Recovery Act
Factors Affecting the Department of Energy's Program Implementation Gao ID: GAO-10-497T March 4, 2010The American Recovery and Reinvestment Act of 2009 (Recovery Act)--initially estimated to cost $787 billion in spending and tax provisions--aims to promote economic recovery, make investments, and minimize or avoid reductions in state and local government services. The Recovery Act provided the Department of Energy (DOE) more than $43.2 billion, including $36.7 billion for projects and activities and $6.5 billion in borrowing authority, in areas such as energy efficiency and renewable energy, nuclear waste clean-up, and electric grid modernization. This testimony discusses (1) the extent to which DOE has obligated and spent its Recovery Act funds, and (2) the factors that have affected DOE's ability to select and start Recovery Act projects. In addition, GAO includes information on ongoing work related to DOE Recovery Act programs. This testimony is based on prior work and updated with data from DOE.
As of February 28, 2010, DOE reported it had obligated $25.7 billion (70 percent) and reported expenditures of $2.5 billion (7 percent) of the $36.7 billion it received under the Recovery Act for projects and activities. For context, as of December 31, 2009, DOE reported that it had obligated $23.2 billion (54 percent) and reported expenditures of $1.8 billion (4 percent). The percentage of Recovery Act funds obligated varied widely across DOE program offices and ranged from a high of 98 percent in the Energy Information Administration to a low of 1 percent for the Loan Guarantee Program Office. None of DOE's program offices reported expenditures of more than a third of their Recovery Act funds as of February 28, 2010. Officials from DOE and states that received Recovery Act funding from DOE cited certain federal requirements that had affected their ability to implement some Recovery Act projects. For example: (1) Davis Bacon Requirements. Officials reported that Davis-Bacon requirements had affected the start of projects in the Weatherization Assistance Program because the program had previously been exempt from these requirements. (2) National Environmental Policy Act (NEPA). DOE officials told us that NEPA may affect certain projects that are likely to significantly impact the environment, thereby requiring environmental assessments or environmental impact statements. (3) National Historic Preservation Act (NHPA). Officials from the Michigan Department of Human Services told us that about 90 percent of the homes scheduled to be weatherized under the Weatherization Assistance Program would need a historic review. Additionally, DOE and state officials told us that (4) Newness of programs. In some cases, because some Recovery Act programs were newly created, officials needed time to establish procedures and provide guidance before implementing projects. (5) Staff capacity. DOE officials also told us that they experienced challenges in hiring new staff to carry out Recovery Act work. Also, District of Columbia officials told us they needed to hire 6 new staff members to oversee and manage the weatherization program. (6) State, local, or tribal issues. The economic recession affected some states' budgets, which also affected states' ability to use some Recovery Act funds, such as difficulty providing matching funds.
GAO-10-497T, Recovery Act: Factors Affecting the Department of Energy's Program Implementation
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Testimony:
Before the Committee on Energy and Natural Resources, U.S. Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 10:00 a.m. EST:
Thursday, March 4, 2010:
Recovery Act:
Factors Affecting the Department of Energy's Program Implementation:
Statement of Patricia A. Dalton, Managing Director:
Natural Resources and Environment:
GAO-10-497T:
GAO Highlights:
Highlights of GAO-10-497T, a testimony before the Committee on Energy
and Natural Resources, United States Senate.
Why GAO Did This Study:
The American Recovery and Reinvestment Act of 2009 (Recovery Act)-”
initially estimated to cost $787 billion in spending and tax
provisions-”aims to promote economic recovery, make investments, and
minimize or avoid reductions in state and local government services.
The Recovery Act provided the Department of Energy (DOE) more than
$43.2 billion, including $36.7 billion for projects and activities and
$6.5 billion in borrowing authority, in areas such as energy
efficiency and renewable energy, nuclear waste clean-up, and electric
grid modernization.
This testimony discusses (1) the extent to which DOE has obligated and
spent its Recovery Act funds, and (2) the factors that have affected DOE
‘s ability to select and start Recovery Act projects. In addition, GAO
includes information on ongoing work related to DOE Recovery Act
programs. This testimony is based on prior work and updated with data
from DOE.
What GAO Found:
As of February 28, 2010, DOE reported it had obligated $25.7 billion
(70 percent) and reported expenditures of $2.5 billion (7 percent) of
the $36.7 billion it received under the Recovery Act for projects and
activities. For context, as of December 31, 2009, DOE reported that it
had obligated $23.2 billion (54 percent) and reported expenditures of
$1.8 billion (4 percent). The percentage of Recovery Act funds
obligated varied widely across DOE program offices and ranged from a
high of 98 percent in the Energy Information Administration to a low
of 1 percent for the Loan Guarantee Program Office. None of DOE‘s
program offices reported expenditures of more than a third of their
Recovery Act funds as of February 28, 2010.
Table: Recovery Act Funding, Obligations, and Expenditures
(Cumulative) Reported by Department of Energy as of February 28, 2010:
Recovery Act: DOE;
Funding: $36,710 million;
Obligations: $25,652 million;
Percentage Obligated: 70%
Expenditures: $2,514 million;
Percentage Expended: 7%.
Source: GAO analysis of DOE data.
[End of table]
Officials from DOE and states that received Recovery Act funding from
DOE cited certain federal requirements that had affected their ability
to implement some Recovery Act projects. For example:
* Davis Bacon Requirements. Officials reported that Davis-Bacon
requirements had affected the start of projects in the Weatherization
Assistance Program because the program had previously been exempt from
these requirements.
* National Environmental Policy Act (NEPA). DOE officials told us that
NEPA may affect certain projects that are likely to significantly
impact the environment, thereby requiring environmental assessments or
environmental impact statements.
* National Historic Preservation Act (NHPA). Officials from the
Michigan Department of Human Services told us that about 90 percent of
the homes scheduled to be weatherized under the Weatherization
Assistance Program would need a historic review.
Additionally, DOE and state officials told us that other factors also
affected the timing of project selection or starts. For example:
* Newness of programs. In some cases, because some Recovery Act
programs were newly created, officials needed time to establish
procedures and provide guidance before implementing projects.
* Staff capacity. DOE officials also told us that they experienced
challenges in hiring new staff to carry out Recovery Act work. Also,
District of Columbia officials told us they needed to hire 6 new staff
members to oversee and manage the weatherization program.
* State, local, or tribal issues. The economic recession affected some
states‘ budgets, which also affected states‘ ability to use some
Recovery Act funds, such as difficulty providing matching funds.
View [hyperlink, http://www.gao.gov/products/GAO-10-497T] or key
components. For more information, contact Patricia A. Dalton at (202)
512-3841 or daltonp@gao.gov.
[End of section]
Mr. Chairman and Members of the Committee:
I am pleased to be here today to discuss the status of the Department
of Energy's (DOE) implementation of programs funded under the American
Recovery and Reinvestment Act of 2009 (Recovery Act). Congress and the
administration have fashioned a significant response to what is
generally considered to be the nation's most serious economic crisis
since the Great Depression. The Recovery Act is intended to promote
economic recovery, make investments, and minimize or avoid reductions
in state and local government services. Enacted on February 17, 2009,
the act was a response to the economic recession at a time when the
jobless rate was approaching 8 percent. In early 2009, the
Congressional Budget Office estimated that the Recovery Act's combined
spending and tax provisions would cost approximately $787 billion. On
January 26, 2010, CBO updated its estimate of the cost of the Recovery
Act. It now estimates that the Recovery Act will cost $75 billion more
than originally estimated--or a total of $862 billion from 2009
through 2019. That amount includes more than $43.2 billion for DOE
efforts in areas such as energy efficiency and renewable energy,
nuclear waste cleanup, and electric grid modernization.
The Recovery Act specifies several roles for GAO, including conducting
ongoing reviews of selected states' and localities' use of funds made
available under the act. We recently completed our fifth review,
issued yesterday, which examined a core group of 16 states, the
District of Columbia, and selected localities.[Footnote 1] We also
recently completed a review on the impact of certain federal
requirements and other factors on Recovery Act project selection and
starts.[Footnote 2]
My statement today is based largely on these two prior reviews and
updated with data from DOE and focuses on (1) the extent to which DOE
has obligated and spent its Recovery Act funds, and (2) the factors
that have affected DOE's ability to select and start Recovery Act
projects. In addition, we include information on ongoing GAO work on
DOE Recovery Act programs. We obtained financial data from DOE on its
obligations and expenditures for Recovery Act projects and also asked
DOE--and 26 other federal agencies--which federal requirements, if
any, affected the timing of project selection and start dates, as well
as whether any requirements at the state and local levels, or any
other factors, affected project selection and start dates. To
supplement the federal agencies' responses, we spoke with officials in
16 states and the District of Columbia who are responsible for
implementing Recovery Act projects. We are reviewing these 16 states
and the District of Columbia for our bi-monthly reviews on Recovery
Act implementation. The states selected contain about 65 percent of
the U.S. population and are estimated to receive collectively about
two-thirds of the intergovernmental federal assistance funds available
through the Recovery Act. We selected these states and the District of
Columbia on the basis of federal outlay projections; percentage of the
U.S. population represented; unemployment rates and changes; and a mix
of states' poverty levels, geographic coverage, and representation of
both urban and rural areas. We also spoke with representatives from
the National Governors Association; the National Association of State
Auditors, Comptrollers, and Treasurers; and the National Association
of Counties.
Our prior work was conducted in accordance with generally accepted
government auditing standards. Those standards require that we plan
and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on
our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit
objectives.
Background:
The Recovery Act provided DOE more than $43.2 billion, including $36.7
billion for projects and activities and $6.5 billion in borrowing
authority.[Footnote 3] Of the $36.7 billion for projects and
activities, almost half--$16.8 billion--was provided to the Office of
Energy Efficiency and Renewable Energy for projects intended to
improve energy efficiency, build the domestic renewable energy
industry, and restructure the transportation industry to increase
global competitiveness. The Recovery Act also provided $6 billion to
the Office of Environmental Management for nuclear waste cleanup
projects, $4.5 billion to the Office of Electricity Delivery and
Energy Reliability for electric grid modernization, $4 billion to the
Loan Guarantee Program Office to support loan guarantees for renewable
energy and electric power transmission projects, $3.4 billion to the
Office of Fossil Energy for carbon capture and sequestration efforts,
and $2 billion to the Office of Science and the Advanced Research
Projects Agency-Energy for advanced energy technology research.
DOE Obligated 70 Percent and Reported Expenditures of 7 Percent of its
Recovery Act Funds as of February 28, 2010:
As of February 28, 2010, DOE reported that it had obligated $25.7
billion (70 percent) and reported expenditures of $2.5 billion (7
percent) of the $36.7 billion it received under the Recovery Act for
projects and activities (see table 1). By comparison, as of December
31, 2009, the department reported it had obligated $23.2 billion (54
percent) and reported expenditures of $1.8 billion (4 percent).
Table 1: Recovery Act Funding, Obligations, and Expenditures
(Cumulative) Reported by Department of Energy as of February 28, 2010:
Program Office: Advanced Research Projects Agency - Energy;
Funding: $389 million;
Obligations: $156 million;
Percentage Obligated: 40%;
Expenditures: $2 million;
Percentage Expended: 1%.
Program Office: Departmental Administration;
Funding: $42 million;
Obligations: $26 million;
Percentage Obligated: 61%;
Expenditures: $13 million;
Percentage Expended: 31%.
Program Office: Energy Efficiency and Renewable Energy;
Funding: $16,764 million;
Obligations: $14,559 million;
Percentage Obligated: 87%;
Expenditures: $823 million;
Percentage Expended: 5%.
Program Office: Energy Information Administration;
Funding: $8 million;
Obligations: $8 million;
Percentage Obligated: 98%;
Expenditures: 0;
Percentage Expended: 0.
Program Office: Environmental Management;
Funding: $6,000 million;
Obligations: $5,525 million;
Percentage Obligated: 92%;
Expenditures: $1,378 million;
Percentage Expended: 23%.
Program Office: Fossil Energy;
Funding: $3,396 million;
Obligations: $961 million;
Percentage Obligated: 28%;
Expenditures: $9 million;
Percentage Expended: 0.
Program Office: Loan Guarantee Program Office;
Funding: $3,970 million;
Obligations: $56 million;
Percentage Obligated: 1%;
Expenditures: $25 million;
Percentage Expended: 1%.
Program Office: Office of Electricity Delivery and Energy Reliability;
Funding: $4,495 million;
Obligations: $2,924 million;
Percentage Obligated: 65%;
Expenditures: $20 million;
Percentage Expended: 0.
Program Office: Office of Science;
Funding: $1,636 million;
Obligations: $1,435 million;
Percentage Obligated: 88%;
Expenditures: $241 million;
Percentage Expended: 15%.
Program Office: Western Area Power Administration;
Funding: $10 million;
Obligations: $3 million;
Percentage Obligated: 32%;
Expenditures: $3 million;
Percentage Expended: 26%.
Program Office: Total;
Funding: $36,710 million[A];
Obligations: $25,652 million;
Percentage Obligated: 70%;
Expenditures: $2,514 million;
Percentage Expended: 7%.
Source: GAO analysis of DOE data.
Note: The numbers in this table are rounded to the nearest million.
[A] The Recovery Act also provided DOE with $6.5 billion in borrowing
authority ($3.25 billion for the Bonneville Power Administration and
$3.25 billion for the Western Area Power Administration), which is not
included in this table. DOE was also appropriated $15 million in the
Recovery Act for the Office of Inspector General, which is also not
included in this table.
[End of table]
The percentage of Recovery Act funds obligated varied widely across
DOE program offices. Several program offices--Energy Efficiency and
Renewable Energy, the Energy Information Administration, Environmental
Management, and Science--had obligated more than 85 percent of their
Recovery Act funds by February 28, 2010, while other program offices--
Fossil Energy, the Loan Guarantee Program, and the Western Area Power
Administration--had obligated less than a third of their Recovery Act
funds by that time.
The percentage of Recovery Act funds spent also varied across DOE
program offices, though to a lesser degree than the percentage
obligated. None of the program offices reported expenditures of more
than a third of their Recovery Act funds as of February 28, 2010. The
percentage of funds spent ranged from a high of 31 percent for
Departmental Administration to a low of zero percent for the
Electricity Delivery and Energy Reliability, Energy Information
Administration, and Fossil Energy offices.
Federal Requirements and Other Factors Affected the Timing of Project
Selection and Starts:
Officials from DOE and states that received Recovery Act funding from
DOE cited certain federal requirements and other factors that had
affected their ability to implement some Recovery Act projects. In
particular, DOE officials reported that Davis-Bacon requirements and
the National Environmental Policy Act affected the timing of some
project selection and starts, while state officials reported that the
National Historic Preservation Act affected their ability to select
and start Recovery Act projects. Other factors unrelated to federal
requirements--including the newness of programs, staff capacity, and
state and local issues--also affected the timing of some projects,
according to federal and state officials.
DOE and State Officials Reported that Certain Federal Requirements
Affected Project Selection and Starts:
Officials from DOE and states that received DOE funding cited certain
federal requirements that had affected their ability to select or
start some Recovery Act projects. For example:
* Davis-Bacon requirements.[Footnote 4] DOE's Weatherization
Assistance Program became subject to the Davis-Bacon requirements for
the first time under the Recovery Act after having been previously
exempt from those requirements.[Footnote 5] Thus, the Department of
Labor (Labor) had to determine the prevailing wage rates for
weatherization workers in each county in the United States. In July
2009, DOE and Labor issued a joint memorandum to Weatherization
Assistance Program grantees authorizing them to begin weatherizing
homes using Recovery Act funds, provided they paid construction
workers at least Labor's wage rates for residential construction, or
an appropriate alternative category, and compensated workers for any
differences if Labor established a higher local prevailing wage rate
for weatherization activities. On September 3, 2009, Labor completed
its determinations; later that month, we reported that Davis-Bacon
requirements were a reason why some states had not started
weatherizing homes.[Footnote 6] Specifically, we reported that 7 out
of 16 states and the District of Columbia decided to wait to begin
weatherizing homes until Labor had determined county-by-county
prevailing wage rates for their state. Officials in these states
explained that they wanted to avoid having to pay back wages to
weatherization workers who started working before the prevailing wage
rates were known. In general, the states we reviewed used only a small
percentage of their available funds in 2009, mostly because state and
local agencies needed time to develop the infrastructures required for
managing the significant increase in weatherization funding and for
ensuring compliance with Recovery Act requirements, including Davis-
Bacon requirements. According to available DOE data, as of December
31, 2009, 30,252 homes had been weatherized with Recovery Act funds,
or about 5 percent of the approximately 593,000 total homes that DOE
originally planned to weatherize using Recovery Act funds.[Footnote 7]
* National Environmental Policy Act (NEPA).[Footnote 8] DOE officials
told us that while NEPA is unlikely to impose a greater burden on
Recovery Act projects than on similar projects receiving federal
funds, the timing of certain projects may be slowed by these
requirements. However, DOE officials reported that the agency had
taken steps to expedite the NEPA review process and said that the
agency's funding opportunity announcements specified that projects
must be sufficiently developed to meet the Recovery Act's timetable
for commitment of funds. Nevertheless, DOE officials also told us that
several program offices--including Loan Guarantee, Fossil Energy,
Electricity Delivery and Energy Reliability, and the Power Marketing
Administrations--will likely have projects that significantly impact
the environment and will therefore require environmental assessments
or environmental impact statements. DOE officials told us that they
plan to concurrently complete NEPA reviews with other aspects of the
project selection and start process. State officials in California and
Mississippi also told us that NEPA had caused delays in DOE Recovery
Act projects. For example, California officials said that the State
Energy Commission must submit some of its Recovery Act projects to DOE
for NEPA review because they are not covered by DOE's existing
categorical exclusions.[Footnote 9] State officials said that such
reviews can take up to six or more weeks. Both California and
Mississippi officials told us that activities that are categorically
excluded under NEPA (e.g., road repaving or energy-efficient upgrades
to existing buildings) still require clearance before the state can
award funds. Staff must spend time filling out forms and supplying
information to DOE on projects that may qualify for a categorical
exclusion.
* National Historic Preservation Act (NHPA).[Footnote 10] State
officials told us that NHPA had also affected DOE Recovery Act project
selection and starts.[Footnote 11] Mississippi officials, in
particular, cited NHPA's clearance requirements as one of the biggest
potential delays to project selection in energy programs. Many of the
city-and county-owned facilities that could benefit from the Energy
Efficiency and Conservation Block Grant program could be subject to
historic preservation requirements, which mandate that projects must
be identified within 180 days of award.[Footnote 12] In part because
of this requirement, the state had to adjust program plans and limit
the scope of eligible recipients and projects to avoid historic
preservation issues. Likewise, officials from the Michigan Department
of Human Services told us that NHPA requires that weatherization
projects receiving federal funds undergo a state historic preservation
review. According to Michigan officials, this requirement means that
the State Historic Preservation Office may review every home over 50
years of age if any work is to be conducted, regardless of whether the
home is in a historic district or on a national registry. These
officials estimated that 90 percent of the homes scheduled to be
weatherized would need a historic review. These reviews are a
departure from Michigan's previous experience; the State Historic
Preservation Office had never considered weatherization work to
trigger a review. Furthermore, Michigan officials told us that their
State Historic Preservation Office's policy is to review
weatherization applications for these homes within 30 days after
receiving the application and advise the Michigan Department of Human
Services on whether the work can proceed. However, as of October 29,
2009, the State Historic Preservation Office had only two employees,
so state officials were concerned that this process could cause a
significant delay. To avoid further delays, Michigan officials told us
that in November 2009, they signed an agreement with the State
Historic Preservation Office that is designed to expedite the review
process. They also told us that with the agreement in place, they
expect to meet their weatherization goals.
* Buy American provisions.[Footnote 13] DOE officials told us that Buy
American provisions could cause delays in implementing Recovery Act
projects. Officials from other federal agencies said those provisions
have affected or may affect their ability to select or start some
Recovery Act projects. In some cases, those agencies had to develop
guidance for compliance with Buy American provisions, including
guidance on issuing waivers to recipients that were unable to comply.
For example, according to Environmental Protection Agency officials,
developing Buy American guidance was particularly challenging because
of the need to establish a waiver process for Recovery Act projects.
At the local level, officials from the Chicago Housing Authority (CHA)
reported that the only security cameras that are compatible with the
existing CHA system and City of Chicago police systems are not made in
the United States. CHA worked with the Department of Housing and Urban
Development to determine how to seek a waiver for this particular
project. Moreover, an industry representative told us that the Buy
American provisions could interrupt contractors' supply chains,
requiring them to find alternate suppliers and sometimes change the
design of their projects, which could delay project starts.
DOE and State Officials Reported that Other Factors Have Also Affected
the Timing of Project Selection and Starts:
Officials from DOE and states also told us that factors other than
federal requirements have affected the timing of project selection or
starts. For example:
* Newness of programs. Because some Recovery Act programs were newly
created, in some cases, officials needed time to establish procedures
and provide guidance before implementing projects. In particular, the
DOE Inspector General noted that the awards process for the Energy
Efficiency and Conservation Block Grant program, newly funded under
the Recovery Act, was challenging to implement because there was no
existing infrastructure. Hence, Recovery Act funds were not awarded
and distributed to recipients in a timely manner.
* Staff capacity. Officials from DOE stated that they would need to
hire a total of 550 staff--both permanent and temporary--to carry out
Recovery Act-related work. However, several issues affected DOE's
ability to staff these federal positions, including the temporary
nature and funding of the Recovery Act and limited resources for
financial management and oversight. To address those issues, DOE was
granted a special direct hire authority as part of the Recovery Act
for certain areas and program offices. The authority allowed DOE to
expedite the hiring process for various energy efficiency, renewable
energy, electricity delivery, and energy reliability programs and
helped DOE fill longer term temporary (more than 1 year, but not more
than 4 years) and permanent positions. However, according to DOE
officials, government-wide temporary appointment authority does not
qualify an employee for health benefits, and thus few candidates have
been attracted to these temporary positions. According to DOE
officials, the Office of Management and Budget recently approved
direct-hire authority for DOE, which officials believe will alleviate
issues related to health care benefits.
Some state officials told us that they experienced heavy workloads as
a result of the Recovery Act, which impaired their ability to
implement programs. As we reported in December 2009, smaller
localities, which are often rural, told us that they faced challenges
because of a lack of staff to understand, apply for, and comply with
requirements for federal Recovery Act grants.[Footnote 14] For
example, some local government officials reported that they did not
employ a staff person to handle grants and therefore did not have the
capacity to understand which grants they were eligible for and how to
apply for them. In the District of Columbia, Department of the
Environment officials explained that weatherization funds had not been
spent as quickly as anticipated because officials needed to develop
the infrastructure to administer the program. For example, the
department needed to hire six new staff members to oversee and manage
the program. Officials reported that, as of late January 2010, the
department had still not hired any of the six new staff required.
Officials from the National Association of Counties said that some
localities had turned down Recovery Act funding to avoid the
administrative burdens associated with the act's numerous reporting
requirements.
* State, Local, or Tribal Issues. In our recently issued report on
factors affecting the implementation of Recovery Act projects, we
noted that the economic recession affected some states' budgets,
which, in turn, affected states' ability to use some Recovery Act
funds.[Footnote 15] For example, according to a recent report by DOE's
Office of Inspector General, implementation of the Weatherization
Assistance Program's Recovery Act efforts was delayed in part by state
hiring freezes, problems resolving local budget shortfalls, and state-
wide furloughs.[Footnote 16] State-level budget challenges have
affected the implementation of other Recovery Act projects. For
example, officials from the Department of Defense told us that because
states were experiencing difficulties in passing their current-year
budgets, some were unable to provide matching funds for certain Army
National Guard programs. As a result, the Department of Defense had to
revise its Recovery Act project plan to cancel or reduce the number of
Army National Guard projects with state matching funds and replace
them with other projects that did not require matching funds.
Officials from the Department of Housing and Urban Development also
told us that project starts in some instances were affected by the
need for state and local governments to furlough employees as a result
of the economic downturn.
GAO Has Ongoing Work on DOE Recovery Act Programs:
In a report issued yesterday, we discussed recipient reporting in
DOE's Weatherization Assistance Program.[Footnote 17] Specifically, we
noted that reporting about impacts to energy savings and jobs created
and retained at both the state and local agency level is still
somewhat limited. Although many local officials that we interviewed
for that review have collected data about new hires, none could
provide us with data on energy savings. Some states told us they plan
to use performance measures developed by DOE, while others have
developed their own measures. For example, Florida officials told us
they plan to measure energy savings by tracking kilowatts used before
and after weatherization, primarily with information from utility
companies. In addition, local agencies in some states either collect
or plan to collect information about other aspects of program
operations. For example, local agencies in both California and
Michigan collect data about customer satisfaction. In addition, a
local agency in California plans to report about obstacles, while an
agency in New York will track and report the number of units on the
waiting list.
As we reported, DOE made several outreach efforts to their program
recipients to ensure timely reporting. These efforts included e-mail
reminders for registration and Webinars that provided guidance on
reporting requirements. For the first round of reporting, DOE
developed a quality assurance plan to ensure all prime recipients
filed quarterly reports, while assisting in identifying errors in
reports. The methodology for the quality assurance review included
several phases and provided details on the role and responsibilities
for DOE officials. According to DOE officials, the data quality
assurance plan was also designed to emphasize the avoidance of
material omissions and significant reporting errors.
In addition to our reviews of states' and localities' use of Recovery
Act funds, GAO is also conducting ongoing work on several DOE efforts
that received Recovery Act funding, including the Loan Guarantee
Program and the Office of Environmental Management's activities.
As I noted earlier, Congress made nearly $4 billion in Recovery Act
funding available to DOE to support what the agency has estimated will
be about $32 billion in new loan guarantees under its innovative
technology loan guarantee program. However, we reported in July 2008
that DOE was not well positioned to manage the loan guarantee program
effectively and maintain accountability because it had not completed a
number of key management and internal control activities.[Footnote 18]
To improve the implementation of the loan guarantee program and to
help mitigate risk to the federal government and American taxpayers,
we recommended that, among other things, DOE complete internal loan
selection policies and procedures that lay out roles and
responsibilities and criteria and requirements for conducting and
documenting analyses and decision making, and develop and define
performance measures and metrics to monitor and evaluate program
efficiency, effectiveness, and outcomes. We are currently engaged in
ongoing work to determine the current state of the Loan Guarantee
Program and what progress DOE has made since our last report, and we
expect to report on that work this summer.
Ongoing work also focuses on DOE's Office of Environmental Management,
which also received Recovery Act funding. The Office of Environmental
Management oversees cleanup efforts related to decades of nuclear
weapons production.[Footnote 19] The Recovery Act provided DOE with $6
billion--in addition to annual appropriations of $6 billion--for
cleanup activities including packaging and disposing of wastes,
decontaminating and decommissioning facilities, and removing
contamination from soil. DOE has begun work on the majority of its
more than 85 Recovery Act projects at 17 sites in 12 states and has
spent nearly $1.4 billion (about 23 percent of its total Recovery Act
funding) on these projects. We are currently conducting work to
evaluate the implementation of these projects, including the number of
jobs that have been created and retained, performance metrics being
used to measure progress, DOE's oversight of the work, and any
challenges that DOE may be facing. We expect to report on that work
this summer.
Mr. Chairman, this completes my prepared statement. We will continue
to monitor DOE's use of Recovery Act funds and implementation of
programs. I would be happy to respond to any questions you or other
Members of the Committee may have at this time.
Contact and Acknowledgments:
For further information regarding this testimony, please contact me or
Mark Gaffigan, Director, at (202) 512-3841. Kim Gianopoulos (Assistant
Director), Amanda Krause, Jonathan Kucskar, David Marroni, Alise
Nacson, and Alison O'Neill made key contributions to this testimony.
[End of section]
Footnotes:
[1] GAO, Recovery Act: One Year Later, States' and Localities' Uses of
Funds and Opportunities to Strengthen Accountability, [hyperlink,
http://www.gao.gov/products/GAO-10-437] (Washington, D.C.: Mar. 3,
2010).
[2] GAO, Recovery Act: Project Selection and Starts Are Influenced by
Certain Federal Requirements and Other Factors, [hyperlink,
http://www.gao.gov/products/GAO-10-383] (Washington, D.C.: Feb. 10,
2010).
[3] DOE was initially appropriated $45.2 billion in the Recovery Act;
however, $2 billion for the Loan Guarantee Program was transferred
from DOE's Recovery Act appropriation. As a result, DOE's
appropriations under the Recovery Act now total $43.2 billion.
[4] The Davis-Bacon Act requires that contractors and subcontractors
pay workers the locally prevailing wages on most federally funded
construction projects, and it imposes several administrative
requirements relating to the payment of workers on qualifying
projects. The Recovery Act generally applies Davis-Bacon requirements
to Recovery Act-funded projects, requiring contractors and
subcontractors to pay all laborers and mechanics at least the
prevailing wage rates in the local area where they are employed, as
determined by the Secretary of Labor. In addition, contractors are
required to pay these workers weekly and submit weekly certified
payroll records, generally to the contracting federal agency.
[5] The Recovery Act appropriated $5 billion for the Weatherization
Assistance Program, which DOE is distributing to each of the states,
the District of Columbia, and seven territories and Indian tribes. The
program seeks to assist low-income families by making such long-term
energy efficiency improvements to their homes as installing
insulation; sealing leaks; and modernizing heating equipment, air
circulation fans, and air conditioning equipment.
[6] GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to
States and Localities, While Accountability and Reporting Challenges
Need to Be Fully Addressed, [hyperlink,
http://www.gao.gov/products/GAO-09-1016] (Washington, D.C., Sept. 23,
2009).
[7] DOE collects data reported by states and territories on the number
of homes weatherized and on state and territory expenditures of funds
on a quarterly basis. The data reported by states as of a certain date
(such as for the quarter ending December 31, 2009) can change as
states finalize figures for homes weatherized and funds spent. DOE
originally planned to weatherize 593,000 homes with Recovery Act
funding by March 31, 2012. A DOE report issued on February 24, 2010,
indicated that 30,252 homes had been weatherized nationwide as of
December 31, 2009, though numbers are not yet finalized.
[8] NEPA established national environmental policies and goals to
ensure that federal agencies properly consider environmental factors
before deciding on a project. Under NEPA, federal agencies evaluate
the potential environmental effects of projects they are proposing
using an environmental assessment or, if projects may significantly
affect the environment, a more detailed environmental impact statement.
[9] If an agency determines that activities of a proposed project fall
within a category of activities the agency has already determined has
no significant environmental impact--called a categorical exclusion--
then the agency generally does not need to prepare an environmental
assessment or environmental impact statement.
[10] NHPA declares that the federal government has a responsibility to
expand and accelerate historic preservation programs and activities in
order to preserve the nation's historical and cultural foundations.
The act requires that for all projects receiving federal funding or a
federal permit, federal agencies must take into account the project's
effect on any historic site, building, structure, or other object that
is or can be listed on the National Historic Register. Under the act
and its implementing regulations, the agency must consult with
relevant federal, state, and tribal officials with regard to such a
project.
[11] DOE officials told us in January 2010 that they were in the
process of developing an agreement with the Advisory Council on
Historic Preservation and the National Conference of State Historic
Preservation Officers to create a manageable framework for
streamlining DOE's compliance with NHPA requirements.
[12] The Energy Efficiency and Conservation Block Grants program,
administered by DOE, provides funds through competitive and formula
grants to units of local and state government and Indian tribes to
develop and implement projects to improve energy efficiency and reduce
energy use and fossil fuel emissions in their communities. The
Recovery Act includes $3.2 billion for the program.
[13] The Buy American Act generally requires that raw materials and
manufactured goods acquired for public use be made or produced in the
United States, subject to limited exceptions. Federal agencies may
issue waivers for certain projects under specified conditions, for
example, if using American-made goods is inconsistent with the public
interest or the cost of those goods is unreasonable. Agencies also
need not use American-made goods if they are not sufficiently
available or of satisfactory quality. The Recovery Act has similar
provisions, including one limiting the "unreasonable cost" exception
to those instances when inclusion of American-made iron, steel, or
other manufactured goods would increase the overall project cost by
more than 25 percent.
[14] GAO, Recovery Act: Status of States' and Localities' Use of Funds
and Efforts to Ensure Accountability, [hyperlink,
http://www.gao.gov/products/GAO-10-231] (Washington, D.C.: Dec. 10,
2009).
[15] [hyperlink, http://www.gao.gov/products/GAO-10-383].
[16] DOE Office of Inspector General, OAS-RA-10-04, Special Report:
Progress in Implementing the Department of Energy's Weatherization
Assistance Program Under the American Recovery and Reinvestment Act
(Feb. 19, 2010).
[17] [hyperlink, http://www.gao.gov/products/GAO-10-437].
[18] GAO, Department of Energy: New Loan Guarantee Program Should
Complete Activities Necessary for Effective and Accountable Program
Management, [hyperlink, http://www.gao.gov/products/GAO-08-750]
(Washington, D.C., July 7, 2008).
[19] DOE estimates that the total cost to complete this work will come
to about $300 billion and that it will take several more decades.
[End of section]
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