Each fiscal year, the Department of Energy (DOE) requests new obligational authority from the Congress to meet the costs of running its programs. During a fiscal year, new obligational authority can be adjusted to reflect changes in authority, such as a rescission of authority. These adjustments result in an adjusted new obligational authority for DOE, representing the net amount of new resources available to DOE in a fiscal year. In fiscal year 1995, DOE received about $17.8 billion in adjusted new obligational authority. The Congress provides DOE with its obligational authority through two major appropriations acts—Energy and Water Development Appropriations and Interior and Related Agencies Appropriations. The Energy and Water Development appropriation provides the bulk of DOE’s funding—about $16.2 billion in fiscal year (FY) 1995. In comparison, the Interior and Related Agencies appropriation provided about $1.6 billion in FY 1995. These two major appropriations acts are further broken down into more specific appropriations for DOE’s programs. The programs can receive funding from more than one specific appropriation but usually receive a majority of their funding from one or two specific appropriations. When appropriating funds for an agency—providing the authority to incur obligations—the Congress sets the amount and purpose of the funds and the time frame during which the funds will be available. When a specific time frame is defined, referred to as a fixed appropriation, the period is typically 1 to 5 years. However, some appropriations do not restrict the time in which the funds must be obligated but state that the funds are “to remain available until expended” or to “remain available without fiscal year limitation.” This is generally referred to as “no-year” authority. DOE receives no-year authority for most of its activities. With no-year authority, DOE may retain unexpended balances (both unobligated balances and uncosted obligations) indefinitely. In contrast, under a fixed appropriation, unobligated balances are no longer available for new obligations after the appropriation has expired. Both unobligated balances and uncosted obligations are cancelled, and the expired account is closed 5 years after the period in which the funds were available. DOE has accumulated significant carryover balances from prior years’ appropriations but still receives new obligational authority each year under congressional appropriations. These carryover balances grew from $7.7 billion in fiscal year 1991 to $12 billion in fiscal year 1995. The carryover balances have come to represent a significant portion of the total resources DOE has available to meet the costs of its programs. In fiscal year 1995, DOE had $29.8 billion in total resources available, consisting of $12 billion in carryover balances and another $17.8 billion in adjusted new obligational authority. (Fig. 1.1 compares the sources of DOE’s total available resources—DOE’s adjusted new obligational authority and carryover balances—over the last 5 complete fiscal years.) The Congress, recognizing the growing significance of carryover balances, has begun to consider these balances when making decisions about providing new obligational authority. Over the last 5 years, the Congress has recommended that DOE use its carryover balances in lieu of new obligational authority. However, the Department’s carryover balances continue to be significant. (See fig.1.2.) DOE’s increasing budget needs have also heightened the Department’s and the Congress’s efforts to analyze why these carryover balances exist and whether they exceed the requirements for DOE’s programs and are therefore available to reduce the need for new obligational authority. Although attention has focused on uncosted obligations ($8.4 billion in fiscal year 1995), unobligated balances also contribute significantly to carryover balances ($3.6 billion in fiscal year 1995). Figure 1.3 shows the contribution of both uncosted obligations and unobligated balances to the total carryover balances over the last 5 years. Appendix I provides details on the carryover balances, DOE’s use of them, and the adjusted new obligational authority for DOE’s appropriations over the last 5 years. At the beginning of fiscal year 1995, DOE had $3.6 billion in unobligated balances—an increase from $1.7 billion at the beginning of fiscal year 1991. Unobligated balances can result from the “pooling” of funds as they move through DOE’s funding process, which is depicted in figure 1.4. At the beginning of the process, the Congress appropriates obligational authority to DOE through its appropriations acts. During the fiscal year, the Office of Management and Budget (OMB) apportions the appropriations to DOE. Once DOE receives the apportionment from OMB, it may allot the funding to its programs. DOE allots funding to its programs on the basis of approved financial plans for each program. These plans, developed by the programs in conjunction with the Office of the Chief Financial Officer (CFO), provide direction on the amount of funding to be allotted to the programs and the timing of those allotments. Not all the funding is allotted to the programs at once. Typically, some funds are held in reserve for various reasons, including the need to hold funding back because of direction from OMB or the Congress. Thus, unallotted appropriations are the first area where funding can pool. After receiving their allotment, DOE’s programs then make obligations within their organizations and to contractors to conduct the programs’ activities. However, not all the allotments are obligated. For example, funding may not be obligated if a program cannot yet proceed with an activity because it is awaiting completion of some legal proceeding or compliance with an environmental requirement. These unobligated allotments at the program level are the second area where funding can pool. Unobligated allotments and unallotted appropriations are the two categories of unobligated balances held by DOE. DOE must ask OMB to “reapportion” any unobligated balances remaining at the end of the fiscal year for the next year, but that step is typically only a formality, and DOE retains its unobligated balances from year to year. Unobligated balances can also be created by deobligating funding that had been obligated but for which the funding’s original purpose no longer exists—for example, a construction project that is cancelled or reduced in scope. This funding is held in reserve either by the program (as an unobligated allotment) or by the CFO (as an unallotted appropriation). Typically, this funding includes the excess funding that DOE has identified and is (1) holding to reduce the following year’s budget request or (2) proposing that the Congress allow the Department to reallocate to a use that differs from the funding’s original purpose. With no-year authority, DOE can request reallocation of unobligated funds indefinitely. DOE notifies the Congress of its intent to reallocate funds for purposes other than those specified in the appropriation by reprogramming within an existing appropriation or by transferring the funds between appropriations. DOE typically obligates the majority of its obligational authority for a new fiscal year to the various contractors that implement its programs at facilities throughout the nation. As the contractors receive goods and services, they liquidate or “cost” the obligations. However, not all the obligations are costed during a given year, and these uncosted obligations can accumulate from one fiscal year to the next. This accumulation represents the final area where DOE’s funding can pool and contribute to carryover balances, as figure 1.4 showed. In 1992, we testified that DOE’s uncosted obligations were growing—totaling over $7 billion at the beginning of fiscal year 1992—and that DOE did not have an effective system for analyzing these uncosted obligations to determine the extent to which they could be used to reduce DOE’s budget requests. At the beginning of fiscal year 1995, the uncosted obligations remained significant, at about $8.4 billion. In response to our testimony, the Congress, in the Energy Policy Act of 1992, directed DOE to submit with each annual budget request a report of its uncosted obligations at the end of the previous fiscal year. The report was to (1) show what portions of the uncosted obligations were committed and uncommitted, (2) describe the purposes for which all such funds were intended, and (3) explain the effects that the information in the report had on the annual budget request that DOE was submitting. As required by the act, DOE has issued three reports on the status of its uncosted obligations for the end of fiscal years 1992, 1993, and 1994. Our objectives in this review were to determine whether (1) DOE has an effective approach for identifying the carryover balances that exceed its programs’ requirements and may be available to reduce its budget request and (2) opportunities exist to develop a more effective approach for analyzing these carryover balances. This report is based in large part on a series of reviews that we have conducted over the past 3 years. (See a list of our related reports at the end of this report.) To obtain information on DOE’s unobligated balances and uncosted obligations, we obtained and reviewed internal reports from DOE’s accounting and financial systems that track how DOE manages and monitors its funding. We did not attempt to verify the data in these reports or reconcile the data to published sources.