Federal Reports

SUMMARY    This audit was performed by the Defense Contract Audit Agency (DCAA) on behalf of the Department of Energy’s Office of Inspector General and examined Lawrence Livermore National Security, LLC’s (LLNS) costs incurred and claimed for fiscal year 2021 at the Lawrence Livermore National Laboratory under management and operating contract No. DE-AC52-07NA27344.

The audit’s objective was to determine if costs charged to Department Contract No. DE-AC52-07NA27344 for fiscal year 2021 were allowable, allocable, and reasonable in accordance with applicable laws, regulations, and contract terms.

The DCAA performed the audit in accordance with generally accepted government auditing standards.

The DCAA identified two audit findings. First, the DCAA questioned over $63 million in management fee in the Laboratory Directed Research and Development allocation base. The DCAA questioned the management fee, which represents a contractual incentive paid by the Department, because LLNS included it as a cost in the Laboratory Directed Research and Development allocation base. The DCAA validated that the proposed fee amount did not exceed the amount in the contract, and the Department determined that the contractor was entitled to the earned fee. Second, the DCAA increased LLNS’ proposed allocation bases for one indirect cost pool because LLNS did not include all activity that had a causal or beneficial relationship to the cost pool. In addition to the two audit findings, the DCAA reported scope limitations regarding: (1) real-time testing was being performed, which resulted in unresolved risk that could materially affect labor and material costs; and (2) unresolved subcontract costs.  

If the issues identified by the DCAA are fully addressed, it should help ensure that costs charged to the Department are appropriately allocated. Accordingly, the DCAA recommends that LLNS conduct a study to determine the method or allocation base that represents a causal or beneficial relationship and results in an equitable allocation of the Site Support costs.

LLNS did not concur with the DCAA’s findings and asserted that its allocation bases were compliant with cost accounting standards.  

The VA Office of Inspector General’s (OIG) information security inspection program assesses whether VA facilities are meeting federal security requirements related to three high-risk control areas: configuration management, security management, and access. For this inspection, the OIG selected the VA Spokane Healthcare System in Washington and found deficiencies in all three areas.

Configuration management controls, which identify and manage security features for all hardware and software components of an information system, were deficient in vulnerability remediation and system baseline configurations.

Security management controls had one deficiency. The OIG identified volunteers and scheduling clerks who were granted unnecessary access to an electronic health record screen that contained unredacted personally identifiable information.

Access controls had four deficiencies. The OIG found that the Mann-Grandstaff VA Medical Center was deficient in inventory management of physical keys, unsecured network equipment, electrical grounding, and fuel storage. As a result, the facility risks unauthorized access, disruption, and destruction of critical information technology resources.

To address deficiencies, the OIG made seven recommendations to VA, all of which VA concurred with.

During the week of August 11, 2025, we performed a self-initiated audit at the Santa Clarita Processing and Distribution Center (P&DC) and four delivery units serviced by the plant. The delivery units included the Chandler Station, Encino and Sherman Oaks Branches, and Woodland Hills Main Post Office in the Los Angeles, CA, area.

We issued individual reports for the four delivery units and P&DC. We also issued another report summarizing the results of our audits at all four delivery units with specific recommendations for management to address.

The VA Office of Inspector General (OIG) completed a desk review of the single audit reporting package for the United States Veterans Initiative and Subsidiaries (U.S. VETS) for the year that ended June 30, 2024. The OIG performed this desk review consistent with its duties and responsibilities under the Inspector General Act, as amended, 5 U.S.C. § 404, with the objective of determining whether the single audit reporting package complied with the reporting requirements of the Uniform Guidance. 

Based on the OIG team’s review, the rating for the reporting package is “pass with deficiencies"—meaning there are quality deficiencies that should be brought to the attention of the auditor (and auditee, when appropriate) for correction in future audits. The OIG does not express an opinion on the quality of the audit work performed or on the accuracy of the single audit reporting package. 

Namely, the OIG team found that the U.S. VETS’ Schedule of Expenditures of Federal and Non-Federal Awards did not fully comply with reporting requirements, because it did not provide totals by individual federal programs and the associated assistance listing numbers, as required.

The OIG is providing a copy of this memorandum to VA officials, federal agencies with direct expenditures listed on the Schedule of Expenditures of Federal and Non-Federal Awards, and Armanino LLP (the firm that conducted the single audit) to inform them of the results of this desk review.