Inspector General Warns Energy Dept. about “Immense Risks” of Big New Lending Programs

The New York Times recently reported on the Dept. of Energy’s frantic effort to lend $400 billion before the election of 2024. In doing so, the Times article publicized a critical report by the Office of the Inspector General dated November 2022.

That report, along with a memo to the energy secretary from Inspector General Teri Donaldson, identified numerous risks that had just been increased by the ballooning plans for loans. These increases (no surprise!) had been authorized by the CHIPS Act, the Infrastructure Investment and Jobs Act, and the IRA (“Inflation Reduction Act”). In her memo, the O.G. says that the budget had been only $45.3 billion budget for fiscal year 2022.

The report says:

“It is imperative that Department leadership recognize the immense risks associated with these new and expanded programs and take assertive steps to mitigate the risks. The OIG has identified a need for Department leadership to identify and set aside sufficient resources for full Federal program staffing, as well as sufficient resources to build robust internal controls and independent oversight systems to prevent and detect problems to ensure the Government and taxpayers are protected.

And:

“These risks are compounded by the fact that this major increase in spending and lending under the new legislation will be overseen by a Department procurement and acquisition workforce that has been historically underfunded and understaffed.”

It’s interesting that the “procurement and acquisition workforce . . . has been historically underfunded,” when you consider this: The department spends “approximately 90 percent of its annual budget on contracts to operate its scientific laboratories, engineering and production facilities, and environmental restoration sites.”

Brad Plumer and Lisa Friedman of the New York Times pointed out that the Energy Department was striving to avoid a “Solyndra”—a $535 million investment in solar power that went under.

Image of Solyndra building by jaycross is licensed under a Creative Commons license, CC BY 2.0.