Agencies urged to document oil spill costs

The White House is directing federal agencies to document all costs and spending related to the Deepwater Horizon oil spill, according to a July 1 governmentwide memo from Office of Management and Budget Director Peter R. Orszag.

The 11-page directive, which applies to past and future costs, urges agencies to categorize all spending that can be attributed to the spill to "preserve options for cost recovery and reimbursement." Agencies also are encouraged to work with affected states to track their costs, including benefit payments, unemployment compensation and food assistance.

The memo, however, does not address whether any, or all, of the costs will be recouped by the government, either directly through BP or the Coast Guard's Oil Spill Liability Trust Fund. "Agencies should track expenses whether or not they currently believe them to be recoverable," Orszag wrote.

The guidance does not tackle environmental and natural resources damages, which will be tracked under existing regulations and procedures, or the loss of revenue from taxes and royalties.

The Obama administration has directed agencies to maintain documentation related to their total oil spill spending, which includes direct costs such as travel, transportation and equipment and indirect costs that cannot be tied to a specific activity but are related to the spill.

Direct agency spending is likely to constitute most of the activity. That includes salaries and overtime pay for personnel assigned to work on the oil spill; cleanup materials; transportation equipment; office supplies; travel and per diem expenses. In addition, agencies should track the costs to conduct public health monitoring and other spending to mitigate the impact of the disaster, such as disseminating public information and coordinating benefit relief, the memo said.

Examples of indirect agency spending, meanwhile, could include the maintenance of central offices and financial management activities, legal assistance, strategy development, and policy and audit reviews.

"Agencies should track all expenses that can be reasonably related to the oil spill," Orszag wrote. "If there is doubt as to whether a particular cost is related, it is better to account for it and later revise the totals downwards based on subsequent guidance."

While it could be months -- and likely years -- before the government can put a definite price tag on the oil spill, one of the few glimpses into the actual ongoing spending is through government contracting.

To date, agencies have spent more than $45 million on roughly 180 contracts related to the spill, according to the Federal Procurement Data System Next-Generation database. Nearly half these contracts were subjected to full and open competition, while more than $16 million went to small businesses -- a rate of 36.7 percent, the data shows.

Those procurement costs, however, could be understated. A note attached to the data indicated that many contracting offices responding to the spill do not have access to their normal contract writing systems and have not been able to enter procurement information into the database. Others might have waited to enter data into the system because of the rapid pace of operations and priority of the cleanup. "It is impossible to estimate the impact this may have on the total numbers," the note attached to the procurement database stated. "As the operations tempo slows we expect that the data will be entered and thus the accuracy in terms of total contracts awarded, and dollars obligated, will increase."

At more than $16 million, the National Oceanic and Atmospheric Administration has spent the most on Gulf Coast contracts, including awards for chemical analysis, laboratory equipment and charter services. Other top procurement spenders include the Coast Guard [more than $12 million] and the Environmental Protection Agency [just under $11 million], the data show.

Other agencies not typically associated with environmental missions also are participating in the cleanup effort. For example, NASA issued a nearly $300,000 contract for the use of an aircraft that will fly an infrared imaging instrument to chart the condition of oil on the ocean surface and create a coastline map to assess the spill's impact on the ecosystem and Gulf Coast habitats.

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