OFFICIAL USE ONLY 

 

OFFICIAL USE ONLY 

eeOFF

 

Special Inquiry 

U.S. Department of Energy 

Office of Inspector General 

Office of Audit Services 

Review of Allegations Regarding Hiring 

and Contracting in the Office of Energy 

Efficiency and Renewable Energy 

 OAS-SR-10-04 September 2010 
Department of Energy

Washington, DC 20585

September 22, 2010

MEMORANDUM FOR THE SECRETARY

FROM: Gregory H. Friedman

 Inspector General

SUBJECT: INFORMATION: Special Inquiry: "Review of Allegations Regarding

 Hiring and Contracting in the Office of Energy Efficiency and

 Renewable Energy" Report Number: OAS-SR-10-04

INTRODUCTION

In April 2010, the Office of Inspector General (OIG) began receiving allegations concerning 

hiring and contracting practices within the Office of Energy Efficiency and Renewable Energy 

(EERE). These allegations included: 

1. Improprieties in the hiring of a contract employee to a senior Federal career position, 

including concerns that the contract employee was pre-selected or otherwise had an 

unfair advantage;

2. Performance of inherently governmental duties, including the supervision of Federal 

employees, by the same contract employee; and,

3. Award of work to a contractor without adequate competition. 

Although a number of other allegations with similar concerns were received, the OIG chose to 

focus its attention on those outlined above because of their overall importance to the integrity of 

the EERE mission, especially its role in the implementation and execution of the Department of 

Energy's responsibilities under the American Recovery and Reinvestment Act of 2009 (Recovery 

Act). Consequently, we initiated a fact-finding inquiry into these matters. To this end, we 

interviewed 31 current and former Department employees, including issue area specialists, and 

identified and reviewed applicable Federal regulations. We also analyzed over 250,000 emails, 

the results of which yielded evidence, presented in our report, pertaining to the specific 

allegations included in the scope of our inquiry. Our analysis of emails also disclosed another 

area of concern that is outlined in this report. 

RESULTS OF SPECIAL INQUIRY

We concluded that the allegation related to pre-selection of a senior EERE official was 

substantiated. Our inquiry identified a number of actions by management officials that 

contributed to a concern expressed by many in the EERE career workforce that the contract 

employee in this case performed a number of inherently governmental functions. We were
2

unable to substantiate the allegation regarding lack of adequate competition in contractor work 

awards. We did, however, find that the contract employee developed a statement of work that 

was tasked to the contractor for which he worked. This apparent conflict provided the 

opportunity for inappropriate manipulation of contract taskings to the financial benefit of the 

contractor's employer. While this potential existed, we did not substantiate that the related work 

was actually overstated. 

Federal Position Selection Process

We identified a number of circumstances surrounding the hiring action that were troubling, 

actions that understandably led the complainants to believe, and for us to conclude, that the 

contract employee was, in fact, pre-selected. Evidence gathered from a number of sources, 

including the Federal selecting official, demonstrated that the contract employee was granted 

preferences and advantages that were not granted to other applicants. For example:

The selecting official expressed specific intentions to make the contract employee a 

Federal employee several months before the contract employee's eventual appointment to 

the position

The contract employee was provided specific knowledge about the applicable position in 

advance of the general public. The contract employee actively participated in key aspects 

of the hiring action such as preparing the Position Description and developing questions 

to be answered during the application/interview process for the position for which the 

contract employee was ultimately hired; and,

A memorandum justifying the selection of the contract employee for a Federal position 

stated that the contract employee was currently serving as the selecting official's deputy; 

was responsible for all operations in the program; and, oversaw all project 

implementation for the program.

When interviewed, the selecting official told us that the contract employee was not pre-selected 

and that a number of other candidates were considered. The selecting official ultimately 

acknowledged that the contract employee's involvement in the hiring action could be seen as an 

unfair advantage and expressed the view that, in hindsight, the contract employee should have 

been excluded from any action associated with the hiring process.

Based on the fact pattern in this case, we are referring the matter regarding pre-selection to the 

U. S. Special Counsel (Special Counsel) for a determination as to whether prohibited personnel 

practices should be prosecuted under the Special Counsel's authority. Additionally, 

complainants and other witnesses raised concerns about the selection of other contractor 

employees by the same selecting official for Federal positions within EERE. We are forwarding 

these matters to the Special Counsel as well.
3

Contract Employee Performing Inherently Governmental Duties

We found conflicting evidence regarding complaints that the contract employee improperly 

performed inherently governmental duties. As with the selection process, we identified factors 

that contributed to a belief by the complainants and others that the contract employee was 

effectively functioning as a Federal employee. In particular, our inquiry established that the 

contract employee was actively involved in the management of the applicable EERE program by 

participating in high level management meetings where policy and strategic decisions were 

made; assisting in the development and implementation of policy-oriented program goals; 

participating actively and intimately in the hiring process for new employees; and, developing 

performance standards for Federal employees. We placed substantial weight on the fact that the 

individual was commonly referred to as the "deputy" by the Acting Program Manager, as noted 

previously. All-in-all, these circumstances gave rise to a belief held by many career EERE 

employees that the contract employee was performing inherently governmental duties.

In responding to our interview questions, various witnesses, including members of EERE senior 

management, expressed a very different view. They asserted that the contract employee was 

providing consulting services and all program decisions were made by Federal employees; tasks 

performed by the contract employee were ultimately approved by a Federal employee; and, any 

"direction" the contract employee communicated to Federal employees was from the Acting 

Program Manager rather than the contract employee. However, it was clear that the extent of the 

contract employee's responsibilities contributed to the perception that the complainants and 

witnesses had concerning inherently governmental duties.

Improper Awarding of Work to a Contractor without Competition

We were unable to substantiate the allegation that work was improperly awarded to a contractor 

without competition. Evidence disclosed that the questioned work was awarded to a current 

contractor through the modification of existing task orders. The work appeared to be within the 

scope of the existing contract and the decision to task the work to the contractor was a matter 

within management's discretion. We did, however, identify an internal control weakness that 

permitted the subject of the allegation regarding pre-selection to develop a statement of work for 

additional work that was ultimately assigned to the contractor for which the employee worked. 

This control weakness provided the opportunity for the contract employee or similarly situated 

employees to manipulate contract taskings to the financial benefit of their own employer. 

However, we did not identify any inappropriate escalation of work in this case.

Other Matters

In addition to the specific allegations addressed during our inquiry, we also found evidence of a 

disturbing practice related to Federal participation in support service contractor hiring. 

Specifically, we identified situations in which EERE officials requested contractors to hire 

specific individuals and assign them to support its contracts. In other cases, EERE requested that 

contractors hire individuals until they could be brought on as permanent Federal employees. In 

some instances, the individuals were actually hired by the support service contractor, while in 

another, the contractor resisted attempts by Federal officials to specify which employees it hired. 
4

In a May 2010 email, a procurement official, after learning of these practices, cautioned a senior 

EERE manager that staffing is the responsibility of the prime contractor and that Federal 

employees should not participate in interviewing potential contract employees. 

WORK ATMOSPHERE

Our inquiry focused on identifying the facts surrounding specific allegations concerning an 

individual contract employee and contractor. In doing so, we were mindful that these activities 

occurred during EERE's early efforts to implement the Recovery Act. The Recovery Act 

significantly expanded EERE programs and funding, resulting in the need to immediately hire a 

large number of Federal employees and expand the use of contractors in implementing EERE's 

programs. Several witnesses discussed the pressure EERE was under to implement the Recovery 

Act programs and expressed their belief that this pressure led to the Program's reliance on less 

than optimal Federal hiring and contracting practices. Additionally, the selecting official in this 

case was new to the Federal government and claimed to be unfamiliar with Federal rules and 

regulations for hiring of employees.

Because of the significance of the Recovery Act and the relevance of the Department's hiring and 

contracting practices to the success of the Recovery Act's energy components, the Department 

should take prompt action to ensure that the issues raised in our report are thoroughly reviewed 

and addressed. We have made several recommendations designed to help improve the integrity 

of the hiring and contractor management process. Due to the nature of this report, it was not 

formally coordinated with management prior to release. 

This memorandum serves as a public Executive Summary of this report. The detailed results of 

this Special Inquiry have been published in a separate, non-public report to management. Any 

request for release of the details in this matter will be handled by the OIG in accordance with the 

Freedom of Information Act (Title 5, U.S.C. Section 552) and the Privacy Act (Title 5, U.S.C. 

Section 552a).

cc: Deputy Secretary

Chief of Staff

General Counsel

Chief Human Capital Officer

Director, Office of Management
IG Report No. OAS-SR-10-04

CUSTOMER RESPONSE FORM

The Office of Inspector General has a continuing interest in improving the usefulness of its 

products. We wish to make our reports as responsive as possible to our customers' requirements, 

and, therefore, ask that you consider sharing your thoughts with us. On the back of this form, 

you may suggest improvements to enhance the effectiveness of future reports. Please include 

answers to the following questions if they are applicable to you:

1. What additional background information about the selection, scheduling, scope, or 

procedures of the inspection would have been helpful to the reader in understanding this 

report?

2. What additional information related to findings and recommendations could have been 

included in the report to assist management in implementing corrective actions?

3. What format, stylistic, or organizational changes might have made this report's overall 

message more clear to the reader?

4. What additional actions could the Office of Inspector General have taken on the issues 

discussed in this report which would have been helpful?

5. Please include your name and telephone number so that we may contact you should we have 

any questions about your comments.

Name Date 

Telephone Organization 

When you have completed this form, you may telefax it to the Office of Inspector General at 

(202) 586-0948, or you may mail it to:

Office of Inspector General (IG-1)

Department of Energy

Washington, DC 20585

ATTN: Customer Relations

If you wish to discuss this report or your comments with a staff member of the Office of 

Inspector General, please contact Felicia Jones (202) 586-7013.
This page intentionally left blank.
The Office of Inspector General wants to make the distribution of its reports as customer friendly and cost

effective as possible. Therefore, this report will be available electronically through the Internet at the 

following address:

U.S. Department of Energy Office of Inspector General Home Page

http://www.ig.energy.gov

Your comments would be appreciated and can be provided on the Customer Response Form

attached to the report.