Audit of Fermi Research Alliance LLC Costs FY21-22

DOE OIG Reports

Filed March 11th, 2026

Detected March 28th, 2026

Summary

The DOE Office of Inspector General, through the Defense Contract Audit Agency, audited Fermi Research Alliance LLC's costs for FY21-22. The audit questioned approximately $9.9 million in performance award fees and $142,463 in direct costs, including improper holiday pay claims.

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What changed

The Department of Energy's Office of Inspector General (DOE OIG), via the Defense Contract Audit Agency (DCAA), has released an audit report (DOE-OIG-26-20) concerning costs incurred by Fermi Research Alliance LLC for fiscal years 2021 and 2022 under contract DE-AC02-07CH11359. The audit identified approximately $9.9 million in questioned performance award fees and $142,463 in questioned direct costs. Specifically, the DCAA questioned performance award fees included in the General and Administrative pool and labor costs related to improper triple-time holiday pay claims, which exceeded the allowable double-time rate. Two scope limitations were also noted due to the absence of real-time testing, posing unresolved risks to labor and materials costs.

While the Department determined the contractor was entitled to the earned fee after reconciliation, the questioned costs, particularly the holiday pay, require resolution. The DOE OIG recommends that Fermi Research Alliance LLC coordinate with the contracting officer to resolve the identified questioned costs. Compliance officers should review internal policies and controls related to award fee calculations and employee compensation, especially for holiday pay, to ensure adherence to contract terms and applicable regulations to prevent similar findings in future audits.

What to do next

Coordinate with the contracting officer to resolve questioned costs related to performance award fees and holiday pay.
Review and update internal policies regarding employee holiday pay to ensure compliance with contractual limits (e.g., double-time vs. triple-time).
Implement real-time testing procedures for labor and direct materials costs to mitigate scope limitations identified in the audit.

Penalties

Approximately $9.9 million in performance award fees and $142,463 in direct costs were questioned.

Source document (simplified)

Audit: DOE-OIG-26-20

Fermi Research Alliance LLC’s Costs Incurred and Claimed for Fiscal Years 2021 and 2022 Under Contract No. DE-AC02-07CH11359

Office of Inspector General

March 11, 2026

March 6, 2026

Fermi Research Alliance LLC’s Costs Incurred and Claimed for Fiscal Years 2021 and 2022 Under Contract No. DE-AC02-07CH11359

This audit was performed by the Defense Contract Audit Agency (DCAA) on behalf of the Department of Energy’s Office of Inspector General, which examined Fermi Research Alliance, LLC’s costs incurred and claimed for fiscal years 2021 and 2022 at the Fermi National Accelerator Laboratory, under management and operating contract No. DE-AC02-07CH11359.

The audit’s objective was to determine if costs charged to Department Contract No. DE-AC02-07CH11359 for fiscal years 2021 and 2022 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 and questioned approximately $9.9 million in performance award fees and $142,463 in direct costs. Specifically, the DCAA questioned performance award fees in the General and Administrative pool. The DCAA questioned the performance award fees, which represented a contractual incentive paid by the Department because the fee was included as a cost in the General and Administrative pool. The DCAA reconciled the proposed fee amount to the general ledger, and the Department determined that the contractor was entitled to the earned fee. The DCAA also questioned labor costs due to claimed triple-time pay for employees working on holidays, which exceeded allowable pay of double-time. In addition to the questioned costs noted, the DCAA reported two scope limitations because real-time testing was not performed, which resulted in unresolved risk that could materially affect: (1) labor costs and (2) direct materials and supplies costs.

If the issues identified by the DCAA are fully addressed, it should help ensure that costs charged to the Department are allowable, allocable, and reasonable in accordance with contract terms. We recommend that the contractor coordinate with the contracting officer to resolve the questioned costs identified in this report.