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Backgrounder on Draft Inspector General Report on DOE International Travel

Over the past two years, Energy Secretary Hazel R. O’Leary led business delegations on four international trade missions — to India, Pakistan, China and South Africa. These missions were designed to help U.S. businesses succeed in the increasingly competitive international energy marketplace.

On December 9, 1995, Secretary O’Leary asked the Department’s Inspector General to review questions which had been raised about the Department’s international travel. On May 30, 1996, the Inspector General submitted a draft report that identified shortcomings in administration, management and accounting procedures and practices for international travel. In the draft report, the Inspector General made 29 recommendations to improve the cost-effectiveness of the Department’s international travel.

Secretary O’Leary has instructed the Department to implement each of the Inspector General’s recommendations promptly. Before the Inspector General completed his review, the Department took steps to fix its administrative and accounting problems. These steps, which effectively implement many of the Inspector General’s recommendations, are outlined below.

Implemented Interim International Travel Policy

After undertaking a comprehensive management evaluation of these issues, the Department developed and implemented a new international travel policy on April 15, 1996. This interim policy, after incorporating the comments of the Inspector General, the General Accounting Office, and others will be finalized on July 31.

The travel policy addresses many of the deficiencies identified in the Inspector General’s draft report: the need for more centralized management and tighter budget controls; the refinement of aircraft procurement policies; aggressive cost recovery from private sector participants; and detailed accounting of funds spent through U.S. embassies overseas. The travel policy includes the following reforms:

  • Improves procedures for selecting private sector travelers;
  • Ensures that management responsibilities and decisionmaking are clearly articulated for future trade missions, to ensure cost-effective use of taxpayer funds;
  • Requires full-cost recovery from all private sector participants;
  • Revises air charter acquisition procedures to ensure that aircraft for future trade missions are chosen in the most cost-effective manner possible; and
  • Directs that detailed, advance agreements be made with U.S. embassies overseas for which assistance is being requested to support DOE missions.

Improved Interagency Coordination

Initial press reports indicated that the Department of Energy could not account for $255,000 of expenses incurred on the four trade missions. These funds were never “lost” but represented charges billed through U.S. embassies that were not adequately documented. The State Department, at our request, has now provided invoices for the majority of these expenses. After analysis and review of the invoices to date, the State Department has identified $31,100 in funds that should be reimbursed to the Department of Energy because they were improperly charged to DOE. We are working to reconcile additional costs that we believe were improperly billed to DOE.

Future Department of Energy travel that requires embassy support will follow more rigorous accounting procedures and controls for costs incurred by embassies on the Department’s behalf. These reforms address some of the deficiencies identified by the Inspector General. The State Department also has recently reissued guidance to its embassies and agency “customers” on the use of overseas embassies to support agency missions.

Resolving Anti-Deficiency Act Issues

The Inspector General’s draft report raises the issue of possible violation of the Anti-Deficiency Act. Nothing in the Inspector General’s report, however, indicates any action by the Secretary that is questionable under the Anti-Deficiency Act or other laws.

On the South African trade mission, as was the case with other Department of Energy trade missions, business participants made payments for administrative expenses, including incidental food and beverages. On the South Africa trade mission, each business participant was assessed $600 for those administrative expenses; additionally, other organizations offered to cover the cost of some meals and receptions during the trip. It was not the intent of the Department of Energy that government funds be used to pay for food and beverages.

Unfortunately, some expenses which should have been paid with the $600 assessments or private sector hosts were incorrectly charged to DOE’s Departmental Administration account. The Department has disputed most of these charges and is making every effort to ensure that the U.S. Treasury is reimbursed for any costs that should not have been charged to the government. The Department’s Office of General Counsel is reviewing these issues, as recommended by the Inspector General.

Secretary O’Leary is committed to fixing the administrative and accounting problems identified by the Inspector General. This commitment reflects her longstanding effort to make the Department more cost-effective and accountable to the American people — an effort that has saved taxpayers more than $5 billion from 1992 budget projections.

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