Recovery Blog

IG Details Lessons Learned on Energy Spending

Posted in Accountability by on May 7, 2012

The Department of Energy is a major player in the $840 billion economic stimulus program. Indeed, the Department has received more than $35 billion to support science, energy and environmental projects along with the authority to make or guarantee another $52 billion in energy-related loans. Put simply, that amount of funding makes the Energy Department one of the largest federal agency recipients of Recovery Act funds.

Given our professional responsibilities in the DOE Office of Inspector General, my colleagues and I keep a close eye on how that money is spent to ensure that the taxpayer’s interests are protected and that the funds are not wasted. It’s a big job. By last April, my office had completed nearly 80 reviews and a number of investigations that pinpointed serious problems in Energy’s Recovery programs. We discovered, for instance, that work done under Energy’s $5 billion weatherization program was often of poor quality. To cite another example, my auditors found that poor record-keeping made it difficult for DOE managers to document the decision-making process in a major loan guarantee program designed to encourage development of alternative energy sources.

What to make from all of this? What are the lessons learned? The overarching takeaway is that, if after the expenditure of such an enormous amount of taxpayer funds, the Department has not learned a great deal about the efficient and effective delivery of public services, an important opportunity has been lost. Drawing on our oversight experience, we developed a series of recommendations intended to help Department officials make better decisions. These were captured in a January 2012 special report entitled, “Lessons Learned/Best Practices during the Department of Energy’s Implementation of the American Recovery and Reinvestment Act of 2009.”

The report points out that Energy officials were required to push a lot of Recovery money out the door quite rapidly. This expansion of existing programs strained the Department’s resources and led to both notable successes and failures. Given that backdrop, we offered a number of lessons in the report that can benefit the Department. They include:

  • Implementing a rigorous system of risk management practices to ensure that program decisions are made after due diligence, that risks are continuously monitored and adjustments made as needed, and that performance metrics ensure programs meet their intended objectives.
  • Using spending plans and project baselines to manage and account for changes in financial resources and to ensure the information being reported on program and project progress is correct.
  • Ensuring that staffing levels and employee skills match the demands of the work being performed.
  • Anticipating and planning for the impact of regulatory requirements on DOE operations, a recommendation that would help the Department and its grant and contract recipients achieve a high level of program performance.
  • Monitoring program activities more closely to improve the quality of work and addressing fraud complaints from the public in a more effective and timely manner.

Department officials have assured us that they intend to implement management reforms to ensure that program risks are more clearly identified and minimized, that Recovery Act staffing and oversight activities have been improved, and that best practices derived from the Recovery Act experience will be applied more broadly in departmental operations. DOE management has also vowed to work closely with my office to achieve more efficient and effective implementation of Recovery Act programs. This is good news, considering that substantial funds have yet to be spent, which will require continued oversight activities for several more years.

– Gregory H. Friedman, Inspector General, Department of Energy & Member of the Recovery Board

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