BY CYNTHIA LEE
UCLA Today Staff

The University of California is aggressively implementing a series of changes and reviews to strengthen financial controls and improve governance at the Los Alamos National Laboratory, its interim vice president of laboratory management told a congressional subcommittee recently.

Speaking to the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigation, UC Senior Vice President for University Affairs Bruce B. Darling described the sweeping reforms being taken in the wake of allegations of misuse of purchase cards, theft and fraud.

“The University of California takes full responsibility for these problems and is aggressively implementing the changes necessary to strengthen financial controls and restore the American public’s confidence in Los Alamos and the university’s management of it,” said Darling, who was appointed in January to the interim management post.

A number of UCLA researchers have collaborative relationships with the Los Alamos lab and its sister Department of Energy facilities, the Lawrence Berkeley National Laboratory and Lawrence Livermore National Laboratory.

Darling told the subcommittee in the first of three hearings on the business and administrative operations of the Department of Energy lab — which has been managed by UC since its inception 60 years ago — that “the general thrust of many of the allegations concerning control weaknesses are valid.

“It is clear, for example, that the purchase card program at Los Alamos, which differed from the program used at the university’s 10 campuses and two other UC-managed laboratories, lacked strong controls,” he said.

“The controls that did exist were not adequately enforced. It is also clear that Los Alamos did not impose the kinds of sanctions and accountability that would have encouraged employees to keep track of property for which they were responsible.”

A review team led by Darling determined that $4.9 million in purchase card transactions either had not been electronically reconciled in a timely manner or were otherwise in question.

After a thorough review, $4.7 million in transactions have been resolved and reconciled. Because UC cannot determine if the remaining transactions were inappropriate or simply lacked proper documentation, the university auditor is recommending the federal government be reimbursed $195,246.

A number of other actions have been taken, Darling said.

The director of the lab’s Audit Office has been reassigned and that office is now managed by the University Auditor, who has strengthened the independence of the audit function among all three UC-managed national labs. Peer reviews of the critical audit and assessment functions of the lab have been launched, and internal audit reporting structures have been redefined. A plan has been developed to bring a substantial backlog of audit and investigation work up to date.

The laboratory’s chief financial officer and two deputies were reassigned, and finance and business operations are now managed by UC’s vice president for financial management, who has put together a team of property, procurement and technology specialists from Lawrence Livermore National Laboratory to review business procedures, financial systems and organizational structure at Los Alamos. A team of more than 30 Ernst & Young consultants has been conducting a comprehensive review of the lab’s key financial processes and will recommend an optimal organizational structure.

UC also is looking at how other national laboratories, such as NASA’s Jet Propulsion Laboratory, are managed.

Though it has been a difficult period for the lab and the UC, the experience “has strengthened us,” Darling said. “It has further bolstered our resolve to restore the confidence of the nation in the service we are determined to perform in time of peace and in time of war.”