Audit of Consolidated Nuclear Security's Claimed Costs for Nuclear Facilities

DOE OIG Reports

Filed March 13th, 2026

Detected March 28th, 2026

Summary

The DOE Office of Inspector General audited $5.87 billion in costs claimed by Consolidated Nuclear Security, LLC for managing nuclear facilities between FY 2016-2018. The audit identified $324,000 in questioned costs for unworked overtime and improper subcontract classifications, leading to two recommendations for improvement.

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What changed

The Department of Energy's Office of Inspector General has released an audit report (DOE-OIG-26-23) concerning $5.87 billion in costs claimed by Consolidated Nuclear Security, LLC (CNS) for the management and operation of the Pantex Plant and Y-12 National Security Complex during fiscal years 2016 through 2018. The audit identified approximately $324,000 in questioned costs related to unworked overtime and control deficiencies in subcontract administration, which led to improper classification of subcontracts. The OIG has issued two recommendations to mitigate the risk of reimbursing unallowable costs and advised CNS to work with the contracting officer to resolve the questioned amounts.

While CNS concurred with the recommendations, it disagreed with certain aspects of the report concerning an investigative matter. Compliance officers should note the specific findings regarding allowable, allocable, and reasonable costs, as well as the control deficiencies in subcontract administration. The report highlights the importance of accurate cost reporting and robust subcontract oversight for management and operating contractors. Although no specific compliance deadline is mentioned, CNS is expected to implement the OIG's recommendations and resolve the questioned costs.

What to do next

Review internal controls for subcontract administration to prevent improper classification.
Work with the contracting officer to resolve the $324,000 in questioned costs.
Implement OIG recommendations to reduce the risk of reimbursing unallowable costs.

Source document (simplified)

Audit: DOE-OIG-26-23

Consolidated Nuclear Security, LLC’s Statement of Cost Incurred and Claimed for Fiscal Years 2016 Through 2018 Under Contract No. DE-NA0001942

Office of Inspector General

March 13, 2026

March 12, 2026

Consolidated Nuclear Security, LLC’s Statement of Cost Incurred and Claimed for Fiscal Years 2016 Through 2018 Under Contract No. DE-NA0001942

The Office of Inspector General initiated this audit to review the $5,872,733,964 of costs claimed by Consolidated Nuclear Security, LLC (CNS) to manage and operate the Pantex Plant and the Y-12 National Security Complex for fiscal years (FY) 2016 through 2018.

CNS managed and operated both the Pantex Plant and the Y-12 National Security Complex as a management and operating contractor for the Department of Energy’s National Nuclear Security Administration.

Specifically, the audit objective was to determine if costs charged to Department Contract No. DE-NA0001942 for FYs 2016 through 2018 were allowable, allocable, and reasonable in accordance with appliable laws, regulations, and contract terms.

We identified one noncompliance and one control deficiency. We questioned approximately $324,000 of costs claimed by CNS in its Statement of Cost Incurred and Claimed in FYs 2016 and 2017 for unworked overtime due to an administrative error. We also found that CNS improperly classified subcontracts as firm-fixed-price due to control deficiencies in subcontract administration.

To address the issues identified in this report, we made two recommendations that, if fully implemented, should reduce the risk of reimbursing unallowable costs. Further, we recommend that CNS work with the contracting officer to resolve the questioned costs identified in this report.

CNS concurred with our recommendations; however, it did not agree with all the information presented in the report specifically related to an investigative matter.