal capacity of 70 

beam lines. Each beam line provides high intensity x-rays for research in almost all 

scientific disciplines for government, academia and the private sector. The annual 

operating budget of the facility is about $90 million, and the Department's Argonne Site 

Office administers the contract for Laboratory operations. 

Currently, there are 46 beam lines operating at the Advanced Photon Source, and each 

beam line provides about 5,000 hours of available time for scientific inquiry. Before 

being allocated beam time, proposals are peer reviewed to ensure scientific and technical 

merit. Ream time is then allotted for either non-proprietarv experiments, in which the 

results are to be published in scientific journals, or for proprietary experiments, in which 

the results are retained by users. Departmental and Federal directives require full 

recovery of operating costs for proprietary usage. We initiated this audit to determine 

whether the Department was effectively recovering funds to offset operating costs for the 

proprietary use of the Advanced Photon Source. 

RESULTS OF AUDIT 

We determined that the Department was not effectively administering financial controls 

over proprietary research at the Advanced Photon Source. Specifically, we found that the 

Laboratory: 

Charged hourly rates for proprietary usage of the Advanced Photon Source that 

did not sufficiently cover operating costs; 
Routinely reduced the number of hours charged from the time recorded by floor 

coordinators; and, 

Did not always collect advances for proprietary experiments or bill those 

conducting proprietary research in a timely manner. 

During our review, we noted that the Department had not reviewed Advanced Photon 

Source charges for proprietary research since its inception in 1995. Additionally, the 

Laboratory had not established adequate controls to ensure accurate reporting of 

proprietary usage, require advance payments and bill proprietary users in a timely 

manner. 

As a result, the Department was, in effect, subsidizing scientists conducting proprietary 

research at Argonne by at least $3 million from Fiscal Year (FY) 2004 through the first 

quarter of FY 2006. This was directly due to Argonne's charging policies and 

procedures. The Department, in essence, also used taxpayer provided funds to "float" 

experiments that were conducted to benefit for-profit concerns. Until the pricing policies 

for the Advanced Photon Source are restructured in accordance with Federal 

requirements and financial controls are improved, the Department will continue 

subsidizing proprietary researchers. To address this situation, we made recommendations 

to the Manager of the Argonne Site Office to adjust the rate structure for the Advanced 

Photon Source, establish controls to accurately record proprietary usage, and improve 

billing and collection practices. 

MANAGEMENT REACTION 

Management agreed to adjust its proprietary rates over the next two fiscal years to more 

closely retlect the proprietary users' actual share of operating costs and to take other 

actions to improve financial controls. However, it disagreed with our conclusion that 

Argonne's proprietary rates had been understated in the past, and our recommendation 

that lost collections should be recovered. It maintained that the proprietary rates, which 

had been in effect for the past ten years, were appropriate for a facility that was in the 

process of increasing the number of users to full capacity and maximizing the scientific 

and technical output of the Advanced Photon Source. 

While we recognize the importance of the scientific research conducted at the Advanced 

Photon Source, management's position is not consistent with the Department's policy of 

recovering the full cost of operations when proprietary research is conducted at its 

facilities. In our view, since management had not reviewed proprietary rates for over ten 

years, it could not be assured that the rates were appropriate, or that any needed rate 

changes would affect the number of users and amount of scientific output. As noted in 

the report, unlike other users who publish their research data, proprietary users do not 

share their research results, intending to seek patents and profit from their research. A 

more detailed summary of management's response and our comments is addressed 

beginning on page 6 of the report. 

Attachment 
cc: Deputy Secretary 

Under Secretary for Science 

Chief of Staff 

Chief Financial Officer 

Deputy for Programs, Office of Science 

Acting Manager, Argonne Site Office 

Manager, Chicago Operations Office 
REPORT ON RECOVERY OF COSTS FOR THE PROPRIETARY USE OF 

THE ADVANCED PHOTON SOURCE 

TABLE OF 

CONTENTS 

Proprietary Usaqe of the Advanced Photon Source 

Appendices 

1. Objective, Scope, and Methodology ............................................................................. 9 

2. Proprietary Rage Calculation ........................................................................................ 11 

3. Related Audit Reports ................................................................................................... 12 

4. Management Comments.. ............................................................................................... 13 
PROPRIETARY USAGE OF THE ADVANCED PHOTON SOURCE 

Recovery of Argonne National Laboratory (Argonne) was not effectively 

Proprietary Usage managing the recovery of operating costs for proprietary research 

Costs at the Advanced Photon Source (APS). Specifically, we found that 

Argonne charged an inappropriately low proprietary rate; routinely 

reduced the number of hours charged to proprietary users from 

those recorded by its system; and, did not bill in a timely manner 

or require advanced funding from users. 

Beam Line Use Rates 

Argonne charged proprietary users about half of the hourly rate 

needed to recover the full operating cost of using the APS. Table 1 

(below) illustrates the difference in hourly rates charged by 

Argonne compared to the full operating cost recovery rates during 

Fiscal Year (FY) 2004 through the first quarter of FY 2006. 

Overall, Argonne's hourly rate ranged from 45 to 50 percent below 

the full cost recovery rate. 

While Argonne used an appropriate dollar estimate for operating 

costs, we found that Argonne used values for both the number of 

beam lines and the number of beam hours that overstated capacity. 

Specifically, although the APS has consistently demonstrated that 

it has only about 42 to 46 beam lines, each with 5,000 hours of 

beam time that are available each year, Argonne calculated the 

proprietary rate based on the optimal perfomiance of 70 beam lines 

each with 6,000 hours of beam time. Consequently, the 

established proprietary rate did not represent the actual share of 

operating costs experienced at the APS. Appendix 2 explains more 

fully our calculation of the full operating cost recovery rates. 

Beam Line Hours 

Further, Argonne could not be assured that it had charged 

proprietary researchers for the correct number of hours used on the 

APS. Specifically, Argonne routinely reduced the number of hours 

charged to users from the time recorded by its floor coordinators 

based upon users' contention that experiments were ended early or 

that hours were incorrectly recorded. Although users are required 

to provide real-time notification to Argonne floor coordinators 

when experiments begin and end, we found that Argonne reduced 

the billable house even when coordinators had not been notified at 

the time of the experiment. 

Page 1 Details of Finding 
For example, during calendar year 2005, Argonne adjusted the 

reported usage of the APS based on user responses to a systemgenerated billing notification for more than 67 percent of the 270 

proprietary experiments. These adjustments totaled 4,980 hours 

and reduced the billable hours initially recorded in the system by 

39 percent. To determine the adequacy of the system, we reviewed 

a sample of 30 proprietary experiments reported during calendar 

year 2005. Our review identified 14 experiments with 522 hours in 

billable hour reductions for which the user contended that the end 

time and date entered by the floor coordinator were incorrect or 

where recording errors were made. Examples of the proprietary 

hour adjustments included: 

97 hours reduced to 1 hour of proprietary usage. The user 

contended that the "automated system mis-recorded our 

proprietary declaration." The user supposedly talked with the 

floor coordinator, but was not sure who the floor coordinator 

was. 

52 hours reduced to 14 hours of proprietary usage. The user 

claimed that the experiment had ended early and he had only 

used the beam two days instead of the three days recorded. 

However, the floor coordinator was not contacted when the 

experiment was completed. 

Finally, we also noted that, during calendar year 2005, one 

automated experiment station accessed the APS main beam line for 

1,464 hours that were not claimed as proprietary use, although the 

research performed is predominately proprietary. According to 

management, the user was not conducting experiments the entire 

time, but received the beam to maintain a constant heat load on its 

optics. If it shut off the main beam, the user would need about an 

hour of beam time to heat the optical components. 

Billings and Advances 

Argonne did not bill in a timely manner and did not always 

establish advances for proprietary experiments. Although 

Argonne's goal is to bill within 60 days, proprietary experiments 

were not billed for an average of 21 1 days until after the 

experiment ended during the period of October 2003 through 

December 2005. Although it has not met its 60 day billing goal, 

Argonne has improved the timeliness of its billing and reduced the 

time it took to bill for proprietary experiments to 1 18 days, on 

average, for experiments conducted during the first quarter of 

Fiscal Year 2006. 

Page 2 Details of Finding 
Argonne also allowed proprietary experiments to start or continue 

without advanced funding required by both Departmental and 

Federal directives. The use of the Department of Energy's 

(Department) resources to finance proprietary usage of the APS is 

prohibited by Department's Accounting Handbook, Chapter 13, 

Reirnhtlrsable Work, Revenues, and Other Collections, and the 

Office of Management and Budget's Circular A-25, User Churges. 

However, in a j udgmental sample of 60 of the 48 1 billed 

experiments, we found that 49 did not have advances established 

until an average of 243 days after the experiment was completed. 

Although the advances were in place for the other 11 experiments, 

Argonne had not applied the billings against the advance until an 

average of 169 days after the end of the experiments. In both 

situations, the Department's resources were used to offset missing 

or unapplied advances. 

Administration of Argonne was not effectively managing the recovery of operating 

Proprietary Usage costs associated with the proprietary use of the APS because it did 

not (a) update and review its basis for the hourly rates charged to 

proprietary users; (b) establish and enforce controls to accurately 

record proprietary use; and, (c) establish adequate controls to 

monitor and detect delinquent proprietary billings and insufficient 

advances. 

Hourly Rates 

DOE Order 522. I, Pricing of Departmental Materials and 

Services, requires that rates be established to recover the full cost 

of certain Department products and services, such as proprietary 

research at the Department's user facilities. Although not 

prescriptive, the rate should be based on anticipated costs and 

capacity for each year in order to achieve full cost recovery. 

However, Argonne's management at the APS did not calculate a 

rate that would achieve full cost recovery because, in calculating 

the rate, it used optimal rather than anticipated number of hours 

and beam lines available, since the inception of the APS in 1995. 

In contrast, the proprietary rates at Brookhaven's light source are 

based on current operating capacity. 

Although Argonne did not have documentation explaining why it 

used the optimal capacity, the Deputy Director of the APS said that 

the number of beam hours originated in the beginning of the 

project and had not been updated. The official also indicated the 

maximum number of beam lines may have been originally 

established as the basis for the hourly rates because of concerns 

about charging a significantly higher rate during the initial years of 

Page 3 Details of Finding 
operation in which the number of beam lines would have been 

minimal and when they were encouraging industrial participation 

at the facility. 

Additionally, the Argonne Site Office did not ensure that 

Argonne's proprietary rates achieved full cost recovery. Although 

pricing reviews of user charges are required on a biennial basis, the 

APS proprietary rates were never reviewed. The previous, as well 

as the most recent Departmental biennial pricing report of 

December 2005, failed to identify proprietary usage at the APS as 

an activity requiring a pricing review. 

Pro~rietary Hours 

Argonne made adjustments to proprietary hours as requested by 

the users, without question, because it did not enforce its system to 

record the hours spent on proprietary research and did not require 

users to certify their proprietary hours. In December 2004, 

Argonne implemented a proprietary usage system that requires the 

users to notify APS floor coordinators who record the start and end 

times in an APS database. However, Argonne did not enforce the 

requirement. We identified 14 instances out of the 30 experiments 

where either the floor coordinator was not notified or recording 

errors were claimed to have been made. In each case, Argonne 

made subsequent changes to the recorded hours based upon the 

user contcntion that fewer hours were actually used in the 

experiment. The requirement to contact the floor coordinator is 

crucial to provide confidence in the system to record hours, as no 

other means were identified which could be used to ensurc that all 

proprietary usage is accurately charged. Since Argonne does not 

require the user to certify the time recorded, Argonne had limited 

opportunity to refute contested claims by the users. 

Further, the controls were not cnforced at the automated 

experiment station. Although not conforming to Argonne's policy, 

the team operating this station provided a weekly declaration of 

proprietary usage hours because contacting the floor coordinator 

between experiments was impractical. However, as we noted 

above, the experiment station accessed the main beam line for 

more hours than declared. Argonne had not considered 

alternatives to ensure the unclaimed hours were not used for 

proprietary experiments. For example, the station's operator 

indicated that the shutter to the main beam line could be closed at 

the end of the experiments. 

Page 4 Details of Finding 
Billings and Advances 

Argonne also did not establish adequate controls over billings and 

advance activities. While APS management pointed out that 

diminished en~ployee performance contributed to the untimely 

billing problem, we noted that Argonne did not have policies or 

procedures covering these activities. For example, there were no 

requirements for management to obtain and review aging 

schedules or status reports, which would show the timeliness of 

billings or call attention to insufficient user advances. Further, we 

noted the absence of formal desk procedures detailing how and 

when to prepare the billings for proprietary usage and monitor the 

adequacy of advances. 

Recovery of As a result of Argonne not effectively managing the recovery of 

Costs and Use of operating costs, the Department's forgone revenues totaled at least 

Department Funds $3 million during FY 2004 through the first quarter of 2006. As 

shown in Table 2, had the full cost recovery rate been charged for 

proprietary usage, the APS could have applied $3 million to offset 

its operating costs, safeguards and security costs, and the 

Department's administrative charge. 

Until the rate is corrected and controls over the usage recording 

system are strengthened, the Department will continue to forgo an 

average of at least $1.3 million per year. Additionally, the 

Department is likely to lose an indeterminate amount of revenues 

until it improves the identification of billable hours due to 

proprietary usage. 

Finally, as a result of Argonne not establishing sufficient advances, 

we estimate that the Department used its funds to "float" 

experiment costs of $370,205 for the 49 sampled experiments that 

did not have adequate advances. 

Page 5 Details of Finding 
RECOMMENDATIONS We recommend that the Manager, Argonne Site Office: 

1. In conjunction with the Chicago Operations Office, 

conduct pricing reviews of the APS proprietary rates in 

accordance with DOE Order 522.1 for FY 2006 and 

future years; 

2. Direct Argonne to develop or revise policy and 

procedures over proprietary activities to ensure: 

a. Proprietary rates calculations are in accordance 

with Departmental and Argonne policy; 

b. Proprietary usage is accurately recorded by 

requiring, at a minimum, users to certify the 

beginning and ending times of proprietary 

experiments and addressing experiment stations 

that fall outside the typical operating scenario; 

and, 

c. Proprietary billings and collections are 

performed in a timely manner, including the 

establishment of monitoring and detection 

controls such as aging schedules, status reports, 

and desk procedures. 

3. Make a determination as to the recovery of lost 

collections from the University of Chicago due to rate 

deficits in FYs 2004 through FY 2006 and a loss of 

billable hours, as appropriate. 

MANAGEMENT The Argonne Site Office and Basic Energy Science (BES) 

REACTION AND generally agreed to implement recomn~endations to adjust the 

AUDITOR proprietary rates, improve the recording of billable hours, and to 

COMMENTS to enhance proprietary billings and collections. However, they 

disagreed with our conclusion that the APS' proprietary rates were 

understated in the past and our recommendation regarding the recovery 

of lost collections. Management agreed to comply with DOE Order 

522.1 by modifying its proprietary rates over the next two fiscal years to 

more closely reflect the estimated actual hours and operating beam lines. 

Management also agreed to direct Argonne to revise its policy and 

procedures, implement controls to improve the timeliness of collections 

and require users to electronically certify the time they begin and finish 

their experiments. 

Page 6 Recommendations and Corr~ments 
However, information provided by management as a supplenient to its 

formal comments indicated disagreement with several points in the 

report. Management's disagreements, followed by our responses, are 

detailed below. 

Management Comment: Management disagreed with our conclusion 

that Argonne's proprietary usage rates for FY 06 and earlier were 

understated. According to management, using the actual number of 

operational beam lines rather than the projected number of beam lines 

would unduly penalize the proprietary users while the number of users 

was being increased to full capacity. Management claimed that there is 

no official definition of what full cost recovery means for a user facility 

that does not have the maximum number of users onboard to utilize the 

facility to its full capacity. Further, management did not agree that 

research and development costs to optimize the beam line should be 

included as part of the operating costs. However, it agreed to seek a 

determination from the Department's Chief Financial Officer (CFO) 

regarding its proposal to increase the rates over several years while 

excluding research and development costs from the proprietary rate. 

Auditor Comment: Although it disagreed with our conclusion that 

proprietary rates were understated in the past, management's 

agreement to adjust the rate and seek a CFO detennination is a 

positive step. Unlike other users that publish their research data, 

proprietary users do not share their research results, intending to 

seek patents and profit from the patents. Full recovery of costs, 

including research and development costs, that benefit proprietary 

research is necessary to avoid any subsidy of private research at 

taxpayer expense, as required by Departmental policy. Therefore, 

we believe it is appropriate to seek recovery of research funds that 

benefit the proprietary users. 

Management Comment: Management determined recovering 

money lost from the understated rate would show bad faith on the 

part of Department and not be in its best interest. Management 

asserted the general user and the taxpayer have benefited from 

Argonne's policy not to recover full operating costs. It stated that 

two proprietary users have invested a combined total of over 

$19 million in capital and operating cost to provide state-of-the-art 

beam lines, which are available to APS general users 25 percent of 

the time. As an example of the benefits of the proprietary use, 

management stated the potent anti-AIDS drug "Kaletra" was 

developed in part based on data collected at one of these beam 

lines. Management believes that neither of these beam lines would 

exist today had Argonne charged full costs. 

Page 7 Comments 
Auditor Comment: Although we cannot speculate about what 

proprietary users would have done if faced with higher rates, 

proprietary users receive substantial value for their use of the APS. 

Namely, the Department does not require the recovery of 

depreciation or imputed interest on the Department's $467 million 

investment to construct the APS. 

Further, we noted that general usage of the beam lines provided by 

the two proprietary users identified by management were below 

the 25-percent level for the period we reviewed. During this 

period, one of the beam lines was being constructed and 

con~n~issioned, and was not fully staffed. The second proprietary 

user provided less than one percent of the available beam time to 

general users because its automated operation restricts the type of 

san~ples it can accept. Thus, while it is available as management 

stated, its functionality to general users is limited. 

However, we have clarified our recommendation to focus on the 

recovery of lost collections due to deficits in the proprietary rate, 

as well as, the loss of billable hours, from Argonne and not the 

proprietary users. Specifically, Argonne, as the Department's 

contractor is required to implement the Department's Orders on full 

cost recovery for user services paid for by the government. 

Accordingly, we believe that Argonne is responsible for loss 

collections due to the Department as a result of services provided 

to proprietary users at government expense. 

Management Comment: Finally, management determined not to 

recover billable hours. Management believes there is adequate 

incentive for proprietary users to provide reasonably accurate and 

honest statements of proprietary beam time use. With respect to 

the automated beam line mentioned in the report, management 

stated it would add additional shutter monitors and require 

software changes to improve monitoring of beam line usage. 

However, management did not intend to charge users for the beam 

time used to heat the optics before delivery to the proprietary 

experiment station. 

Auditor Comment: We are concerned that management does not 

feel justified in making an attempt to collect a portion of the hours 

related to the automated operation. The APS policy states that the 

proprietary user fee should be charged for any activity such as 

experiment setup and mounting and aligning samples that is, or is 

intended to be, proprietary and the APS is delivering user beam. 

Thus, we believe the consistent application of APS policy justifies 

recovering the time used to heat the optics as billable hours. 

Page 8 Comments 
Appendix 1 

OBJECTIVE The objective of this audit was to determine whether the 

Department of Energy (Department) is effectively recovering 

operating costs for the proprietary use of the Advanced Photon 

Source. 

SCOPE 

METHODOLOGY 

The audit was performed between January 2006 and December 

2006 at the Advanced Photon Source, located at Argonne National 

Laboratory in Argonne, Illinois. The scope of the audit included a 

review of the proprietary use of the Advanced Photon Source from 

October 1, 2003, through December 3 1, 2005. 

To accomplish the audit objective, we: 

Kesearched applicable Federal and Departmental 

regulations and guidance; 

Reviewed Argonne National Laboratory policies regarding 

proprietary usage of the Advanced Photon Source; 

Assessed the appropriateness of the methodology used to 

calculate the proprietary usage hourly rate; 

Tested the effectiveness and efficiency of the proprietary 

billings; 

Evaluated the adequacy of the system used to determine 

the duration of proprietary experiments; 

Sampled and tested billings and cxperiment usage data; 

Held discussion with key Argonne officials and stafc 

Met with Departmental staff from the Argonne Site Office 

and Chicago Operations Office; and, 

Interviewed proprietary users of the Advanced Photon 

Source. 

The audit was conducted in accordance with generally accepted 

Government auditing standards for perfornlance audits and 

included tests of internal controls and compliance with laws and 

regulation to the extent necessary to satisfy the audit objective. 

We assessed the Department's compliance with the Government 

Performance and Results Act of 1993. The Department has 

established performance measures for the Advanced Photon 

Source related to its ability to maximize access and utilization. 

Because our review was limited, it would not necessarily have 

discovered all internal control deficiencies that may have existed at 

Page 9 Objective, Scope, and Methodology 
Appendix I (continued) 

the time of our audit. In performing this audit, we relied on 

computer-based data and performed limited testing on the data we 

considered critical to satisfying the audit objective. We noted 

inaccuracies in the data obtained on billable hours and, in order to 

use this data, adjusted the number of billable hours based on our 

inquiries and reviews of supporting documents. We also requested 

that the numbcr of billable hours be examined. 

An exit conference was held with Argonne Site Office officials on 

December 1 1,2006. 

Page 10 Objective, Scope, and Methodology 
Appendix 2 

PROPRIETARY RATE CALCULATION 

We calculated the hourly rate by dividing the anticipated annual operating costs by the 

anticipated capacity. The anticipated beam lines and hours have consistently reflected actual 

capacity experienced at the Advance Photon Source. 

1. The number of beam lines expected to be available for use during each fiscal year. 

2. The number of hours budgeted, scheduled, and provided for each time period. 

3. The amount budgeted for facility operations in the upcoming year plus the Safeguards and 

Security surcharge of 1.2 percent and the Department of Energy's (Department) 

administration charge of 3 percent. As stipulated in the Department's directive, the cost of 

depreciation and imputed interest are not to be recovered. 

Page 11 Proprietary Rate Calculation 
Appendix 3 

RELATED AUDIT REPORTS 

Synchrotron Rudiution Light Sources ut Lawrence Berkeley National Laboratoq~ and 

Statford Linear Accelerator Laborator?/ (DOEIIG-0562, July 2002). The audit identified 

that the beam lines at Berkeley National Laboratory were not being fully utilized. Beam 

lines were idle 35 percent of the time when 150 scientifically valid research proposals 

had been rejected. Berkeley did not have a centralized scheduling system and therefore 

was unaware that additional beam time was available. As a consequence, independent 

researchers were unnecessarily turned away. In addition, it was noted that the Office of 

Basic Energy Science did not provide guidance on tracking and reporting actual use of 

the Synchrotron facilities or establish useful performance measures to evaluate their use. 

As a result, opportunities to conduct valuable research with the potential to benefit the 

researcher, the Department of Energy (Department), and the public were lost. The audit 

recommended the implementation of a centralized scheduling system, and that scheduled 

time is used in accordance with the schedule; reporting of actual usage; and 

implementation of performance measures. 

Peer Reviewed ScientlJic Literature Generuted at the Department's Light Sources 

(DOEIIG-0520, August 2001). The audit identified that only 44 percent of the abstracts 

generated from research performed at the Department's light sources had been available 

for public dissemination through the Office of Scientific and Technical Information 

(OSTI). The audit disclosed that abstracts were not available because the Department 

had not established adequate procedures to ensure that peer-reviewed journal literature 

for research performed at the light sources was collected in OSTI's PubSCIENCE 

database. Although required to notify OSTI, the laboratories did not notify OSTI of the 

peer-reviewed journal articles. As a result, researchers did not have full and ready access 

to valuable government-sponsored research information and that scientific advancement 

was not fully promoted. The audit recommended that OSTI monitor and obtain the 

publications being generated from the light sources and obtain published literature from 

publishers with agreements with OSTI. 

Cost Sharing rlt Basic Energy Sciences' User Facilities (DOEIIG-044 1, March 1999). 

The audit identified the potential for Basic Energy Science to obtain additional funding 

for user facilities from industry and other agencies that benefit from the facilities. The 

audit recommended that the Director, Office of Science, consider opportunities to share 

cost enhancements and perform feasibility studies to obtain cost sharing. 

Page 12 Related Audit Reports 
Appendix 4 

Department of Energy 

Argonne Site Off ice 

9800 South Cass Avenue 

Argonne, Illinois 60439 

NOV OE 200~ 

George W. Collard 

Assistant lnspector General 

For Performance Audits 

Office of lnspector General 

SUBJECT: DRAFT REPORT ON fiAUDIT OF MANAGEMENT CONTROLS OVER 

PROPRIETARY USAGE OF THE ADVANCED PHOTON SOURCE 

(APS) AT ARGONNE NATIONAL LABORATORY" 

This letter provides the Management Response to rhe above subject draft audit report 

for the Office of Basic Energy Sciences (BES) and the Argonne Site Office (ASO). 

Attached is a detailed Management Response, developed in consultation with BES, 

providing the rationale for our response to your recommendations. Below we have 

addressed each of your recommendations in the order given in the report. 

RESPONSE TO RECOMMENDATIONS 

1. In conjunction with the Chicago Operations [sic] Office (CH), conduct pricing 

reviews of the APS proprietary rates in accordance with DOE Order 522.1 for FY 

2006 and future years. 

ASO, with the help of CH, has reviewed the priclng rates for FY 06, and as 

discussed below, we believe such rates were appropriate. We concur that future 

pricing rates must be consistent with DOE Order 522.1; however, there is no 

official prescriptive rate for recovery of costs at a user facility. 

2. Direct Argonne to develop or revise policy and procedures over proprietary 

activities to ensure: 

a) Proprietary rates calculations are in accordance with Departmental and 

Argonne policy. 

Agree. AS0 will direct ANL to develop revised policy and procedures 

implementing the attached Management Response regarding the policy on 

proprietary rate calculations. 

b) Proprietary billings and collections are performed in a timely manner, including 

the establishment of monitoring and detection controls such as aging schedules, 

status reports, and desk procedures; and, 

Agree. Corrective actions have already taken place to ensure that billings and 

collections are performed in a timely manner. 

c) Proprietary usage is accurately recorded by requiring, at a minimum, users to 

certify the beginning and ending times of proprietary experiments and addressing 

experiment stations that fall outside the typical operating scenario; 

A cornponenl of the Office of Science 

Page 13 Management Comments 
Appendix 4 (continued) 

George W. Collard 

Agree. APS has agreed to implement a certification process to ensure that 

proprietary usage is accurately recorded. 

3. Make a determination as to the recovery of lost collections due to rate deficits in 

FYs 2004 through FY 2006, as appropriate; and, 

4. Make a determination as to the recovery of billable hours. 

Our analysis shows that user contributions far exceed any potenrial lost 

collections. In fact, two users have contributed over $19M in capital and 

operating cost to provide state-of-the-art facilities that are made available to other 

users. An attempt to recover '70st collections" would show bad faith on the part 

of DOE, and we believe recovery is not in the best interest of the DOE program 

funding the APS. Furthermore, BES and AS0 believe that there is adequate 

incentive for APS proprietary users to provide reasonably accurate and honest 

statements of proprietary beamtime use, and therefore no recovery should be 

made. 

If you have any questions, you may contact me at 630-252-2250 or Nancy Oetter at 630- 

252-2325. 

Q. L& 

A. Creig Zoo 

Acting site Manager 

Enclosure: 

As Stated 

cc: P. Dehmer, DOUHQ, SC-22/GTN, wlencl. 

J. M. Gibson, ANUAPS, wlencl. 

M. Bartos, ANUOCF, wlencl. 

E. O'Connor, ANUOCF, wlencl. 

L. Novotny, ANUOTD, wlencl. 

T. Van Deven, OIG, wlencl. 

W. Lubecke, OIG, wlencl. 

Page 14 Management Comments 
IG Report No. DOEIIG-0753 

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3. What format, stylistic, or organizational changes might have made this report's overall 

message more clear to the reader'? 

4. What additional actions could the Office of Inspector General have taken on the issues 

discussed in this report which would have been helpful? 

5. Please include your name and telephone number so that we may contact you should we have 

any questions about your comments. 

Name Date 

Telephone Organization 

When you have completed this form, you may telefax it to the Office of Inspector General at 

(202) 586-0948, or you may mail it to: 

Office of Inspector General (IG- 1 ) 

Department of Energy 

Washington, DC 20585 

ATTN: Customer Relations 

If you wish to discuss this report or your comments with a staff member of the Office of 

Inspector General, please contact Judy Garland-Smith (202) 586-7828. 
The Office of Inspector General wants to make the distribution of its reports as customer friendly and cost 

effective as possible. Therefore, this report will be available electronically through the Internet at the 

following address: 

U.S. Department of Energy Office of Inspector General Home Page 

http://www.ig.doe.gov 

Your comments would be appreciated and can be provided on the Customer Response Form 

attached to the report.