July 1, 2019

Allegations of Mismanagement at the Department of Energy’s Loan Programs Office

The Department of Energy’s Loan Programs Office (LPO) finances large-scale energy infrastructure projects in the United States.  LPO works closely with industry to bridge gaps in the commercial debt market when innovative technologies or unfamiliar borrowers may not be well understood by the private sector.  LPO has approved more than $30 billion of loans and loan guarantees for more than 30 projects related to energy infrastructure, manufacturing of electric vehicles, and new energy technology through its Title XVII Innovative Clean Energy Projects and Advanced Technology Vehicles Manufacturing loan programs. 

The Office of Inspector General received allegations regarding specific instances of improper obligation and spending of funds by LPO.  We initiated this inspection to evaluate allegations that LPO: (1) unnecessarily obligated/overfunded a support services contract by $3 million before the end of fiscal year 2018 to avoid losing funds; (2) wasted funds on another contractor that was hired to conduct an Equal Employment Opportunity investigation when there were resources within the Department and conduct a cultural survey that was meant to skew the results of a negative Federal Employee Viewpoint Survey; (3) wastefully used funds for decorative office items and services including a coat rack, rug, plants, and a plant watering service; and (4) reimbursed a $600 hotel room and attempted to hide a conference room expense during travel. 

We did not substantiate any of the allegations regarding improper obligation and spending of funds.  However, during the course of our inspection, we noted an area of concern for management’s consideration.  In particular, during our review of contract funding actions and purchase card transactions, we found that LPO did not have formal written policies and procedures to guide employees through the request, approval, and funding/acquisition process.  Because we did not substantiate the allegations regarding improper obligation and spending of funds, and LPO is taking action to strengthen internal controls in the area of concern we identified, we did not make any recommendations.

Topic: Management and Adminstration