The National Nuclear Security Administration’s Molybdenum-99 Cooperative Agreements with Commercial Companies

The National Nuclear Security Administration’s (NNSA) Molybdenum-99 (Mo-99) program objective is to accelerate the establishment of a reliable non-highly enriched uranium-based Mo-99 production capability in the U.S. sufficient to supply the U.S. Mo-99 demand as soon as possible. The supply should rely on diversified technologies that utilize a variety of facilities to ensure that patients in the U.S. have access to the Mo-99 they need without interruption. To achieve this objective, in 2018, a new Funding Opportunity Announcement was issued by NNSA’s Office of Material Management and Minimization for Mo-99 production without the use of highly enriched uranium for a 50-50 percent cost-sharing arrangement between the U.S. Government and each recipient of Federal funding in support of commercial application demonstration projects. Based on NNSA’s review of the awardees’ technical capacity and ability to adequately fund their cost share to bring their projects to commercial production and become long-term producers in the U.S., it awarded four cooperative agreements. We initiated this audit to determine if NNSA administered the Mo-99 cooperative agreements with commercial companies in accordance with applicable program requirements. We reviewed four cooperative agreements and found that NNSA generally administered the agreements in accordance with applicable requirements. However, NNSA did not always ensure that compliance audits were performed, as required, when expenditures exceeded $750,000. Specifically, an awardee with expenditures totaling $10,258,447.83 did not have an audit completed, as required; therefore, these costs are pending the completion of compliance audits. In addition, we found that NNSA has an opportunity to improve its internal controls related to the invoice approval process by ensuring that alternate personnel assigned to the task understand and follow the established process. We are questioning approximately $34,313 of costs paid to the awardee due to erroneous charges. Finally, we found that NNSA did not document its risk evaluation of an awardee to include how the results of the pre-award survey factored into the risk evaluation. These issues occurred because (1) NNSA does not have a policy to monitor and ensure that awardees are complying with audit requirements; (2) an alternate Contracting Officer did not follow NNSA’s internal invoice approval process and approved the invoice without a thorough invoice review; and (3) NNSA does not have a policy for formally documenting high-risk recipients and any special award conditions. To address the issues identified in this report, we have made three recommendations that, if fully implemented, should help ensure that NNSA’s administration of cooperative agreements complies with applicable regulations and policies. Management fully concurred with two of the three recommendations and concurred in principle with the other recommendation. Management also identified responsive corrective actions to address the associated report issues.