Energy Department couldn’t manage stimulus money, watchdog says

This post has been updated.

In his first appearance on Capitol Hill since the scandal surrounding the now-defunct solar company Solyndra broke, the federal watchdog who first raised concerns said Wednesday that the Energy Department has struggled to quickly distribute $35.2 billion in economic stimulus funding.

Gregory H. Friedman told a House subcommittee hearing on the Obama administration’s efforts to promote “green jobs” that the department’s stimulus haul eclipsed its annual budget by more than $8 billion and placed strains on federal, state and local officials charged with distributing the funds.

In some cases, state government personnel charged with distributing the federal dollars had been furloughed as part of state budget crunches, Friedman said.

His appearance meant to summarize more than 100 investigations conducted by Friedman’s office into the department’s stimulus spending that have recovered $2.3 million in stimulus fraud and sparked five criminal prosecutions.

In several of his investigations, Friedman has concluded that the political push to quickly create jobs and spur economic development didn’t match up with economic realities on the ground. And while he credits the department for making significant progress in distributing the federal aid, 45 percent of stimulus dollars distributed by Energy still hadn’t been spent by state and local government as of Oct. 22.

Energy Department officials have defended their management of stimulus dollars, noting that a majority of the money has been distributed to recipients on time. But the $535 million government-backed loan given to Solyndra, the now-shuttered solar company, has raised questions about the rush to distribute stimulus dollars and the leadership of Energy Secretary Steven Chu and his top aides.

GALLERY: The fall of Solyndra

In his testimony, Friedman noted that the department failed to properly document and couldn’t always demonstrate how it resolved or mitigated risks prior to granting loan guarantees. Critics have said that such steps might have prevented the Solyndra scandal.

Friedman also criticized the administration for touting the existence of “shovel ready” projects that needed federal funding in order to be quickly completed. From the start, administration critics were skeptical that enough such projects existed to spur the economy.

Friedman agreed: “Few actual ‘shovel ready’ projects existed,” he said. Instead, projects benefiting from Energy Department money “required extensive advance planning, organizational enhancements, and additional staffing and training” that delayed the quick distribution of stimulus dollars.

Stimulus-backed projects to weatherize homes also were often of poor quality, Friedman said, and in one case, a weatherization subcontractor gave preferential treatment to his employees and their relatives — meaning eligible elderly and handicapped residents missed out or had to wait for the weatherization of their homes.

Lawmakers also heard from Labor Department watchdogs who said the administration’s effort to train unemployed workers for “green jobs” has fallen short of goals.

As of June, just 8,000 people had found “green jobs” after completing training programs paid for with Labor Department stimulus dollars, Elliot P. Lewis, assistant inspector general for the Labor Department, told the subcommittee. The department has distributed $490.1 million to training programs in hopes of finding work for at least 80,000 people. But as of June, just 26,000 had completed training program, Lewis said.

“Green jobs have not materialized, and therefore job placements had been much less than expected,” Lewis said.

The Labor Department said the training programs are scheduled to continue through 2013 and are expected to provide training to more than 124,000 people.

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