Recovery Act
Energy Efficiency and Conservation Block Grant Recipients Face Challenges Meeting Legislative and Program Goals and Requirements Gao ID: GAO-11-379 April 7, 2011The American Recovery and Reinvestment Act of 2009 (Recovery Act) provided $3.2 billion for the Department of Energy's (DOE) Energy Efficiency and Conservation Block Grant Program (EECBG) to develop and manage projects to improve energy efficiency and reduce energy use and fossil fuel emissions. The Recovery Act requires GAO to review funds made available under the act and to comment on recipients' estimates of jobs created or retained. GAO examined (1) how EECBG recipients used EECBG funds and challenges they faced, if any; (2) DOE and recipients' oversight and monitoring activities and challenges, if any; (3) the extent to which the EECBG program is meeting Recovery Act and program goals for energy savings; and (4) the quality of jobs data reported by Recovery Act recipients, particularly EECBG recipients. GAO also updates the status of open recommendations from previous bimonthly and recipient reporting reviews. GAO analyzed DOE recipient data and interviewed DOE officials and a nonprobability sample of EECBG recipients, among other things.
According to DOE data, EECBG recipients primarily used funds for 3 of the 14 activities eligible for EECBG funding. These activities are energy-efficiency retrofits, financial incentive programs, and buildings and facilities projects. Some DOE officials, recipients, and others identified challenges in obligating and spending funds due to local jurisdictional requirements and staff and resource limitations. In addition, in April 2010 DOE determined that many recipients were not on a trajectory to obligate and spend funds within specified time frames, so DOE issued new milestones for obligating and spending funds. Many recipients reported having had difficulty meeting the new milestones. DOE is taking steps to address these difficulties. According to DOE officials and documentation, DOE follows a programwide monitoring plan to oversee the use of Recovery Act funds and uses a variety of techniques to monitor recipients. Overall, recipients also use various methods to monitor contractors and subrecipients, but DOE does not always collect information on recipients' monitoring activities. As a result, DOE does not always know whether the monitoring activities of recipients are sufficiently rigorous to ensure compliance with federal requirements. Some DOE officials, recipients, and others have reported to GAO that some DOE staff and recipients faced challenges with overseeing the use of funds, including (1) technical challenges with a Web-based reporting application DOE uses as a primary oversight tool and (2) staffing and expertise limitations, such as some recipients' unfamiliarity with federal grant procedures. Recipients contacted and some DOE officials reported to GAO that recipients are using EECBG funds to develop projects designed to reduce energy use and increase energy savings in line with Recovery Act and program goals. However, DOE officials have experienced challenges in assessing the extent to which the EECBG program is meeting those goals. Because actual energy savings data are generally available only after a project is completed, DOE officials said that most recipients report estimates to comply with program reporting requirements. DOE takes steps to assess the reasonableness of these estimates but does not require recipients to report the methods or tools used to develop estimates. In addition, while DOE provides recipients with a tool to estimate energy savings, DOE does not require that recipients use the most recent, updated version of its estimating tool. GAO's analysis of the Recovery.gov data that recipients reported, including jobs funded, shows data quality this quarter reflects minor amounts of inconsistencies or illogical data. The portion of EECBG recipients reporting some jobs funded has continued to increase. DOE headquarters and field officials continue to address data quality concerns, including ensuring that recipients and reviewers had the updated Office of Management and Budget guidance on narrative descriptions. However, data across reporting periods may not be comparable because, in earlier periods, some confusion existed about methods for calculating jobs funded. GAO recommends that DOE (1) explore a means to capture information on recipients' monitoring activities, and (2) solicit information on recipients' methods for estimating energy-related impact metrics and verify that recipients use the most recent version of DOE's estimating tool. DOE generally agreed with GAO's recommendations.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Franklin W. Rusco Team: Government Accountability Office: Natural Resources and Environment Phone: (202) 512-4597GAO-11-379, Recovery Act: Energy Efficiency and Conservation Block Grant Recipients Face Challenges Meeting Legislative and Program Goals and Requirements
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United States Government Accountability Office:
GAO:
Report to the Congress:
April 2011:
Recovery Act:
Energy Efficiency and Conservation Block Grant Recipients Face
Challenges Meeting Legislative and Program Goals and Requirements:
GAO-11-379:
GAO Highlights:
Highlights of GAO-11-379, a report to the Congress.
Why GAO Did This Study:
The American Recovery and Reinvestment Act of 2009 (Recovery Act)
provided $3.2 billion for the Department of Energy‘s (DOE) Energy
Efficiency and Conservation Block Grant Program (EECBG) to develop and
manage projects to improve energy efficiency and reduce energy use and
fossil fuel emissions. The Recovery Act requires GAO to review funds
made available under the act and to comment on recipients‘ estimates
of jobs created or retained. GAO examined (1) how EECBG recipients
used EECBG funds and challenges they faced, if any; (2) DOE and
recipients‘ oversight and monitoring activities and challenges, if
any; (3) the extent to which the EECBG program is meeting Recovery Act
and program goals for energy savings; and (4) the quality of jobs data
reported by Recovery Act recipients, particularly EECBG recipients.
GAO also updates the status of open recommendations from previous
bimonthly and recipient reporting reviews. GAO analyzed DOE recipient
data and interviewed DOE officials and a nonprobability sample of
EECBG recipients, among other things.
What GAO Found:
According to DOE data, EECBG recipients primarily used funds for 3 of
the 14 activities eligible for EECBG funding. These activities are
energy-efficiency retrofits, financial incentive programs, and
buildings and facilities projects. Some DOE officials, recipients, and
others identified challenges in obligating and spending funds due to
local jurisdictional requirements and staff and resource limitations.
In addition, in April 2010 DOE determined that many recipients were
not on a trajectory to obligate and spend funds within specified time
frames, so DOE issued new milestones for obligating and spending
funds. Many recipients reported having had difficulty meeting the new
milestones. DOE is taking steps to address these difficulties.
According to DOE officials and documentation, DOE follows a
programwide monitoring plan to oversee the use of Recovery Act funds
and uses a variety of techniques to monitor recipients. Overall,
recipients also use various methods to monitor contractors and
subrecipients, but DOE does not always collect information on
recipients‘ monitoring activities. As a result, DOE does not always
know whether the monitoring activities of recipients are sufficiently
rigorous to ensure compliance with federal requirements. Some DOE
officials, recipients, and others have reported to GAO that some DOE
staff and recipients faced challenges with overseeing the use of
funds, including (1) technical challenges with a Web-based reporting
application DOE uses as a primary oversight tool and (2) staffing and
expertise limitations, such as some recipients‘ unfamiliarity with
federal grant procedures.
Recipients contacted and some DOE officials reported to GAO that
recipients are using EECBG funds to develop projects designed to
reduce energy use and increase energy savings in line with Recovery
Act and program goals. However, DOE officials have experienced
challenges in assessing the extent to which the EECBG program is
meeting those goals. Because actual energy savings data are generally
available only after a project is completed, DOE officials said that
most recipients report estimates to comply with program reporting
requirements. DOE takes steps to assess the reasonableness of these
estimates but does not require recipients to report the methods or
tools used to develop estimates. In addition, while DOE provides
recipients with a tool to estimate energy savings, DOE does not
require that recipients use the most recent, updated version of its
estimating tool.
GAO‘s analysis of the Recovery.gov data that recipients reported,
including jobs funded, shows data quality this quarter reflects minor
amounts of inconsistencies or illogical data. The portion of EECBG
recipients reporting some jobs funded has continued to increase. DOE
headquarters and field officials continue to address data quality
concerns, including ensuring that recipients and reviewers had the
updated Office of Management and Budget guidance on narrative
descriptions. However, data across reporting periods may not be
comparable because, in earlier periods, some confusion existed about
methods for calculating jobs funded.
What GAO Recommends:
GAO recommends that DOE (1) explore a means to capture information on
recipients‘ monitoring activities, and (2) solicit information on
recipients‘ methods for estimating energy-related impact metrics and
verify that recipients use the most recent version of DOE‘s estimating
tool. DOE generally agreed with GAO‘s recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-11-379] or key
components. For more information, contact Mark E. Gaffigan at (202)
512-3841 or gaffiganm@gao.gov or Yvonne D. Jones at (202) 512-6806 or
jonesy@gao.gov.
[End of section]
Contents:
Letter:
Background:
Grant Recipients Are Using EECBG Funds Primarily for Three Activities
but Face Several Challenges in Obligating and Spending These Funds:
DOE and Recipients Are Taking Actions to Provide Oversight of EECBG
Funds but Report Facing Challenges in Meeting Recovery Act and Other
Program Requirements:
DOE Has Faced Challenges in Determining the Extent to Which the EECBG
Program is Meeting Recovery Act and Program Goals for Energy Savings:
Oversight of Recipient Reporting Data Quality Continues for the Sixth
Round of Reporting:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Department of Energy:
Appendix III: Status of Prior Open Recommendations and Matters for
Congressional Consideration:
Appendix IV: GAO Contacts and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Activities Eligible for EECBG Funding:
Table 2: Number of Projects and Percentage of EECBG Funds Allocated to
Activities:
Table 3: Total EECBG Funds Obligated and Spent by Recipients as of
December 31, 2010:
Table 4: Recipients That Met DOE's September 30, 2010, Spending
Milestone:
Table 5: Planned Frequency of EECBG Monitoring Activities:
Table 6: DOE-Reported EECBG Monitoring Progress as of February 14,
2011:
Figure:
Figure 1: Portion of EECBG Recipients Reporting Funding at Least a
Partial FTE in 2010:
Abbreviations:
CFO: Chief Financial Officer:
DOE: Department of Energy:
EECBG: Energy Efficiency and Conservation Block Grant:
EECS: Energy Efficiency and Conservation Strategy:
EISA: Energy Independence and Security Act of 2007:
FTE: full-time equivalent:
HVAC: heating, ventilation, and air conditioning:
LED: light-emitting diode:
NACo: National Association of Counties:
NASEO: National Association of State Energy Officials:
OMB: Office of Management and Budget:
OWIP: Office of Weatherization and Intergovernmental Programs:
PAGE: Performance and Accountability for Grants in Energy:
Recovery Act: American Recovery and Reinvestment Act of 2009:
USCM: U.S. Conference of Mayors:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
April 7, 2011:
Report to the Congress:
Since the American Recovery and Reinvestment Act of 2009 (Recovery
Act) was enacted in February 2009, the Department of the Treasury has
paid out approximately $205.4 billion[Footnote 1] of the Recovery Act
funds for use by states and localities. The Recovery Act directed
states to use the funds for various purposes, including to preserve
and create jobs; assist those most affected by the recession; and
invest in transportation, environmental protection, and other
infrastructure to provide long-term economic benefits.[Footnote 2] Of
the Recovery Act funds, about $3.2 billion were provided as grants to
states, territories, federally recognized Indian tribes and local
communities through the Department of Energy's (DOE) Office of Energy
Efficiency and Renewable Energy's newly funded Energy Efficiency and
Conservation Block Grant program (EECBG). DOE provides EECBG funds to
grant recipients to develop, promote, and manage projects to improve
energy efficiency and reduce energy use and fossil fuel emissions in
local communities. DOE further encourages EECBG recipients to develop
new and innovative approaches; prioritize energy efficiency and
conservation; develop projects in a cost-effective manner that will
stimulate the economy; and to the extent possible, to develop programs
that will continue beyond the funding period.
DOE provides EECBG funds to grant recipients in two forms: through
formula grants and competitive grants. Of the $3.2 billion, DOE
awarded about $2.7 billion through formula grants to local communities
and states. About 61 percent of the total EECBG funds ($1.94 billion)
was awarded as formula grants to more than 2,000 local communities--
including cities, counties, and tribal communities--and about 24
percent of the total EECBG funds ($767 million) was awarded to the
states, five territories, and the District of Columbia. About 1
percent of the total EECBG funds ($40 million) was allocated to
Administrative and Training/Technical Assistance. In addition to the
approximately $2.7 billion in formula grants, DOE awarded about 14
percent of the total EECBG funds ($453 million) through competitive
grants to local communities.
This report, the ninth in a series of bimonthly GAO reviews, responds
to a mandate in the Recovery Act, which requires that GAO conduct such
reviews of funds made available under the act to determine how funds
are used, including whether funds are achieving the stated purposes of
the act. The Recovery Act also requires GAO to comment on estimates of
jobs created or retained as reported by recipients.[Footnote 3] Over
the past 2 years, our bimonthly reviews of Recovery Act programs have
covered a wide range of programs including Medicaid, education, Head
Start, highways and transit, housing construction and tax credit
assistance, emergency food and shelter, justice assistance and
community-oriented policing, workforce investment, and environmental
and energy projects.
In this report, we reviewed and updated recipients' information
available on the EECBG program, focusing on the approximately $2.7
billion awarded through formula funding to eligible states and local
and tribal communities. Specifically, our objectives were to determine
(1) how EECBG funds are being used, and what challenges, if any, EECBG
recipients face in obligating and spending their funds; (2) actions
DOE officials and EECBG recipients are taking to provide oversight of
EECBG funds and challenges, if any, they face in meeting Recovery Act
and other requirements; (3) the extent to which EECBG recipients and
the EECBG program are meeting Recovery Act and EECBG program goals for
energy savings and what challenges, if any, recipients have
encountered in measuring and reporting energy savings; and (4) how the
quality of estimates of jobs created and retained reported by Recovery
Act recipients, particularly EECBG recipients, has changed over time.
To address these objectives, we reviewed relevant federal laws and
regulations, as well as DOE guidance documents. We analyzed DOE's
EECBG program data from DOE databases. We interviewed EECBG program
officials, including about 30 project officers, technical monitors,
and contractors in the field offices responsible for managing and
monitoring awards. We also interviewed representatives from several
energy and public service organizations, including the National
Association of State Energy Officials (NASEO), the National
Association of Counties (NACo), and the U.S. Conference of Mayors
(USCM). In addition, we e-mailed questions to a sample of 91
purposefully selected city and county recipients that are eligible to
receive EECBG funding. We received responses from 49 recipients to
questions on the various aspects of our objectives, such as obligating
and spending funds, guidance, best practices, monitoring, and
challenges experienced. The responses from this nonprobability sample
of recipients are not generalizable to the 2,185 EECBG states, cities,
counties, and tribal grant recipients eligible for formula funding
nationwide. To comment on recipients' estimates of jobs created or
retained, we analyzed the quality of estimates of jobs created or
retained provided by recipients. The Recovery Act requires that
nonfederal recipients of Recovery Act funds--including grants,
contracts, and loans--submit quarterly reports. These reports include
a list of each project or activity for which Recovery Act funds were
expended or obligated and information concerning the amount and use of
funds and jobs created or retained by these projects and activities,
among other information. The latest of these recipient reports covered
the activity as of the Recovery Act's passage through the quarter
ending December 31, 2010. We assessed these reports for completeness
and reliability and found them sufficiently reliable for the purposes
of this report.
Our oversight of programs funded by the Recovery Act has resulted in
more than 10 related products in or after December 2010 and more than
90 related products with numerous recommendations since we began
reporting on the Recovery Act (see the Related GAO Products list for
reports issued in or after December 2010 and GAO's Web site for a list
of all GAO reports related to Recovery Act funding). In addition to
the objectives outlined above, this report updates agency actions in
response to recommendations from previous bimonthly and recipient
reporting reviews that have not been fully implemented (open
recommendations), including our prior recommendations regarding the
use of Recovery Act funds for the Weatherization Assistance Program
(see appendix III).[Footnote 4]
We conducted this performance audit from September 2010 to April 2011
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 goals of the Recovery Act are to preserve and create jobs and
promote economic recovery; to assist those most impacted by the
recession; to provide investments needed to increase economic
efficiency by spurring technological advances in science and health;
to invest in transportation, environmental protection, and other
infrastructure that will provide long-term economic benefits; and to
stabilize state and local government budgets, in order to minimize and
avoid reductions in essential services and counterproductive state and
local tax increases.
The EECBG program was authorized in the Energy Independence and
Security Act of 2007 (EISA),[Footnote 5] which intended to move the
United States toward greater energy independence and security and to
increase the production of clean renewable fuels, among other things.
The EECBG program was funded for the first time by the Recovery Act,
through formula and competitive grants. Through the program, DOE
allocates formula grants to the 50 states, the District of Columbia,
and five territories; to city and county recipients based on their
resident and commuter populations; and to Native American tribes based
on population and climatic conditions. Applicants eligible for formula
funding include cities or city-equivalent units of government, such as
towns or villages with populations of at least 35,000; counties, which
include county-equivalent units of local government, such as parishes
or boroughs with populations of at least 200,000; and all Indian
tribes and any Alaska Native village. A city or county is also
eligible for direct funding if it is one of the 10 highest-populated
cities or counties of the state in which it is located.
The EECBG program has broad goals for energy-related outcomes. DOE
encourages EECBG recipients to develop new and innovative approaches
to meet the purposes of the program: to prioritize energy efficiency
and conservation; develop projects in a cost-effective manner that
will maximize benefits over time; stimulate the economy; leverage
other public or private resources; promote energy market
transformation; and to the extent possible, to develop programs that
will provide sustainable, and measurable energy savings, job creation,
and economic stimulus benefits that will continue beyond the funding
period.
DOE announced the funding opportunity for interested applicants to
submit applications for EECBG formula grant funding on March 26, 2009.
DOE required applicants to submit an Energy Efficiency and
Conservation Strategy (EECS) that described their strategy for
achieving the Recovery Act's goals of the program. DOE had 120 days to
review and approve or disapprove recipients' EECSs. DOE's funding
announcement also required that recipients select projects from the 14
eligible activities identified in Section 544 of EISA, shown in table
1.
Table 1: Activities Eligible for EECBG Funding:
Eligible activity: 1. Energy Efficiency and Conservation Strategy
(EECS);
Description: Developing a strategy for using EECBG funds to promote
energy efficiency and conservation goals. All recipients are required
to develop and submit an EECS.
Eligible activity: 2. Technical consultant services;
Description: Retaining a technical consultant to assist in developing
an EECS.
Eligible activity: 3. Residential and commercial buildings energy
audits;
Description: Conducting energy audits of residential and commercial
buildings.
Eligible activity: 4. Financial incentive programs;
Description: Providing programs for energy-efficiency improvements,
such as energy-saving performance contracting, on-bill financing, and
revolving loan funds.
Eligible activity: 5. Energy-efficiency retrofits;
Description: Providing grants to nonprofit organizations and
governmental agencies for retrofitting existing facilities to improve
energy efficiency.
Eligible activity: 6. Buildings and facilities;
Description: Developing and implementing energy efficiency and
conservation programs for buildings and facilities within the
recipient's jurisdiction, such as measurement and verification
protocols, public education, and identifying energy-efficient
technology.
Eligible activity: 7. Transportation programs;
Description: Developing programs to conserve energy used in
transportation, such as bike lanes, synchronizing traffic signals, and
programs that reduce commuting.
Eligible activity: 8. Codes and inspections;
Description: Developing building codes and inspection services to
promote building energy efficiency.
Eligible activity: 9. Energy distribution;
Description: Implementing energy distribution technologies that
significantly increase energy efficiency, including distributed
resources, combined heat and power, and district heating and cooling
systems.
Eligible activity: 10. Material conservation programs;
Description: Developing and implementing material conservation
programs, including source reduction, recycling, and recycled content
procurement programs that increase energy efficiency.
Eligible activity: 11. Reduction/capture of methane/greenhouse gases;
Description: Purchasing or implementing technologies to reduce and
capture methane and greenhouse gases generated by landfills or similar
waste-related sources.
Eligible activity: 12. Lighting;
Description: Replacing traffic signals and street lighting with energy-
efficient lighting technologies, such as light emitting diodes.
Eligible activity: 13. Renewable energy technologies;
Description: Developing on-site renewable energy technology on or in a
government building, including solar energy, wind energy, fuel cells,
and biomass.
Eligible activity: 14. Other;
Description: Undertaking any other appropriate activity that meets the
purposes of the program and is approved by DOE, such as using EECBG
funds to leverage public and private sector funds and partnering with
third party lenders.
Source: EISA Pub. L. No. 110-140, § 544; DOE, Financial Assistance
Funding Opportunity Announcement: Recovery Act - Energy Efficiency and
Conservation Block Grants - Formula Grants, DE-FOA-0000013 (Mar. 26,
2009); DOE, Energy Efficiency and Conservation Block Grant Program
Notice 10-011 (April 21, 2010); DOE, Energy Efficiency and
Conservation Block Grant Program Notice 10-021 (Jan. 4, 2011).
[End of table]
The Recovery Act increased the importance of transparency and
accountability in its use of funds. Accordingly, DOE requires grant
recipients to report grant-level expenditure information and
performance information including hours worked, energy cost savings,
and percent of work completed as well as other figures, through a Web-
based application called the Performance and Accountability for Grants
in Energy (PAGE) system within 30 calendar days of the end of each
quarter year.[Footnote 6] PAGE allows recipients to electronically
submit and manage grant performance and financial information to DOE.
In addition, grant recipients are required to report through
www.FederalReporting.gov within 10 days after the end of each quarter.
This information is made available to the general public through the
Recovery.gov Web site.
Grant Recipients Are Using EECBG Funds Primarily for Three Activities
but Face Several Challenges in Obligating and Spending These Funds:
Grant recipients are using EECBG funds primarily for three activities:
energy-efficiency retrofits, financial incentive programs, and
building and facilities programs. However, recipients have reported
several challenges that have delayed their efforts to obligate and
spend these funds.
Grant Recipients Have Allocated Almost Two-Thirds of EECBG Funds to 3
of the 14 Eligible Activities:
Grant recipients have allocated most EECBG funds to 3 of the 14
activities that DOE designated as eligible for EECBG funding in
accordance with EISA. As shown in table 2, recipients have allocated
nearly two-thirds (65.1 percent) of EECBG funds for three types of
activities: (1) energy-efficiency retrofits (36.8 percent), which
includes activities such as grants to nonprofit organizations and
governmental agencies for retrofitting existing facilities to improve
energy efficiency; (2) financial incentive programs (18.5 percent),
which includes activities such as rebates, subgrants, and revolving
loans to promote energy-efficiency improvements; and (3) energy-
efficiency and conservation programs for buildings and facilities (9.8
percent), which includes activities such as installing storm windows
or solar hot water technology. Some EECBG recipients are using their
awards to fund projects in all three of these categories. For example,
according to information reported through PAGE, New York City plans to
use $31 million of its $80.8 million award to fund energy-efficiency
retrofits at municipal buildings such as schools, courthouses, police
precincts, and firehouses. It has also allocated $16.1 million to a
financial incentive program that will provide loans to capital-
constrained building owners for energy-efficient retrofits to
residential, commercial, or industrial buildings. New York City
designated another $2 million for buildings and facilities projects
and will fund a retro-commissioning program at city facilities
designed to identify efficiency measures and address anomalies in
energy use, equipment schedules, and control sequences that may cause
energy waste. As indicated in table 2, these three activities account
for 48 percent of all the projects funded through the EECBG program,
or 3,674 out of 7,594 total projects.
Table 2: Number of Projects and Percentage of EECBG Funds Allocated to
Activities:
Activity: 1. Energy Efficiency and Conservation Strategy (EECS)[A];
Budget: $151,438,205;
Percent of budget: 5.2%;
Number of projects: 801;
Percent of all projects: 10.5%.
Activity: 2. Technical consultant services;
Budget: $71,982,608;
Percent of budget: 2.5%;
Number of projects: 555;
Percent of all projects: 7.3%.
Activity: 3. Residential and commercial buildings and audits;
Budget: $68,330,175;
Percent of budget: 2.4%;
Number of projects: 443;
Percent of all projects: 5.8%.
Activity: 4. Financial incentive programs;
Budget: $534,573,604;
Percent of budget: 18.5%;
Number of projects: 406;
Percent of all projects: 5.3%.
Activity: 5. Energy-efficiency retrofits;
Budget: $1,065,779,447;
Percent of budget: 36.8%;
Number of projects: 2,460;
Percent of all projects: 32.4%.
Activity: 6. Buildings and facilities;
Budget: $284,711,283;
Percent of budget: 9.8%;
Number of projects: 808;
Percent of all projects: 10.6%.
Activity: 7. Transportation;
Budget: $122,182,595;
Percent of budget: 4.2%;
Number of projects: 528;
Percent of all projects: 7.0%.
Activity: 8. Codes and inspections;
Budget: $19,765,501;
Percent of budget: 0.7;
Number of projects: 117;
Percent of all projects: 1.5.
Activity: 9. Energy distribution;
Budget: $35,628,958;
Percent of budget: 1.2%;
Number of projects: 77;
Percent of all projects: 1.0%.
Activity: 10. Material conservation programs;
Budget: $35,677,882;
Percent of budget: 1.2%;
Number of projects: 163;
Percent of all projects: 2.1%.
Activity: 11. Reduction/capture of methane/greenhouse gases;
Budget: $30,474,297;
Percent of budget: 1.1%;
Number of projects: 48;
Percent of all projects: 0.6%.
Activity: 12. Lighting;
Budget: $198,321,849;
Percent of budget: 6.9%;
Number of projects: 622;
Percent of all projects: 8.2%.
Activity: 13. Renewable energy technologies;
Budget: $175,410,392;
Percent of budget: 6.1%;
Number of projects: 478;
Percent of all projects: 6.3%.
Activity: 14. Other;
Budget: $100,112,235;
Percent of budget: 3.5%;
Number of projects: 88;
Percent of all projects: 1.2%.
Activity: Total;
Budget: $2,894,389,031[B];
Percent of budget: 100.0%[C];
Number of projects: 7,594;
Percent of all projects: 100.0%.
Source: DOE.
[A] The number of projects funded under this activity is relatively
high because all recipients were required to complete an energy
efficiency and conservation strategy as part of their grant
application and some recipients used EECBG funds to cover the cost of
preparing these strategies.
[B] According to DOE officials, budgeted amounts are reported by
recipients at the activity level and as a result there is some
discrepancy between this figure and the total amount awarded
(approximately $2.7 billion).
[C] Totals may not add up to 100 percent due to rounding.
[End of table]
According to DOE officials, a number of factors explain why energy-
efficiency retrofits, financial incentive programs, and buildings and
facilities programs account for such a large portion of all EECBG-
funded projects. DOE officials told us that some recipients had
previously identified needed improvements to their buildings and
facilities. Recipients also told us that EECBG funds allowed them to
undertake planned facilities projects that previously lacked the
requisite funding. DOE officials told us that other recipients
allocated EECBG funds to these projects to save money on future energy
bills and many recipients chose retrofit programs because these
programs allowed them to use EECBG funds to engage their broader
communities by retrofitting commercial and residential buildings, in
addition to government facilities. DOE also encouraged recipients to
pursue these projects. In the EECBG program's funding announcement,
DOE asked recipients to "prioritize energy efficiency and conservation
first as the cheapest, cleanest, and fastest ways to meet energy
demand" and to "develop programs and strategies that will continue
beyond the funding period."[Footnote 7] Energy efficiency retrofits
and buildings and facilities projects meet both of these goals.
Although financial incentive programs appear to be the second highest
funded activity--receiving over 18 percent of EECBG funds--the data
for this activity require further explanation. According to DOE
officials, approximately 73 percent of activities classified as
financial incentive programs are subgrants made by state governments
to units of local government within the state.[Footnote 8] Such
subgrant recipients can use these funds for any of the 14 eligible
activities, such as lighting, retrofits, and transportation. The state
awarding the subgrant can report details of the activities funded by
subgrant recipients. However, the state government reports these
details in narrative fields within DOE's PAGE system while the primary
activity type, reflected in table 2, is simply classified as
"financial incentive programs." High-level summary data on these
activities may give the impression that over 18 percent of EECBG funds
are allocated to financial incentive programs however, nearly three-
quarters of these funds may ultimately be used for any of the 14
eligible activities. Although DOE collects information on how these
funds are ultimately used, these data are not readily available.
DOE has obligated all EECBG funds to recipients, and recipients are
beginning to obligate and spend these funds. The Recovery Act required
DOE to obligate all funds to recipients by September 30, 2010, and DOE
has done so. DOE staff told us that recipients have completed the
planning stages of their projects and they expect that recipient
spending will soon hit a peak before leveling off as funds are
expended. As of December 2010, recipients reported obligating
approximately $1.7 billion, 57 percent of their EECBG budgets, and
reported spending more than $655 million, approximately 23 percent of
their EECBG budgets. DOE officials expect recipients' spending to
increase significantly in forthcoming reporting periods as work begins
or increases on more projects. The table below shows the total funds
budgeted, obligated, and spent and the percentages of budgeted funds
spent for each eligible activity.
Table 3: Total EECBG Funds Obligated and Spent by Recipients as of
December 31, 2010:
Activity: 1. Energy Efficiency and Conservation Strategy (EECS);
Budget: $151,438,205;
Obligated by recipients: $103,869,366;
Spent by recipients: $41,251,127;
Percent of budget spent: 27.2%.
Activity: 2. Technical consultant services;
Budget: $71,982,608;
Obligated by recipients: $48,167,480;
Spent by recipients: $18,209,103;
Percent of budget spent: 25.3%.
Activity: 3. Residential and commercial buildings and audits;
Budget: $68,330,175;
Obligated by recipients: $31,872,116;
Spent by recipients: $14,454,762;
Percent of budget spent: 21.2%.
Activity: 4. Financial incentive programs;
Budget: $534,573,604;
Obligated by recipients: $368,791,277;
Spent by recipients: $92,384,019;
Percent of budget spent: 17.3%.
Activity: 5. Energy-efficiency retrofits;
Budget: $1,065,779,447;
Obligated by recipients: $569,119,301;
Spent by recipients: $249,773,284;
Percent of budget spent: 23.4%.
Activity: 6. Buildings and facilities;
Budget: $284,711,283;
Obligated by recipients: $148,324,716;
Spent by recipients: $68,106,739;
Percent of budget spent: 23.9%.
Activity: 7. Transportation;
Budget: $122,182,595;
Obligated by recipients: $49,087,408;
Spent by recipients: $29,754,830;
Percent of budget spent: 24.4%.
Activity: 8. Codes and inspections;
Budget: $19,765,501;
Obligated by recipients: $13,710,406;
Spent by recipients: $4,961,257;
Percent of budget spent: 25.1%.
Activity: 9. Energy distribution;
Budget: $35,628,958;
Obligated by recipients: $11,075,534;
Spent by recipients: $5,568,287;
Percent of budget spent: 15.6%.
Activity: 10. Material conservation programs;
Budget: $35,677,882;
Obligated by recipients: $12,767,443;
Spent by recipients: $10,834,821;
Percent of budget spent: 30.4%.
Activity: 11. Reduction/capture of methane/greenhouse gases;
Budget: $30,474,297;
Obligated by recipients: $24,816,635;
Spent by recipients: $5,518,184;
Percent of budget spent: 18.1%.
Activity: 12. Lighting;
Budget: $198,321,849;
Obligated by recipients: $97,181,881;
Spent by recipients: $57,828,029;
Percent of budget spent: 29.2%.
Activity: 13. Renewable energy technologies;
Budget: $175,410,392;
Obligated by recipients: $79,385,833;
Spent by recipients: $43,722,847;
Percent of budget spent: 24.9%.
Activity: 14. Other;
Budget: $100,112,235;
Obligated by recipients: $94,853,487;
Spent by recipients: $12,769,706;
Percent of budget spent: 12.8%.
Activity: Total;
Budget: $2,894,389,031[A];
Obligated by recipients: $1,653,022,884;
Spent by recipients: $655,136,996;
Percent of budget spent: 22.6%.
Source: DOE.
[A] According to DOE officials, budgeted amounts are reported by
recipients at the activity level and as a result there is some
discrepancy between this figure and the total amount awarded
(approximately $2.7 billion).
[End of table]
EECBG Recipients Face Several Challenges in Obligating and Spending
Recovery Act Funds and Meeting DOE's New Obligating and Spending
Milestones:
Some recipients and others have identified several challenges that
have delayed spending of Recovery Act funds under this newly funded
EECBG program. DOE has made efforts to help recipients address some of
these challenges, including launching a Technical Assistance Program
and Solution Center to provide recipients with one-on-one assistance,
an online resource library, training, webcasts, and a peer-exchange
forum for sharing best practices and lessons learned.
Inexperienced DOE Program Administrators:
Because the EECBG program is relatively new--authorized by EISA in
2007 but not funded until the Recovery Act was passed in 2009--some
DOE administrators had little previous experience with the program and
its requirements. DOE's Inspector General reported that some of the
DOE staff assigned to review EECBG grant applications lacked financial
assistance experience and failed to obtain the information necessary
to issue awards, which required additional requests for documentation
that further delayed awards.[Footnote 9] The Inspector General also
reported that the program lacked a permanent Program Director until
April 2010. Some EECBG project officers--the DOE staff primarily
responsible for overseeing and interacting with EECBG recipients--told
us that they faced a steep learning curve during the initial months of
the program, when they began working with recipients to resolve
obstacles to applying for funds and address questions about meeting
requirements and reporting outcomes. Several project officers compared
managing the EECBG program to flying a plane while it is still being
built.
Limitations in Recipient Staff and Resources:
In addition, several DOE project officers told us that some
recipients' efforts to effectively manage grants and spend funds have
been complicated by staff and resource limitations. Some recipients
lack the staff and resources needed to comply with EECBG and Recovery
Act requirements. For example, a project officer told us that one
county has only two staff members who were entirely responsible for
managing the grant and meeting reporting requirements, in addition to
their regular workload. The economic downturn exacerbated some
recipients' staffing challenges as budget shortfalls led to furloughs
and hiring freezes. For example, one county reported to DOE that
staffing shortages due to budget cuts had delayed its planned retrofit
projects. Another recipient reported project delays due to a furlough
that closed the city government and prevented the city council from
approving their plans for a financial incentive program.
Jurisdictional Requirements:
Some recipients also told us that they experienced local
jurisdictional requirements that delayed their ability to spend
Recovery Act funds. DOE's Inspector General reported that local budget
and procurement requirements prevented some recipients from obligating
funds until DOE made the entire award amount available. In addition,
several project officers told us that some recipients cannot initiate
their proposed EECBG-funded projects until their spending decisions
and budgets are approved by local officials, which can delay projects
and spending for months or even longer in localities where local
officials only meet quarterly or twice a year. In response to
questions about spending delays, one recipient told us that although
local procedures can be time-consuming, these procedures also protect
tax dollars. Another recipient told us that DOE needs to take local
procedures into consideration so that spending milestones are more
flexible and realistic. Both representatives from NACo told us that
although recipients are grateful for the opportunity to implement
critical projects that they previously could not have funded, DOE has
not adapted guidance and deadlines to the needs, timelines, or
procedures of local governments and that this has created some
challenges. Some project officers expressed similar views in our
meetings with them, stating that the federal government in general
lacked an appreciation of city and county government processes. Both
USCM representatives also told us that although DOE's guidance and
support had improved significantly, this lack of understanding of how
city governments worked had a negative impact on the success of the
program.
Reporting Requirements:
Additionally, some recipients told us that meeting the reporting
requirements for EECBG Recovery Act funds is time-intensive and that
requiring recipients to submit similar information through PAGE and
FederalReporting.gov makes the reporting process unnecessarily
duplicative. For example, one recipient told us that the required
reporting for EECBG takes two to three times longer than other federal
grants. Some recipients told us that the EECBG program's reporting
requirements were more cumbersome than other federal grant programs.
One recipient with decades of federal grant experience told DOE's
Recovery Act help line that although DOE staff had been very helpful
in providing information, the reporting requirements for EECBG
Recovery Act funds were the most onerous he had experienced in 20
years of government work despite regularly applying for millions of
dollars in federal grants. Another recipient told us that his city
canceled one of its planned projects, a geothermal system, because the
reporting requirements would have been too burdensome. Similarly,
project officers told us that some small recipients were so
overwhelmed with the reporting requirements that they declined their
awards. However, the vast majority of recipients accepted their awards.
Delays in Acquiring Needed Materials and Products:
Some recipients have also faced challenges in acquiring needed
materials and products in a timely manner. EECBG recipients have
created a large demand for energy-efficient materials. As a result,
some of the materials and products needed to complete projects are out
of stock or on back order, which can delay the implementation of these
projects and the spending of funds allocated for these projects. For
example, project officers told us that shortages of lighting and
heating, ventilation, and air conditioning (HVAC) systems products
have delayed some of the projects requiring these items. Both NASEO
representatives told us that shortages were also an issue for solar
and energy-efficient lighting projects.
DOE Established New Obligating and Spending Milestones for Recipients:
When DOE announced funding opportunities through the EECBG program in
March 2009, it stated that recipients must obligate all funds within
18 months of their effective award date[Footnote 10] and spend all
funds within 36 months of their effective award date.[Footnote 11]
These original time frames require recipients that were awarded grants
in fall 2009--the majority of recipients--to obligate 100 percent of
their funds by spring 2011 and to spend these funds by fall 2012.
However, in April 2010 DOE determined that many recipients were not on
a trajectory to obligate and spend all of their funds within this time
frame. DOE sent letters to all EECBG recipients outlining new
obligation and spending milestones in an effort to increase obligating
and spending rates among recipients and ensure that all funds are
spent before the 36-month deadline. DOE's new milestones encouraged
recipients to obligate 90 percent of their funds by June 25, 2010,
spend 20 percent of their funds by September 30, 2010, and spend 50
percent of their funds by June 30, 2011. Officials from the Office of
Weatherization and Intergovernmental Programs (OWIP), the DOE office
which manages the EECBG program, told us that DOE and the
Administration expressed an urgency to spend funds quickly, thereby
creating jobs and stimulating the economy--primary purposes of the
Recovery Act.
These OWIP officials told us that many recipients found the milestone
letters useful to facilitate local procurement processes and overcome
other barriers to obligations and payments. DOE initiated Operation
Clear Path to meet the September 2010 spending milestone by contacting
600 targeted recipients through telephone calls and helping these
recipients develop strategies and tactics to accelerate their
spending. An internal DOE newsletter reported that Operation Clear
Path was yielding real gains by reaching out to recipients of grants
over $3 million. DOE cited recent spending increases among targeted
recipients as evidence that this approach was succeeding. For example,
one city moved $600,000 from a revolving loan fund to a lighting
retrofit, bringing the city's spending up to 31 percent. Additional
examples given from other cities include $10 million spent to
capitalize a revolving loan fund and $4 million spent on a lighting
equipment purchase.
However, many recipients have had difficulty meeting these new
milestones. According to DOE's data, about 41 percent of recipients
met DOE's new milestone of spending 20 percent of EECBG funds by
September 30, 2010 (see table 4).
Table 4: Recipients That Met DOE's September 30, 2010, Spending
Milestone:
Award amount: Over $2 million;
Total number of grants: 294;
Number of recipients that spent over 20% of funds by Sept. 30,
2010[A]: 95;
Percent of recipients that spent over 20% of funds by Sept. 30, 2010:
32%.
Award amount: Between $250,000 and $2 million;
Total number of grants: 909;
Number of recipients that spent over 20% of funds by Sept. 30,
2010[A]: 339;
Percent of recipients that spent over 20% of funds by Sept. 30, 2010:
37%.
Award amount: Less than $250,000;
Total number of grants: 984;
Number of recipients that spent over 20% of funds by Sept. 30,
2010[A]: 467;
Percent of recipients that spent over 20% of funds by Sept. 30, 2010:
47%.
Award amount: Total number of grant recipients;
Total number of grants: 2,187[B];
Number of recipients that spent over 20% of funds by Sept. 30,
2010[A]: 901;
Percent of recipients that spent over 20% of funds by Sept. 30, 2010:
41%.
Source: DOE.
[A] Note that spending is determined by funds drawn down from the
Automated Standard Application for Payments system. The system was
developed by the Financial Management Service through which recipient
organizations receiving federal funds can draw from accounts pre-
authorized by federal agencies.
[B] Note: two recipients have withdrawn from the program since
September 30, 2010. The current number of recipients, as of February
14, 2011, is 2,185.
[End of table]
Furthermore, some project officers told us that DOE's new spending and
obligation milestones confused recipients. These project officers
stated that some recipients were concerned about the consequences they
would face for not being able to meet the new milestones. Although DOE
officials told us that there were no repercussions for recipients that
failed to meet these milestones, some project officers told us that
some recipients did not understand this and were concerned that they
might lose their funding. In some cases, project officers told us that
they too were unsure of the consequences of recipients' failing to
meet these milestones.
In addition, some representatives from NASEO told us that these new
milestones were not consistent with the timelines set in the terms and
conditions of award agreements that DOE had already approved. Some
project officers told us they are concerned that DOE is sending
conflicting messages by encouraging recipients to spend funds more
quickly than the time frame recipients had agreed to in the terms of
their grants. Further, DOE's Inspector General reported in August 2010
that DOE's new obligating and spending milestones "may increase the
risks associated with ensuring compliance with regulatory requirements—
as well as, maintaining effective financial control over the
expenditure of funds."[Footnote 12]
DOE has initiated a second round of telephone calls to targeted
recipients, some of which may have been contacted during the first
round of follow-up telephone calls, in an effort to increase spending
to meet DOE's new milestone of spending 50 percent of EECBG funds by
June 30, 2011. DOE staff continue to work with recipients and project
officers to share best practices, overcome challenges, and ensure that
the EECBG program advances the goals of energy efficiency and job
creation. However, it is still unclear whether this effort will
overcome the challenges recipients face in obligating and spending
EECBG funds and meeting DOE's new milestones.
DOE and Recipients Are Taking Actions to Provide Oversight of EECBG
Funds but Report Facing Challenges in Meeting Recovery Act and Other
Program Requirements:
Both DOE and recipients are taking a variety of actions to provide
oversight of EECBG funds, with some recipients providing much more
rigorous oversight than others. DOE and recipients reported having
experienced technical, staffing, and expertise challenges that hinder
their ability to meet Recovery Act and program requirements. DOE is
taking steps to address many of these challenges.
DOE and Recipients Are Taking a Variety of Actions to Provide
Oversight of EECBG Funds, and the Level of Recipient Oversight Varies:
DOE and recipients are using a variety of oversight actions for EECBG
funds such as program office monitoring and oversight by the DOE Chief
Financial Officer (CFO) and the Inspector General. Recipients are also
providing oversight, and the level of this oversight may vary by the
recipient's resources and the nature of the project.
DOE's Oversight Actions:
DOE's framework for oversight is its programwide monitoring plan that
was issued in August 2009 and revised in March and June 2010.
According to DOE documentation, DOE developed the plan to, among other
things, provide a structure for oversight of recipients' procedures
and processes, ensure consistent application of program and reporting
standards, and provide clear and transparent guidelines. As outlined
in the monitoring plan, OWIP oversees the administration and oversight
of EECBG funds. The office plans and budgets programmatic requirements
and resources, develops standardized monitoring practices, provides
expertise to review and analyze performance measures, and helps
provide guidance and technical expertise to meet programmatic
requirements, among other activities. Specifically, OWIP has issued
guidance to help recipients and DOE program staff meet Recovery Act
and program requirements such as Buy American,[Footnote 13] Davis-
Bacon,[Footnote 14] and monitoring requirements, as well as to help to
ensure that funds are spent efficiently. OWIP also develops and hosts
Web seminars on specific topics such as designing retrofit and
appliance rebate programs.
To monitor recipients' use of funds, DOE project officers act as the
primary support to recipients, as well as liaisons between recipients
and DOE. DOE's monitoring plan directs project officers to gather key
program data from recipients, provide information on training and
technical assistance opportunities, and coordinate monitoring
activities. In addition to project officers, DOE also uses other
monitoring staff such as technical monitors, contract specialists, and
staff accountants.[Footnote 15] The plan and guidance also identify
goals and actions for three primary components of oversight and
monitoring: (1) desktop monitoring, (2) on-site monitoring, and (3)
worksite visits. Specifically:
* Desktop monitoring: According to DOE, all EECBG grant awards are to
be reviewed through quarterly desktop monitoring--remote monitoring
conducted by the project officer. This includes examining recipients'
financial and other reports to assess progress and determine
compliance with federal requirements, as well as examining recipients'
planned goals and objectives and the reporting and tracking of
resources expended by the recipient and subrecipients.[Footnote 16]
DOE also directs project officers and other monitors to use
information gained from desktop monitoring for further monitoring and
potential corrective action.
* On-site monitoring: DOE conducts periodic on-site monitoring of
grant recipients. On-site monitoring primarily occurs at the recipient
and contractor levels and can also include field inspections on
projects that have achieved milestones since the previous visit. Prior
to on-site monitoring, monitors also review the previous findings of
other DOE project officers and monitoring staff to determine
deficiencies and to determine what steps are being taken to resolve
the issues. During on-site monitoring, project officers review what
specific internal controls[Footnote 17] recipients have in place, such
as segregation of duties, accounting standards and practices, and
payment procedures. Monitoring staff also interview contractors to
determine if follow-up procedures were used and deficiencies were
corrected.
* Project worksite reviews: DOE monitoring staff also visit some
worksites during on-site monitoring to review the progress of
activities at the project, facility, or building being completed.
Staff also review the quality of work performed and compliance with
federal requirements, such as the Buy American provision. DOE
officials stated that worksite reviews were conducted as determined
necessary by the project officer, though project officers made an
effort to visit at least one worksite during every on-site visit.
Overall, DOE officials stated that they planned to prioritize their
monitoring based on the size of the grant rather than on the expected
risk of the project. For example, all recipients with over $2 million
in Recovery Act funds--which as a group, represent about 70 percent of
all EECBG Recovery Act formula funds--receive significantly more on-
site monitoring than would recipients of grants of under $250,000.
Table 5 shows the frequency of DOE's planned monitoring activities.
Table 5: Planned Frequency of EECBG Monitoring Activities:
Type of monitoring: Percent of total grant funds[A];
Recipients receiving less than $250,000: 4%;
Recipients receiving less than $1M but at least $250,000: 16%;
Recipients receiving less than $2M but at least $1M: 9%;
Recipients receiving $2M or greater: 70%.
Type of monitoring: Desktop reviews;
Recipients receiving less than $250,000: Quarterly;
Recipients receiving less than $1M but at least $250,000: Quarterly;
Recipients receiving less than $2M but at least $1M: Quarterly;
Recipients receiving $2M or greater: Quarterly.
Type of monitoring: On-site reviews;
Recipients receiving less than $250,000: One in the life of the grant
for 10% of the grants;
Recipients receiving less than $1M but at least $250,000: One in the
life of the grant for 25% of the grants;
Recipients receiving less than $2M but at least $1M: One in the life
of the grant;
Recipients receiving $2M or greater: One to two per year.
Type of monitoring: Worksite reviews;
Recipients receiving less than $250,000: As needed;
Recipients receiving less than $1M but at least $250,000: As needed;
Recipients receiving less than $2M but at least $1M: As needed;
Recipients receiving $2M or greater: As needed.
Source: DOE.
[A] Numbers do not add to 100 percent due to rounding.
[End of table]
To conduct and track monitoring activities, DOE monitoring staff make
extensive use of a Web-based application, the PAGE system. For
example, DOE monitoring staff use PAGE data to inform and target
further monitoring actions such as on-site monitoring. Additionally,
DOE has also created a monitoring tool within PAGE that compiles the
checklists used by project officers to determine the compliance of
recipients with the program's statutes and requirements. DOE guidance
states that through the use of PAGE, monitoring staff can target
recipients with low spending rates or reporting delays for additional
follow-up to help ensure that funds were spent in a timely manner.
Project officers also stated that they use financial data reported in
PAGE to identify potential areas of concern for further analysis.
Overall, DOE officials stated that they have almost met their desktop
monitoring goals with a rate of over 90 percent of their planned
monitoring complete, and based on their current rate, are on track to
meet on-site monitoring goals (see table 6). DOE officials stated that
they do not currently track the number of worksite reviews, but that
all initial on-site monitoring visits also include a worksite review.
Table 6: DOE-Reported EECBG Monitoring Progress as of February 14,
2011:
Type of monitoring: Total recipients;
Recipients receiving less than $250,000: 982;
Recipients receiving less than $1M but at least $250,000: 733;
Recipients receiving less than $2M but at least $1M: 176;
Recipients receiving $2M or greater: 294;
Total: 2,185[A].
Type of monitoring: Total on-site visits;
Recipients receiving less than $250,000: 67;
Recipients receiving less than $1M but at least $250,000: 61;
Recipients receiving less than $2M but at least $1M: 51;
Recipients receiving $2M or greater: 293;
Total: 472.
Type of monitoring: Total desktop reports submitted--CY 2010 Q3 (CY
2010 Q4);
Recipients receiving less than $250,000: 915 (790);
Recipients receiving less than $1M but at least $250,000: 732 (94);
Recipients receiving less than $2M but at least $1M: 176 (16);
Recipients receiving $2M or greater: 293 (104);
Total: 2,116 (1,004).
Type of monitoring: Percentage desktop reports submitted--CY 2010 Q3
(CY 2010 Q4);
Recipients receiving less than $250,000: 93.2% (80.4%);
Recipients receiving less than $1M but at least $250,000: 99.9%
(12.8%);
Recipients receiving less than $2M but at least $1M: 100.0% (9.1%);
Recipients receiving $2M or greater: 99.6% (35.4%);
Total: 96.8% (45.9%).
Source: DOE:
Note: "CY" refers to calendar year and "Q" refers to quarter.
[A] Total number of recipients for table 4 and table 6 do not match
because two recipients withdrew from the program.
[End of table]
In addition to desktop monitoring and site visits, several DOE
officials reported almost meeting their planned staffing goals for
project officers and other monitoring staff. Specifically, as of
December 20, 2010, these DOE officials reported that approximately 60
project officers, 20 contract specialists, and 35 full-time
equivalents (FTE) of contractor support were assigned to administer
the EECBG program.[Footnote 18] These staff members are located in
Washington, D.C.; Oak Ridge, Tennessee; Golden, Colorado; and Las
Vegas, Nevada. As of December 2010, DOE officials stated they had met
their staffing goals with the exception of one field office, which had
recently lost several of its staff. These DOE officials said they
hoped to fill those positions soon.
DOE monitoring also includes specific financial management oversight
in DOE field offices, as well as independent oversight through DOE's
Inspector General. Specifically, financial management oversight is
conducted by the DOE Office of the CFO in the Golden, Colorado, and
Oak Ridge, Tennessee, field offices. In addition, the project officers
in the Las Vegas, Nevada, field office also oversee disbursements of
DOE funds. Data on the disbursement of funds are then made available
to DOE employees, including headquarters employees and the CFO. DOE's
Inspector General also provides oversight of the EECBG program and has
issued a report on the status of implementation of EECBG, as well as
the management controls over the development and implementation of
PAGE.[Footnote 19] Along with issuing such reports, DOE's Inspector
General takes actions to investigate allegations related to fraud,
waste, and abuse for the EECBG program. To date, DOE's Inspector
General has received four complaints regarding the use of EECBG funds
and is handling two of them through ongoing investigations, while the
other two were sent back to the program office for resolution. A DOE
Inspector General official stated that the complaints are related to
potential conflicts of interest and potential ethics violations.
Additionally, while not investigating EECBG directly, DOE's Inspector
General recently issued a management alert related to DOE's State
Energy Efficient Appliance Rebate Program.[Footnote 20] Some
recipients also used EECBG funds to help fund rebate programs. In its
alert, DOE's Inspector General identified an incident in which a
consumer in Georgia was able to purchase water heaters at a store,
return them, and still inappropriately apply for and receive a rebate
through the state's rebate program. DOE's Inspector General report
noted that the incident showed that if similar process vulnerabilities
exist in other jurisdictions, then the rebate program could be exposed
to abusive practices on a broad scale.
Recipients' Oversight Actions:
The extent of recipients' oversight through the monitoring of Recovery
Act funds may depend on the individual recipient's resources and the
nature of the project. Broadly stated, federal law, federal
regulations, and DOE guidance require that recipients comply with
applicable laws, including provisions in the Recovery Act, such as Buy
American, and other federal requirements, including regulatory and
procedural requirements. Recipients are responsible for informing
subrecipients of all applicable laws and other federal requirements
and ensuring their subrecipients' compliance with program, fiscal, and
audit requirements. The Single Audit Act, as amended, requires
recipients passing on the funds to subrecipients to monitor the
subrecipients' use of the federal funds through site visits, limited
scope audits, and other means.[Footnote 21] DOE did not require
recipients to conduct any specific oversight actions but instead
released guidance on October 26, 2010, identifying a number of best
practices for monitoring by recipients to ensure their and their
subrecipients' compliance with federal requirements for monitoring.
Further, DOE has also provided additional resources regarding the
monitoring of subrecipients, such as workshops and guidance.
We found that recipients contacted are using various methods to meet
applicable laws and other federal requirements, and recipients, DOE
officials, and project officers stated that some recipients are
providing substantially more rigorous monitoring than others. For
example, while it is required that recipients monitor subrecipients,
in response to our questions, one recipient did not indicate that it
monitored subrecipients and instead stated that it included terms in
their contracts that required contractor adherence to applicable
federal requirements. Other recipients reported actively monitoring
funds but using relatively limited techniques such as reviewing
invoices and other reports submitted by vendors. DOE officials
acknowledged that many recipients are resource constrained, limiting
their ability to monitor and ensure compliance with applicable federal
requirements, and DOE would need to evaluate on a case-by-case basis
whether the grant recipient's subrecipient monitoring system is
sufficient to meet compliance requirements. However, officials stated
that DOE does not gather specific information on recipient monitoring
practices except during on-site visits. Additionally, because less
than 25 percent of grants under $1 million are to receive on-site
visits, DOE does not have specific information on monitoring for many
recipients. DOE officials stated that they focused monitoring efforts
on recipients of larger grants because they were more likely to have
subrecipients. DOE officials also said that they adopted standard,
well-accepted audit sampling practices to achieve the most effective
coverage in verifying monitoring practices and conducted additional on-
site reviews of recipients that have demonstrated cause for concern
such as not filing quarterly reports. Officials stated that if they
identified a concern during an on-site visit, they would work with the
recipient to develop an alternative system to monitor subrecipients.
While some recipients reported less rigorous monitoring activities, in
other instances, recipients reported having detailed monitoring
practices with multiple components. For example, one recipient
reported collecting monthly progress reports, which included financial
reports, from all subrecipients, vendors, and contractors, as well as
conducting site visits. Additionally, the recipient reported that
their auditor and grant services staff also conducted internal audits
of all Recovery Act programs. Another recipient also reported using a
variety of monitoring practices such as inspections, site visits, and
regular billing of vendors. The recipient's staff also reported that
they planned to use third-party oversight of site visits in the coming
year and that they had recently hired a grant compliance analyst who
would be administering a subrecipient monitoring plan in the coming
year.
Some grant sizes and project types may not lend themselves to the same
level of oversight as others. DOE project officers stated that some
larger projects included specific monitoring requirements in the
contract to help ensure that the project met key goals including
achieving project outcomes and ensuring that funds were used
efficiently. For example, project officers stated that some recipients
were able to use expertise provided by contractors that perform energy-
savings work to generate energy-cost savings to help determine
estimated versus achieved energy savings. Other smaller contracts,
however, were not large enough to include these types of oversight. In
another instance, one recipient noted that because the grants with
subrecipients they were using were so small, ranging from $8,000 to
$55,000, that the recipient did not see the need to conduct internal
and financial audits but did report conducting on-site visits on some
projects.
DOE Officials and Recipients Reported Technical, Staffing, and
Expertise Challenges That Hinder Efforts to Ensure Requirements Are
Met:
DOE officials and some recipients reported experiencing technical,
staffing, and expertise challenges that hinder the ability of both DOE
and recipients to provide oversight to ensure that Recovery Act and
program requirements are met, but DOE is taking steps to address many
of these challenges.
Technical Challenges:
Some DOE project officers and recipients reported experiencing
technical challenges using PAGE. For example, project officers told us
that monitoring was challenging because of the extensive amount of
time that they spent helping recipients use the PAGE system, which
recipients found cumbersome and difficult to use. In particular, some
project officers said that they provide ongoing support during
reporting cycles to help fix reporting errors and, in some cases, help
walk recipients through the reporting process and help fix reporting
errors. For example, some DOE project officers in one field office
told us that during the reporting period--the last week of the quarter
and the following 2 months--project officers spent approximately 70 to
85 percent of their time helping recipients fill out their PAGE and
federal reporting forms.[Footnote 22] Other project officers with the
same office also told us that recipients often cannot figure out how
to enter data into PAGE and do not understand the reporting system. In
another field office, a DOE project officer stated that almost all of
the initial PAGE reports for each quarter were initially rejected for
issues such as missing or incorrect data entries and that recipients
reported having difficulties with entering data in every field. Some
recipients have also reported difficulties using PAGE--for example,
though not asked about PAGE issues specifically in our structured
questions, one recipient stated in a response regarding challenges
faced that "PAGE reporting is the biggest challenge" while another
recipient noted that "technical glitches" in PAGE made reporting more
challenging.
Incorrect data entered into PAGE has also limited project officers'
ability to monitor recipients. For example, some project officers
stated that some recipients continued to enter incorrect information
in PAGE for data fields such as total hours worked and estimated
energy savings--key project measures used to help gauge project
progress and status--in part due to difficulties recipients had
understanding PAGE data fields. Specifically, some project officers
stated that some PAGE data field names were difficult to interpret,
confusing some recipients. Some project officers also stated that
recipients entered incorrect job information using incorrect job
calculation formulas or that they entered incorrect energy data and
that DOE project officers had to spend time locating the errors and
working with the recipient to ensure that the correct data were
entered. In previous work looking at EECBG, as well as the State
Energy Program and Weatherization Assistance Program, we have also
reported on both DOE monitoring staff and recipients having problems
with PAGE that hindered DOE's ability to administer the
program.[Footnote 23] Specifically, we previously reported that some
DOE staff and recipients noted that the time and effort that project
officers spent with recipients to help them understand and navigate
the PAGE system significantly increased the administrative burden of
the program.
In reviewing PAGE's development process, DOE's Inspector General found
significant issues, noting that DOE did not seek input from grant
recipients in designing PAGE because it had to be developed and
implemented so quickly. The Inspector General's report noted that user
input significantly increases the likelihood that the system will meet
user needs and also helps avoid rework costs due to a lack of
functionality. Similarly, we previously reported on the importance of
eliciting the users' needs to identify and prioritize system
requirements.[Footnote 24] Without gathering this information,
programs and systems may not meet the needs of their users.
DOE officials stated that they have implemented a number of
improvements to both the administration of PAGE, and the system
itself, to help address user concerns and that they are currently
implementing more changes. For example, DOE established a PAGE hotline
to assist users and gather users' feedback and also provided training
videos for recipients using PAGE. DOE officials also stated that they
recently implemented a new software tool to gather and prioritize user
feedback from large numbers of recipients to better address users'
major concerns. Additionally, DOE officials said that among other
improvements, they plan to incorporate a new interface in the next few
months for DOE staff to review data reported in PAGE, which was
designed to improve usability of the system. DOE officials stated that
these improvements will take time to implement and have to be
carefully considered so as not to negatively affect other PAGE
functions. For example, PAGE is also used for recipient reporting by
DOE's Weatherization Assistance and State Energy programs. DOE
officials also stated that they have had to adapt their process to
handle the large number of PAGE users, in contrast to the previous
system. Specifically, DOE officials stated that approximately 50 state
users and a limited number of federal staff used the previous system,
while PAGE had 4,292 recipient and 411 federal users as of December 8,
2010.
Staffing and Expertise Challenges:
Some DOE officials, monitoring staff, and grant recipients, as well as
all stakeholders we contacted, stated that some recipients are also
encountering staffing and expertise challenges that have limited their
ability to monitor the use of Recovery Act funds and ensure effective
and efficient use of funds while also meeting Recovery Act and other
federal requirements. As noted previously, some project officers
stated that some recipients may lack sufficient resources and staffing
for program oversight such as monitoring. Some DOE officials also
acknowledged the significant recipient workload associated with
monitoring. These officials stated that the biggest overall challenge
to monitoring was the need to determine the right amount of
information to collect from recipients so as to ensure recipient
compliance with applicable federal requirements while not burdening
recipients with reporting requirements. These officials also stated
that they took steps to decrease the reporting burden on recipients,
including decreasing certain monitoring requirements. Further, these
DOE officials also stated that some recipients said that they might
have trouble ensuring compliance with program requirements due to
limited staffing and were focused on Recovery Act requirements such as
Davis-Bacon and Buy American. Finally, the NASEO and USCM
representatives we spoke with stated that some recipients have
expressed concerns about complying with Davis-Bacon requirements,
especially with limited staff and a large number of projects. For
example, both USCM representatives stated that while some city and
county projects already had Davis-Bacon or Buy American requirements
before the Recovery Act, they were typically on much larger projects
in excess of $30 million, such as transportation projects, with
dedicated resources to ensure compliance with these requirements.
Some DOE monitoring staff and the NASEO and USCM representatives
stated that some recipients found compliance with federal laws,
including Recovery Act provisions, such as those for financial
management monitoring and Davis-Bacon, difficult because of a lack of
previous expertise with those requirements. Additionally, some DOE
monitoring staff stated that some recipients have limited experience
with federal grants and faced a steep learning curve with implementing
projects, and that this inexperience has limited monitoring efforts,
making it more difficult to ensure that funds were spent properly. For
example, several DOE staff in one field office stated that, in
particular, those recipients that did not have previous experience
performing a Single Audit Act report[Footnote 25] tended to have more
trouble meeting EECBG requirements than others due to inexperience.
Additionally, some DOE project officers also stated that some smaller
recipients with fewer staff did not have specific expertise in energy
management and that this made it more difficult to monitor programs.
Further, these DOE project officers also noted that certain project
types, such as energy loan programs, may have fewer tangible outcomes
than others such as building retrofits, and are thus more difficult to
monitor, especially without specific staff expertise. Additionally,
certain Recovery Act requirements can also prove more difficult to
ensure compliance with than others. For example, both NASEO
representatives stated that some recipients found compliance with the
Buy American provision difficult, especially for items with multiple
components such as air conditioners.
DOE is taking steps to address staffing and expertise challenges by
expanding support to recipients. Some DOE officials and the NASEO and
USCM representatives stated that DOE's administration of EECBG was
initially limited during the program's early stages and that this
hindered early program administration including oversight. Overall,
the NASEO and USCM representatives stated that while the DOE program
office has improved significantly in providing support such as
guidance to recipients, the program was significantly impacted by
these early delays. DOE has gradually expanded the amount of support
provided to recipients. For example, while DOE project officers
continue to provide individualized support to recipients, DOE has also
developed a Technical Assistance and Solution Center to provide
information related to monitoring recipient activities such as project
implementation. Through the Technical Assistance and Solution Center,
DOE has provided near daily Web seminars on specific energy topics
while also helping connect recipients with specific technical
expertise. Further, DOE continues to issue programwide guidance to
help recipients comply with Recovery Act and program requirements. For
example, on January 4, 2011, DOE issued guidance to help recipients
determine the eligibility of recipient programs for Recovery Act
funds. DOE has also hosted seminars with recipients and subrecipients
to help identify and share monitoring best practices. Finally, DOE is
working with the Office of Management and Budget (OMB) to update OMB's
Compliance Supplement to its guidance for the Single Audit Act (Cir.
No. A-133) regarding EECBG program requirements.
DOE Has Faced Challenges in Determining the Extent to Which the EECBG
Program is Meeting Recovery Act and Program Goals for Energy Savings:
EECBG program recipients reported using EECBG grant funding to develop
projects designed to achieve a variety of benefits in line with
Recovery Act and program goals, including reducing total energy use
and increasing energy savings for local governments and residents. For
example, some recipients we contacted reported anticipating energy
savings and reduced overall energy usage from such projects as
powering the electrical needs for a large city park with solar panels;
maximizing the use of day lighting in government buildings; installing
more energy-efficient technology in households and businesses;
replacing convention center light fixtures with light-emitting diode
(LED) bulbs to reduce energy usage; and updating and remodeling a 40-
year-old public building with more energy-efficient products,
including new windows and doors, and HVAC systems.
Furthermore, DOE officials told us that some recipients are already
reporting achieving benefits consistent with Recovery Act and program
goals. For example, DOE reported that according to initial recipient
self-reporting through December 2010, EECBG recipients have upgraded
more than 10,000 buildings, installed 40,000 efficient street lights,
and upgraded more than 100,000 traffic signals. DOE has put some
examples of program successes on its Web site. For example, a small
town in southwestern Wyoming used its EECBG funds to convert its
streetlights to LED fixtures. Town officials reported better lighting
quality and visibility, less light pollution, and lower energy use
that has reduced lighting-related energy costs by almost two-thirds.
In North Carolina, local officials used EECBG funds to convert an
abandoned grocery store into an energy-efficient community training
center and classroom. By installing a more energy-efficient roof, new
insulation, and HVAC systems, local officials said they anticipate
achieving substantial energy savings. Another recipient in Oklahoma
used EECBG funds to purchase five wind turbines. According to the
recipient, the new wind energy technology has offset the electrical
costs for all town-owned buildings, and the recipient reported
anticipating saving $24,000 annually.
However, DOE officials have experienced challenges in assessing
whether the EECBG program is meeting Recovery Act and program goals
for energy savings because most recipients do not measure energy
savings by collecting actual data and several factors affect the
reasonableness of energy-savings estimates. Additionally, while DOE
officials say they have anecdotal examples of program successes, DOE
lacks actual programwide data on energy savings. DOE guidance requires
that recipients report impact metrics--which include energy savings,
energy cost savings, renewable-energy generation, and emissions
reductions--on a quarterly basis and verify cumulative totals when
grants are closed out, but it does not require that these impact
metrics be based on actual, as opposed to estimated, data.[Footnote
26] Furthermore, according to some DOE officials, there have been only
a few opportunities for recipients to collect actual energy-savings
data because in most cases actual data are only available after a
project has been completed, and recipients are just beginning to
complete projects. These officials said that instead of collecting
actual energy-savings data, most recipients report estimates to comply
with program reporting requirements.
As part of the quarterly review process, DOE's monitoring plan
appendix requires project officers to assess whether recipients'
estimates of impact metrics, including energy savings, are reasonable
[Footnote 27] and to determine whether grant recipients have an
adequate procedure in place to collect, verify, and report these data.
Project officers are further instructed, as part of this quarterly
review process, to review recipients' reported impact metrics and
determine whether they are within a range of values that DOE would
expect. For example, DOE's EECBG desktop review guidance instructs
project officers to consider rejecting recipients' quarterly reports
in cases where the estimates entered by recipients appear too low or
too high.
According to DOE officials, several factors affect the extent to which
estimates are reasonable. One factor is the variance in the type and
robustness of methodologies that recipients use to develop estimates.
DOE guidance allows recipients flexibility in how they estimate impact
metrics, such as energy savings. For example, DOE's Program Notice 10-
07B requires that recipients "take care to account for other
determinant factors (e.g., weather variation)" when recipients develop
estimates. DOE officials said that they prefer that recipients rely on
certain estimation methods and tools that DOE would expect to produce
more accurate and sophisticated estimates of grant project results--
such as contractor-or engineering-supplied estimates of project
savings or estimates calculated with the Environmental Protection
Agency's Portfolio Manager tool.[Footnote 28] For recipients that are
not able to use methods or tools that are specific to their grant
projects, DOE has provided recipients with tools that DOE officials
believe are capable of calculating "high-level" estimates of energy-
related impact metrics.[Footnote 29] Since the beginning of the EECBG
program in 2009, DOE has updated and refined its estimating tool and
underlying assumptions several times and may update the tool and
assumptions in the future as well. While DOE officials said they
believe that estimates calculated with the current version of this
tool are more accurate than those calculated with previous versions,
DOE does not require that recipients who use its estimating tool to
use the most updated version when calculating and reporting estimates.
Consequently, some recipients may use DOE's earlier, less refined tool
to develop estimates of energy-related impact metrics.
Another factor that affects DOE officials' ability to assess
reasonableness is the fact that the agency recommends but does not
require, that recipients report the methods or tools used to calculate
estimates, so DOE officials do not know which recipients are using
older versions of DOE's estimation tool or other methods to estimate
energy-related impact metrics. Knowing which method or version of a
tool recipients used to calculate estimates may be more important for
smaller grant recipients, as DOE officials told us they believe that
smaller grant recipients who do not have the expertise at hand or
resources to hire energy-efficiency experts are more likely to use a
DOE-supplied estimation tool. Without knowing the methods being used
by recipients to estimate energy-related impacts, DOE cannot identify
instances where the method along with the associated assumptions being
used in calculating estimates may need to be more carefully reviewed.
A third factor that DOE officials said can affect the development and
reporting of reasonable estimates is the level of expertise available
to recipients to develop impact metrics, as this can vary. According
to DOE officials, some EECBG recipients are receiving federal grants
for the very first time through the EECBG program, which was
implemented in March 2009. Some communities may have limited (if any)
direct experience with federal grant program requirements, and
likewise have limited experience in measuring and reporting impact
metrics. As a result, DOE officials reported that some recipients have
had difficulty developing their estimates. In addition, DOE officials
said that some recipients may also have made errors in reporting their
estimates of energy-related impact metrics. For example, DOE officials
said that some recipients may be incorrectly aggregating impact
metrics from multiple project sites and, as a result, producing errors
in the estimated energy-related impacts.
In December 2010, DOE issued guidance to recipients outlining the
steps DOE and recipients must take to formally close out EECBG grants.
As part of this process, project officers are required to review
recipients' final quarterly performance report and federal financial
report for completeness and reasonableness. However, this guidance
does not specify how project officers should assess reasonableness.
DOE officials said that the agency is in the process of drafting
internal closeout guidance for its project officers that will outline
the procedures the project officers must follow to formally close out
a grant. According to DOE officials, the upcoming internal closeout
guidance intends to recommend, but not require, that recipients
confirm they are reporting the most accurate data available at the
time of closeout. DOE officials told us that once a grant is closed
out, the agency does not require and cannot legally obligate the
recipients to capture additional energy-savings data. For the few
grants that have been closed, DOE expects its project officers to rely
on their own expertise to assess the reasonableness of the estimates,
according to DOE officials. For example, one project officer told us
that as a project is completed, he determines whether the reported
energy savings are reasonable by comparing the estimate when the
project is completed to the recipient's original estimates, saying
that he expects the estimates to be comparable unless the recipient
has changed the scope of the project or received updated information
from vendors or engineers. Even if the scope of the project has not
changed or no new information has been provided, differences may be
observed if recipients used an earlier version of the DOE tool to
prepare an initial estimate and then used the updated DOE tool to
compute the energy savings at the end of the project. Given that DOE
may not know what method the recipient used to estimate energy
savings, project officers may not be able to determine the level of
review necessary to ensure reasonable reporting. Additionally, some of
the project officers noted that they do not have the technical
expertise to independently verify energy-savings estimates.
To determine overall program outcomes, DOE officials told us they plan
to conduct a program-wide evaluation measurement and verification
study after the end of the EECBG program, which will be designed to
measure and report the program's energy savings and cost savings.
However, this effort is still in the design phase. As part of this
study, the officials said that they would need to capture more than a
year's worth of data to account for weather and seasonal variations
that impact energy needs. While DOE collects some information
regarding expected energy savings, officials noted that they were
uncomfortable reporting these numbers before completing the study,
which may be as long as 2 to 3 years after the projects are completed.
Oversight of Recipient Reporting Data Quality Continues for the Sixth
Round of Reporting:
To meet our mandate to comment on recipient reports, we have continued
monitoring data that recipients reported for Recovery.gov, including
data on jobs funded. This time we focused our review on the EECBG
recipient data in addition to the national data. Analyzing these data
can help in improving the accuracy and completeness of the
Recovery.gov data and in planning analyses of recipient reports.
Overall, this round's results were similar to those we observed in
previous rounds. According to Recovery.gov as of January 30, 2011,
recipients reported on over 209,400 awards across multiple programs
indicating that the Recovery Act funded approximately 585,654 jobs
during the quarter beginning October 1, 2010, and ending December 31,
2010.[Footnote 30] This included 2,051 prime reports associated with
EECBG recipients.[Footnote 31] As reported by the Recovery
Accountability and Transparency Board, job calculations are based on
the number of hours worked in a quarter and funded under the Recovery
Act--expressed in FTEs.[Footnote 32]
Analysis of Sixth Round Recipient Reporting Data Shows Data Quality
Remains Relatively Stable:
Using the sixth reporting period data, we continued our monitoring of
errors or potential problems by repeating the analyses and edit checks
reported in our previous reports. We reviewed 71,643 prime recipient
report records from all programs posted on Recovery.gov for this sixth
round. This was, for the first time, a decrease of 6,068 prime
recipient reports or about an 8 percent drop from round five. The size
of this decline in reporting was somewhat mitigated by the number of
prime recipients reporting for the first time in round six. In round
five, 7,465 recipients identified that round as their final report and
did not report in round six. This was more than three times the number
of prime recipients reporting for the first time in round six and
suggests that further decreases in the number of recipients reporting
in the next quarter are likely. For our analyses, in addition to this
sixth round of recipient report data, we also used all the previous
rounds of data as posted on Recovery.gov as of February 2, 2011.
In examining recipient reports, we continued to look for progress in
addressing limitations we noted in our prior reports. In those prior
rounds, we reviewed data logic and consistency and reviewed unusual or
atypical data. Data logic and consistency provide information on
whether the data are believable, given program guidelines and
objectives; unusual or atypical data values indicate potential
inaccuracies. As with previous quarterly report rounds, these reviews
included (1) the ability to link reports for the same project across
quarters and (2) concerns in the data logic and consistency, such as
reports marked final that show a significant portion of the award
amount not spent. We continued to see minor variations in the number
or percent of reports appearing atypical or showing some form of data
discrepancy. For example, we continued to find a small number of prime
recipient reports for which there were potential linkage issues across
quarters. For this latest round, there was a slight increase from 1.5
percent to 2.2 percent in the number of prime reports appearing across
all quarters showing a skip in reporting for one or more quarters.
This may impact the ability to track project funding and FTEs over
quarters. The number of reports marked "final" for which there
appeared to be some discrepancy, such as reports marked "final" but
for which project status was marked as less than 50 percent completed,
continued to be quite small and unchanged from the previous round.
We continued to examine the recipient reports' agency review flag
field as part of our examination of data logic and consistency, since
we have noted inconsistencies between agencies' accounts of their
review process and the data shown in that field. Prime recipient
report records include a review flag indicating whether or not a
federal agency reviewed the record during the data quality review time
frames. Prior analyses suggested that, for some agencies, the data in
this field might not correctly reflect the extent of their review
process. However, this did not seem to be the case for the EECBG
program. EECBG program data in this field in this sixth round showed
that 93 percent of the prime recipient reports were marked as reviewed
by DOE, which was generally consistent with accounts of agency
officials about their review process. However, we continue to observe
some inconsistency when another data field on recipient reports, which
shows whether or not a correction was initiated, is considered in
conjunction with agency and recipient review flags. A correction could
be initiated by either the prime recipient or the reviewing agency.
Logically, one might expect that if a correction was made, it would
have been initiated by a reviewer, and therefore the review flag
should also be set to "yes." In this sixth round, as in the prior
round, 10 percent of all prime recipient reports for all programs had
this correction flag set to "yes" even though the review flags
indicated that neither the agency nor prime recipient had reviewed
those reports.
As part of our focus on EECBG recipient reports for this sixth round
of reporting, we examined reported FTE data since they can provide
insight into the use and impact of the Recovery Act funds. Recipient
reports of FTEs, however, cover only direct jobs funded by the
Recovery Act. They do not include the employment impact on suppliers
(indirect jobs) or on the local community (induced jobs).[Footnote 33]
Our analyses of EECBG reporting for the last five quarters showed a
steady increase in the number of FTEs reported in each quarterly
reporting period. As shown in figure 1, there was also a similar
steady increase in the percent of EECBG recipients reporting funding
at least a partial FTE with Recovery Act funds.
Figure 1: Portion of EECBG Recipients Reporting Funding at Least a
Partial FTE in 2010:
[Refer to PDF for image: stacked horizontal bar graph]
Reporting quarter: Second (Oct.-Dec. 2009);
Number of recipients reporting funding at least a partial FTE: 393
(21%);
Number of recipients reporting no FTEs: 1,504 (79%);
Total number of recipients: 1,897.
Reporting quarter: Third (Jan.-Mar. 2010);
Number of recipients reporting funding at least a partial FTE: 685
(33%);
Number of recipients reporting no FTEs: 1,375 (67%);
Total number of recipients: 2,060.
Reporting quarter: Fourth (Apr.-June 2010);
Number of recipients reporting funding at least a partial FTE: 934
(44%);
Number of recipients reporting no FTEs: 1,186 (56%);
Total number of recipients: 2,120.
Reporting quarter: Fifth (July-Sept. 2010);
Number of recipients reporting funding at least a partial FTE: 1,167
(55%);
Number of recipients reporting no FTEs: 948 (45%);
Total number of recipients: 2,115.
Reporting quarter: Sixth (Oct.-Dec. 2010);
Number of recipients reporting funding at least a partial FTE: 1,243
(61%);
Number of recipients reporting no FTEs: 808 (39%);
Total number of recipients: 2,051.
Source: GAO analysis of Recovery.gov data.
Note: We did not include data from the first reporting quarter due to
concerns about reliability.
[End of figure]
For this report, we have chosen not to show the count of EECBG FTEs
reported, out of concern about the comparability and reliability of
the figures across quarterly reporting periods. As we noted in our
September 2010 report, our field work had shown that the FTE
calculations continued to be difficult for some recipients. This
concern, while still present, based on information gathered from DOE
officials in headquarters and DOE project officers in the field,
continues to be addressed by DOE officials at all levels. As we noted
in September, some confusion may have existed about the acceptability
and use of some methods for calculating FTEs over the course of the
reporting periods.[Footnote 34] This decision is also based on some
irregularities and inconsistencies we observed in our analyses of the
FTE data across quarters and the relationship of the hours worked, as
reported to DOE by recipients, with the FTE values the recipients
directly reported to FederalReporting.gov.[Footnote 35],[Footnote 36]
DOE officials indicated that they continue to assess compliance with
and encourage recipients to follow the DOE and Office of Management
and Budget (OMB) guidance on how to correctly report FTEs. Moving
forward, as these issues in reporting methods are addressed, it is
likely that the comparability and reliability of the figures may
improve.
Quality Reviews Performed on EECBG Data by DOE and Prime Recipients
Included a Focus on Updated OMB Guidance Requirements:
Each quarter, DOE performs quality assurance steps on the data that
recipients provide to FederalReporting.gov, including checks that are
performed centrally across all their Recovery Act programs and reviews
done by EECBG project officers at the program level. Based on these
reviews, DOE officials reported that most recipients of Recovery Act
funds have reported to FederalReporting.gov in previous rounds and now
understand the reporting process, resulting in the reporting
proceeding more smoothly.
As in previous rounds, DOE performed several checks of the data
centrally as information became available. For example, officials
compared the amount recipients reported as funds awarded with agency
internal records. They also compared jobs data from DOE's PAGE
reporting system with FTEs reported to FederalReporting.gov. When
discrepancies were found, project officers were instructed to contact
recipients to make the necessary corrections. DOE followed up with
grant recipients who did not report to FederalReporting.gov. For the
sixth round, DOE reported 36 recipients to OMB as not in compliance.
Of these, 34 are EECBG grant recipients. Several are tribal recipients
that are in remote locations where reporting online is particularly
challenging.
EECBG project officers' efforts also helped ensure the quality of
information recipients reported to FederalReporting.gov. For example,
one group of project officers we interviewed reported spending a large
portion of time helping recipients complete reporting requirements and
ensuring the quality of reports. Project officers cited helping
recipients understand terminology, such as distinguishing between
vendors and recipients of subawards. They reported taking steps,
including following up when large increases in job numbers were
reported, reports were missing, a recipient in a remote location had
difficulty submitting reports, or recipients had questions about
definitions.
DOE officials notified both recipients and reviewers, such as project
officers, of the need to ensure that narrative descriptions met
requirements laid out in OMB's September 2010 guidance.[Footnote 37]
On September 29, 2010--a few days after OMB's guidance was released
but before recipients started reporting for the quarter--DOE e-mailed
both recipients and project officers instructions related to the
guidance. The e-mail to recipients informed recipients of the need to
provide sufficiently clear descriptions to facilitate the public's
understanding, and stated that overly general or unclear award
descriptions could be considered material omissions. Similarly, the e-
mail to reviewers restated the guidance. It instructed reviewers to
make sure they read the descriptions in the narrative data fields, and
provide a comment to the recipient if they believed clarification was
required. DOE also included this information in its webinars on
recipient reporting designed for grant recipients and contractors.
Further, it included a step in the reviewers' checklist to determine
if the narrative descriptions provided clear and complete information
on the award's purpose, scope, and activities.
DOE officials also reported that during the last three quarters'
reviews they have focused on ensuring that reports marked "final"
correctly reflect that status. They have reached out to educate
recipients on what that designation means and to ensure that those
marked "final" are correctly identified. This includes looking at the
amount reported as spent. DOE's quality assurance process flags
reports in which it appears the designation may not be correct based
on financial analyses, and encourages recipients to make needed
corrections during the continuous corrections process.
Conclusions:
The Recovery Act pledges unprecedented transparency and accountability
in its use of funds. In light of this pledge, the ability of the EECBG
program to ensure compliance with applicable laws, including the
Recovery Act and program requirements is critical, and will help
determine the extent to which the program is meeting Recovery Act and
program goals. DOE and recipients are taking steps to monitor the use
of funds to help ensure that Recovery Act and program requirements are
met, but DOE assesses recipients' monitoring practices only in a
limited number of cases. Because of this limited assessment, DOE is
not always able to identify when recipients' monitoring practices are
sufficient to ensure compliance with applicable federal requirements.
If DOE is not aware of recipients' monitoring practices, it cannot
ensure that they have effective monitoring practices in place.
In addition to ensuring that Recovery Act and program requirements are
met, DOE must also be able to determine the extent to which the EECBG
program is meeting Recovery Act and program goals for energy-related
outcomes, such as energy savings. Because actual energy-savings data
are often unavailable, DOE must rely on estimates. DOE takes some
steps to assess the reasonableness of energy-related estimates, but
without knowing which methodology or tool recipients used, it is
difficult to do such an assessment. For example, without knowing if
recipients who used DOE's estimating tool--which has been revised in
the past and may be revised again in the future--were using the best
available information for calculating metrics in the most recent
version, project officers cannot be sure that recipients used sound
estimating methods. Without more information regarding the recipients'
estimating methods, DOE's assessment of the reasonableness of these
estimates may not be sufficient to support the defensible development
of programwide estimates of energy-related impacts, and therefore, the
assessment of progress toward program goals.
Recommendations for Executive Action:
To better ensure that EECBG funds are used to meet Recovery Act and
program goals, we are recommending that the Secretary of Energy take
the following two actions:
* Explore a means to capture information on the monitoring processes
of all recipients to make certain that recipients have effective
monitoring practices.
* Solicit information from recipients regarding the methodology they
used to calculate their energy-related impact metrics and verify that
recipients who use DOE's estimation tool use the most recent version
when calculating these metrics.
Agency Comments and Our Evaluation:
We provided a draft of this report to the Department of Energy for
review and comment. DOE's comments are reproduced in appendix II. DOE
agreed with GAO's recommendations, stating that "implementing the
report's recommendations will help ensure that the Program continues
to be well managed and executed." DOE also provided additional
information on steps it has initiated or planned to implement. In
particular, with respect to our first recommendation, DOE elaborated
on additional monitoring practices it performs over high dollar value
grant recipients, such as its reliance on audit results obtained in
accordance with the Single Audit Act and its update to the EECBG
program requirements in the Compliance Supplement to OMB Circular No.
A-133. However, these monitoring practices only focus on larger grant
recipients, and we believe that the program could be more effectively
monitored if DOE captured information on the monitoring practices of
all recipients.
We are sending copies of this report to appropriate congressional
committees, the Secretary of Energy, the Director of the Office of
Management and Budget, and other interested parties. The report will
also be available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact Mark E. Gaffigan at (202) 512-3841 or gaffiganm@gao.gov, or
Yvonne D. Jones at (202) 512-6806 or jonesy@gao.gov. Contact points
for our Offices of Congressional Relations and Public Affairs may be
found on the last page of this report. GAO staff who made major
contributions to this report are listed in appendix IV.
Signed by:
Mark E. Gaffigan:
Managing Director Natural Resources and Environment:
Signed by:
Yvonne D. Jones:
Director, Strategic Issues:
List of Committees:
The Honorable Daniel Inouye:
Chairman:
The Honorable Thad Cochran:
Vice Chairman:
Committee on Appropriations:
United States Senate:
The Honorable Harold Rogers:
Chairman:
The Honorable Norman D. Dicks:
Ranking Member:
Committee on Appropriations:
House of Representatives:
The Honorable Joseph I. Lieberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Darrell E. Issa:
Chairman:
The Honorable Elijah Cummings:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
The Honorable Fred Upton:
Chairman:
The Honorable Henry Waxman:
Ranking Member:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Jeff Bingaman:
Chairman:
The Honorable Lisa Murkowski:
Ranking Member:
Committee on Energy and Natural Resources:
United States Senate:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
Objectives:
We took a number of steps to address our objectives, which were to
determine (1) how Energy Efficiency and Conservation Block Grant
(EECBG) funds are being used, and what challenges, if any, do EECBG
recipients face in obligating and spending their funds; (2) actions
Department of Energy (DOE) officials and EECBG recipients are taking
to provide oversight of EECBG funds and challenges, if any, they face
in meeting Recovery Act and other requirements; (3) the extent to
which EECBG program recipients and the EECBG program are meeting
Recovery Act and EECBG program goals for energy savings, and what
challenges, if any, have recipients encountered in measuring and
reporting energy savings; and (4) how the quality of estimates of jobs
created and retained reported by Recovery Act recipients, particularly
EECBG recipients, has changed over time.
Scope and Methodology:
To address these objectives, we reviewed and analyzed relevant federal
laws and regulations, as well as federal agency guidance related to
program goals, use of funds, monitoring, and reporting outcomes. We
interviewed agency officials and about 30 staff members in DOE field
offices that have some role in managing and monitoring awards
including project officers, technical monitors, contract specialists
and contractors, and compliance officers, as well as those that
provide direct support including attorneys and accountants, to discuss
the roles and responsibilities for managing awards, project management
guidance and communication, activities undertaken and challenges faced
in providing support to recipients with obligating and spending funds,
monitoring, and reporting outcomes. We also met with officials from
the DOE Office of Inspector General to better understand their role in
the expanded grant-awarding process and in monitoring recipients. We
also interviewed representatives from associations and organizations,
including the National Association of Counties (NACo), the National
Association of State Energy Officials (NASEO), and the U.S. Conference
of Mayors (USCM) to better understand best practices identified and
challenges faced by recipients in using funds, monitoring projects,
and reporting outcomes.
We also reviewed reports prepared by DOE and analyzed data from DOE's
iPortal database on the number of grant awards, amount of obligations
and expenditures, and number of users. In addition, we reviewed
reports prepared by DOE and analyzed data from DOE's PAGE database on
the number and type of program activities. We assessed the reliability
of the program data we used by reviewing DOE documentation and
Inspector General reports on the Performance and Accountability for
Grants in Energy (PAGE) system; interviewing knowledgeable DOE
officials about the quality and potential limitations of the data and
what checks and controls were in place to ensure data accuracy; and
performing edit checks on iPortal and PAGE data. We determined the
data were sufficiently reliable for our purposes.
In addition, we developed a set of questions to be administered to a
nonprobability sample of 50 grant recipients eligible to receive
formula funding. These questions addressed various aspects of our
first three objectives, such as obligating and spending funds,
guidance, best practices, internal controls, monitoring, working with
DOE officials, and challenges faced in implementing projects. We pre-
tested and revised these questions and sent them in an e-mail to 50
EECBG grant recipients in cities and counties in the United States.
Using October 2010 data from DOE's iPortal and PAGE information
systems, and from data gathered from Recovery.gov, we purposefully
identified and selected a sample of city, county, and tribal
recipients that included a range of grants by project activity types
(e.g., building retrofit, incentive program); award size;[Footnote 38]
state; different DOE project officers and monitors; and different
stages of completion. We received responses from 25 of the 50 city and
county grant recipients. No tribal communities responded. The
responses from recipients in this sample are not generalizable to the
2,185 state, city, county and tribal recipients receiving formula
EECBG funds nationwide.
To obtain additional information regarding our objective addressing
program goals for saving energy and reporting those savings, we
selected another nonprobability sample of 41 EECBG grant recipients
and sent them a similar e-mail questionnaire. We selected a range of
recipients for this sample similar to the sample previously described.
In addition, however, these recipients were selected because they had
completed many, if not all, projects in their award as of October
2010. We selected these recipients in order to obtain information on
best practices, strengths and weaknesses in reporting outcomes and
challenges in measuring jobs, and cost and energy savings. The
questionnaire sent to this sample of recipients included questions
addressing these topics along with a few of the same questions asked
of the other recipient sample. We received responses from 24 of the 41
grant recipients in the sample. One tribal grant recipient in our
sample responded. The responses from this sample are also not
generalizable to the population of EECBG recipients nationwide.
In making our selection of grant recipients in both samples, we did
not include grant recipients whose grant applications or awards were
the subject of data collection efforts for previous GAO or DOE
Inspector General reports. For both samples, we sent follow-up e-mails
to recipients who did not respond after several weeks to our initial e-
mail, encouraging them to complete the questionnaire. We were not able
to conduct further follow-up activities to improve the response rate
in the limited time remaining for us to complete our data collection
field work. We reviewed responses to questions on guidance and
experiences in obligating and spending funds, oversight and monitoring
efforts, and reporting outcomes as well as best practices and
challenges faced in managing and monitoring projects.
The recipient reporting section of this report responds to the
Recovery Act's mandate that we comment on the estimates of jobs
created or retained by direct recipients of Recovery Act funds. For
our review of the sixth submission of recipient reports, covering the
period from October 1, 2010, through December 31, 2010, we built on
findings from our five prior reviews of the reports, covering the
period from February 2009 through September 30, 2010. To understand
how the quality of jobs data reported by EECBG grant recipients has
changed over time, we compared the six quarters of recipient reporting
data that were publicly available at Recovery.gov on February 2, 2011.
We performed edit checks and other analyses on EECBG grant recipient
reports, which included matching DOE-provided data from iPortal and
PAGE information systems on EECBG recipients. As part of that matching
process, we also examined the reliability of recipient data contained
in these DOE information systems. Our assessment activities included
reviewing documentation of system processes, Inspector General reviews
of the systems and conducting logic tests for key variables. Our
matches showed a high degree of agreement between DOE recipient
information and the information reported by recipients directly to
FederalReporting.gov. However, the magnitude of the differences or
lack of agreement with regard to the full-time equivalents (FTE) are
not insignificant.[Footnote 39] In general, we consider the data used
to be sufficiently reliable, with attribution to official sources for
the purposes of providing background information and a general sense
of the status of EECBG recipient reporting.
To update the status of open recommendations from previous bimonthly
and recipient reporting reviews, we obtained information from agency
officials on actions taken in response to the recommendations.
We conducted this performance audit from September 2010 to April 2011
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.
[End of section]
Appendix II: Comments from the Department of Energy:
Department of Energy:
Washington, DC 20585:
March 17, 2011:
Mark Gaffigan:
Managing Director:
Natural Resources and Environment:
US Government Accountability Office:
441 G Street Room 2P47:
Washington DC 20548:
Dear Mr. Gaffigan:
The Office of Energy Efficiency and Renewable Energy (EERE)
appreciates the opportunity to review and comment on the results of
the GAO Report to Congress "Energy Efficiency and Conservation Block
Grant Recipients Face Challenges Meeting Legislative and Program Goals
and Requirements". EERE management is committed to continuing to
improve the Energy Efficiency and Conservation Block Grant (EECBG)
Program.
Energy efficiency and conservation measures implemented at the local
level are important ways to save taxpayer dollars and reduce demand
for polluting sources of energy and reduce America's dependence on
fossil fuel. Our partnership with local communities in executing
Energy Block Grants is creating clean energy jobs that are
contributing to the country's economic growth and recovery. Thanks to
this program, new alliances have been forged between local businesses,
non-profits and governments as we transition into a new clean energy
economy. Through the adoption of renewable energy and energy
efficiency technologies, communities of every size are addressing
local energy challenges and saving money by saving energy.
The EECBG program has seen enormous success: to date, we have injected
nearly $1 billion into the economy. The direct jobs count continues to
rise”over 3,400 hundred jobs in Q3 of CY 2010 and over 5,700 jobs in
Q4 of CY 2010, a 70% increase over the previous quarter. Grantees are
reporting significant impacts on their community through
implementation of their EECBG sustainability strategies.
According to initial grantee self-reporting through December 2010,
communities have upgraded the energy efficiency of over 10,000
buildings; installed 40,000 efficient street lights; and upgraded more
than 100,000 traffic signals.[Footnote 1]
Americans are at work making schools, court houses and police stations
run more efficiently, developing electric charging station networks,
upgrading homes and businesses, and installing clean energy solutions
like solar panels and waste-to-energy power plants. This translates to
millions of dollars of savings for taxpayers today and billions into
the future. Over 2,300 communities from America's rural counties and
tribal organizations to our largest cities and every state and U.S.
Territory are moving to a more secure economic and energy future.
EERE would also like to comment on the reporting requirements that GAO
discusses in the report. Across the Recovery Act, programs are being
implemented with unprecedented transparency, and each program must
balance the need for detailed reporting to ensure that taxpayer
dollars are effectively put to work with the level of burden on
grantees. The EECBG program is one of the largest grant programs ever
run by the federal government (as measured by the number of grantees),
with 2,300 recipients and over 10,000 sub-recipients. Many of these
recipients and sub-recipients are receiving federal grant money for
the first time. While DOE does not have the resources to visit each
recipient, sub-recipient, and project site, we do require recipients
to file short but detailed reports on project activities to ensure
compliance with EECBG grant terms and conditions. This allows DOE to
track and monitor a wide breadth of recipients to ensure they are
effectively spending taxpayer dollars and complying with requirements.
There are many reporting requirements that are independent of the
EECBG-specific requirements. For example, GAO notes the case of an
EECBG recipient who canceled a geothermal project because of
"reporting requirements" (p. 14). In general, geothermal projects
funded with Federal dollars, particularly ARRA funds, may trigger a
variety of requirements that necessitate documentation or reporting by
the recipient”for example, NEPA, Davis-Bacon, and Buy American
requirements. The additional EECBG reporting requirements are nominal
and do not differ based on the activity type, so this particular
project would not have required any more EECBG reporting than any
other activity.
For reporting requirements specific to the EECBG program, EERE
solicits regular feedback from grantees, stakeholders and project
officers with the aim of continuously improving our operations,
including reporting. Such feedback led EERE to make changes that
lowered the reporting burden on grantees, while improving the quality
of reports the program received. For example, EERE scaled back
significantly our monthly reporting requirements. EERE also
incorporated lessons learned from formula grant recipients into the
reporting requirements for competitive grant recipients.
Below are EERE's responses to GAO's two recommendations.
Recommendation 1: Explore means to capture information processes of
all recipients to make certain that recipients have effective
monitoring practices.
The EECBG program manages an unprecedented number of grantees in what
is essentially a startup program, with grants ranging in size from
$25,000 to $80 million. We agree with GAO's position that EECBG should
establish effective monitoring practices that ensure funds are
properly spent and controls are in place to prevent waste, fraud and
abuse. However, information gathering and review must be balanced with
agency resources. EECBG adopted standard, well-accepted, audit
sampling practices to achieve the most effective coverage in verifying
monitoring practices. These practices include 100% sampling of reviews
for the high dollar value (allocation greater than or equal to $1
million) grantees. These are typically our most complex grants, with
multiple sub-recipients. EECBG monitors the remaining set of grantees
based on the size, complexity and risk profile of the grantees.
Additional on-site reviews are undertaken for grants that have/are
demonstrating potential at-risk behaviors, such as not filing
quarterly reports, demonstrating reporting errors or inconsistencies,
show a lack of responsiveness to project officers and other EERE
personnel, and/or through desktop reviews, which are conducted on 100%
of grantees quarterly.
As of March 7, 2011, EERE has conducted onsite monitoring of 483 grant
recipients with a combined allocation of just over $2 billion, or
approximately 75% of the EECBG formula program's total $2.7 billion
allocation. EERE plans to conduct at least one onsite visit to each
recipient with an allocation of $1 million or greater, which accounts
for 79% of EECBG's total allocation. The number will increase to over
80% as EERE monitors conduct additional onsite visits. EERE performs
onsite monitoring of $2 million or greater grantees at least once per
year.
EERE project officers complete a monitoring checklist and file a
narrative report after each onsite monitoring visit. These monitoring
checklists and narrative reports provide EERE with information on
recipient monitoring practices. During the 483 onsite visits conducted
to-date, EERE identified a handful of cases where recipients'
monitoring of sub-recipients/subcontractors needed improvement. In
these cases, EERE informed the recipients of the need to improve, and”
where appropriate”instituted a Corrective Action Plan (CAP) to help
ensure that recipients take the necessary steps to remediate issues.
We then continue to track the status of the CAPs at a program level to
ensure that issues are driven to resolution.
EERE also has issued guidance on sub-recipient monitoring (EECBG
Program Notice 10-019, October 26, 2010). DOE's guidance includes both
general principles and specific examples of tools and best practices
developed by EECBG recipients. Recipients were encouraged to
incorporate both the general principles and the specific tools/best
practices into their own monitoring activities.
As part of EERE's comprehensive oversight and monitoring approach, we
will continue to rely on the results of audits performed in accordance
with Office of Management and Budget (OMB) Circular A-133 (single
audits). All of the larger EECBG recipients are subject to the A-133
audit requirement, the scope of which includes a review of sub-
recipient monitoring practices. For the current fiscal year, EERE is
actively working with OMB to include a specific discussion of
EECBG program requirements in OMB's annual guidance for the A-133
program in order the strengthen the audit oversight of the EECBG
program.
Recommendation 2: Solicit information from recipients regarding the
methodology they used to calculate their energy-related impact metrics
and verify that recipients who use DOE's estimation tool use the most
recent version when calculating these metrics.
The Department of Energy and recipients use a variety of tools and
scientific approaches to estimate the energy savings of specific
activities. These tools and approaches include engineering estimates,
individually metered equipment, utility bill tracking, and estimation
tools such as the calculator made available to grantees by EECBG.
EECBG grants represent over 10,000 unique activities, ranging in
geography, approach, technology, and size. Due to the diversity of
these grants, it is not practical to prescribe one form of measurement
and verification to all grantees.
EERE has issued guidance that provides grantees with suggested
guidelines to plan and conduct appropriate Evaluation, Measurement &
Verification (EM&V) efforts for their Recovery-Act-funded EECBG
programs and activities.[Footnote 2] It is important that the results
achieved with funds provided by the Recovery Act be documented and
assessed to the extent practicable for grantees. In order to provide a
reasonable estimate of energy savings, the program reviews energy
process and impact metrics submitted each quarter for reasonableness,
works with grantees to correct unreasonable metrics, and continues to
work
with grantees through closeout to refine metrics. EECBG will take a
scientific approach to overall program evaluation during the formal
evaluation process at the conclusion of the program.
EERE is deeply committed to the success of the Energy Efficiency and
Conservation Block Program and believes that implementing the report's
recommendations will help ensure that the Program continues to be well
managed and executed. The Department will be pleased to provide any
additional documentation upon request.
Thank you for the opportunity to comment on the report. We look
forward to working with GAO to help achieve the goals of the American
Reinvestment and Recovery Act.
If you have any questions, please contact Ms. Martha Oliver, Office of
Congressional and Intergovernmental Affairs, at (202) 586-2229.
Sincerely,
Signed by:
[Illegible] for:
Kathleen B. Hogan:
Deputy Assistant Secretary for Energy Efficiency:
Office of Technology Development:
Energy Efficiency and Renewable Energy:
Appendix II Footnotes:
[1] These numbers reflect preliminary grantee reported metrics that
have not necessarily been audited by a third party or the US
Department of Energy.
[2] EECBG Program Notice 10-017.
[End of section]
Appendix III: Status of Prior Open Recommendations and Matters for
Congressional Consideration:
In this appendix, we update the status of agencies' efforts to
implement the 26 open recommendations, and 5 newly implemented
recommendations from our previous bimonthly and recipient reporting
reviews.[Footnote 40] New recommendations and agency responses to
those recommendations are included in the program section of this
report. Recommendations that were listed as implemented or closed in a
prior report are not repeated here. Lastly, we address the status of
our Matters for Congressional Consideration.
Department of Energy:
Open Recommendations:[Footnote 41]
Given the concerns we have raised about whether program requirements
were being met, we recommended in May 2010 that the Department of
Energy (DOE), in conjunction with both state and local weatherization
agencies, develop and clarify weatherization program guidance that:
* clarifies the specific methodology for calculating the average cost
per home weatherized to ensure that the maximum average cost limit is
applied as intended.
* accelerates current DOE efforts to develop national standards for
weatherization training, certification, and accreditation, which is
currently expected to take 2 years to complete.
* develops a best practice guide for key internal controls that should
be present at the local weatherization agency level to ensure
compliance with key program requirements.
* sets time frames for development and implementation of state
monitoring programs.
* revisits the various methodologies used in determining the
weatherization work that should be performed based on the
consideration of cost-effectiveness and develops standard
methodologies that ensure that priority is given to the most cost-
effective weatherization work. To validate any methodologies created,
this effort should include the development of standards for accurately
measuring the long-term energy savings resulting from weatherization
work conducted.
In addition, given that state and local agencies have felt pressure to
meet a large increase in production targets while effectively meeting
program requirements and have experienced some confusion over
production targets, funding obligations, and associated consequences
for not meeting production and funding goals, we recommended that DOE
clarify its production targets, funding deadlines, and associated
consequences while providing a balanced emphasis on the importance of
meeting program requirements.
Agency Actions:
DOE generally concurred with all of our recommendations and has begun
to take some actions to implement them. With regard to clarifying the
methodology to calculate the average cost per home weatherized, DOE
has taken some action but has not yet provided specific guidance to
clarify this methodology. In response to our recommendation to develop
and clarify guidance on developing national standards for
weatherization training, certification, and accreditation, according
to DOE officials, DOE is making progress toward advancing such
standards. For example, DOE and the Department of Labor released the
draft "Workforce Guidelines for Home Energy Upgrades" for single-
family homes in November 2010. DOE officials expect to finalize the
guidelines by early spring 2011.
DOE has taken some steps to address our recommendation that it develop
and clarify guidance to generate a best practice guide for key
internal controls. According to officials, the Weatherization
Assistance Program Technical Assistance Center Web site provides a
variety of best practices on program management, administrative
procedures, and technical standards. However, while the Web site is a
central repository for all relevant resource documents, DOE has not
created a dedicated guide on best practices for key internal controls.
In response to our recommendation to develop and clarify guidance to
set time frames for development and implementation of state monitoring
programs, DOE has taken limited action. DOE officials provided current
guidance available on state monitoring efforts but did not identify
any time frames for development or implementation of state monitoring
programs.
With regard to our recommendation on developing and clarifying
guidance for prioritizing cost-effective weatherization work, DOE has
taken some actions. For example, DOE contracted with the Oak Ridge
National Laboratory in 2010 to conduct an assessment of aspects of
program performance such as costs and benefits for program years 2008
to 2010. The assessment will cover both Recovery Act funds and annual
appropriation funds. Preliminary results may be available in late
spring 2011. In response to our recommendation that DOE clarify its
production targets, funding deadlines, and associated consequences,
DOE has taken steps to address this recommendation. According to
officials, DOE has communicated directly with recipients about
funding, production, and other priorities. For example, the Green
Light program is in its fourth round of communications between two DOE
offices and recipients. DOE officials cited these calls as assisting
in the identification of barriers preventing grantees from increasing
production and expenditures. In addition, DOE officials stated that
grantees were notified of the requirement to spend all Recovery Act
funds by March 31, 2012. However, DOE provided no evidence that it has
clarified the consequences.
Newly Implemented Recommendations:[Footnote 42]
We recommended that DOE, in conjunction with both state and local
weatherization agencies, develop and clarify weatherization program
guidance that:
* establishes best practices for how income eligibility should be
determined and documented and issues specific guidance that does not
allow the self-certification of income by applicants to be the sole
method of documenting income eligibility.
* considers and addresses how the weatherization program guidance is
impacted by the introduction of increased amounts of multifamily units.
Agency Actions:
DOE agreed with both of our recommendations and has taken action to
implement them. In response to our recommendation on issuing guidance
and establishing best practices to determine income eligibility, DOE
issued guidance--Weatherization Program Notice 10-18, 2010 Poverty
Income Guidelines and Definition of Income--on September 20, 2010. In
this guidance, DOE clarified the definition of income and strengthened
income eligibility requirements. For example, the guidance clarified
that self-certification of income would only be allowed after all
other avenues of documenting income eligibility are exhausted.
Additionally, for individuals to self-certify income, a notarized
statement indicating the lack of other proof of income is required.
Regarding our recommendation on weatherization program guidance for
multifamily units, DOE officials identified several issues that impact
the increased number of multifamily buildings to be weatherized and
issued several guidance documents addressing multifamily buildings.
For example, DOE issued Weatherization Program Notice 11-1, Program
Year 2011 Weatherization Grant Guidance in December 2010, which
contained two sections related to multifamily units. One section
covered the eligibility of multifamily units for the weatherization
program and the other section provided guidance on conducting energy
audits on multifamily units. In reviewing the recently issued program
guidance for both recommendations, we have concluded that DOE
addressed the intent of these recommendations.
Environmental Protection Agency:
Open Recommendation:[Footnote 43]
We recommended that the Environmental Protection Agency (EPA)
Administrator work with the states to implement specific oversight
procedures to monitor and ensure subrecipients' compliance with the
provisions of the Recovery Act-funded Clean Water and Drinking Water
State Revolving Fund (SRF) program.
Agency Actions:
In response to our recommendation, EPA provided additional guidance to
the states regarding their oversight responsibilities, with an
emphasis on enhancing site-specific monitoring and inspections.
Specifically, in June 2010, the agency developed and issued an
oversight plan outline for Recovery Act projects that provides
guidance on the frequency, content, and documentation related to
regional reviews of state Recovery Act programs and regional and state
reviews of specific Recovery Act projects. For example, EPA's guidance
states that regions and states should be reviewing the items included
on the EPA "State ARRA Inspection Checklist" or use a state equivalent
that covers the same topics. The plan also describes EPA headquarters'
role in ongoing Recovery Act oversight and plans for additional
webcasts. EPA also reiterated that contractors are available to
provide training and to assist with file reviews and site inspections.
We are undertaking further review of the states' use of Recovery Act
funds for the Clean Water and Drinking Water programs. As part of that
work, we will consider EPA's and the states' oversight of Recovery Act
funds and, more specifically, progress in implementing EPA's guidance.
Department of Health and Human Services: Office of Head Start:
Open Recommendation:[Footnote 44]
To facilitate understanding of whether regional decisions regarding
waivers of the program's matching requirement are consistent with
Recovery Act grantees' needs across regions, we recommended that the
Director of the Office of Head Start (OHS) should regularly review
waivers of the nonfederal matching requirement and associated
justifications.
Agency Actions:
OHS has not conducted a review of waivers of the nonfederal matching
requirement, but OHS officials stated that the variation is largely
due to differences in regions' policy in timing: some regional offices
grant waivers at the same time that the grant is made official,
whereas other regions grant waivers later. OHS officials stated that
although the OHS central office has not regularly reviewed grantees'
justifications for waiver applications for regional variability in the
past, they are looking into tracking this data in their Web-based
system consistently across regions. The process of tracking waivers is
not yet complete.
Open Recommendation:[Footnote 45]
To oversee the extent to which grantees are meeting the program goal
of providing services to children and families and to better track the
initiation of services under the Recovery Act, we recommended that the
Director of OHS should collect data on the extent to which children
and pregnant women actually receive services from Head Start and Early
Head Start grantees.
Agency Actions:
The Department of Health and Human Services (HHS) disagreed with our
recommendation. OHS officials stated that attendance data are
adequately examined in triennial or yearly on-site reviews and in
periodic risk management meetings. Because these reviews and meetings
do not collect or report data on service provision, we continue to
believe that tracking services to children and families is an
important measure of the work undertaken by Head Start and Early Head
Start service providers.
Open Recommendation:[Footnote 46]
To help ensure that grantees report consistent enrollment figures, we
recommended that the Director of OHS should better communicate a
consistent definition of "enrollment" to grantees for monthly and
yearly reporting and begin verifying grantees' definition of
"enrollment" during triennial reviews.
Agency Actions:
OHS issued informal guidance on its Web site clarifying monthly
reporting requirements, but has not clarified yearly reporting
requirements.
Open Recommendation:[Footnote 47]
To provide grantees consistent information on how and when they will
be expected to obligate and expend federal funds, we recommended that
the Director of OHS should clearly communicate its policy to grantees
for carrying over or extending the use of Recovery Act funds from one
fiscal year into the next.
Agency Actions:
HHS indicated that OHS will issue guidance to grantees on obligation
and expenditure requirements, as well as improve efforts to
effectively communicate the mechanisms in place for grantees to meet
the requirements for obligation and expenditure of funds.
Open Recommendation:[Footnote 48]
To better consider known risks in scoping and staffing required
reviews of Recovery Act grantees, we recommended that the Director of
OHS should direct OHS regional offices to consistently perform and
document Risk Management Meetings and incorporate known risks,
including financial management risks, into the process for staffing
and conducting reviews.
Agency Actions:
HHS reported OHS is reviewing the risk management process to ensure it
is consistently performed and documented in its centralized data
system and that it has taken related steps, such as requiring the
grant officer to identify known or suspected risks prior to an on-site
review.
Department of Housing and Urban Development:
Open Recommendation:[Footnote 49]
Because the absence of third-party investors reduces the amount of
overall scrutiny Tax Credit Assistance Program (TCAP) projects would
receive and the Department of Housing and Urban Development (HUD) is
currently not aware of how many projects lacked third-party investors,
we recommended that HUD should develop a risk-based plan for its role
in overseeing TCAP projects that recognizes the level of oversight
provided by others.
Agency Actions:
HUD responded to our recommendation by saying it will identify
projects that are not funded by the HOME Investment Partnerships
Program funds and projects that have a nominal tax credit award.
However, HUD said it will not be able to identify these projects until
it could access the data needed to perform the analysis, and it does
not receive access to those data until after projects have been
completed. HUD currently has not taken any action on this
recommendation because it only has data on the small percentage of
projects completed to date. It is too early in the process to be able
to identify projects that lack third-party investors. The agency will
take action once they are able to collect the necessary information
from the project owners and the state housing finance agencies.
Department of Labor:
Open Recommendations:[Footnote 50]
To enhance the Department of Labor's (Labor) ability to manage its
Recovery Act and regular Workforce Investment Act (WIA) formula grants
and to build on its efforts to improve the accuracy and consistency of
financial reporting, we recommended that the Secretary of Labor take
the following actions:
* To determine the extent and nature of reporting inconsistencies
across the states and better target technical assistance, conduct a
one-time assessment of financial reports that examines whether each
state's reported data on obligations meet Labor's requirements.
* To enhance state accountability and to facilitate their progress in
making reporting improvements, routinely review states' reporting on
obligations during regular state comprehensive reviews.
Agency Actions:
Labor agreed with both of our recommendations and has begun to take
some actions to implement them. To determine the extent of reporting
inconsistencies, Labor awarded a contract in September 2010 to perform
an assessment of state financial reports to determine if the data
reported are accurate and reflect Labor's guidance on reporting of
obligations and expenditures. Labor plans to begin interviewing states
in February 2011 and will issue a report after the interviews are
completed and analyzed. To enhance states' accountability and
facilitate their progress in making improvements in reporting, Labor
has drafted guidance on the definitions of key financial terms such as
obligations, which is currently in final clearance. After the guidance
is issued, Labor plans to conduct a systemwide webinar on this topic.
Open Recommendation:[Footnote 51]
Our September 2009 bimonthly report identified a need for additional
federal guidance in defining green jobs and we made the following
recommendation to the Secretary of Labor:
* To better support state and local efforts to provide youth with
employment and training in green jobs, provide additional guidance
about the nature of these jobs and the strategies that could be used
to prepare youth for careers in green industries.
Agency Actions:
Labor agreed with our recommendation and has begun to take several
actions to implement it. Labor's Bureau of Labor Statistics has
developed a definition of green jobs which was finalized and published
in the Federal Register on September 21, 2010. In addition, Labor
continues to host a Green Jobs Community of Practice, an online
virtual community available to all interested parties. As part of this
effort, in December 2010, Labor hosted its first Recovery Act Grantee
Technical Assistance Institute, which focused on critical success
factors for achieving the goals of the grants and sustaining the
impact into the future. The department also plans to host a symposium
in late Spring 2011 with the green jobs state Labor Market Information
Improvement grantees. The symposium will share recent research and
other promising practices to inform workforce development and training
strategies. In addition, the department anticipates releasing its
Internet-based Occupational Information Network (O*NET) Career
Profiler tool in the winter of 2011 for those new to the workforce.
This tool includes the O*NET green leaf symbol to highlight green
occupations. Furthermore, the department's implementation study of the
Recovery Act-funded green jobs training grants is still ongoing. The
interim report is expected in late 2011.
Newly Implemented Recommendation:[Footnote 52]
Our September 2009 bimonthly report identified a need for additional
federal guidance in measuring the work readiness of youth and we made
the following recommendation to the Secretary of Labor:
* To enhance the usefulness of data on work readiness outcomes,
provide additional guidance on how to measure work readiness of youth,
with a goal of improving the comparability and rigor of the measure.
Agency Actions:
Labor agreed with our recommendation and has taken steps to implement
it. Labor issued guidance in May and August 2010 to identify
requirements for measuring the work readiness of youth and the
methodology for implementing the work readiness indicators for the WIA
Youth Program. The guidance clarified the changes to the definition of
work readiness by requiring a worksite evaluation conducted by the
employer.
Executive Office of the President: Office of Management and Budget:
Open Recommendation:
To leverage Single Audits as an effective oversight tool for Recovery
Act programs, we recommended that the Director of the Office of
Management and Budget (OMB):
1. provide more direct focus on Recovery Act programs through the
Single Audit to help ensure that smaller programs with higher risk
have audit coverage in the area of internal controls and
compliance;[Footnote 53]
2. take additional efforts to provide more timely reporting on
internal controls for Recovery Act programs for 2010 and beyond;
[Footnote 54]
3. evaluate options for providing relief related to audit requirements
for low-risk programs to balance new audit responsibilities associated
with the Recovery Act;[Footnote 55]
4. issue Single Audit guidance in a timely manner so that auditors can
efficiently plan their audit work;[Footnote 56]
5. issue the OMB Circular No. A-133 Compliance Supplement no later
than March 31 of each year;[Footnote 57]
6. explore alternatives to help ensure that federal awarding agencies
provide their management decisions on the corrective action plans in a
timely manner;[Footnote 58] and:
7. shorten the timeframes required for issuing management decisions by
federal agencies to grant recipients.[Footnote 59]
Agency Actions:
(1) To provide more direct focus on Recovery Act programs to help
ensure that smaller programs with higher risk have audit coverage in
the area of internal controls and compliance through the Single Audit,
OMB updated its single audit guidance in the OMB Circular A-133,
Audits of States, Local Government, and Non-Profit Organizations
Compliance Supplement in July 2010.[Footnote 60] This compliance
supplement requires auditors to consider all federal programs with
expenditures of Recovery Act awards to be considered programs with
higher risks when performing standard risk-based tests to select
programs to be audited. The compliance supplement also clarified
information to assist auditors in determining the appropriate risk
levels for programs with Recovery Act expenditures. OMB officials have
stated that they are in the process of completing the 2011 Compliance
Supplement which they expected to issue by March 31, 2011. As of April
4, 2011, the 2011 Compliance Supplement had not yet been issued. They
also stated that this compliance supplement will continue to provide
guidance that addresses some of the higher risks inherent in Recovery
Act programs. The most significant of these risks are associated with
newer programs that may not yet have the internal controls and
accounting systems in place to help ensure that funds are distributed
and used in accordance with program regulations and objectives.
Since Recovery Act spending is projected to continue through 2016, we
believe that it is essential that OMB provide direction in Single
Audit guidance so that some smaller programs with higher risk would
not be automatically excluded from receiving audit coverage based upon
the requirements in the Single Audit Act. In recent discussions with
OMB officials, we communicated our concern that future Single Audit
guidance provide instruction that helps to ensure that smaller
programs with higher risk have audit coverage in the area of internal
controls and compliance. OMB officials agreed and stated that they
plan to continue including similar language in the Compliance
Supplement and performing outreach training throughout the duration of
the Recovery Act.
(2) To address the recommendation for taking additional efforts to
encourage more timely reporting on internal controls for Recovery Act
programs for 2010 and beyond, OMB commenced a second voluntary Single
Audit Internal Control Project (project) in August 2010 for states
that received Recovery Act funds in fiscal year 2010.[Footnote 61]
Similar to the prior project (which did not get started until October
2009), one of the project's goals is to achieve more timely
communication of internal control deficiencies for higher-risk
Recovery Act programs so that corrective action can be taken more
quickly. Specifically, the project encourages participating auditors
of states that received Recovery Act funds to identify and communicate
deficiencies in internal control to management 3 months sooner than
the 9-month time frame currently required under OMB Circular No. A-
133. The project also requires that management provide, 2 months
earlier than required under statute, plans for correcting internal
control deficiencies to the cognizant agency for audit for immediate
distribution to the appropriate federal agencies.[Footnote 62] The
federal agency is then to have provided its concerns relating to
management's plan of corrective actions in a written decision as
promptly as possible and no later than 90 days after the corrective
action plan is received by the cognizant agency for audit. According
to OMB officials, 14 states volunteered to participate in the second
project. Each participating state was to select a minimum of four
Recovery Act programs for inclusion in the project.
We assessed the results of the first OMB Single Audit Internal Control
Project for fiscal year 2009 and found that it was helpful in
communicating internal control deficiencies earlier than required
under statute. We reported that 16 states participated in the first
project and that the states selected at least two Recovery programs
for the project. We also reported that the project's dependence on
voluntary participation limited its scope and coverage and that
voluntary participation may also bias the project's results by
excluding from analysis states or auditors with practices that cannot
accommodate the project's requirement for early reporting of control
deficiencies. Overall, we concluded that although the project's
coverage could have been more comprehensive, the analysis of the
project's results provided meaningful information to OMB for better
oversight of the Recovery Act programs selected and information for
making future improvements to the Single Audit guidance.
OMB's second Single Audit Internal Control Project is in progress and
its planned completion date is June 2011. OMB plans to assess the
project's results after its completion date. As of February 9, 2011,
OMB officials have stated that the 14 participating states have met
the milestones for submitting interim internal control reports by
December 31, 2010 and their corrective action plans by January 31,
2011. We believe that OMB needs to continue taking steps to encourage
timelier reporting on internal controls through Single Audits for
Recovery Act programs.
(3) OMB officials have stated that they are aware of the increase in
workload for state auditors who perform Single Audits due to the
additional funding to Recovery Act programs and corresponding
increases in programs being subject to audit requirements. OMB
officials stated that they solicited suggestions from state auditors
to gain further insights to develop measures for providing audit
relief. However, OMB has not yet identified viable alternatives that
would provide relief to all state auditors that conduct Single Audits.
For state auditors that are participating in the second OMB Single
Audit Internal Control Project, OMB has provided some audit relief in
that they have modified the requirements under Circular No. A-133 to
reduce the number of low-risk programs that are to be included in some
project participants' risk assessment requirements. As expenditures of
Recovery Act funds are expected to continue through 2016, it is
important that OMB look for opportunities and implement various
options for providing audit relief in future years.
(4)(5) With regard to issuing Single Audit Guidance in a timely
manner, and specifically the OMB Circular A-133 Compliance Supplement,
we previously reported in December 2010 that OMB officials stated that
they intended to issue the 2011 Compliance Supplement by March 31,
2011.[Footnote 63] In January 2011, OMB officials reported that the
production of the 2011 Compliance Supplement was on schedule for
issuance by March 31, 2011. As of April 4, 2011, the 2011 Compliance
Supplement had not yet been issued, and we will continue to monitor
OMB's progress to achieve this objective.
(6)(7) In October 2010, OMB officials stated that, based on their
assessment of the results of the project, they have discussed
alternatives for helping to ensure that federal awarding agencies
provide their management decisions on the corrective action plans in a
timely manner, including possibly shortening the time frames required
for federal agencies to provide their management decisions to grant
recipients.[Footnote 64] However, OMB officials have yet to decide on
the course of action that they will pursue to implement our related
recommendations. OMB officials acknowledged that the results of the
2009 OMB Single Audit Internal Control Project confirmed that this
issue continues to be a challenge. They stated that they have met
individually with several federal awarding agencies that were late in
providing their management decisions in the 2009 project to discuss
the measures that the agencies will take to improve the timeliness of
their management decisions.
In March 2010, OMB issued guidance under memo M-10-14, item 7,
[hyperlink,
http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_2010/
m10-14.pdf] that called for federal awarding agencies to review
reports prepared by the Federal Audit Clearinghouse regarding Single
Audit findings and submit summaries of the highest-risk audit findings
by major Recovery Act programs by September 30, 2010, as well as other
relevant information on the federal awarding agency's actions
regarding these areas. OMB officials have stated that they plan to use
this information to identify trends that may require clarification or
additional guidance in the compliance supplement. OMB officials also
stated that they are working with the Recovery Act Accountability and
Transparency Board to develop metrics for determining how federal
awarding agencies are to use information available in the Single
Audit. As of January 2011, according to OMB officials, the metric
project is progressing. OMB officials have stated that they anticipate
that the metrics will be available in early spring 2011 and that the
metrics could be applied at the agency level, by program, to allow for
analysis of Single Audit findings and other uses to be determined. One
goal of the metrics project is to increase the effectiveness and
timeliness of federal awarding agencies' actions to resolve Single
Audit findings. We will monitor the progress of these efforts to
determine the extent that it improves the timeliness of federal
agencies' actions to resolve audit findings so that risks to Recovery
Act funds are reduced and internal controls in Recovery Act programs
are strengthened.
Department of Transportation:
Open Recommendations:[Footnote 65]
To ensure that Congress and the public have accurate information on
the extent to which the goals of the Recovery Act are being met, we
recommended that the Secretary of Transportation direct the Federal
Highway Administration (FHWA) to take the following two actions:
1. Develop additional rules and data checks in the Recovery Act Data
System, so that these data will accurately identify contract
milestones such as award dates and amounts, and provide guidance to
states to revise existing contract data.
2. Make publicly available--within 60 days after the September 30,
2010, obligation deadline--an accurate accounting and analysis of the
extent to which states directed funds to economically distressed
areas, including corrections to the data initially provided to
Congress in December 2009.
Agency Actions:
As of the time of this report, the Department of Transportation (DOT)
was in the process of developing its plans in response to these
recommendations.
Open Recommendation:[Footnote 66]
To better understand the impact of Recovery Act investments in
transportation, we believe that the Secretary of Transportation should
ensure that the results of these projects are assessed and a
determination made about whether these investments produced long-term
benefits. Specifically, in the near term, we recommended that the
Secretary direct FHWA and the Federal Transit Administration (FTA) to
determine the types of data and performance measures they would need
to assess the impact of the Recovery Act and the specific authority
they may need to collect data and report on these measures.
Agency Actions:
In its response, DOT noted that it expected to be able to report on
Recovery Act outputs, such as the miles of road paved, bridges
repaired, and transit vehicles purchased, but not on outcomes, such as
reductions in travel time, nor did it commit to assessing whether
transportation investments produced long-term benefits. DOT further
explained that limitations in its data systems, coupled with the
magnitude of Recovery Act funds relative to overall annual federal
investment in transportation, would make assessing the benefits of
Recovery Act funds difficult. DOT indicated that, with these
limitations in mind, it is examining its existing data availability
and, as necessary, would seek additional data collection authority
from Congress if it became apparent that such authority were needed.
DOT plans to take some steps to assess its data needs, but it has not
committed to assessing the long-term benefits of Recovery Act
investments in transportation infrastructure. We are therefore keeping
our recommendation on this matter open.
Newly Implemented Recommendation:[Footnote 67]
We recommended that the Secretary of Transportation should gather
timely information on the progress they are making in meeting the
maintenance-of-effort requirement and to report preliminary
information to Congress within 60 days of the certified period
(September 30, 2010), (1) on whether states met required program
expenditures as outlined in their maintenance-of-effort
certifications, (2) the reasons that states did not meet these
certified levels, if applicable, and (3) lessons learned from the
process.
Agency Actions:
On January 27, 2011, the Secretary of Transportation sent a report to
Congress that addressed each reporting element we recommended. DOT
reported that 29 states and the District of Columbia met their planned
level of expenditure and 21 states did not. It also summarized reasons
states did not meet the certified levels, such as a reduction in
dedicated revenues for transportation or a state legislature approving
a lower-than-expected level of transportation funding in the state
budget. Finally, DOT's report provided its perspectives on lessons
learned from the process, including identifying barriers to
effectively implementing the maintenance-of-effort requirement. For
example, it noted that the lack of clarity around statutory
definitions regarding what constituted "state funding" and the
substantial decreases in state dedicated transportation revenues were
barriers to states producing an accurate certification and meeting the
certified level.
Department of the Treasury:
Newly Implemented Recommendation:[Footnote 68]
The Department of the Treasury (Treasury) should expeditiously provide
Housing Finance Agencies (HFA) with guidance on monitoring project
spending and develop plans for dealing with the possibility that
projects could miss the spending deadline and face further project
interruptions.
Agency Actions:
Treasury officials told us that after they provided additional
guidance, every state HFA and the respective property owners complied
with the 30 percent spending rule by the end of calendar year 2010. We
concluded that Treasury and the state HFAs have addressed the intent
of this recommendation.
Matters for Congressional Consideration:
Matter:[Footnote 69]
To the extent that appropriate adjustments to the Single Audit process
are not accomplished under the current Single Audit structure,
Congress should consider amending the Single Audit Act or enacting new
legislation that provides for more timely internal control reporting,
as well as audit coverage for smaller Recovery Act programs with high
risk.
We continue to believe that Congress should consider changes related
to the Single Audit process.
Matter:[Footnote 70]
To the extent that additional coverage is needed to achieve
accountability over Recovery Act programs, Congress should consider
mechanisms to provide additional resources to support those charged
with carrying out the Single Audit Act and related audits.
We continue to believe that Congress should consider changes related
to the Single Audit process.
Matter:[Footnote 71]
To provide HFAs with greater tools for enforcing program compliance,
in the event the Section 1602 Program is extended for another year,
Congress may want to consider directing Treasury to permit HFAs the
flexibility to disburse Section 1602 Program funds as interest-bearing
loans that allow for repayment.
We continue to believe that Congress should consider directing
Treasury to permit HFAs the flexibility to disburse Section 1602
Program funds as interest-bearing loans that allow for repayment.
[End of section]
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Mark E. Gaffigan, (202) 512-3841 or gaffiganm@gao.gov:
Yvonne D. Jones, (202) 512-6806 or jonesy@gao.gov:
Staff Acknowledgments:
In addition to the contacts above, Joshua Akery, Thomas Beall, Andrew
Ching, Holly Dye, Kim Gianopoulos, Sharon Hogan, Thomas James,
Jonathan Kucskar, Kristen Massey, Karine McClosky, Alison O'Neill,
Carol Patey, Brenda Rabinowitz, Beverly Ross, Kelly Rubin, Ben Shouse,
Jonathan Stehle, Kiki Theodoropoulos, Nick Weeks, and Ethan Wozniak
made key contributions to this report.
[End of section]
Related GAO Products:
The following is a list of 10 related products published since the
last mandated GAO report on the Recovery Act. [hyperlink,
http://www.gao.gov/products/GAO-11-166], December 15, 2010. For a full
list of products related to the Recovery Act, see [hyperlink,
http://gao.gov/recovery/related-products/].
Medicaid: Improving Responsiveness of Federal Assistance to States
during Economic Downturns. [hyperlink,
http://www.gao.gov/products/GAO-11-395]. Washington, D.C.: March 31,
2011.
State and Local Governments: Knowledge of Past Recessions Can Inform
Future Federal Fiscal Assistance. [hyperlink,
http://www.gao.gov/products/GAO-11-401]. Washington, D.C.: March 31,
2011.
Recovery Act: Status of Department of Energy's Obligations and
Spending. [hyperlink, http://www.gao.gov/products/GAO-11-483T].
Washington, D.C.: March 17, 2011.
Recovery Act: Broadband Programs Awards and Risks to Oversight.
[hyperlink, http://www.gao.gov/products/GAO-11-371T]. Washington,
D.C.: February 10, 2011.
Department of Education: Improved Oversight and Controls Could Help
Education Better Respond to Evolving Priorities. [hyperlink,
http://www.gao.gov/products/GAO-11-194]. Washington, D.C.: February
10, 2011.
Rail Transit: FTA Programs Are Helping Address Transit Agencies'
Safety Challenges, but Improved Performance Goals and Measures Could
Better Focus Efforts. [hyperlink,
http://www.gao.gov/products/GAO-11-199]. Washington, D.C.: January 31,
2011.
Defense Infrastructure: High-Level Federal Interagency Coordination Is
Warranted to Address Transportation Needs beyond the Scope of the
Defense Access Roads Program. [hyperlink,
http://www.gao.gov/products/GAO-11-165]. Washington, D.C.: January 26,
2011.
Summary of GAO's Performance and Financial Information Fiscal Year
2010. [hyperlink, http://www.gao.gov/products/GAO-11-3SP]. Washington,
D.C.: January 24, 2011.
Child Support Enforcement: Departures from Long-term Trends in Sources
of Collections and Caseloads Reflect Recent Economic Conditions.
[hyperlink, http://www.gao.gov/products/GAO-11-196]. Washington, D.C.:
January 14, 2011.
Multiple Employment and Training Programs: Providing Information on
Colocating Services and Consolidating Administrative Structures Could
Promote Efficiencies. [hyperlink,
http://www.gao.gov/products/GAO-11-92]. Washington, D.C.: January 13,
2011.
[End of section]
Footnotes:
[1] This amount is current as of March 18, 2011. For updates see
[hyperlink, http://gao.gov/recovery].
[2] Recovery Act, Pub. L. No. 111-5, § 3, 123 Stat. 116 (2009).
[3] Recovery Act, div. A, § 1512(e), 123 Stat. 288. In this report, we
refer to the quarterly reports required by Section 1512 as recipient
reports.
[4] GAO, Recovery Act: States' and Localities' Uses of Funds and
Actions Needed to Address Implementation Challenges and Bolster
Accountability, [hyperlink, http://www.gao.gov/products/GAO-10-604]
(Washington, D.C.: May 26, 2010).
[5] The Energy Independence and Security Act of 2007 (EISA) was signed
into law on December 19, 2007. Pub. L. No. 110-140, 121 Stat. 1492.
[6] The first quarter that recipients began reporting grant
information through PAGE was July 1, 2009, to September 30, 2009.
[7] DOE, Financial Assistance Funding Opportunity Announcement:
Recovery Act - Energy Efficiency and Conservation Block Grants -
Formula Grants, DE-FOA-0000013 (Mar. 26, 2009).
[8] According to EECBG statutory requirements for formula grants, "A
State that receives a grant under the program shall use not less than
60 percent of the amount received to provide subgrants to units of
local government in the State that are ineligible" for direct formula
grants. This means that 60 percent of EECBG funds awarded to states
must be distributed to local units of government within the state that
are not eligible to receive direct formula grants through the EECBG
program.
[9] DOE, Office of Inspector General, The Department of Energy's
Implementation of the Energy Efficiency and Conservation Block Grant
Program under the Recovery and Reinvestment Act: A Status Report, OAS-
RA-10-16 (Aug. 11, 2010).
[10] DOE defines the effective date of award as the date that the DOE
contracting officer signed the award document.
[11] DOE, Financial Assistance Funding Opportunity Announcement:
Recovery Act - Energy Efficiency and Conservation Block Grants -
Formula Grants, DE-FOA-0000013 (Mar. 26, 2009) and DOE, Energy
Efficiency and Conservation Block Grant Program Notice 10-011 (Apr.
21, 2010).
[12] DOE, Office of Inspector General, The Department of Energy's
Implementation of the Energy Efficiency and Conservation Block Grant
Program under the Recovery and Reinvestment Act: A Status Report, OAS-
RA-10-16 (Aug. 11, 2010).
[13] The Buy American requirement of the act generally requires that
grant recipients use iron, steel, and manufactured goods produced in
the United States on all Recovery Act-funded projects.
[14] Under Division A, Section 1606 of the Recovery Act, contractors
and subcontractors hired with Recovery Act funds are required to pay
prevailing wages to laborers and mechanics.
[15] Duties and position titles for monitoring staff vary somewhat by
DOE office location. For the purposes of this report, contract
specialists and technical monitors will also be referred to as project
officers.
[16] DOE defines subrecipients as those recipients that receive pass-
through funds from recipients but are not the ultimate beneficiary of
the funds, such as the vendor or contractor who provided the good or
service.
[17] Internal controls include organization, policies, and procedures
and are tools to help program and financial managers achieve results
and safeguard the integrity of their programs.
[18] A full-time equivalent (FTE) is calculated as the total hours
worked divided by the number of hours in a full-time schedule.
[19] DOE, Office of Inspector General, The Department of Energy's
Implementation of the Energy Efficiency and Conservation Block Grant
Program under the Recovery and Reinvestment Act: A Status Report, OAS-
RA-10-16 (Aug. 11, 2010).
[20] DOE, Office of Inspector General, Management Controls over the
Development and Implementation of the Office of Energy Efficiency and
Renewable Energy's Performance and Accountability for Grants in Energy
System, OAS-RA-10-14 (July 22, 2010).
[21] 31 U.S.C. § 7502(f)(2). OMB's implementing guidance, OMB Circular
No. A-133, Audits of States, Local Governments, and Non-Profit
Organizations (June 2007), also imposes additional monitoring
oversight requirements.
[22] In addition to PAGE reporting, under Section 1512 of the Recovery
Act, recipients of Recovery Act funds must also report--via
FederalReporting.gov--on key project metrics such as job creation and
total funds spent.
[23] GAO, Recovery Act: Opportunities to Improve Management and
Strengthen Accountability over States' and Localities' Uses of Funds,
[hyperlink, http://www.gao.gov/products/GAO-10-999] (Washington, D.C.:
Sept. 20, 2010).
[24] GAO, Geostationary Operational Environmental Satellites:
Improvements Needed in Continuity Planning and Involvement of Key
Users, [hyperlink, http://www.gao.gov/products/GAO-10-799]
(Washington, D.C.: Sept. 1, 2010).
[25] Under the Single Audit Act, as amended, a non-federal entity that
expends more than $500,000 of federal awards is required to have
either a single audit or a program-specific audit for the fiscal year
and report the results of the audit, among other things, to the
federal clearinghouse designated by OMB.
[26] DOE guidance encourages recipients who have the resources to
voluntarily capture actual energy-savings data once they become
available and conduct an evaluation, measurement, and verification
effort to measure energy savings and usage.
[27] In order to establish reasonableness, DOE officials said that DOE
expects project officers to use their own knowledge and expertise, as
well as leverage the knowledge and expertise of other program staff,
to identify data outliers and spot inconsistencies. DOE is also
developing online tools (in conjunction with project officers) to help
make these determinations, according to DOE officials.
[28] DOE allows recipients to use the Environmental Protection
Agency's ENERGY STAR "Portfolio Manager" tool to measure and track
energy performance.
[29] DOE guidance states that outputs from DOE-supplied calculators
and tools should only be used for reporting if site specific estimates
are not available. The instructions for the DOE "ARRA Benefit
Reporting Calculator" state: "This tool is designed to provide high
level estimates of energy savings and resulting emission reductions.
This tool is not intended to replace contractor or engineering
supplied estimates of your project savings."
[30] Under the continuous corrections period, recipients were allowed
to modify submissions from February 2, 2011, to March 21, 2011. The
final update of this round of recipient reported data should occur on
March 23, 2011.
[31] Prime recipients are nonfederal entities that receive Recovery
Act funding as federal awards in the form of grants, loans, or
cooperative agreements directly from the federal government.
[32] Under the Recovery Act, recipients are to file reports for any
quarter in which they receive Recovery Act funds directly from the
federal government. Reporting requirements apply to nonfederal
recipients of funding, including entities such as state and local
governments, educational institutions, nonprofits, and other private
organizations. These requirements apply to recipients who receive
funding through the Recovery Act's discretionary appropriations, not
recipients receiving funds through entitlement programs, such as
Medicaid, or tax provisions. Certain other exceptions apply, such as
for individuals. Recovery Act, div. A, § 1512, 123 Stat. at 287-288.
[33] For further discussion of FTE data limitations, see GAO, Recovery
Act: Recipient Reported Jobs Data Provide Some Insight into Use of
Recovery Act Funding, but Data Quality and Reporting Issues Need
Attention, [hyperlink, http://www.gao.gov/products/GAO-10-223]
(Washington, D.C.: Nov. 19, 2009), 6-9.
[34] [hyperlink, http://www.gao.gov/products/GAO-10-999].
[35] See further discussion regarding our scope and methodology in
appendix I.
[36] FederalReporting.gov is the nationwide data collection system for
recipient reporting data requirements, while the data reported by
recipients are available to the public for viewing and downloading in
Recovery.gov.
[37] See OMB Memorandum M-10-34. This memorandum included updated
guidance on when a recipient should mark a record as final and stated
that changes to prior reports may not be initiated for the number of
jobs field. Further, the memorandum noted that previous OMB
memorandums (M-09-21 and M-10-08) require recipients to provide
narrative descriptions that are sufficiently clear to facilitate
understanding by the general public.
[38] We selected a mix of large, medium and small grants defined as
grants greater than $2 million, grants between $250,000 and $2
million, and grants less than $250,000, respectively.
[39] In matching 2010 third quarter recipient reports against DOE-
provided data, we could not match 2 percent of the recipient reports
with the DOE data. For the recipient reports that we did match, 21
percent of the matched records were not congruent with regard to
whether they reported any FTE value or not. An example of the mismatch
would be a DOE-provided record that showed some FTE value while the
matching recipient report showed zero or no FTE value at all.
[40] GAO, Recovery Act: As Initial Implementation Unfolds in States
and Localities, Continued Attention to Accountability Issues Is
Essential, [hyperlink, http://www.gao.gov/products/GAO-09-580]
(Washington, D.C.: Apr. 23, 2009); Recovery Act: States' and
Localities' Current and Planned Uses of Funds While Facing Fiscal
Stresses, [hyperlink, http://www.gao.gov/products/GAO-09-829]
(Washington, D.C.: July 8, 2009); 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); Recovery Act: Recipient Reported Jobs Data Provide Some Insight
into Use of Recovery Act Funding, but Data Quality and Reporting
Issues Need Attention, [hyperlink,
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19,
2009); 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); 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); Recovery Act: States' and Localities' Uses of Funds and Actions
Needed to Address Implementation Challenges and Bolster
Accountability, [hyperlink, http://www.gao.gov/products/GAO-10-604]
(Washington, D.C.: May 26, 2010); Recovery Act: Opportunities to
Improve Management and Strengthen Accountability over States' and
Localities' Uses of Funds, [hyperlink,
http://www.gao.gov/products/GAO-10-999] (Washington, D.C.: Sept. 20,
2010); and Recovery Act: Head Start Grantees Expand Services, but More
Consistent Communication Could Improve Accountability and Decisions
about Spending, [hyperlink, http://www.gao.gov/products/GAO-11-166]
(Washington, D.C.: Dec. 15, 2010).
[41] [hyperlink, http://www.gao.gov/products/GAO-10-604], 245-246.
[42] [hyperlink, http://www.gao.gov/products/GAO-10-604], 245-246.
[43] [hyperlink, http://www.gao.gov/products/GAO-10-604], 246-247.
[44] [hyperlink, http://www.gao.gov/products/GAO-10-604], 184.
[45] [hyperlink, http://www.gao.gov/products/GAO-10-604], 184.
[46] [hyperlink, http://www.gao.gov/products/GAO-11-166], 39.
[47] [hyperlink, http://www.gao.gov/products/GAO-11-166], 39.
[48] [hyperlink, http://www.gao.gov/products/GAO-11-166], 39.
[49] [hyperlink, http://www.gao.gov/products/GAO-10-999], 189.
[50] [hyperlink, http://www.gao.gov/products/GAO-10-604], 244.
[51] [hyperlink, http://www.gao.gov/products/GAO-09-1016], 78.
[52] [hyperlink, http://www.gao.gov/products/GAO-09-1016], 78.
[53] [hyperlink, http://www.gao.gov/products/GAO-09-829], 127.
[54] [hyperlink, http://www.gao.gov/products/GAO-10-604], 248.
[55] [hyperlink, http://www.gao.gov/products/GAO-09-829], 127.
[56] [hyperlink, http://www.gao.gov/products/GAO-10-604], 247.
[57] [hyperlink, http://www.gao.gov/products/GAO-10-999], 194.
[58] [hyperlink, http://www.gao.gov/products/GAO-10-604], 247-248.
[59] [hyperlink, http://www.gao.gov/products/GAO-10-999], 194.
[60] Congress passed the Single Audit Act, as amended, 31 U.S.C. ch.
75, to promote, among other things, sound financial management,
including effective internal controls, with respect to federal awards
administered by nonfederal entities. The Single Audit Act requires
states, local governments, and nonprofit organizations expending
$500,000 or more in federal awards in a year to obtain an audit in
accordance with the requirements set forth in the act. A Single Audit
consists of (1) an audit and opinions on the fair presentation of the
financial statements and the Schedule of Expenditures of Federal
Awards; (2) gaining an understanding of and testing internal control
over financial reporting and the entity's compliance with laws,
regulations, and contract or grant provisions that have a direct and
material effect on certain federal programs (i.e., the program
requirements); and (3) an audit and an opinion on compliance with
applicable program requirements for certain federal programs.
[61] OMB's second project is similar to its first Single Audit
Internal Control project which started in October 2009. Sixteen states
participated in the first project. We assessed the results of the
project and reported them in [hyperlink,
http://www.gao.gov/products/GAO-10-999].
[62] Each award recipient expending more than $50 million is assigned
a cognizant agency for audit. Generally, the cognizant agency for
audit is the federal awarding agency that provides the predominant
amount of direct funding to a recipient unless OMB assigns this
responsibility to another agency. Some of the responsibilities of the
cognizant agency include performing quality control reviews,
considering auditee requests for extensions, and coordinating a
management decision for audit findings that affect federal programs of
more than one agency. For the states participating in the project, HHS
is the cognizant agency for audit.
[63] The Compliance Supplement is updated annually. The 2010
Compliance Supplement was issued in July 2010 and is applicable to
audits of fiscal years beginning after June 30, 2009.
[64] The project's guidelines called for the federal awarding agencies
to complete (1) performing a risk assessment of the internal control
deficiency and identify those with the greatest risk to Recovery Act
funding and (2) identifying corrective actions taken or planned by the
auditee. OMB guidance requires this information to be included in a
management decision that the federal agency was to have issued to the
auditee's management, the auditor, and the cognizant agency for audit.
[65] [hyperlink, http://www.gao.gov/products/GAO-10-999], 187-188.
[66] [hyperlink, http://www.gao.gov/products/GAO-10-604], 241-242.
[67] [hyperlink, http://www.gao.gov/products/GAO-10-437], 29.
[68] [hyperlink, http://www.gao.gov/products/GAO-10-999], 194.
[69] [hyperlink, http://www.gao.gov/products/GAO-09-829], 128.
[70] [hyperlink, http://www.gao.gov/products/GAO-09-829], 128.
[71] [hyperlink, http://www.gao.gov/products/GAO-10-604], 251.
[End of section]
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