DOE LOAN 

GUARANTEES

Further Actions Are 

Needed to Improve 

Tracking and Review 

of Applications

Report to Congressional Committees

March 2012

GAO-12-157

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-157, a report to 

congressional committees

March 2012 

DOE LOAN GUARANTEES

Further Actions Are Needed to Improve Tracking 

and Review of Applications

Why GAO Did This Study

The Department of Energy’s (DOE) 

Loan Guarantee Program (LGP) was 

created by section 1703 of the Energy 

Policy Act of 2005 to guarantee loans 

for innovative energy projects. 

Currently, DOE is authorized to make 

up to $34 billion in section 1703 loan 

guarantees. In February 2009, the 

American Recovery and Reinvestment 

Act added section 1705, making 

certain commercial technologies that 

could start construction by September 

30, 2011, eligible for loan guarantees. 

It provided $6 billion in appropriations 

that were later reduced by transfer and 

rescission to $2.5 billion. The funds 

could cover DOE’s costs for an 

estimated $18 billion in additional loan 

guarantees. GAO has an ongoing 

mandate to review the program’s

implementation. Because of concerns 

raised in prior work, GAO assessed (1) 

the status of the applications to the 

LGP and (2) for loans that the LGP has

committed to, or made, the extent to 

which the program has adhered to its 

process for reviewing applications. 

GAO analyzed relevant legislation, 

regulations, and guidance; prior audits; 

and LGP data, documents, and 

applications. GAO also interviewed 

DOE officials and private lenders with 

experience in energy project lending.

What GAO Recommends

GAO recommends that the Secretary 

of Energy establish a timetable for, and 

fully implement, a consolidated system 

to provide information on LGP 

applications and reviews and regularly 

update program policies and 

procedures. DOE disagreed with the 

first of GAO’s three recommendations; 

GAO continues to believe that a 

consolidated system would enhance 

program management.

What GAO Found

The Department of Energy (DOE) has made $15 billion in loan guarantees and 

conditionally committed to an additional $15 billion, but the program does not 

have the consolidated data on application status needed to facilitate efficient 

management and program oversight. For the 460 applications to the Loan 

Guarantee Program (LGP), DOE has made loan guarantees for 7 percent and 

committed to an additional 2 percent. The time the LGP took to review loan 

applications decreased over the course of the program, according to GAO’s 

analysis of LGP data. However, when GAO requested data from the LGP on the 

status of these applications, the LGP did not have consolidated data readily 

available and had to assemble these data over several months from various 

sources. Without consolidated data on applicants, LGP managers do not have 

readily accessible information that would facilitate more efficient program 

management, and LGP staff may not be able to identify weaknesses, if any, in 

the program’s application review process and approval procedures. Furthermore, 

because it took months to assemble the data required for GAO’s review, it is also 

clear that the data were not readily available to conduct timely oversight of the 

program. LGP officials have acknowledged the need for a consolidated system 

and said that the program has begun developing a comprehensive business 

management system that could also be used to track the status of LGP 

applications. However, the LGP has not committed to a timetable to fully 

implement this system. 

The LGP adhered to most of its established process for reviewing applications, 

but its actual process differed from its established process at least once on 11 of 

the 13 applications GAO reviewed. Private lenders who finance energy projects 

that GAO interviewed found that the LGP’s established review process was 

generally as stringent as or more stringent than their own. However, GAO found 

that the reviews that the LGP conducted sometimes differed from its established 

process in that, for example, actual reviews skipped applicable review steps. In 

other cases, GAO could not determine whether the LGP had performed some 

established review steps because of poor documentation. Omitting or poorly 

documenting reviews reduces the LGP’s assurance that it has treated applicants 

consistently and equitably and, in some cases, may affect the LGP’s ability to 

fully assess and mitigate project risks. Furthermore, the absence of adequate 

documentation may make it difficult for DOE to defend its decisions on loan 

guarantees as sound and fair if it is questioned about the justification for and 

equity of those decisions. One cause of the differences between established and 

actual processes was that, according to LGP staff, they were following 

procedures that had been revised but were not yet updated in the credit policies 

and procedures manual, which governs much of the LGP’s established review 

process. In particular, the version of the manual in use at the time of GAO’s 

review was dated March 5, 2009, even though the manual states it was meant to 

be updated at least annually, and more frequently as needed. The updated 

manual dated October 6, 2011, addresses many of the differences GAO

identified. Officials also demonstrated that LGP had taken steps to address the

documentation issues by beginning to implement its new document management 

system. However, by the close of GAO’s review, LGP could not provide sufficient 

documentation to resolve the issues identified in the review. 

View GAO-12-157. For more information, 

contact Frank Rusco at (202) 512-3841 or 

ruscof@gao.gov.
Page i GAO-12-157 DOE Loan Guarantees

Letter 1 

Background 4

DOE Has Made $15.1 Billion in Loan Guarantees but Does Not 

Maintain Consolidated Data on Status of Applications 11

The LGP Did Not Always Adhere to Its Review Process, Which May 

Pose Risks and Result in Inconsistent Treatment 21

Conclusions 30

Recommendations for Executive Action 32

Agency Comments and Our Evaluation 32

Appendix I Objectives, Scope, and Methodology 34

Appendix II Tables of Loan Guarantees Conditionally Committed or Closed 37

Appendix III Key Tasks in the LGP’s Review and Approval Process for Loan 

Guarantee Applications 40

Appendix IV Comments from the Department of Energy 45

Appendix V GAO Contact and Staff Acknowledgments 51

Related GAO Products 52

Tables

Table 1: DOE Solicitations for Applications to the LGP 7

Table 2: Number of Applications, Median and Total Loan 

Guarantees Requested, Total Conditionally Committed 

Loan Guarantees, and Total Closed Loan Guarantees, by 

Solicitation, through September 30, 2011 12

Table 3: Number (and Percentage) of Applications in Each Review 

Stage, by Solicitation, as of September 30, 2011 15

Contents
Page ii GAO-12-157 DOE Loan Guarantees

Table 4: Number of Applications and Median Number of Days 

Elapsed During Each Review Stage and Overall, by 

Solicitation 16

Table 5: LGP’s Adherence to Its Review Process for 13 Applications 

with Closed or Conditionally Committed Loan Guarantees, 

by Review Stage and Step 23

Table 6: Documentation Deficiencies Identified During 13 

Application Reviews 28

Table 7: Section 1703 Applications Reaching Conditional 

Commitment as of September 30, 2011, by Solicitation 37

Table 8: Section 1705-Eligible Applications Reaching Conditional 

Commitment as of September 30, 2011, by Solicitation 37

Table 9: Section 1705-Eligible Applications Reaching Closing as of 

September 30, 2011, By Solicitation 38

Table 10: Key Review and Approval Tasks for Loan Guarantee 

Applications, by Review Stage 40

Figures

Figure 1: Overview of LGP Review Process for Applications 

through the Intake, Due Diligence, and Conditional 

Commitment to Closing Stages 9

Figure 2: Amount of Loan Guarantees Requested in 460 

Applications by Energy Technology Category, as of July 

29, 2011 13
Page iii GAO-12-157 DOE Loan Guarantees

Abbreviations 

CRB Credit Review Board

DOE Department of Energy

EERE Energy Efficiency, Renewable Energy

FIPP Financial Institution Partnership Program

LGP Loan Guarantee Program

LPO Loan Programs Office

OMB Office of Management and Budget

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-12-157 DOE Loan Guarantees

United States Government Accountability Office

Washington, DC 20548

March 12, 2012

The Honorable Dianne Feinstein

Chair

The Honorable Lamar Alexander

Ranking Member

Subcommittee on Energy and Water Development

Committee on Appropriations

United States Senate

The Honorable Rodney P. Frelinghuysen

Chairman

The Honorable Peter J. Visclosky

Ranking Member

Subcommittee on Energy and Water Development, 

 and Related Agencies

Committee on Appropriations

House of Representatives

The Department of Energy’s (DOE) loan guarantee program (LGP) is 

currently authorized to issue loan guarantees worth up to $34 billion for 

certain types of energy projects that need affordable financing.1

 

1

The amount of authority does not include approximately $20 billion that expired when 

authority for a portion of the program expired on September 30, 2011.

Federal 

loan guarantee programs such as the LGP can help companies obtain 

such financing because the federal government agrees to reimburse the 

lender for the guaranteed amount if a borrower defaults. As directed by 

section 1703 of the Energy Policy Act of 2005, the LGP originally focused 

on projects that use new or significantly improved energy technologies 

and avoid, reduce, or sequester emissions of air pollutants or man-made 

greenhouse gases. In February 2009, Congress expanded the scope of 

the LGP in the American Recovery and Reinvestment Act (Recovery Act),

by adding section 1705 to the Energy Policy Act, which provided funding 

and extended the program to include projects that use commercial energy 

technology that employs renewable energy systems, electric power 

transmission systems, or leading-edge biofuels that meet certain criteria. 

The LGP has issued nine calls for applications—known as solicitations—

each of which covers particular types of energy technology.

 
 

Page 2 GAO-12-157 DOE Loan Guarantees

According to DOE officials, the LGP is important to both develop new 

energy technologies for commercial use and make some commercial 

projects possible, thereby creating jobs and new energy supplies. 

However, loan guarantee programs can also expose the government to 

substantial financial risks. For example, a borrower could default on a 

federally guaranteed loan, leaving taxpayers to pay for the loss. In the 

past, we also found problems with federal loan guarantee programs that 

occurred in part because agencies did not exercise sufficient due 

diligence. Due diligence is the review process by which a lender identifies 

and mitigates potential problems or risks with a project before the lender 

makes a loan or loan guarantee. Recently, the filing of bankruptcy 

petitions by two recipients of DOE loan guarantees have raised concerns 

that DOE may not be sufficiently identifying and mitigating the risk of a 

loan default.

GAO has an ongoing mandate under the 2007 Revised Continuing 

Appropriations Resolution to review DOE’s execution of the LGP and to 

report its findings to the House and Senate Committees on 

Appropriations. This is the sixth time we have reported on this program.2

We have raised concerns in our prior work about the limitations of the 

portion of the program conducted under section 1703 in attracting 

financially viable projects representing the full range of targeted 

technologies.3 In addition, we previously reported, among other things, 

that the LGP treated applicants inconsistently and recommended that 

DOE treat applicants consistently or clearly establish the conditions that 

would warrant disparate treatment.4

 

2

See our list of related products on the LGP at the end of this report.

Because of questions regarding 

inconsistent treatment of applicants and DOE’s review process that we 

raised in the 2010 report, our objectives for this report were to determine 

(1) the status of the applications to the LGP’s nine solicitations and (2) the 

extent to which the LGP has adhered to its process for reviewing

applications for loans that the LGP has committed to or closed.

3

GAO, Department of Energy: New Loan Guarantee Program Should Complete Activities 

Necessary for Effective and Accountable Program Management, GAO-08-750

(Washington, D.C.: July 7, 2008). 

4

GAO-08-750; GAO, Department of Energy: Further Actions Are Needed to Improve 

DOE’s Ability to Evaluate and Implement the Loan Guarantee Program, GAO-10-627

(Washington, D.C.: July 12, 2010). 
 

Page 3 GAO-12-157 DOE Loan Guarantees

To determine the status of applications to the LGP’s nine solicitations, we 

reviewed DOE and LGP documents on the establishment and operation 

of the program and analyzed the LGP’s available data on the applications 

received and their current status. Because the LGP did not maintain 

consolidated information on application status, it had to assemble data 

from various sources for all of the applications as of September 30, 2011. 

To assist in this effort, we tailored a data request to collect data on the 

status of all 460 applications to the program in consultation with agency 

officials. These data were to provide a current snapshot of the program by 

solicitation and allow analysis of various characteristics. LGP staff familiar 

with each solicitation completed the spreadsheets, and these 

spreadsheets were reviewed by managers before they were forwarded to 

GAO. We assessed the reliability of the data the LGP provided by 

reviewing it, comparing it to other sources and following up with the 

agency to clarify questions and inconsistencies, and obtain missing data. 

Once the data were all collected, we found them to be sufficiently reliable 

for our purposes. This process enabled us to develop up-to-date 

programwide information on the status of applications. The LGP staff 

updated its March 2011 applicant status data as of July 29, 2011, and we 

obtained additional data on the conditional commitments and closings 

made by the September 30, 2011, expiration of the section 1705 authority 

for loan guarantees with a credit subsidy. In cases where multiple 

applications were submitted for a single project, we considered each to 

be a single application for purposes of this report. In addition, we met with 

the LGP’s management and staff from each of the divisions involved with 

the review process. To determine the extent to which the LGP has 

adhered to its process for reviewing applications for loans that it has 

committed to or closed, we identified the key steps in the review process 

by analyzing the laws, regulations, policies, guidance, and solicitations for 

the program. We verified these key steps in interviews with LGP officials. 

We identified the 13 applications that had received conditional 

commitments or had closed by December 31, 2010.5

 

5

Three additional applications had either reached conditional commitment or closed during 

this period. We excluded these applications from our review because the LGP’s review 

process for these applications was substantially different. A conditional commitment is a 

commitment by DOE to issue a loan guarantee if the applicant satisfies specific 

requirements. The Secretary of Energy has the discretion to cancel a conditional 

commitment at any time for any reason prior to the issuance of a loan guarantee.

We then requested 

documentation from the LGP of the key review steps it conducted for 

selected applications. We initially requested this documentation for a 
 

Page 4 GAO-12-157 DOE Loan Guarantees

nonprobability sample of 6 applications representing a range of 

solicitations and project types.6 We also collected more limited 

information on the 7 remaining applications to which DOE had 

conditionally committed to issue a loan guarantee by the end of calendar 

year 2010. For these 7, we reviewed certain key steps for which we found 

differences from the LGP’s established process during our review of the 

initial 6 applications. We did not evaluate the quality of the LGP’s 

analyses supporting the completion of these steps. The applications we 

reviewed were processed by the LGP under the policies and procedures 

that were in place through September 30, 2011.7

We conducted this performance audit from September 2010 to February 

2012 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

We also interviewed 

seven private lenders with experience financing energy sector projects to 

gain insights on the comparability of the LGP and private sector review 

processes. A more detailed discussion of our objectives, scope, and 

methodology is presented in appendix I.

DOE’s LGP was designed to address the fundamental impediment for 

investors that stems from the high risks of clean energy projects, 

including technology risk—the risk that the new technology will not 

perform as expected—and execution risk—the risk that the borrower will 

not perform as expected. Companies can face obstacles in securing 

enough affordable financing to survive the “valley of death” between 

developing innovative technologies and commercializing them. Because 

the risks that lenders must assume to support new technologies can put 

private financing out of reach, companies may not be able to 

commercialize innovative technologies without the federal government’s 

 

6

Because this was a nonprobability sample, we cannot generalize what we found to all 

applications, but we chose these applications to include a variety of project types and for 

different solicitations.

7

Department of Energy, Title XVII Of The Energy Policy Act Of 2005 Loan Guarantee 

Program, Credit Policies and Procedures (Washington, D.C., Mar. 5, 2009).

Background 
 

Page 5 GAO-12-157 DOE Loan Guarantees

financial support. According to the DOE loan program’s Executive 

Director, DOE loan guarantees lower the cost of capital for projects using 

innovative energy technologies, making them more competitive with 

conventional technologies and thus more attractive to lenders and equity 

investors. Moreover, according to the DOE loan programs Executive 

Director, the program takes advantage of DOE’s expertise in analyzing 

the technical aspects of proposed projects, which can be difficult for 

private sector lenders without that expertise.

Until February 2009, the LGP was working exclusively under section 1703 

of the Energy Policy Act of 2005, which authorized loan guarantees for 

new or innovative energy technologies that had not yet been 

commercialized. Congress had authorized DOE to guarantee 

approximately $34 billion in section 1703 loans by fiscal year 2009, after 

accounting for rescissions, but it did not appropriate funds to pay the 

“credit subsidy costs” of these guarantees. For section 1703 loan 

guarantees, each applicant was to pay the credit subsidy cost of its own 

project. These costs are defined as the estimated long-term cost, in net 

present value terms, over the entire period the loans are outstanding to 

cover interest subsidies, defaults, and delinquencies (not including 

administrative costs). Under the Federal Credit Reform Act of 1990, the 

credit subsidy cost for any guaranteed loan must be provided prior to a 

loan guarantee commitment.

In past reports, we found several issues with the LGP’s implementation of 

section 1703. For example, in our July 2008 report, we stated that risks 

inherent to the program make it difficult for DOE to estimate credit 

subsidy costs it charges to borrowers.8

 

8

If DOE underestimates these 

costs, taxpayers will ultimately bear the costs of defaults or other

shortfalls not covered by the borrowers’ payments into a cost-subsidy 

pool that is to cover section 1703’s program-wide costs of default. In 

addition, we reported that, to the extent that certain types of projects or 

technologies are more likely than others to have fees that are too high to 

remain economically viable, the projects that do accept guarantees may 

be more heavily weighted toward lower-risk technologies and may not 

represent the full range of technologies targeted by the section 1703 

program.

GAO-08-750. 
 

Page 6 GAO-12-157 DOE Loan Guarantees

In February 2009, the Recovery Act amended the Energy Policy Act of 

2005, authorizing the LGP to guarantee loans under section 1705. This 

section also provided $2.5 billion to pay applicants’ credit subsidy costs.9

This credit subsidy funding was available only to projects that began 

construction by September 30, 2011, among other requirements.10 DOE 

estimated that the funding would be sufficient to provide about $18 billion 

in guarantees under section 1705. Section 1705 authorized guarantees 

for commercial energy projects that employ renewable energy systems, 

electric power transmission systems, or leading-edge biofuels that meet 

certain criteria. Some of these are the same types of projects eligible 

under section 1703, which authorizes guarantees only for projects that 

use new or significantly improved technologies.11

 

9

Pub. L. No. 111-5, Div. A, Title IV (Feb. 17, 2009). Congress originally appropriated 

nearly $6 billion to pay the credit subsidy costs of projects supported under section 1705, 

with the limitation that funding to pay the credit subsidy costs of leading-edge biofuel 

projects eligible under this section would not exceed $500 million. Congress later 

authorized the President to transfer up to $2 billion of the nearly $6 billion to expand the 

“Cash for Clunkers” program. Pub. L. No. 111-47 (Aug. 7, 2009). The $2 billion was 

transferred to the Department of Transportation, leaving nearly $4 billion to cover credit 

subsidy costs of projects supported under section 1705. On August 10, 2010, Pub. L. No. 

111-226 rescinded an additional $1.5 billion from the loan guarantee appropriation to pay 

for education-related jobs, Medicaid and other initiatives, further reducing funding 

available to $2.5 billion.

Consequently, many 

projects that had applied under section 1703 became eligible to have their 

credit subsidy costs paid under section 1705.

10Other requirements include that the workers employed on the project, including 

contractors or subcontractors, will be paid wages not less than prevailing on similar work 

in the locality in accordance with the Davis-Bacon Act. The act limited loan guarantees 

under section 1705 to the following categories of projects: (1) renewable energy systems, 

including incremental hydropower, that generate electricity or thermal energy, and facilities 

that manufacture related components; (2) electric power transmission systems, including 

upgrading and reconductoring projects; and (3) leading-edge biofuel projects that will use 

technologies performing at the pilot or demonstration scale that the Secretary determines 

are likely to become commercial technologies and will produce transportation fuels that 

substantially reduce life-cycle greenhouse gas emissions compared with other 

transportation fuels.

11New or significantly improved technology means a technology concerned with the 

production, consumption, or transportation of energy and that is not a commercial 

technology, and that has either: (1) only recently been developed, discovered, or learned; 

or (2) involves or constitutes one or more meaningful and important improvements in 

productivity or value, in comparison to commercial technologies in use in the United 

States at the time the term sheet is issued.
 

Page 7 GAO-12-157 DOE Loan Guarantees

Because authority for the section 1705 loan guarantees expired on 

September 30, 2011, section 1703 is now the only remaining authority for 

the LGP. In April 2011, Congress appropriated $170 million to pay credit 

subsidy costs for section 1703 projects. Previously, these costs were to 

be paid exclusively by the applicants and were not federally funded. 

Congress also authorized DOE to extend eligibility under section 1703 to 

certain projects that had applied under section 1705 but did not receive a 

loan guarantee prior to the September 30, 2011, deadline.12

DOE has issued nine calls for applications to the LGP. Each of these nine 

“solicitations” has specified the energy technologies it targets and 

provided criteria for the LGP to determine project eligibility and the 

likelihood of applicants repaying their loans (see table 1).

Table 1: DOE Solicitations for Applications to the LGP

Name of solicitation

Date issued or 

updated

Description of eligible energy 

technology

Mixed 06 8/8/06 All technologies except for nuclear 

facilities and oil refineries.

Nuclear Front-End 6/30/08 Facilities for new uranium 

enrichment capacity and 

distribution.

Nuclear Power 6/30/08 Nuclear power facilities.

Energy efficiency and 

renewable energy or 

EERE 08 

6/30/08 Innovative energy efficiency, 

renewable energy, and advanced 

energy transmission and 

distribution technologies.

Fossil 9/22/08 Coal-based power generation and 

industrial gasification facilities that 

incorporate carbon capture and 

sequestration or other beneficial 

uses of carbon and for advanced 

coal gasification facilities.

Energy efficiency and 

renewable energy or EERE 

09 

7/29/09 Innovating energy efficiency, 

renewable energy, and advanced 

energy transmission and 

distribution technologies.

Transmission 7/29/09 Electric power transmission 

infrastructure investment projects.

 

12Department of Defense and Full-Year Continuing Appropriations Act, 2011, Pub. L No. 

112-10.
 

Page 8 GAO-12-157 DOE Loan Guarantees

Name of solicitation

Date issued or 

updated

Description of eligible energy 

technology

Financial Institution 

Partnership Program (FIPP)

10/7/09 Renewable energy generation 

projects using commercial 

technology.

Manufacturing 8/10/10 Manufacture of renewable energy 

systems and components using 

commercial technology.

Source: DOE.

To help ensure that that these criteria were applied consistently and that 

each selected project provided a reasonable prospect of repayment, in 

March 2009, the LGP issued a credit policies and procedures manual for 

the program, outlining its policies and procedures for reviewing loan 

guarantee applications. As shown in figure 1, this review process is 

divided into three stages: intake, due diligence, and “conditional 

commitment to closing.” We use the term “review process” to refer to the 

entire process.
 

Page 9 GAO-12-157 DOE Loan Guarantees

Figure 1: Overview of LGP Review Process for Applications through the Intake, Due Diligence, and Conditional Commitment 

to Closing Stages

During the intake stage, the LGP assesses applications in a two-part 

process for most applicants. In part I, the LGP considers a project’s 

eligibility based on the requirements in the solicitation and relevant laws 

and regulations. Nuclear solicitation applications are also evaluated 

against programmatic, technical, and financial criteria during the part I 

review. Based on the LGP’s eligibility determination during part I review, 

qualifying applicants are invited to submit a part II application. Generally, 

LGP evaluates this application against programmatic, technical, and 

financial criteria to form a basis for ranking applications within each 

solicitation.13

 

13Under the FIPP solicitation, applicants must apply to a private “lead lender,” which 

initially evaluates the proposed loan guarantee for credit approval and decides whether to 

apply to DOE for the loan guarantee.

Based on these initial rankings, the LGP selects certain 
 

Page 10 GAO-12-157 DOE Loan Guarantees

applications for the due diligence stage. During due diligence, the LGP 

performs a detailed examination of the project’s financial, technical, legal, 

and other qualifications to ensure that the LGP has identified and 

mitigated any risks that might affect the applicant’s ability to repay the 

loan guarantee. Key to identifying risks during due diligence are required 

reports by independent consultants on the technical and legal aspects of 

the project and others, such as marketing reports, that the LGP uses 

when needed. The LGP also negotiates the terms of the loan guarantee 

with the applicant during due diligence.

The proposed loan guarantee transaction is then submitted for review 

and/or approval by the following entities:

• DOE’s Credit Committee, consisting of senior executive service DOE 

officials, most of whom are not part of the LGP.

• DOE’s Credit Review Board (CRB), which consists of senior-level 

officials such as the deputy and undersecretaries of Energy.

• The Office of Management and Budget (OMB), which reviews the 

LGP’s estimated credit subsidy range for each transaction.

• Department of the Treasury.

• The Secretary of Energy, who has final approval authority.

Following the Secretary’s approval, the LGP offers the applicant a 

“conditional commitment” for a loan guarantee. If the applicant signs and 

returns the conditional commitment offer with the required fee, the offer 

becomes a conditional commitment, contingent on the applicant meeting 

conditions prior to closing. During the conditional commitment to closing 

stage, LGP officials and outside counsel prepare the final financing 

documents and ensure that the applicant has met all conditions required 

for closing, and the LGP obtains formal approval of the final credit subsidy 

cost from OMB. Prior to closing, applications may be rejected by the LGP. 

Similarly, applicants can withdraw at any point during the review process. 

Once these steps have been completed, the LGP “closes” the loan 

guarantee and, subject to the terms and conditions of the loan guarantee 

agreement, begins to disburse funds to the project. For further detail on 

the review process, see appendix III.
 

Page 11 GAO-12-157 DOE Loan Guarantees

For 460 applications to the LGP from its nine solicitations, DOE has made 

$15.1 billion in loan guarantees and conditionally committed to an 

additional $15 billion, representing $30 billion of the $34 billion in loan 

guarantees authorized for the LGP.14 However, when we requested data 

from the LGP on the status of the applications to its nine solicitations, the 

LGP did not have consolidated data readily available but had to assemble 

them from various sources.

As of September 30, 2011, the LGP had received 460 applications and 

made (closed) $15.1 billion in loan guarantees in response to 30 

applications (7 percent of all applications), all under section 1705. It had 

not closed any guarantees under section 1703. In addition, the LGP had 

conditionally committed another $15 billion for 10 more applications (2 

percent of all applications)—4 under section 1705 and 6 under section 

1703. The closed loan guarantees obligated $1.9 billion of the $2.5 billion 

in credit subsidy appropriations funded by the Recovery Act for section 

1705, leaving $600 million of the funds unused before the program 

expired. For section 1703 credit subsidy costs, the $170 million that 

Congress appropriated in April 2011 to pay such costs is available, but it 

may not cover all such costs because the legislation makes the funds 

available only for renewable energy or efficient end-use energy 

technologies.15

The median loan guarantee requested for all applications was $141 

million. Applications for nuclear power projects requested significantly 

larger loan amounts—a median of $7 billion—and requested the largest 

Applicants whose projects’ credit subsidy costs are not 

covered by the appropriation must pay their own credit subsidy costs. To 

date, credit subsidy costs for loan guarantees that DOE has closed have, 

on average, been about 12.5 percent of the guaranteed loan amounts.

 

14The amount of authority does not include approximately $20 billion that expired when 

authority for a portion of the program expired on September 30, 2011.

15The legislation also made some section 1705 projects submitted to DOE by Feb. 24, 

2011, eligible for these funds, but nuclear projects are not included among eligible 

projects.

DOE Has Made $15.1 

Billion in Loan 

Guarantees but Does 

Not Maintain 

Consolidated Data on 

Status of Applications

DOE Has Made $15.1 

Billion in Loan Guarantees 

and Committed to Another 

$15 Billion
 

Page 12 GAO-12-157 DOE Loan Guarantees 

total dollar amount by type of technology—$117 billion.16 Applications for 

energy efficiency and renewable energy solicitations requested the 

second-largest dollar amount—$74 billion. Table 2 provides further details 

on the applications by solicitation and the resulting closed loan 

guarantees and conditional commitments. Appendix II provides further 

details on the individual committed and closed loan guarantees. 

Table 2: Number of Applications, Median and Total Loan Guarantees Requested, Total Conditionally Committed Loan 

Guarantees, and Total Closed Loan Guarantees, by Solicitation, through September 30, 2011 

Source: GAO analysis of DOE data provided as of July 29, 2011, and updated for new commitments or closings, as of September 30,

2011. 

Note: Totals may not add due to rounding. 

a

Fifteen of these guarantees went to projects that applied under section 1703 but were later deemed 

eligible for and received funding under section 1705. 

 

16The minimum loan guarantee requested for all applications was $0, and the maximum 

loan guarantee requested was $12 billion, both for nuclear power projects. The $0 loan 

guarantee request was for one portion of a jointly sponsored nuclear power project. The 

joint sponsor of the nuclear power project requested approximately $8 billion in loan 

guarantees. 

Dollars in millions 

Solicitation, issue date 

Number 

of 

applications

Median loan 

guarantee 

requested

Total loan 

guarantee 

requested

Total conditionally 

committed loan 

guarantee 

Total closed 

loan 

guaranteea

Mixed 06, 8/8/06 140 $60b $31,018b $72e $1,203

Energy Efficiency and 

Renewable Energy 08, 

6/30/08c

 68 163 21,265 261e 3,381

Nuclear Front-End, 6/30/08 2 2,000 4,000 2,000e 0

Nuclear Power, 6/30/08 19 6,969 117,363 8,326e 0

Fossil, 9/22/08 8 2,072 17,145 0 0

Energy Efficiency and 

Renewable Energy 09, 7/29/09 168 150 52,915 2,105 5,601

Transmission, 7/29/09 12 660 11,586 0 343

Financial Institution 

Partnership Program, 10/7/09 37 146 11,057 2,274 4,516

Manufacturing, 8/10/10 6 98 1,022 0 0

Total 460 $141d $267,372 $15,038e $15,044
 

Page 13 GAO-12-157 DOE Loan Guarantees

b

The median and total loan guarantee amounts reflect the reported loan amounts for 134 of the 140 

Mixed 06 applications because DOE said 6 applicants did not specify the amount of their loan 

guarantee request.

c

This row includes four applications that LGP does not consider to be official submissions since the 

applicants did not pay the application fee. However, we included these applications in our analysis 

because the LGP included them in the application data they provided to us, and these applications 

demonstrate the level of interest in the solicitation.

d

This amount is the median loan guarantee amount requested across all solicitations. The minimum 

loan guarantee requested for all applications was $0, and the maximum loan guarantee requested 

was $12 billion, both for nuclear power projects.

e

For all 460 LGP applications submitted, figure 2 shows the total loan 

guarantee amounts requested by type of energy technology.

Of the $15 billion in committed loan guarantees, applications under the section 1703 authority to 

these solicitations account for $10.4 billion or 71 percent. See appendix II for a list of these committed 

loan guarantees. 

Figure 2: Amount of Loan Guarantees Requested in 460 Applications by Energy 

Technology Category, as of July 29, 2011
 

Page 14 GAO-12-157 DOE Loan Guarantees

Note: For this analysis, we used simplified energy technology categories based on DOE’s data. The 

figure omits one application for which the LGP did not report the type of energy technology employed 

by the proposed project or the amount requested for the project. It also omits requests that DOE 

listed as using “other” energy technology, which totaled about 0.01 percent of the amount requested.

Table 3 provides an overview, as of September 30, 2011, of the status of 

the 460 loan guarantee applications that the LGP received in response to 

its nine solicitations. Of the 460 applications, 66 were still in various 

stages of the approval process (intake and due diligence), 40 had 

received conditional commitment or were closed, and 354 had been 

withdrawn or rejected. DOE documents list a wide range of reasons for 

application withdrawals, including inability to submit application material in 

a timely manner, inability to secure feedstock, project faced many 

hurdles, applicant did not pursue project, and applicant switched to 

another program. Solicitations that primarily targeted efficiency and 

renewable energy received the most applications, while those targeting 

nuclear front-end technologies (for the beginning of the nuclear fuel 

cycle), manufacturing, and fossil fuels received the fewest. The rejection 

rate was highest for applications submitted for two of the earlier 

solicitations and much lower for DOE’s FIPP,17 a more recent solicitation 

involving applications sponsored by private financial institutions. Since we 

began our review, two of the borrowers with closed loan guarantees have 

declared bankruptcy—Solyndra, Inc., with a $535 million loan guarantee 

for manufacturing cylindrical solar cells, and Beacon Power Corporation, 

with a $43 million loan guarantee for an energy storage technology.

 

17FIPP refers to the federal loan guarantees for commercial technology renewable energy 

generation projects under the DOE LGP solicitation number DE-FOA-0000166, dated 

October 7, 2009. This solicitation is unique because it is the only one inviting private 

lenders to share due diligence activities for identifying and mitigating risk and finance a 

portion of total project costs.
 

Page 15 GAO-12-157 DOE Loan Guarantees

Table 3: Number (and Percentage) of Applications in Each Review Stage, by Solicitation, as of September 30, 2011 

Number (percentage) of applications by stage

Solicitation, issue date

Number of 

applications Intake

Due 

diligence

Conditional 

commitment

Guarantees 

made 

(closed) Withdrawn Rejected

Mixed 06, 8/8/06 140 0(0) 3(2) 1(1) 4(3) 8(6) 124(89)

EERE 08, 6/30/08a 68 0(0) 7(10) 2(3) 8(12) 6(9) 45(66)

Nuclear Front End, 6/30/08 2 0(0) 1(50) 1(50) 0(0) 0(0) 0(0)

Nuclear Power, 6/30/08 19 5(26) 4(21) 3(16) 0(0) 7(37) 0(0)

Fossil, 9/22/08 8 0(0) 4(50) 0(0) 0(0) 3(38) 1(13)

EERE 09, 7/29/09 168 12(7) 21(13) 1(1) 10(6) 59(35) 65(39)

Transmission, 7/29/09 12 2(17) 0(0) 0(0) 1(8) 9(75) 0(0)

Financial Institution Partnership 

Program (FIPP), 10/7/09 37 0(0) 7(19) 2(5) 7(19) 18(49) 3(8)

Manufacturing, 8/10/10 6 0(0) 0(0) 0(0) 0(0) 3(50) 3(50)

Totalb 460 19(4) 47(10) 10(2) 30(7) c 113( 25) d 241(52)

Source: GAO analysis of DOE data provided as of July 29, 2011 and updated for new commitments or closings as of September 30,

2011.

a

This row includes four applications that the LGP does not consider to be official submissions since 

the applicants did not pay the application fee. However, we included these applications in our 

analysis because the LGP included them in the application data they provided to us, and these 

applications demonstrate the level of interest in the solicitation.

b

Percentage totals may not add to 100 due to rounding.

c

Four of these conditional commitments are under section 1705, and six are under section 1703. 

Many of the section 1703 applications have been in process since 2008 or before. See appendix II, 

tables 7 and 8.

d

The elapsed time for LGP to process loan applications generally 

decreased over the course of the program, according to LGP data. LGP 

officials noted that the elapsed time between review stages includes the 

time the LGP waited for the applicants to prepare required documents for 

each stage. The process was longest for applications to the earlier 

solicitations, issued solely under section 1703, from start to closing.

All of these closed loan guarantees are under section 1705. See appendix II, table 9.

18

 

18Some closed loan guarantees went to projects that applied under section 1703 but were 

later eligible for and received funding under section 1705.

The 

review process was shorter for applications under the four more recent 

solicitations, issued after the passage of section 1705. For example, the 
 

Page 16 GAO-12-157 DOE Loan Guarantees

first solicitation, known as Mixed 06, had the longest overall time frames 

from intake to closing—a median of 1,442 days—and the FIPP solicitation 

had the shortest time frames—a median of 422 days.19 Applications to the 

FIPP solicitation had the shortest elapsed time because this program was 

carried out in conjunction with private lenders, who conducted their own 

reviews before submitting loan applications to the LGP.20

Table 4: Number of Applications and Median Number of Days Elapsed During Each Review Stage and Overall, by Solicitation 

Table 4 shows 

the median number of days elapsed during each review stage, by 

solicitation, as of September 30, 2011.

Solicitation, issue date

Number of 

applications

Intake stage 

(parts I & II)

Due diligence 

stage

Conditional 

commitment to 

closing stage 

Overall: start

of intake to 

closing date

Rejected 

applications: 

start of intake to 

rejection date

Number of applications 

completing this stage 114 43 30 30 241

Mixed 06, 8/8/06 140 722 430 284 1,442 280

EERE 08, 6/30/08 68 a 90 338 177 696 168

Nuclear Front-End, 6/30/08 2 230 401 b b

Nuclear Power, 6/30/08

b

19 219 294 b b

Fossil, 9/22/08

b

8 199 b b 201 b

EERE 09, 7/29/09 168 194 309 114 668 70

Transmission, 7/29/09 12 178 222 115 515

FIPP, 10/7/09

b

37 73 228 92 422 94

Manufacturing, 8/10/10 6 b b b 78 b

Median number of days for all 

applications 184 294 c 127 d 660 e 277 f

Source: GAO analysis of DOE data.

g

Notes:

The number of days elapsed represents the median for the review period of those applications that 

proceeded to the next review stage. We believe the median is a better representation of the data for 

this table because it reduces the effect of some outliers that skew the data.

 

19The minimum number of days elapsed from intake to closing was 287 days, and the 

maximum number of days from intake to closing was 1,731 days.

20The LGP’s lenders to date have been the U.S. Treasury’s Federal Financing Bank and 

the private lenders under the FIPP solicitation who brought applicants to the LGP and who 

must risk at least 20 percent of the total loans for the applicants’ project.
 

Page 17 GAO-12-157 DOE Loan Guarantees

The calculations were for the status and elapsed days of the 460 applications as of September 30, 

2011.

The elapsed time between review stages includes the time the LGP waited for the applicant to 

prepare required documents for each stage.

a

This row includes four applications that the LGP does not consider to be official submissions since 

the applicants did not pay the application fee. However, we included these applications in our 

analysis because the LGP included them in the application data they provided to us, and these 

applications demonstrate the level of interest in the solicitation. Additionally, the average elapsed time 

for intake review of applications to the EERE 08 solicitation is lower because applications for certain 

types of projects were not required to follow a two-part application process.

b

No applications completed this stage for this solicitation.

c

The minimum number of days elapsed for all applications for intake was 33 and the maximum 

number of days elapsed was 740.

d

The minimum number of days elapsed for all applications for due diligence was 50 and the maximum 

number of days elapsed was 930.

e

The minimum number of days elapsed for all applications for conditional commitment to closing was 

41 and the maximum number of days elapsed was 407.

f

The minimum number of days elapsed for all applications from intake to closing was 287 and the 

maximum number of days elapsed was 1,731.

g

From September 4, 2009, to July 29, 2011—a period of nearly 2 years—

the LGP closed $5.8 billion in loan guarantees for 13 applications under 

section 1705. In the last few months before the authority for section 1705 

loan guarantees expired, the LGP accelerated its closings of section 1705 

applications that had reached the conditional commitment stage. Thus, 

over the last 2 months before the authority for section 1705 expired, the 

LPG closed an additional $9.3 billion in loan guarantees for 17 

applications under section 1705.

The minimum number of days elapsed for all applications from intake to rejection was 9 and the 

maximum number of days elapsed was 1,046.

21 The program did not use about $600 

million of the $2.5 billion that Congress appropriated to pay credit subsidy 

costs before the section 1705 authority expired, and these funds were no 

longer available for use by LGP.

 

21This effort was preceded by DOE’s announcement on May 10, 2011, that the LGP would 

focus on 18 applications that officials believed were most likely to meet all the 

requirements for closing and begin construction prior to the September 30, 2011, 

expiration date.
 

Page 18 GAO-12-157 DOE Loan Guarantees

When we requested data from the LGP on the identity of applicants, 

status, and key dates for review of all the applications to its nine 

solicitations, the LGP did not have consolidated information on application 

status readily available. Instead, it had to assemble these data from 

various sources.

To respond to our initial data request, LGP staff provided information from 

the following five sources:

• “Origination portfolio” spreadsheets, which contain information for 

applications that are in the due diligence stage of the review process. 

These spreadsheets contain identifying information, the solicitation 

applied under, commitment or closing status, type of technology, 

overall cost, proposed or closed loan amount, and expected or actual 

approval dates. Information in these spreadsheets is limited. For 

example, they do not contain dates that the applicant completed each 

stage and do not have information on applications that have been 

rejected or withdrawn.

• “Tear sheet” summaries for each application, which give current 

status and basic facts about the project and its technology, cost, 

finances, and strengths and weaknesses. Tear sheets are updated 

periodically, or as needed, but LGP officials could not easily 

consolidate them because they were kept in word processing software 

that does not have analysis or summarization capabilities.

• “Application trackers,” which are spreadsheets that give basic 

descriptive information and status of applications for some 

solicitations. LGP staff said they were maintained for most, but not all, 

solicitations.

• “Project Tracking Information” documents showing graphic 

presentations of application status summaries, loan guarantee 

amounts requested, technology type, planned processing dates, and 

procurement schedules for technical reports. These documents were 

updated manually through December 20, 2010.

• “Credit subsidy forecasts,” which are documents that track the actual 

or projected credit subsidy costs of the section 1705 projects in 

various stages of the review process and the cumulative utilization of 

credit subsidy funding.

The LGP Does Not 

Maintain Consolidated 

Information on 

Application Status
 

Page 19 GAO-12-157 DOE Loan Guarantees

LGP staff needed over 3 months to assemble the data and fully resolve 

all the errors and omissions we identified. LGP staff also made further 

changes to some of these data when we presented our analysis of the 

data to the LGP in October 2011.22 According to LGP officials in 2010, the 

program had not maintained up-to-date and consolidated documents and 

data. An LGP official said at the time that LGP considered it more 

important to process loan guarantee applications than to update records. 

Because it took months to assemble the information required for our 

review, it is also clear that the LGP could not be conducting timely 

oversight of the program. Federal regulations require that records be kept 

to facilitate an effective and accurate audit and performance evaluation. 

These regulations—along with guidance from the Department of the 

Treasury and OMB—provide that maintaining adequate and proper 

records of agency activities is essential to oversight of the management 

of public resources.23

In addition, under federal internal control standards, federal agencies are 

to employ control activities, such as accurately and promptly recording 

transactions and events to maintain their relevance and value to 

management on controlling operations and making decisions.24

 

22Errors and omissions included missing or incorrect dates associated with an applicant’s 

progression to the next stage of LGP review; incorrect status (e.g., application listed as 

both withdrawn and rejected); inconsistent entries related to the loan guarantee amount 

requested by the applicant; and no status given. 

Under 

these standards, managers are to compare actual program performance 

to planned or expected results and analyze significant differences. 

Managers cannot readily conduct such analysis of the LGP if the agency 

does not maintain consolidated information on applications to the 

program and their status. Moreover, the fact that it took the LGP 3 months 

to aggregate data on the status of applications for us suggests that its 

managers have not had readily accessible and up-to-date information and 

have not been doing such analysis on an ongoing basis. This is not 

consistent with one of the fundamental concepts of internal control, in 

which such control is not a single event but a series of actions and 

activities that occur throughout an entity’s operations and on an ongoing 

2310 C.F.R. § 609.10(f)(1); U.S. Department of the Treasury, Managing Federal 

Receivables A Guide for Managing Loans and Administrative Debt, Financial 

Management Service (Washington, D.C.: 2005); and OMB Circular A-130.

24GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).
 

Page 20 GAO-12-157 DOE Loan Guarantees

basis. Thus, providing managers with access to aggregated, updated 

data could facilitate more efficient management of the LGP.

Furthermore, without consolidated data about applicants, LGP actions, 

and application status, LGP staff may not be able to identify weaknesses, 

if any, in the program’s application review process and approval 

procedures. For example, consolidated data on application status would 

provide a comprehensive snapshot of which steps of the review process 

are taking longer than expected and may need to be addressed. If 

program data were consolidated in an electronic tracking system, 

program managers could quickly access information important to 

managing the LGP, such as the current amount of credit subsidy 

obligated, as well as whether the agency is consistently complying with 

certain procedural requirements under its policies and regulations that 

govern the program. In addition, the program cannot quickly respond to 

requests for information about the program as a whole from Congress or 

program auditors.

In March 2011, the LGP acknowledged the need for such a system. 

According to the March 2011 LGP summary of its proposed data 

management project, as the number of applications, volume of data and 

records, and number of employees increased, the existing method for 

storing and organizing program data and documents had become 

inadequate, and needed to be replaced. In October 2011, LGP officials 

stated that while the LGP has not maintained a consolidated application 

tracking database across all solicitations, the program has started to 

develop a more comprehensive business management system that 

includes a records management system called “iPortal” that also could be 

used to track the status of applications. Officials did not provide a 

timetable for using iPortal to track the status of applications but said that 

work is under way on it. However, until iPortal or some other system can 

track applications’ status, the LGP staff cannot be assured that 

consolidated information on application status necessary to better 

manage the program will be available.
 

Page 21 GAO-12-157 DOE Loan Guarantees

We identified 43 key steps in the LGP’s guidance establishing its review 

process for assessing and approving loan guarantee applications. The 

LGP followed most of its established review process, but the LGP’s actual 

process differed from this established process at least once on 11 of the 

13 applications we reviewed, in part because the process was outdated. 

In some cases, LGP did not perform applicable review steps and in other 

cases we could not determine whether the LGP had completed review 

steps. Furthermore, we identified more than 80 instances of deficiencies 

in documentation of the LGP’s reviews of the 13 applications, such as 

missing signatures or dates. It is too early to evaluate the impact of the 

specific differences we identified on achieving program goals, but we and 

the DOE Inspector General have reported that omitting or poorly 

documenting review steps may pose increased financial risk to the 

taxpayer and result in inconsistent treatment of applications.

We identified 43 key steps in the LGP credit policies and procedures 

manual and its other guidance that establish the LGP’s review process for 

assessing and approving loan guarantee applications. Not all 43 steps 

are necessary for every application, since the LGP’s guidance lets 

officials tailor aspects of the review process on an ad hoc basis to reflect 

the specific needs of the solicitation. For example, under the EERE 08 

solicitation, the LGP required two parts of intake review for applications 

involving large projects that integrate multiple types of technologies, but it 

required only one part for small projects. Furthermore, according to LGP 

officials, they have changed the review process over time to improve 

efficiency and transparency, so the number of relevant steps also 

depends on when the LGP started reviewing a given application. LGP 

guidance recognizes the need for such flexibility and maintains that 

program standards and internal control need to be applied transparently 

and uniformly to protect the financial interests of the government. For 

more information on the key steps we identified, see appendix III.

According to private lenders we contacted who finance energy projects, 

the LGP’s established review process is generally as stringent as or more 

stringent than those lenders’ own due diligence processes. For example, 

like the LGP, private lenders evaluate a project’s proposed expenses and 

income in detail to determine whether it will generate sufficient funds to 

support its debt payments. In addition, private lenders and the LGP both 

rely on third-party expertise to evaluate the technical, legal, and 

marketing risks that might affect the payments. Lenders who were not 

participating in the LGP generally agreed that the LGP’s process, if 

followed, should provide reasonable management of risk. Some lenders 

The LGP Did Not 

Always Adhere to Its 

Review Process, 

Which May Pose 

Risks and Result in 

Inconsistent 

Treatment 

The LGP Did Not 

Consistently Follow Its 

Established Review 

Process, in Part Because 

the Process Was Outdated
 

Page 22 GAO-12-157 DOE Loan Guarantees

that sponsored applications under the FIPP solicitation said that the 

LGP’s review process was more rigorous than their own. They said this 

level of rigor was not warranted for the FIPP solicitation because it 

covered commercial technology, which is inherently less risky than the 

innovative technologies covered by other solicitations. Some private 

lenders we spoke with also noted that financing an innovative energy 

project involves a certain amount of risk that cannot be eliminated, and 

one lender said that a failure rate of 2 or 3 percent is common, even for 

the most experienced loan officers.

However, we found that the LGP did not always follow the review process 

in its guidance. The LGP completed most of the applicable review steps 

for the 6 applications that we reviewed in full, but its actual process 

differed from the established process at least once on 5 of the 6 

applications we reviewed. We also conducted a more limited examination 

of 7 additional applications, in which we examined the steps where the 

actual process differed from the established process for the first 6 

applications. We again found that the LGP’s actual process differed from 

its established process at least once on 6 of the 7 applications. Table 4 

summarizes review steps for which we either identified differences or 

could not determine whether the LGP completed a particular review step 

across all 13 applications. The 13 applications we reviewed represent all 

of the applications that had reached conditional commitment or closing, 

as of December 31, 2010, excluding 3 applications that had applied under 

the earliest solicitation, since the LGP’s review process was substantially 

different for these 3 applications.25

 

25The three excluded applications were from Solyndra, Beacon Power, and Sage 

Electrochromics, LLC. One of the 13 applications we reviewed was for a project with 

multiple sponsors. In this instance, we only reviewed the application with the largest loan 

guarantee amount request.
 

Page 23 GAO-12-157 DOE Loan Guarantees

Table 5: LGP’s Adherence to Its Review Process for 13 Applications with Closed or Conditionally Committed Loan 

Guarantees, by Review Stage and Step

Review stage Review step description

Number of 

applications 

examined for 

review step 

Not 

applicable 

Applicable 

but not 

performed

Could not 

determine if 

step was 

performed Completed

Intake Part I technical review 6 2 0 1 3 

Solicitation-specific ranking 

process for EERE 08 

applicants

13 5 0 8 0 

Obtain CRB approval prior to 

due diligence

13 3 6 0 4 

Due diligence Review of applicant’s 

management (e.g., 

background check, credit 

check, Internal Revenue 

Service check)

6 0 2 1 3 

Obtain final independent 

engineering report prior to 

conditional commitment

13 0 6 0 7 

Obtain final independent 

marketing report prior to 

conditional commitment

13 3 1 1 8 

Complete OMB review of the 

LGP credit subsidy cost 

estimate

13 0 3 7 3 

Conditional 

commitment to closing

Collect a full fee from an 

applicant at conditional 

commitment

13 0 1 0 12

Total 13 19 18 40

Source: GAO analysis of LGP documentation supporting its application reviews.

Note: These differences represent our review of LGP documents for all 43 key review steps for six 

applications, and a targeted review of 9 steps for seven applications.

For the 13 applications we examined, we found 19 differences between 

the actual reviews the LGP conducted and the applicable review process 

steps established in LGP guidance. In most of these instances, according 

to LGP officials, the LGP did not perform an applicable review step 

because it had made changes intended to improve the process but had 

not updated the program’s credit policies and procedures manual or other 

guidance governing the review process.

The following describes the 19 differences we identified, along with the 

LGP’s explanations:
 

Page 24 GAO-12-157 DOE Loan Guarantees

• In six cases, the LGP did not obtain CRB approval prior to due 

diligence, contrary to the March 2009 version of its credit policies and 

procedures manual. This version states that CRB approval is an 

important internal check to ensure only the most promising projects 

proceed to due diligence. LGP officials explained that this step was 

not necessary for these applications because the CRB had verbally 

delegated to the LGP its authority to approve applications before 

these projects proceeded to due diligence. However, LGP documents 

indicate that CRB delegated approval authority after these projects 

had proceeded to due diligence.26

• In seven cases, the LGP did not obtain final due diligence reports 

from independent consultants prior to conditional commitment, as 

required by its credit policies and procedures manual. Through their 

reporting, these independent third parties provide key input to the 

LGP’s loan underwriting and credit subsidy analyses in technical, 

legal, and other areas such as marketing, as necessary. LGP officials 

said that it was a preferable practice to proceed to conditional 

commitment with drafts of these reports and obtain a final report just 

prior to closing. They said this practice helps the LGP reduce financial 

risk, since it allows the LGP to base its decision to close the loan 

guarantee on final reports rather than reports completed 1 to several 

months earlier. An LGP official explained that this part of the review 

process had evolved to meet the program’s needs, but that these 

changes were not yet reflected in the manual. However, the LGP does 

not appear to have implemented this change consistently. Specifically, 

over the course of several months in 2009 and 2010, the LGP 

alternated between the old and the new process concerning final due 

diligence reports from independent consultants. In commenting on a 

draft of this report, LGP officials said that in all cases they received 

final independent consultant reports before the closing of the loan 

guarantees. Because the LGP’s policies and procedures manual at 

the time required final reports at the conditional commitment stage, 

we reviewed the reports available at conditional commitment and did 

not review whether LGP received final reports before closing.

According to an LGP official, the 

delegation of authority was not retroactive.

 

26The documents LGP provided for this step indicated that the CRB decision to delegate 

its authority occurred on June 25, 2009. The projects in question proceeded to due 

diligence in May 2009. 
 

Page 25 GAO-12-157 DOE Loan Guarantees

• In three cases, the LGP conditionally committed to a loan guarantee 

before OMB had completed its informal review of the LGP’s credit 

subsidy cost estimate. According to the credit policies and procedures 

manual, OMB should be notified each time the LGP estimates the 

credit subsidy cost range, and informal discussions between OMB 

and LGP should ensue about the LGP estimate. This cost is to be 

paid by the borrower for all section 1703 projects to date and by the 

federal government for section 1705 projects. LGP officials explained 

that, in two of these cases, the LGP had provided OMB with their 

credit subsidy estimates, but that OMB had not completed its review 

because there were unresolved issues with the LGP estimates. LGP 

officials did not provide an explanation for the third case. Contrary to 

the manual, LGP officials said that OMB’s informal review of the credit 

subsidy estimates for these applications was not a necessary 

prerequisite to conditional commitment because the actual credit 

subsidy cost is calculated just prior to closing and is formally approved 

by OMB. Furthermore, under section 1705, the government rather 

than the borrower, was to pay credit subsidy costs. Accordingly, the 

LGP used these credit subsidy estimates for internal planning 

purposes rather than for calculating a fee to the applicant. In contrast, 

the LGP completed OMB’s informal review prior to conditionally 

committing to at least three of the other loan guarantees we 

reviewed—including one section 1705 project—and thus the LGP did 

not perform this step consistently across all projects. In its October 

2011 update of its credit policies and procedures manual, the LGP 

retained the requirement that OMB review the LGP’s credit subsidy 

cost estimate prior to conditional commitment. Further, the updated 

guidance added that formal discussions with OMB may be required 

each time OMB reviews LGP’s credit subsidy cost estimate and 

should result with their approval.

In two cases, the LGP did not complete its required background check 

for project participants. The documents provided indicate that LGP did 

not determine whether the applicants had any delinquent federal debt 

prior to conditional commitment. In one of these cases, LGP officials 

said that the delinquent federal debt check was completed after 

conditional commitment. In the other case, the documents indicate 

that the sponsor did not provide a statement on delinquent debt, and 

LGP officials confirmed that LGP did not perform the delinquent debt 

check prior to conditional commitment.

• In one case, the LGP did not collect the full fee from an applicant at 

conditional commitment as required by the EERE 08 solicitation. 

According to a LGP official, the LGP changed its policy to require 20 
 

Page 26 GAO-12-157 DOE Loan Guarantees

percent of this fee at conditional commitment instead of the full fee 

specified in the solicitation, in response to applicant feedback. This 

official said the policy change was documented in the EERE 09 

solicitation, which was published on July 29, 2009. However, this 

particular application moved to conditional commitment on July 10, 

2009, prior to the formal policy change.

As outlined in these cases, the LGP departed from its established 

procedures because, in part, the procedures had not been updated to 

reflect all current review practices. The version of the manual in use at the 

time of GAO’s review was dated March 5, 2009, even though the manual 

states that it was meant to be updated at least on an annual basis and 

more frequently if needed. The LGP issued its first update of its credit 

policies and procedures manual on October 6, 2011,27 even though the 

2009 manual states that it was meant to be updated at least annually and 

more frequently if needed. We reviewed the revised manual and found 

that the revisions addressed many of the differences that we identified 

between the LGP’s established and actual review processes. The revised 

manual also states that LGP analyses should be properly documented 

and stored in the new LGP electronic records management system. 

However, the revised guidance applies to loan guarantee applications 

processed after October 6, 2011, but not to the 13 applications we 

reviewed or to any of the 30 loan guarantees the LGP has closed to date.

In addition to the differences between the actual and established review 

processes, in another 18 cases, we could not determine whether the LGP 

had performed a given review step. In some of these cases, the 

documentation did not demonstrate that the LGP had applied the required 

criteria. In other cases, the documentation the LGP provided did not show 

that the step had been performed. The following discusses these cases:

• In one case, we could not determine whether LGP guidance calls for 

separate part I and part II technical reviews for a nuclear front-end 

application or allows for a combined part I and part II technical review. 

The LGP performed a combined part I and part II technical review.

 

27U.S. Department of Energy, Credit Policies and Procedures Manual for Implementing 

Title XVII of the Energy Policy Act of 2005, Revised, Loan Programs Office (Washington, 

D.C.: Oct. 6, 2011). 

The LGP Did Not Always 

Fully Document 

Review Steps 
 

Page 27 GAO-12-157 DOE Loan Guarantees

• In eight cases, we could not determine the extent to which the LGP 

applied the required criteria for ranking applications to the EERE 08 

solicitation. The LGP’s guidance for this solicitation requires this step 

to identify “early mover” projects for expedited due diligence. The LGP 

expedited four such applications but the documentation neither 

demonstrated how the LGP used the required criteria to select 

applications to expedite nor why other applications were not selected.

• In one case, we could not determine whether the LGP completed its 

required background check for project participants. The documents 

provided indicated there were unresolved questions involving one 

participant’s involvement in a $17 billion bankruptcy and another’s 

pending civil suit.

• In one case, we could not determine whether the LGP had received a 

draft or final marketing report prior to conditional commitment in 

accordance with its guidance. The LGP provided a copy of the report 

prepared before closing but did not provide reports prepared before 

conditional commitment.

• In seven cases, LGP either did not provide documents supporting 

OMB’s completion of its informal review of the LGP’s estimated credit 

subsidy range before conditional commitment, or the documentation 

the LGP provided was inconclusive.

We also found 82 additional documentation deficiencies in the 13 

applications we reviewed. For example, in some cases, there were no 

dates or authors on the LGP documents. The documentation deficiencies 

make it difficult to determine, for example, whether steps occurred in the 

correct order or were executed by the appropriate official. The review 

stage with the fewest documentation deficiencies was conditional 

commitment to closing, when 1 of the 82 deficiencies occurred. Table 6 

shows the instances of deficient documentation that we identified.
 

Page 28 GAO-12-157 DOE Loan Guarantees

Table 6: Documentation Deficiencies Identified During 13 Application Reviews

Review phase

Missing 

author

Missing title or other 

identification

Missing final 

version or a 

signature

Missing 

date 

Missing data 

or analysis

Inconsistent with 

other project 

documents

Intake 15 6 2 17 8 1 

Due diligence 12 0 6 6 5 3 

Conditional 

commitment to closing 0 0 0 0 0 1 

Total 27 6 8 23 13 5 

Source: GAO analysis of LGP documentation supporting its application reviews.

Note: These deficiencies represent our review of LGP documents for all 43 review steps for six 

applications and a targeted review of 9 steps for seven applications.

During our review, the LGP did not have a central paper or electronic file 

containing all the documents supporting the key review steps we 

identified as being part of the review process. Instead, these documents 

were stored separately by various LGP staff and contractors in paper files 

and various electronic storage media. As a result, the documents were 

neither readily available for us to examine, nor could the LGP provide us 

with complete documentation in a timely manner. For example, we 

requested documents supporting the LGP’s review for six applicants in 

January 2011. For one of the applications, we did not receive any of the 

requested documents supporting the LGP’s intake application reviews 

until April 2011. Furthermore, for some of the review steps, we did not 

receive documents responsive to our request until November 2011 and, 

as we discussed earlier, in 18 cases we did not receive sufficient 

documentation to determine whether the LGP performed a given review 

step. Federal regulations and guidance from Treasury and OMB provide 

that maintaining adequate and proper records of agency activities is 

essential to accountability in the management of public resources and the 

protection of the legal and financial rights of the government and the 

public.28

 

2836 C.F.R. § 1222.22; U.S. Department of the Treasury, Managing Federal Receivables 

A Guide for Managing Loans and Administrative Debt, Financial Management Service 

(Washington, D.C.: 2005) and OMB Circular A-130.

Furthermore, under the federal standards for internal control, 

agencies are to clearly document internal control, and the documentation 

is to be readily available for examination in paper or electronic form. 
 

Page 29 GAO-12-157 DOE Loan Guarantees

Moreover, the standards state that all documentation and records should 

be properly managed and maintained.29

As stated above, the LGP recognized the need for a recordkeeping 

system to properly manage and maintain documentation supporting 

project reviews. In March 2011, the LGP adopted a new records 

management system called “iPortal” to electronically store documents 

related to each loan application and issued guidance for using this 

system. As of November 1, 2011, LGP officials told us that the system 

was populated with data or records relevant to conditionally committed 

and closed loan guarantees and that they plan to fully populate it with 

documentation of the remaining applications in a few months. The LGP 

was able to provide us with some additional documents from its new 

system in response to an early draft of this report, but the LGP did not 

provide additional documentation sufficient to respond to all of the issues 

we identified. Accordingly, other oversight efforts may encounter similar 

problems with documentation despite the new system.

It is too early in the loan guarantees’ terms to assess whether skipping or 

poorly documenting review steps will result in problems with the 

guarantees or the program. However, we and the DOE Inspector General 

have reported that omitting or poorly documenting review steps may lead 

to a risk of default or other serious consequences. Skipping or poorly 

documenting steps of the process during intake can lead to several 

problems. First, it reduces the LGP’s assurance that it has treated 

applications consistently and equitably. This, in turn, raises the risk that 

the LGP will not select the projects most likely to meet its goals, which 

include deploying new energy technologies and ensuring a reasonable 

prospect of repayment. In July 2010, we reported that the inconsistent 

treatment of applicants to the LGP could also undermine public 

confidence in the legitimacy of the LGP’s decisions. Furthermore, DOE’s 

Inspector General reported in March 2011 that incomplete records may 

impede the LGP’s ability to ensure consistency in the administration of 

 

29GAO/AIMD-00-21.3 states in part that internal control and all transactions and other 

significant events need to be clearly documented, and the documentation should be 

readily available for examination. OMB Circular A-130, Management of Federal 

Information Resources requires agencies to ensure that records management adequately 

document agency activities and ensure access to the records regardless of form or 

medium. 

Differences Between the 

Actual and Established 

Processes and Incomplete 

Documentation May 

Pose Risks
 

Page 30 GAO-12-157 DOE Loan Guarantees

the program, make informed decisions, and provide information to 

Congress, OMB, and other oversight bodies.30

Differences between the actual and established review processes that 

occur during or after due diligence may also lead to serious 

consequences. These stages of the review process were established to 

help the LGP identify and mitigate risks. Omitting or poorly documenting 

its decisions during these stages may affect the LGP’s ability to fully 

assess and communicate the technical, financial, and other risks 

associated with projects. This could lead the program to issue guarantees 

to projects that pose an unacceptable risk of default. Complete and 

thorough documentation of decisions would further enable DOE to 

monitor the loan guarantees as projects are developed and implemented. 

Furthermore, without consistent documentation, the LGP may not be able 

to fully measure its performance and identify any weaknesses in its 

implementation of internal procedures.

The Inspector General 

also stated that, in the event of legal action related to an application, poor 

documentation of the LGP’s decisions may hurt its ability to prove that it 

applied its procedures consistently and treated applicants equitably. 

Moreover, incomplete records may leave DOE open to criticism that it 

exposed taxpayers to unacceptable financial risks.

Through the over $30 billion in loan guarantees and loan guarantee 

commitments for new and commercial energy technologies that DOE has 

made to date, the agency has set in motion a substantial federal effort to 

promote energy technology innovation and create jobs. DOE has also 

demonstrated its ability to make section 1705 of the program functional by 

closing on 30 loan guarantees. It has also improved the speed at which it 

was able to move section 1705 applications through its review process. 

To date, DOE has committed to six loan guarantees under section 1703 

of the program, but it has not closed any section 1703 loan guarantees or 

otherwise demonstrated that the program is fully functional. Many of the 

section 1703 applications have been in process since 2008 or before. As 

DOE continues to implement section 1703 of the LGP, it is even more 

important that it fully implement a consolidated system for overseeing the 

application review process and that LGP adhere to its review process and 

 

30U.S. Department of Energy, Office of Inspector General, Audit Report: The Department 

of Energy’s Loan Guarantee Program for Clean Energy Technologies, DOE/IG-0849 

(Washington, D.C.: Mar. 3, 2011).

Conclusions 
 

Page 31 GAO-12-157 DOE Loan Guarantees

document decisions made under updated policies and procedures. It is 

noteworthy that the process LGP developed for performing due diligence 

on loan guarantee applications may equal or exceed those used by 

private lenders to assess and mitigate project risks. However, DOE does 

not have a consolidated system for documenting and tracking its progress 

in reviewing applications fully implemented at this time. As a result, DOE 

may not readily access the information needed to manage the program 

effectively and to help ensure accountability for federal resources. Proper 

recordkeeping and documentation of program actions is essential to 

effective program management. The absence of such documentation may 

have prevented LGP managers, DOE, and Congress from having access 

to the timely and accurate information on applications necessary to 

manage the program, mitigate risk, report progress, and measure 

program performance. DOE began to implement a new records 

management system in 2011, and LGP staff stated that the new system 

will enable them to determine the status of loan guarantee applications 

and to document review decisions. However, the LGP has neither fully 

populated the system with data or records on all applications it has 

received nor its decisions on them. Nor has DOE committed to a 

timetable to complete the implementation of the new records 

management system. Until the system has been fully implemented, it is 

unclear whether the system will enable the LGP to both track applications 

and adequately document its review decisions.

In addition, DOE did not always follow its own process for reviewing 

applications and documenting its analysis and decisions, potentially 

increasing the taxpayer’s exposure to financial risk from an applicant’s 

default. DOE has not promptly updated its credit policies and procedures 

manual to reflect its changes in program practices, which has resulted in 

inconsistent application of those policies and procedures. It also has not 

completely documented its analysis and decisions made during reviews, 

which may undermine applicants’ and the public’s confidence in the 

legitimacy of its decisions. Furthermore, the absence of adequate 

documentation may make it difficult for DOE to defend its decisions on 

loan guarantees as sound and fair if it is questioned about the justification 

for and equity of those decisions. DOE has recently updated its credit 

policies and procedures manual, which, if followed and kept up to date, 

should help the agency address this issue. 
 

Page 32 GAO-12-157 DOE Loan Guarantees

To better ensure that LGP managers, DOE, and Congress have access 

to timely and accurate information on applications and reviews necessary 

to manage the program effectively and to mitigate risks, we recommend 

that the Secretary of Energy direct the Executive Director of the Loan 

Programs Office to take the following three actions:

• Commit to a timetable to fully implement a consolidated system that 

enables the tracking of the status of applications and that measures 

overall program performance.

• Ensure that the new records management system contains 

documents supporting past decisions, as well as those in the future.

• Regularly update the LGP’s credit policies and procedures manual to 

reflect current program practices to help ensure consistent treatment 

for applications to the program.

We provided a copy of our draft report to DOE for review and comment. 

In written comments signed by the Acting Executive Director of the Loan 

Programs Office, it was unclear whether DOE generally agreed with our 

recommendations. The Acting Executive Director stated subsequently to 

the comment letter that DOE disagreed with the first recommendation and 

agreed with second and third recommendations. In its written comments, 

DOE also provided technical and editorial comments, which were 

incorporated as appropriate. DOE’s comments and our responses to 

specific points can be found in appendix IV of this report. 

Concerning our first recommendation that LGP commit to a timetable to 

fully implement a consolidated system that enables the tracking of the 

status of applications and that measures overall program performance, in 

its written comments, DOE states that the LGP believes that it is 

important that our report distinguish between application tracking and 

records management. We believe we have adequately distinguished the 

need for application tracking and management of documentation. These 

are addressed in separate sections of our report and in separate 

recommendations. DOE also states that LGP has placed a high priority 

on records management and is currently implementing a consolidated 

state-of-the-art records management system. In the statement 

subsequent to DOE’s written comments, the Acting Executive Director 

stated the office did not agree to a hard timetable for implementing our 

first recommendation. As stated in the report draft, under federal internal 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
 

Page 33 GAO-12-157 DOE Loan Guarantees

control standards, agencies are to employ control activities, such as 

accurately and promptly recording transactions and events to maintain 

their relevance and value to management on controlling operations and 

making decisions. Because LGP had to manually assemble the 

application status information we needed for this review, and because this 

process took over 3 months to accomplish, we continue to believe DOE 

should develop a consolidated system that enables the tracking of the 

status of applications and that measures overall program performance. 

This type of information will help LGP better manage the program and 

respond to requests for information from Congress, auditors, or other 

interested parties.

Concerning our second recommendation that LGP ensure that its new 

records management system contains documents supporting past 

decisions as well as those in the future, subsequent to DOE’s written 

comments, the Acting Executive Director stated that DOE agreed.

Concerning our third recommendation that LGP regularly update the 

credit policies and procedures manual to reflect current program 

practices, subsequent to DOE’s written comments, the Acting Executive 

Director stated that DOE agreed. 

We are sending copies of this report to the appropriate congressional 

committees, the Secretary of Energy, and other interested parties. In 

addition, this report also is available at no charge on the GAO website at 

http://www.gao.gov. 

If you or your staff members have any questions about this report, please 

contact me at (202) 512-3841 or ruscof@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff that made major contributions to 

this report are listed in appendix V.

Frank Rusco

Director, Natural Resources and Environment
Appendix I: Objectives, Scope, and 

Methodology

Page 34 GAO-12-157 DOE Loan Guarantees

This appendix details the methods we used to examine the Department of 

Energy’s (DOE) Loan Guarantee Program (LGP). We have reported four 

times and testified three times on this program, including two previous 

reports in response to the mandate in the 2007 Revised Continuing 

Appropriations Resolution to review DOE’s execution of the LGP and to 

report our findings to the House and Senate Committees on 

Appropriations. (See Related GAO Products.) Because of questions 

regarding inconsistent treatment of applications raised by the most recent 

report in this mandated series,1

To gather information on the program, we met with the LGP’s 

management and staff from each of the program’s divisions involved with 

the LGP’s review of loan guarantee applications from intake to closing. In 

general, we reviewed the laws, regulations, policies and procedures 

governing the program and pertinent agency documents, such as 

solicitations announcing loan guarantee opportunities. We reviewed prior 

GAO and DOE Inspector General reports performed under or related to 

our mandate to audit the LGP. In addition, we gathered agency data and 

documents on the loan guarantee applications in process, those that had 

received a DOE commitment, and those that had been closed.

this report, also in response to the 

mandate, assesses (1) the status of the applications to the LGP’s nine 

solicitations and (2) the extent to which the LGP has adhered to its

process for reviewing applications for loans that the LGP has committed 

to or closed.

To determine the status of the applications to all nine of the solicitations 

for our first objective, we explored the LGP’s available sources to see 

what data the program had compiled on the applications received and 

their current status in the review process. Because the LGP did not have 

comprehensive or complete application status data, we tailored a data 

request to collect data on the status of all 460 applications to the 

program. In consultation with agency officials, we prepared a data 

collection form requesting basic information on the identity, authority, 

amount requested, status, key milestone dates, and type of energy 

technology for all of the applications to date. These data were to provide 

a current snapshot of the program by solicitation and allow analysis of 

various characteristics. To ease the data collection burden, we populated 

the spreadsheets for each solicitation with the limited data from available 

 

1

GAO-10-627. 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 35 GAO-12-157 DOE Loan Guarantees

sources. LGP staff or contractors familiar with each solicitation completed 

the spreadsheets, and these spreadsheets were reviewed by managers 

before they were forwarded to GAO. We assessed the reliability of the 

data the LGP provided by reviewing these data, comparing them to other 

sources, and following up repeatedly with the agency to clarify questions 

and inconsistencies, and obtain missing data. This process enabled us to 

develop up-to-date program-wide information on the status of 

applications. This process resulted in data that were complete enough to 

describe the status of the program. Once we collected these data, we 

found them to be sufficiently reliable for our purposes. The LGP updated 

its March 2011 applicant status data as of July 29, 2011, and we obtained 

additional data on the conditional commitments and closings made by the 

September 30, 2011, expiration of the section 1705 authority for loan 

guarantees with a credit subsidy. To maintain consistency between the 

application status data initially provided by the LGP and later data 

updates, we use the terms application and project interchangeably, 

although in some cases multiple applications were submitted for a single 

project.

To assess the LGP’s execution of its review process for our second 

objective, we first analyzed the law, regulations, policies, procedures, and 

published solicitations for the program and interviewed agency staff to 

identify the criteria and the key review process steps for loan guarantees, 

as well as the documents that supported the process. We provided a list 

of the key review steps we identified to LGP officials, and incorporated 

their feedback as appropriate. Based on the key review steps and 

supporting documentation identified by LGP staff, we developed a data 

collection instrument to analyze LGP documents and determine whether 

the LGP followed its review process for the applications reviewed. Since 

the LGP’s review process varied across solicitations, we tailored the data 

collection instrument to meet the needs of the individual solicitations. We 

then selected a nonprobability sample of 6 applications from the 13 that 

had received conditional commitments from DOE or had progressed to 

closing by December 31, 2010, and had not applied under the Mixed 

2006 solicitation, since the LGP’s review process was substantially 

different for this solicitation and not directly comparable to later 

solicitations.2

 

2

The three excluded Mixed 2006 applications were from Solyndra, Beacon Power, and 

Sage Electrochromics, LLC. One of the 13 applications we reviewed was for a project with 

multiple sponsors. In this instance, we only reviewed the application with the largest loan 

guarantee amount request. 

We requested documentation for these 6 applications 
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-12-157 DOE Loan Guarantees

representing a range of solicitations and project types. We selected our 

initial sample to represent each of the five solicitations where applications 

had reached conditional commitment and different LGP investment 

officers to reduce the burden on LGP staff. We requested the documents 

supporting the LGP’s review process from intake to closing and examined 

them to determine whether the applicable review steps were carried out. 

While we examined whether the applicable review steps were carried out, 

we did not examine the content of the documents and the quality of work 

supporting them. Where the documents were not clear about completion 

of the process, showed potential differences from the review process, or 

raised questions, we followed up with program officials to obtain an 

explanation and, as applicable, documentation supporting the 

explanation. On key questions where we identified differences from the 

review process for the initial sample of 6, we conducted a targeted review 

of documents for the 7 remaining applications that had reached 

conditional commitment or closed prior to December 31, 2010, excluding 

Mixed 2006 applicants. The six loan guarantee application files reviewed 

in full and the seven files reviewed in part were a nongeneralizable 

sample of applications.

To identify the initial universe of private lenders with experience financing 

energy projects, we reviewed the list of financial institutions that had 

submitted applications to the LGP under the Financial Institution 

Partnership Program (FIPP) solicitation. We used these firms as a 

starting point because of their knowledge about DOE’s program and 

processes. To identify financial institutions involved in energy sector 

project finance outside of FIPP, we searched or contacted industry 

associations, industry conferences, and other industry groups in the same 

energy sectors that LGP solicitations to date have targeted. We 

interviewed seven private lenders identified through this process using a 

set of standard questions and the outline of the DOE’s review process to 

gain insights on its comparability to the review process for underwriting 

loans in the private sector.

We conducted this performance audit from September 2010 to February 

2012 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
Appendix II: Tables of Loan Guarantees 

Conditionally Committed or Closed

Page 37 GAO-12-157 DOE Loan Guarantees

The following tables provide basic details on the loan guarantee 

applications that received a conditional commitment by September 30, 

2011, or had proceeded to closing by that date. Table 7 lists applications 

under section 1703 with conditional commitments. Table 8 lists section 

1705-eligible applications with conditional commitments that did not reach 

closing by the expiration of the section 1705 authority on September 30, 

2011. Table 9 lists the section 1705 applications with conditional 

commitments that reached closing by the expiration of the section of the 

1705 authority on September 30, 2011.

Table 7: Section 1703 Applications Reaching Conditional Commitment as of September 30, 2011, by Solicitation

Dollars in millions

Solicitation Sponsor Name Technology

Date conditional 

commitment offered 

Guarantee 

amount

Mixed, 8/8/06 SAGE 

Electrochromics, LLC

SAGE 

Electrochromics

Energy Efficiency 3/5/2010 $72

EERE 08, 6/30/08 ADA-ES, Inc. Red River Energy Efficiency 12/8/2009 245

Nuclear Front-End, 6/30/08 AREVA NC, Inc. Eagle Rock 

Enrichment Facility

Nuclear Front-End 5/20/2010 2,000

Nuclear Power, 6/30/08 Georgia Power 

Company

Vogtle 3&4 Nuclear 

Generation

2/16/2010 3,460

Nuclear Power, 6/30/08 MEAG Vogtle 3&4 Nuclear 

Generation

2/16/2010 1,809

Nuclear Power, 6/30/08 Oglethorpe Power 

Corp.

Vogtle 3&4 Nuclear 

Generation

2/16/2010 3,057

Total $10,643

Source: GAO analysis of DOE data.

Table 8: Section 1705-Eligible Applications Reaching Conditional Commitment as of September 30, 2011, by Solicitation

Dollars in millions

Solicitation Sponsor Name Technology

Date conditional 

commitment offered 

Guarantee 

amount 

EERE 08, 6/30/08 Nordic Windpower, 

Ltd. 

Nordic Project Wind Manufacturing 7/2/2009 $16

EERE 09, 7/29/09 Solar Millennium, 

LLC

Blythe Solar Power 

Project Plant

Solar Generation 4/18/2011 2,105

FIPP, 10/7/09 First Solar Topaz (CA) Solar Generation 6/30/2011 1,930

FIPP, 10/7/09 Multiple SolarStrong (USA) Solar Generation 9/8/2011 344

Total $4,395

Source: GAO analysis of DOE data. 

Appendix II: Tables of Loan Guarantees 

Conditionally Committed or Closed
Appendix II: Tables of Loan Guarantees 

Conditionally Committed or Closed

Page 38 GAO-12-157 DOE Loan Guarantees

Table 9: Section 1705-Eligible Applications Reaching Closing as of September 30, 2011, By Solicitation

Dollars in millions

Solicitation Sponsor Name Technology

Date 

conditional 

commitment 

offered 

Date 

closed

Guarantee 

amount 

Mixed, 8/8/06 Beacon Power Corp. Beacon Power Transmission 7/2/2009 8/6/2010 $43

Mixed, 8/8/06 BrightSource Energy, 

Inc.

Ivanpah 1 Solar Generation 2/22/2010 4/5/2011 520

Mixed, 8/8/06 POET, LLC Project LIBERTY Biomass 7/7/2011 9/23/2011 105

Mixed, 8/8/06 Solyndra, Inc. Solyndra Fab 2, 

LLC

Solar 

Manufacturing

3/20/2009 9/4/2009 535

EERE 08, 6/30/08 Abengoa Solar, Inc. Solana Project Solar Generation 7/2/2010 12/20/2010 1,446

EERE 08, 6/30/08 Abound Solar, Inc. Abound Solar 

Manufacturing, LLC

Solar 

Manufacturing 

7/2/2010 12/9/2010 400

EERE 08, 6/30/08 AES Energy Storage, 

LLC

Project Dyno Transmission 7/30/2010 12/22/2010 17

EERE 08, 6/30/08 BrightSouce Energy, 

Inc.

Ivanpah 2 Solar Generation 2/22/2010 4/5/2011 551

EERE 08, 6/30/08 BrightSouce Energy, 

Inc.

Ivanpah 3 Solar Generation 2/22/2010 4/5/2011 556

EERE 08, 6/30/08 First Wind Energy, 

LLC

Kahuku Wind 

Power

Wind Generation 2/18/2010 7/26/2010 117

EERE 08, 6/30/08 SoloPower, Inc. SoloPower 

Manufacturing 

Facility

Solar 

Manufacturing

2/17/2011 8/19/2011 197

EERE 08, 6/30/08 U.S. Geothermal, Inc. Neal Hot Springs Geothermal 6/9/2010 2/23/2011 97

EERE 09, 7/29/09 1366 Technologies, 

Inc. 

Project Eagle Solar 

Maufacturing 

6/17/2011 9/8/2011 150

EERE 09, 7/29/09 Abengoa Bioenergy 

U.S. Holding

Abengoa Bioenergy 

Biomass of Kansas

Biomass 8/19/2011 9/29/2011 132

EERE 09, 7/29/09 Abengoa Solar, Inc. Mojave Solar 

Project 

Solar Generation 6/14/2011 9/23/2011 1,202

EERE 09, 7/29/09 Cogentrix Solar 

Services, LLC

Alamosa Solar 

Generating Project

Solar Generation 5/10/2011 9/9/2011 91

EERE 09, 7/29/09 Nextlight Renewable 

Energy, LLC

Antelope Valley 

Solar Ranch 1

Solar Generation 6/30/2011 9/30/2011 646

EERE 09, 7/29/09 Nextlight Renewable 

Energy, LLC

Agua Caliente Solar Generation 1/20/2011 8/5/2011 967

EERE 09, 7/29/09 Sempra Generation Mesquite Solar 

Energy

Solar Generation 6/15/2011 9/28/2011 337

EERE 09, 7/29/09 Solar Reserve, LLC Tonopah Project Solar Generation 5/19/2011 9/28/2011 737

EERE 09, 7/29/09 Sunpower Corp. California Valley 

Solar Ranch

Solar Generation 4/12/2011 9/30/2011 1,237
Appendix II: Tables of Loan Guarantees 

Conditionally Committed or Closed

Page 39 GAO-12-157 DOE Loan Guarantees

Dollars in millions

Solicitation Sponsor Name Technology

Date 

conditional 

commitment 

offered 

Date 

closed

Guarantee 

amount 

EERE 09, 7/29/09 Yale University Record Hill Wind Wind Generation 3/3/2011 8/15/2011 102

Transmission, 

7/29/09

LS Power Associates, 

LP

Southwest Intertie 

Project (SWIP) - 

South

Transmission 10/19/2010 2/11/2011 343

FIPP, 10/7/09 Caithness Energy, 

LLC

Shepherds Flat 

(OR)

Wind Generation 10/8/2010 12/16/2010 1,051

FIPP, 10/7/09 First Solar Desert Sun (CA) Solar Generation 6/30/2011 9/30/2011 1,169

FIPP, 10/7/09 Nevada Geothermal 

Power Company

Blue Mountain (NV) Geothermal 6/15/2010 9/3/2010 79

FIPP, 10/7/09 NextEra Genesis Solar (CA) Solar Generation 6/14/2011 8/26/2011 682

FIPP, 10/7/09 Noble Environmental 

Power, LLC

Noble Granite (NH) Wind Generation 6/21/2011 9/23/2011 135

FIPP, 10/7/09 Ormat Nevada, Inc. Ormat (NV) Geothermal 6/9/2011 9/23/2011 280

FIPP, 10/7/09 Prosun Solar 

Development 

Company, LLC

Project Amp (USA) Solar Generation 6/22/2011 9/30/2011 1,120

Total $15,044

Source: GAO analysis of DOE data.
Appendix III: Key Tasks in the LGP’s Review 

and Approval Process for Loan Guarantee 

Applications

Page 40 GAO-12-157 DOE Loan Guarantees

Table 10 provides basic details about key review tasks in LGP’s process 

for reviewing and approving loan guarantee applications, as identified 

from our review of relevant laws, regulations, LGP guidance, published 

solicitations and interviews with LGP officials. These tasks formed the 

basis for our examination of LGP files to determine if LGP followed its 

review process for each of the 13 applications that had received 

conditional commitments from DOE or had progressed to closing by 

December 31, 2010, and had not applied under the Mixed 2006 

solicitation.1

Table 10: Key Review and Approval Tasks for Loan Guarantee Applications, by Review Stage

Accordingly, the tasks listed below reflect LGP’s review 

process for the applications we reviewed and do not reflect LGP’s review 

process for applicants to the Mixed 2006 solicitation, which was 

substantially different and not directly comparable to later solicitations. 

Additionally, since we found minor variations in LGP’s review process 

across the solicitations, we have noted below which tasks are only 

applicable under certain solicitations. If no exceptions are listed, then the 

particular task is applicable across all the relevant solicitations.

Review stage and task Description

Intake

1. Collect part I application fee. The first of three fees that LGP collects during the review process. LGP is required by 

its authorizing legislation to charge and collect sufficient fees to cover the program’s 

administrative costs. 

2. Perform part I completeness check. LGP reviews applications using a solicitation-specific checklist to document that the 

application package is complete.

3. Perform innovation review (EERE 08 

applicants). 

LGP reviews applications to determine if the proposed project uses an innovative 

energy technology, as required by the program’s authorizing legislation. For later 

solicitations, this review was incorporated into the LGP’s technical review. 

4. Perform part I technical review (2008 

Nuclear Power and Nuclear Front-End) or 

commercial review (FIPP). 

LGP analyzes the project’s eligibility and responsiveness to statutory and program 

requirements, such as the project’s

• technical relevance against DOE requirements,

• technical approach and work plan, and

• environmental and technological benefits.

 

1

The three excluded Mixed 2006 applications were from Solyndra, Beacon Power, and 

Sage Electrochromics, LLC. One of the 13 applications we reviewed was for a project with 

multiple sponsors. In this instance, we only reviewed the application with the largest loan 

guarantee amount request. 

Appendix III: Key Tasks in the LGP’s Review 

and Approval Process for Loan Guarantee 

Applications 
Appendix III: Key Tasks in the LGP’s Review 

and Approval Process for Loan Guarantee 

Applications

Page 41 GAO-12-157 DOE Loan Guarantees

Review stage and task Description

5. Perform part I financial review (2008 

Nuclear Power and Nuclear Front-End). 

LGP analyzes

• creditworthiness elements such as sponsor/management capabilities, 

financial/business plans, and market factors; and

• programmatic elements such as (a) construction and start-up factors and (b) legal, 

regulatory, and permitting factors.

6. Perform emissions review or lifecycle 

analysis (EERE 08 and EERE 09 

applicants). 

Loan guarantee applications under the EERE 08 and EERE 09 solicitations must pass 

an emissions analysis to meet the authorizing law’s greenhouse gas emissions goals.

7. Perform review for solicitation-specific 

eligibility requirements.

Depending on the solicitation, loan guarantee applications must meet certain 

solicitation-specific eligibility requirements, related to a

• certain project types,

• certain technology categories, and 

• construction commencement requirements for section 1705 projects.

8.a. Rank projects to identify “Early Movers” 

(EERE 08 only). 

LGP identifies the projects that present the fewest obstacles in moving forward to begin 

the technical and financial review process first. The ranking factors are related to

• level of environmental review required under the National Environmental Policy Act 

of 1970,

• financial structure,

• readiness to proceed, and

• offtake agreements if applicable (an agreement to buy all or a substantial part of 

the output of an energy project). 

8.b. Rank Projects and Identify Project 

Strengths and Weaknesses as part of the 

part I review (2008 Nuclear Power and 

Nuclear Front-End). 

The 2008 Nuclear Power and Front-End solicitations call for an early ranking of 

projects. The ranking factors are related to

• the prospect of repayment,

• strength of the project and sponsor, and

• regulatory status.

9. Notify applicants of intent to 

proceed/invite part II submissions

(part II submissions exclude certain EERE 

08 projects). 

For solicitations with a one-part intake process, applicants are notified of LGP’s intent to 

proceed with its review. For solicitations with a two-part intake process, applicants are 

notified they have qualified under part I and are invited to submit application materials 

for part II.

10. Collect part II application fee. The second of three fees that LGP collects during the review process. LGP is required 

by the authorizing legislation to charge and collect sufficient fees to cover the program’s 

administrative costs.

b

11. Perform part II completeness check. LGP reviews applications using a solicitation-specific checklist to document that the part 

II application package is complete.

12. Perform part II technical review 

(excludes FIPP).

LGP analyzes

• the project’s technical relevance against DOE requirements,

• track record and experience of applicant,

• project work plan, and

• environmental benefits of project.
Appendix III: Key Tasks in the LGP’s Review 

and Approval Process for Loan Guarantee 

Applications

Page 42 GAO-12-157 DOE Loan Guarantees

Review stage and task Description

13. Perform part II financial review (excludes 

FIPP). 

LGP analyze

• creditworthiness elements such as sponsor/management capabilities, 

financial/business plans, and market factors; and

• programmatic elements such as (a) construction and start-up factors and (b) legal, 

regulatory, and permitting factors.

14. Perform an environmental critique and 

synopsis.

LGP may prepare a publicly available environmental critique and synopsis to document 

the consideration given to environmental factors and record that the relevant 

environmental consequence of each alternative has been considered in its evaluation 

and selection process. 

15. Application screening/ranking sessions 

for finalization of merit review scores for 

selections to due diligence. 

To focus limited loan guarantee funds on the best applicants, LGP evaluates and 

competitively ranks all applications within each solicitation’s cohort. This ranking is the 

basis for LGP’s decision to invite applicants to due diligence.

16. DOE’s Credit Review Board (CRB) 

approves projects recommended for due 

diligence by LGP (only projects proceeding 

to due diligence prior to 6/25/09). 

DOE’s CRB reviews LGP’s recommendations of projects for due diligence and 

provides approval. The CRB delegated this authority to LGP on June 25, 2009, and 

this task was phased out for applications proceeding to due diligence following this 

decision.

17. Notify applicant of LGP’s decision to 

proceed into due diligence (excludes FIPP). 

After clearing requirements of parts I and II, the applicants are notified that they will 

proceed into due diligence.

Due diligence

18. Evaluate financing plan and assess 

financial viability. 

To evaluate the project in detail, LGP will

• thoroughly review the uses and sources of funds; 

• analyze adequacy, leverage, timing of funding;

• review terms/rights of funding source;

• assess the adequacy of proposed contingency/reserve funding;

• determine compliance with program requirements from the law, final regulations, 

and the solicitation; 

• assess the project’s financial viability, with an emphasis on the applicant’s ability 

to repay the guaranteed portion of loan; and

• evaluate assumptions underlying projected revenues/expenses/likelihood 

technical performance will be achieved.

19. Perform a review of applicant’s 

management. 

LGP performs certain checks (e.g., background check, credit check, IRS check) to 

evaluate the key players for the loan guarantee applicant.

20. Evaluate project risks and identify risk 

mitigants. 

To evaluate the project’s risks and potential mitigants, LGP will

• identify, assess, and estimate the impact of risks associated with the project;

• determine the types and magnitude of the risks associated with the project;

• determine the proper risk allocation among the parties; and

• determine the extent to which risks have been mitigated.

21. Perform a financial model analysis and 

stress-test. 

To evaluate the project’s financial model, LGP will

• verify the applicant’s calculations for its financial model, and

• quantify the impacts of risks by stress-testing the applicant’s and LGP’s financial 

models for changes in assumptions.
Appendix III: Key Tasks in the LGP’s Review 

and Approval Process for Loan Guarantee 

Applications

Page 43 GAO-12-157 DOE Loan Guarantees

Review stage and task Description

22. Assess strengths and weaknesses of 

project participants.

LGP will examine the sponsor’s investment to date and financial/managerial 

capability to implement the project as proposed, including

• the project sponsor’s track record in project development and the technology 

used in the application,

• the project sponsor’s financial strength and resources,

• the strategic value of the project to the sponsor, and

• the experience of the project’s management team.

23. Assess whether an environmental 

assessment, environmental impact statement, 

or categorical exclusion applies. (For FIPP 

projects, this assessment step occurs during 

intake.) 

As required by the National Environmental Policy Act of 1970 (NEPA), LGP reviews 

the project and determines which environmental review process is necessary. 

24. Prepare Environmental Assessment, 

Environmental Impact Statement or 

Categorical Exclusion.

Based on LGP’s analysis under task 23, LGP prepares the appropriate documents, 

which include a description of any significant findings under other applicable 

environmental laws.

25. Identify significant findings under other 

applicable environmental laws. 

26. Receive independent engineering/technical 

consultant report. 

To determine the technical efficacy of the project, LGP or an independent 

engineering firm, will thoroughly review the applicant’s independent engineering 

report, including consideration of factors such as environmental impact and 

infrastructure requirements. This review also provides input for the risks and mitigants 

section of the credit paper.

27. Receive independent legal analysis. To review the project’s legal structure, LGP or an external firm will

• analyze draft legal agreements among project participants,

• analyze intellectual property rights of participants in the project to use the 

proposed technology, and

• provide input for the risks and mitigants section of the credit paper.

28. Receive independent marketing consultant 

report (as applicable).

As necessary, LGP will consult with external marketing advisors to assess the 

project’s market and off-take risk as part of the underwriting and credit analysis 

process. This assessment should be supported by data, examples, and/or research 

that substantiate the score assigned for each attribute.

29. Negotiate term sheet. Based on its due diligence analysis and input from any external advisors, LGP 

prepares a term sheet and negotiates its provisions with the applicant.

30. Calculate expected recovery rate. LGP calculates the percentage of value the agency can expect to recover in the 

event of default.

31. Prepare a credit approval package. LGP assembles key documents describing the proposed loan guarantee agreement 

and project for internal review. These include

• the credit paper providing an overview of the project and its attributes,

• available third-party input,

• draft term sheet,

• internal risk rating matrix,

• recovery rate notching matrix,

• compliance checklist, and

• presentation summarizing the transaction for internal and external review.
Appendix III: Key Tasks in the LGP’s Review 

and Approval Process for Loan Guarantee 

Applications

Page 44 GAO-12-157 DOE Loan Guarantees

Review stage and task Description

32. Credit committee reviews and approves 

the credit approval package.

LGP management internal review and approval step.

33. Office of Management and Budget (OMB) 

reviews LGP’s credit subsidy estimate.

OMB reviews LGP’s calculation of the estimated credit subsidy cost range for the 

project and provides informal approval. The credit subsidy cost is based on a formula 

designed to determine the net present value of the estimated cost to the federal 

government of guaranteeing the loan.

34. LGP consults with U.S. Treasury regarding 

the commitment of Federal Financing Bank 

funds.

The Department of the Treasury reviews the transaction.

35. DOE’s CRB approves projects 

recommended by LGP for conditional 

commitment.

DOE leadership review and approval step.

Conditional commitment to closing

36. DOE offers applicant conditional 

commitment for a loan guarantee and 

applicant accepts.

DOE conditionally commits to issuing a loan guarantee agreement dependent upon 

whether the conditions precedent laid out in the term sheet are met. Upon accepting 

the offer, the applicant pays all or a portion of the second fee, depending on the 

solicitation.

37. LGP prepares and negotiates definitive 

financing documentation

LGP and external counsel prepare and negotiate the final financing terms and loan 

guarantee agreement. 

38. LGP receives final credit rating from a 

rating agency via the applicant.

The applicant obtains and provides final credit rating to LGP.

39. LGP legal team circulates an action memo 

to all relevant parties for concurrence and the 

Secretary’s signature.

Internal review and approval step that includes a crosswalk between the key terms 

at the time of conditional commitment and the final closing terms, including any 

material adverse differences.

40. OMB formally approves the final credit 

subsidy cost.

OMB review and key decision step. 

41. Outside counsel confirms that all 

conditions precedent to the loan guarantee 

agreement have been satisfied.

LGP asks outside counsel to verify that the applicant has met all of the terms agreed 

to at conditional commitment as preconditions for LGP’s approval of the final loan 

guarantee agreement.

42. DOE and applicant execute loan 

agreement, and DOE issues guarantee.

The final loan guarantee documents are executed at closing and the loan is 

considered closed once the agreements have been executed.

43. First funds disbursement. At the time of or shortly after the loan guarantee’s closing, the Federal Financing 

Bank, or other lender, disburses the first payment of funds to the loan guarantee 

recipient.

Sources: GAO analysis of DOE guidance, published solicitations, and relevant regulations.

a

According to LGP officials, this step is a component of the innovation and other eligibility reviews 

rather than a separate step. However, we included it as a separate step in our list of key review tasks 

since it was an important aspect of the process. 

b

As applicable, for solicitations where LGP established a two part application process for some or all 

applicants (excludes stand-alone or manufacturing projects that applied under EERE 08).
Appendix IV: Comments from the Department 

of Energy

Page 45 GAO-12-157 DOE Loan Guarantees

Appendix IV: Comments from the 

Department of Energy

Note: GAO comments 

supplementing those in 

the report text appear at 

the end of this appendix.
Appendix IV: Comments from the Department 

of Energy

Page 46 GAO-12-157 DOE Loan Guarantees

See comment 3.

See comment 2.

See comment 1.
Appendix IV: Comments from the Department 

of Energy

Page 47 GAO-12-157 DOE Loan Guarantees

See comment 4.
Appendix IV: Comments from the Department 

of Energy

Page 48 GAO-12-157 DOE Loan Guarantees
Appendix IV: Comments from the Department 

of Energy

Page 49 GAO-12-157 DOE Loan Guarantees

The following are GAO’s comments on the Department of Energy’s letter 

dated February 23, 2012. 

1. We disagree with DOE’s assertion that our findings relate only to 

procedures that LGP had in place in 2009 and early 2010. We 

compared LGP’s actual process to its established process for each of 

the applications that reached closing or conditional commitment by 

December 31, 2010. As we note in the report, LGP did not revise its 

policies and procedures manual until October 2011, so the same 

established procedures were in place for all of the applications that 

closed by September 30, 2011. We did not review any of the 

applications that were committed or closed during 2011 in depth, in 

part because it took through November 2011 for LGP to respond to 

our repeated requests for available documentation for the applications 

closed or committed to through 2010. Our 2010 report on LGP (GAO10-627) and this report had information on five of the same 

applications. We examined DOE’s review process for these 

applications in much more depth for this report than in the previous 

one. We did take into account changes in LGP procedures, systems, 

and other improvements as part of our review, as noted by the 

references to LGP’s new records management system and its 

updated policies and procedures manual. We also took into account 

changes in LGP policies and procedures that affected the 13 files that 

we reviewed, when LGP was able to document that these changes 

had occurred.

2. As noted in the report, these systems were not fully implemented at 

the time we were gathering data for our review and this is still the 

case, according to DOE’s written comments, dated February 23, 

2012. 

3. As stated above, we disagree with LGP’s statement that our findings 

relate only to procedures that LGP had in place in 2009 and early 

2010. As we note in the report, LGP did not revise its policies and 

procedures manual until October 2011, so the same established 

procedures were in place for all of the applications that closed by 

September 30, 2011. The report describes LGP’s efforts to update its 

documentation management and tracking systems and notes that 

none of these were fully implemented at the time of our review.

4. DOE disagrees with the recommendation to implement an application 

tracking system. However, as noted in our report and DOE’s 

comments, LGP is in the process of implementing a consolidated 

GAO Comments
Appendix IV: Comments from the Department 

of Energy

Page 50 GAO-12-157 DOE Loan Guarantees

state of the art business management system that DOE believes may 

address this need. As we stated in the draft report, under federal 

internal control standards, federal agencies are to employ control 

activities, such as accurately and promptly recording transactions and 

events to maintain their relevance and value to management on 

controlling operations and making decisions. Because LGP had to 

manually assemble the application status information we needed for 

this review, and because this process took the program over three 

months to accomplish, we continue to believe DOE should develop a 

consolidated system that enables the tracking of the status of 

applications and that measures overall program performance. This 

type of information will help LGP better manage the program and 

respond to requests for information from Congress, auditors, or other 

interested parties.
Appendix V: GAO Contact and Staff 

Acknowledgments

Page 51 GAO-12-157 DOE Loan Guarantees

Frank Rusco (202) 512-3841 or ruscof@gao.gov

In addition to the individual named above, Karla Springer, Assistant 

Director; Marcia Carlsen; Cindy Gilbert; Cathy Hurley; Emily Owens; John 

Scott; Ben Shouse; Carol Shulman; Barbara Timmerman; and Lisa Van 

Arsdale made key contributions to this report.

Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 
Related GAO Products

Page 52 GAO-12-157 DOE Loan Guarantees

Recovery Act: Status of Department of Energy’s Obligations and 

Spending. GAO-11-483T. Washington, D.C.: March 17, 2011.

Department Of Energy: Further Actions Are Needed to Improve DOE’s 

Ability to Evaluate and Implement the Loan Guarantee Program.

GAO-10-627. July 12, 2010.

Recovery Act: Factors Affecting the Department of Energy’s Program 

Implementation. GAO-10-497T. March 4, 2010.

American Recovery and Reinvestment Act: GAO’s Role in Helping to 

Ensure Accountability and Transparency for Science Funding.

GAO-09-515T. March 19, 2009.

Department Of Energy: New Loan Guarantee Program Should Complete 

Activities Necessary For Effective and Accountable Program 

Management. GAO-08-750. July 7, 2008.

Department Of Energy: Observations On Actions To Implement The New 

Loan Guarantee Program For Innovative Technologies. GAO-07-798T. 

September 24, 2007.

The Department of Energy: Key Steps Needed to Help Ensure the 

Success of the New Loan Guarantee Program for Innovative 

Technologies by Better Managing Its Financial Risk. GAO-07-339R. 

February 28, 2007.

Related GAO Products

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