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McCaskill wants update on Energy Department’s grant management

The chairman of a Senate subcommittee has asked the Energy Department to show its progress toward better managing its clean-energy grants after an inspector general raised concerns about the program last month.

Sen. Claire McCaskill (D-Mo.), who heads the Senate Subcommittee on Financial and Contracting Oversight, wrote to Energy Secretary Steven Chu on Thursday requesting a response by March 29.

McCaskill on Thursday also asked U.S. Comptroller General Gene Dodaro to examine the State Department’s rules on grants.

An inspector general’s report last month showed that the Energy Department had awarded $150 million in Recovery Act funds to a Michigan-based battery manufacturer that failed to produce any cells for vehicles sold to the public — it was supposed to create enough cells to equip 60,000 vehicles a year.

The company, LG Chem Michigan, also asked the government to reimburse it for labor costs incurred while the battery plant was idle and workers were playing games, watching movies and volunteering with local organizations, the report said.

Energy Department Inspector General Gregory H. Friedman questioned more than $1.6 million in costs submitted by the company.

The report said the Energy Department failed to take corrective action after learning that the battery-manufacturing project was not on track and appeared headed toward cost overruns.

LG Chem defended its work after the audit, saying the company had invested $150 million in its plants and “has a significant interest in the long-term success of this facility.”

The Energy Department agreed to stricter monitoring but defended its performance overall, telling the inspector general that “emerging technologies and industries often face struggles early on.”

McCaskill said in her letter to Dodaro: “I am troubled by the potential for overcharges, improper billing and other areas of potential fraud that may be occurring as a result of lax oversight.”

The LG Chem audit represents the latest bit of bad news in a string of negative developments tied to the Obama administration’s $80 billion clean-technology initiative, which came as part of the Recovery Act.

In 2011, solar-panel manufacturer Solyndra, which received $535 million in loan guarantees from the Energy Department, collapsed and was raided by FBI agents as Democratic lawmakers questioned whether the firm had misled federal officials about its finances.

The government is likely to recover just $24 million of the funds that taxpayers lent to Solyndra, according to the company’s final liquidation report.

In January, an electric car start-up and its sister company sued the Energy Department, alleging that the Energy Department and Chu had awarded money to politically favored firms.

President Obama’s program to invest federal funds in clean-energy start-up companies became a rallying cry for Republicans during the 2012 election.

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