Energy Department couldn’t manage stimulus money, watchdog says
By Ed O’Keefe,
The government watchdog who first raised concerns about the federal loan program used to finance the now-bankrupt solar company Solyndra said Wednesday that the Energy Department was ill-equipped to quickly distribute billions of dollars in economic stimulus funding.
Making his first appearance on Capitol Hill since the Solyndra scandal broke, the Energy Department’s inspector general, Gregory H. Friedman, told a House subcommittee that Energy’s $35.2 billion in stimulus funding eclipsed its annual budget by $8 billion and placed strains on the federal, state and local officials responsible for distributing the funds.
In some cases, state government personnel tasked with distributing the federal dollars had been furloughed because of state budget crunches, Friedman said.
Friedman’s testimony was meant to summarize more than 100 investigations conducted by his office into Energy’s stimulus spending. The probes have recovered $2.3 million in fraudulently obtained stimulus money and sparked five criminal prosecutions.
Several of Friedman’s probes have concluded that the political push to quickly create jobs and spur economic development didn’t match economic realities on the ground. And although he credits the department with making significant progress in distributing the federal aid, he said 45 percent of stimulus dollars distributed by Energy had not been allocated by state and local government as of Oct. 22.
Obama administration officials have defended the department’s management of stimulus dollars, noting that 55 percent of the money had been distributed to recipients as of late last month. 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.
In his testimony, Friedman said the department failed to properly document and could not always demonstrate how it resolved or mitigated risks before granting loan guarantees. Critics have said 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 to be completed quickly. From the start, administration critics were skeptical that such projects existed.
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, according to checks conducted by Friedman’s office. In one case, a weatherization subcontractor gave preferential treatment to his employees and their relatives, meaning that eligible elderly and disabled applicants missed out or had to wait for weatherization of their homes.
Members of the House subcommittee on regulatory affairs also heard from Labor Department watchdogs who raised doubts about $490.1 million in stimulus funds distributed by the department to train unemployed workers for “green jobs” in the energy sector. As of June, 8,000 people had found “green jobs” after completing the stimulus-backed training programs, representing 10 percent of the administration’s goal, said Elliot P. Lewis, the assistant inspector general.
“Green jobs have not materialized, and therefore job placements had been much less than expected,” Lewis said.
Labor Secretary Hilda L. Solis said last month that the training programs are scheduled to run through 2013 and should help train more than 124,000 people. “These were smart investments that are preparing Americans for the clean energy jobs driving our 21st-century economy, and projects are still underway,” she said.