INFORMATION: Special Report on "Selected Department of Energy Program Efforts to Implement the American Recovery and Reinvestment Act"

The American Recovery and Reinvestment Act of 2009 (Recovery Act) was enacted on February 17, 2009, to jumpstart the economy by creating or saving millions of jobs, spurring technological advances in health and science, and investing in the Nation's energy future. The Department of Energy received over $32.7 billion in Recovery Act funding for various science, energy, and environmental programs and initiatives. As of November 2009, the Department had obligated $18.3 billion of the Recovery Act funding, but only $1.4 billion had been spent. The Department's Offices of Energy Efficiency and Renewable Energy, Fossil Energy, Environmental Management, Science, and Electricity Delivery and Energy Reliability received the majority of funding allocated to the Department, about $32.3 billion. Obligating these funds by the end of Fiscal Year 2010, as required by the Recovery Act, and overseeing their effective use in succeeding years, represents a massive workload increase for the Department's programs. The effort to date has strained existing resources. As has been widely acknowledged, any effort to disburse massive additional funding and to expeditiously initiate and complete projects increases the risk of fraud, waste and abuse. It is, therefore, important for the Department's program offices to assess and mitigate these risks to the maximum extent practicable. In this light, we initiated this review as an initial step in the Office of Inspector General's charge to determine whether the Department's major program offices had developed an effective approach for identifying and mitigating risks related to achieving the goals and objectives of the Recovery Act. The Department's program offices included in our review identified risks and planned mitigation strategies that, if successfully implemented and executed, should help achieve the goals and objectives of the Recovery Act. While each office identified risks unique to its respective areas of responsibility, there were a number of risks shared in common. These included the mechanical and substantive requirements related to the award and distribution of funds; program and project performance monitoring; and, program and project execution activities. In particular, the offices self-identified common risks such as: (1) The inability to award and distribute funds in a timely manner to achieve the goals of the Recovery Act; (2) The sufficiency of monitoring procedures and resources to, among other things, prevent and detect fraud, waste and abuse throughout the performance period of financial assistance awards and contracts; and (3) The inherent cost, schedule and performance risks associated with first-of-a-kind, innovative research and demonstration projects. Our review confirmed that the Department had begun to implement a number of strategies designed to mitigate these and other program-specific risks. Our testing, however, identified challenges to the effective implementation of these mitigation strategies that need to be addressed if the Department is to meet the goals and objectives established by the Recovery Act. At the time of our review: (1) Program staffing resources, critical to the success of all other mitigation strategies, remained inadequate both in numbers and qualifications (certifications and training) for positions in procurement and acquisition, project management, and monitoring and oversight functions; (2) Performance measures for achieving Recovery Act goals such as distributing funds in an expeditious manner had not always been established and included in performance plans, and, in financial assistance and contract documents; and (3) Programs had not consistently demonstrated that previously reported deficiencies, identified through audits, inspections, investigations and other oversight activities, had been considered in designing mitigation strategies for the Recovery Act related risks. As we noted in our Special Report on the American Recovery and Reinvestment Act at the Department of Energy (OAS-RA-09-01, March 2009) these sorts of deficiencies, which were described in the March 2009 report, had adversely impacted the success of earlier Departmental projects. We concluded that consideration of these previously encountered internal control weaknesses was essential if the Department was to avoid the same or similar problems in executing the Recovery Act programs/projects. During the course of our audit we identified other internal control weakness indicators. When brought to their attention by the Office of Inspector General audit staff, program officials acted promptly to address these problems by modifying or improving their risk mitigation strategies. For instance, we found that the Office of Energy Efficiency and Renewable Energy, responsible for $16.8 billion in Recovery Act program activities, took steps to strengthen its merit review process to avoid potential conflict of interest concerns