ML18330A112
| ML18330A112 | |
| Person / Time | |
|---|---|
| Issue date: | 11/30/2018 |
| From: | Maureen Wylie NRC/OCFO |
| To: | Baker B NRC/OIG/AIGA |
| References | |
| OIG-13-A-02 | |
| Download: ML18330A112 (5) | |
Text
UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20555-0001 November 30, 2018 MEMORANDUM TO: Dr. Brett M. Baker Assistant Inspector General for Audits Office of the Inspector General FROM: Maureen E. Wylie /RA/
Chief Financial Officer
SUBJECT:
STATUS OF RECOMMENDATIONS: AUDIT OF NRCS PROCESS FOR CALCULATING LICENSE FEES (OIG-13-A-02)
This is a status update in response to the Office of Inspector Generals (OIG) Audit Report, Audit of NRCs Process for Calculating License Fees (OIG-13-A-02) dated October 24, 2012, and memorandum from you on Status Of Recommendations: Audit Of NRCs Process For Calculating License Fees (OIG-13-A-02) dated June 5, 2018.
Recommendation 1:
The Office of the Chief Financial Officer (OCFO) should prepare and document an annual Fee Rule validation on the hourly rate (budget vs. cost analysis) and make adjustments as needed to the fee calculation process.
Status:
In previous updates, the OCFO provided updated schedules for researching, creating new reports, performing an analysis, and documenting a process for the annual validation. In the May 16, 2018, memorandum to you, the OCFO explained that the staff had developed the report, Budget to Cost Hourly Rate Variance Analysis, and supporting analyses that satisfied user acceptance testing. In that report (enclosed), the staff analyzed the variance between the hourly rates for the fiscal year (FY) 2017 based on budget and based on cost. The analysis reflected a nominal difference between the two hourly rate calculations.
CONTACT: Michele Kaplan, OCFO/DPB/LFPT (301) 415-5256
B. Baker Based on this immaterial difference, the OCFO did not plan on changing the current hourly rate calculation and determined that there was little to be gained from continuing to perform this analysis. In the OIG response dated June 5, 2018, you declined to close Recommendation 1 based on the following:
Monitoring the actual costs vs. budgeted costs provides insight into the accuracy of the budget allocation process. If a significant variance was noted, NRC could then review the budget allocation process to identify any adjustments that could be made to their fee calculation process. OIG will meet again with OCFO to discuss the feasibility and usefulness of this report. OIG will close this recommendation when the agency documents the fee rule validation and adjusts the fee calculation process as needed.
The OIG then requested that the OCFO continue to prepare and implement the validation report and provide another update by November 30, 2018.
The OCFO is formally requesting that Recommendation 1 be closed for the following reasons.
Improvements to the Fee Recovery Process The fee recovery process has been radically changed since this audit was conducted. We do not agree that monitoring the actual costs vs. budgeted costs when developing the hourly rate calculation provides any insight into the accuracy of the budget allocation process. OCFO has other, more effective methods, of monitoring the accuracy of the budget allocation process with formal internal control procedures such as the Fee Rule Calculation Procedures Checklist, the License Fee Policy Team (LFPT) Desktop Procedures Guide, the Part 170 Estimates Report and procedures, and the specific instructions sent from LFPT staff to the OCFO Budget Analysts and Office PMDA staff. In addition, there are multiple layers of review of the activities and work papers to support the fee rule.
Since this audit in 2012, OCFO has implemented many other improvements to the fee recovery processes, including cross-staff and management-level review of the calculation spreadsheets, work papers, fluctuation analyses, and Federal Register notice files. In addition, staff monitors the accuracy of the budget formulation and execution processes with the development of the OCFO End of Year Analysis and monthly Budget Execution Reports.
In response to the recommendations in your audit report, NRCs Internal Control Over Fee Revenue, OIG-15-A-12, dated March 19, 2015, we have deployed the Cost Activity Code (CAC) System which linked CACs, dockets, and Enterprise Project Identifiers (EPIDs)
(specific tasks/activities in the regulatory process) to increase data accuracy to support fee billing, program management and external reporting, in addition to implementing new internal control procedures over the assignment of CACs. A new contract cost validation report was developed with specific procedures for staff to follow that improved the accuracy of fee-recoverable contract costs. A process was implemented to collect and provide detailed contractor cost information to licensees. A new procedure was established whereby Resident Inspectors record their non-generic time to a newly created fee billable CAC for activities related to indirect efforts not otherwise captured using other billable activity codes.
B. Baker Further, weve improved controls and oversight of the fee schedule development with enhanced review procedures such as cross-staff and management-level review of the calculation spreadsheets, work papers, fluctuation analyses, and Federal Register notice files. In addition, through expanded staff training and development, and augmenting staff (from 2 FTE to 5 FTE) in license fee policy, we ensured high-quality analysis.
Statutory Requirements The Omnibus Budget Reconciliation Act of 1990, as amended (OBRA 90) requires the NRC to recover approximately 90% of its annual budget authority through fees. There is no legal requirement to recover costs. Costs are irrelevant for developing the annual fee schedule. In addition, whatever is not collected as Part 170 fees, must be collected as Part 171 (annual) fees. Therefore, a change in Part 170 billings would cause the need for a corresponding reciprocal change in Part 171 billings in order to comply with the law. Since our stakeholders understand the inverse relationship between Part 170 and Part 171 fees, they are not as concerned with the relative proportion of those fees as much as they are concerned with our overall budget and rightsizing it to regulate our workload efficiently.
Burden Reduction In the Presidents Management Agenda (PMA), issued March 20, 2018, Cross Agency Priority Goal 6 was established to reduce the burden of low-value activities by redirecting resources to high-value activities that accomplish crucial mission outcomes. Federal agencies were asked to regularly review their own management guidance, administrative requirements, regulations and internal reporting obligations to identify opportunities to streamline operations and thereby maximize the impact of the resources funding their operations. A low-value activity is one that consumes resources but adds little value. We believe that the validation report analysis fits the definition of low-value activity.
The Validation Report parameters would still need to be reprogrammed every year, (e.g., the mission-direct FTE productive hours rate, the fiscal year, specific non-fee-recoverable amounts that are identified in the annual appropriation, etc.) to tie to the appropriation language and fee rule assumptions. The Validation Report was developed in FAIMIS and we would have to tax our FAIMIS contractors and redirect their attention from developing or revising other important FAIMIS reports to update the Validation Reports parameters. Additional resources would then be needed to verify that the Validation Report was functioning properly after the changes were made.
B. Baker As we discussed in our last response dated May 16, 2018, while some insights were gained by the process of developing the report and procedures for the hourly rate variance analysis, the staff believes that there is little value to be gained from expending additional staff and contract resources to update the validation reports parameters to tie to the annual appropriation and perform this analysis when there are other activities currently preformed to ensure reasonable accuracy over the budgeting and fee recovery processes.
cc: S. Zane, OIG J. Storch, OIG R. Lewis, OEDO J. Jolicoeur, OEDO
ML18330A112; *concurred via email OFFICE OCFO/LFPT OCFO/DPB OCFO/DPB NAME MKaplan RAllwein SCoffin DATE 11/26/2018 11/26/2018 11/27/2018 OFFICE DCFO CFO NAME BFicks* MEWylie*
DATE 11/27/2018 11/29/2018