Concerns Over Award of Low-Income Weatherization Assistance Program Funds to an Ineligible Local Agency

GAO reviewed the award of the Department of Energy's (DOE) low-income weatherization assistance program funds by the State of Pennsylvania to the North Philadelphia Block Development Corporation. GAO provided information on the following questions: (1) what administrative techniques are available to DOE to prevent the award of weatherization funds to an ineligible local agency; (2) in instances where a State ignores legal requirements by awarding weatherization funds to an ineligible local agency, what action DOE can take; and (3) what the status is of DOE actions to recover the funds awarded by the State of Pennsylvania to the corporation.

DOE has no practical way to ensure that a State will not award funds to an ineligible local agency. It relies on the States to adhere to the legal and regulatory requirements of the weatherization program. DOE primarily relies on periodic independent audits of State financial records for disclosure of noncompliance with these requirements. In instances where a State does not adhere to legal and regulatory requirements in awarding weatherization funds to a local agency, DOE can withhold a like amount from future grant funding and institute action to rule that the State is ineligible for program participation. On the basis of an audit of State financial records, DOE can take exception to the amount of the ineligible award and withhold a like amount from future grant disbursements to the State until it has repaid the amount of the exception. The Energy Conservation and Production Act provides that, if after reasonable notice and a public hearing the Secretary of Energy finds that a State has failed to comply substantially with the law, he may notify such State that it will not be eligible to participate in the program until he is satisfied that noncompliance no longer exists. Pennsylvania's unauthorized contract with the corporation amounted to $107,437, although only $35,813 was made available as an operating advance. DOE is withholding $75,000 in fiscal year 1980 administrative funds for the weatherization program from Pennsylvania, pending settlement of the audit exception.