Audit: Battelle needs to stick to purchasing rules

An audit of purchasing records kept by Pacific Northwest National Laboratory’s contractor has raised questions about whether they are managed well enough that officials could detect possible problems.

The report on the audit by the Department of Energy’s Office of Inspector General was made public Monday.

Battelle, which operates PNNL in Richland for DOE, has been moving toward a paperless procurement system. Some of the issues were related to that change.

Inspectors found that procurements recorded in the new computerized system did not always contain the necessary documents to support contracting decisions and that some important details were missing.

“Lack of specific detail calls into question the integrity of the documents,” the audit report said.

Some files did not include information on origination, approvals and changes. The audit also questioned why 22 of the 47 documents had “image” signatures that could easily be copied or fabricated.

“While we are seeing improvement in efficiencies under a paperless system, there certainly have been a few growing pains along the way,” said Susan Bauer, spokeswoman for PNNL.

The audit report also criticized Battelle’s practice of splitting procurements into several awards to the same subcontractor.

Battelle said it sometimes split up the awards for convenient administration of contracts, to meet the financial needs of clients and to make paying invoices easier.

However, splitting awards into smaller pieces allowed purchases that were larger than contract specialists had the authority to make.

In one case, 27 purchase orders were made to a single subcontractor for a total of $3.1 million, all processed on the same day. The contract specialist had authority to award subcontracts up to only $1.5 million.

The audit report also took issue with whether contracts were adequately reviewed and approved when they were changed.

In one case, Battelle awarded a 1-year, $100,000 subcontract, which was then modified 20 times over six years to grow in value to more than $3 million without requiring any increase in scrutiny.

“The issues we identified were due to weaknesses in Battelle’s policies and procedures as well as inconsistent implementation of the policies and procedures,” the audit report said.

Roger Snyder, manager of the DOE Pacific Northwest Site Office, which oversees Battelle, said in a letter to audit officials that his office had identified Battelle’s inconsistencies in is procurement activities before the audit.

It had already lowered acquisition thresholds and put in place a plan to addressing many of the concerns later identified in the audit, Snyder said.

Bauer said that the required approvals were given in the procurements questioned in the audit, but in some cases officials could not easily produce documentation of the approvals.

The Pacific Northwest Site Office generally agreed with the recommendations of the audit report.

Recommendations included revising polices and procedures and more frequent reviews of Battelle’s procurements.

“This audit has highlighted some of the issues we have been working on,” Bauer said.

Not only are recommendations being followed, but PNNL is taking a more holistic view of the issue, she said. A team is in place to evaluate how to handle and store documentation and process approvals for procurements going forward, she said.

This story was originally published August 1, 2016 at 8:00 PM with the headline "Audit: Battelle needs to stick to purchasing rules."