Recovery Act: Energy Efficiency and Conservation Block Grant Recipients Face Challenges Meeting Legislative and Program Goals and Requirements
Published: 2011-04-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The American Recovery and Reinvestment Act of 2009 (Recovery Act) provided $3.2 billion for the Department of Energy's (DOE) Energy Efficiency and Conservation Block Grant Program (EECBG) to develop and manage projects to improve energy efficiency and reduce energy use and fossil fuel emissions. The Recovery Act requires GAO to review funds made available under the act and to comment on recipients' estimates of jobs created or retained. GAO examined (1) how EECBG recipients used EECBG funds and challenges they faced, if any; (2) DOE and recipients' oversight and monitoring activities and challenges, if any; (3) the extent to which the EECBG program is meeting Recovery Act and program goals for energy savings; and (4) the quality of jobs data reported by Recovery Act recipients, particularly EECBG recipients. GAO also updates the status of open recommendations from previous bimonthly and recipient reporting reviews. GAO analyzed DOE recipient data and interviewed DOE officials and a nonprobability sample of EECBG recipients, among other things.
section_title: What GAO Found
paragraphs: According to DOE data, EECBG recipients primarily used funds for 3 of the 14 activities eligible for EECBG funding. These activities are energy-efficiency retrofits, financial incentive programs, and buildings and facilities projects. Some DOE officials, recipients, and others identified challenges in obligating and spending funds due to local jurisdictional requirements and staff and resource limitations. In addition, in April 2010 DOE determined that many recipients were not on a trajectory to obligate and spend funds within specified time frames, so DOE issued new milestones for obligating and spending funds. Many recipients reported having had difficulty meeting the new milestones. DOE is taking steps to address these difficulties. According to DOE officials and documentation, DOE follows a programwide monitoring plan to oversee the use of Recovery Act funds and uses a variety of techniques to monitor recipients. Overall, recipients also use various methods to monitor contractors and subrecipients, but DOE does not always collect information on recipients' monitoring activities. As a result, DOE does not always know whether the monitoring activities of recipients are sufficiently rigorous to ensure compliance with federal requirements. Some DOE officials, recipients, and others have reported to GAO that some DOE staff and recipients faced challenges with overseeing the use of funds, including (1) technical challenges with a Web-based reporting application DOE uses as a primary oversight tool and (2) staffing and expertise limitations, such as some recipients' unfamiliarity with federal grant procedures. Recipients contacted and some DOE officials reported to GAO that recipients are using EECBG funds to develop projects designed to reduce energy use and increase energy savings in line with Recovery Act and program goals. However, DOE officials have experienced challenges in assessing the extent to which the EECBG program is meeting those goals. Because actual energy savings data are generally available only after a project is completed, DOE officials said that most recipients report estimates to comply with program reporting requirements. DOE takes steps to assess the reasonableness of these estimates but does not require recipients to report the methods or tools used to develop estimates. In addition, while DOE provides recipients with a tool to estimate energy savings, DOE does not require that recipients use the most recent, updated version of its estimating tool. GAO's analysis of the Recovery.gov data that recipients reported, including jobs funded, shows data quality this quarter reflects minor amounts of inconsistencies or illogical data. The portion of EECBG recipients reporting some jobs funded has continued to increase. DOE headquarters and field officials continue to address data quality concerns, including ensuring that recipients and reviewers had the updated Office of Management and Budget guidance on narrative descriptions. However, data across reporting periods may not be comparable because, in earlier periods, some confusion existed about methods for calculating jobs funded.
section_title: What GAO Recommends
paragraphs: GAO recommends that DOE (1) explore a means to capture information on recipients' monitoring activities, and (2) solicit information on recipients' methods for estimating energy-related impact metrics and verify that recipients use the most recent version of DOE's estimating tool. DOE generally agreed with GAO's recommendations.

section_title: Letter
paragraphs: Since the American Recovery and Reinvestment Act of 2009 (Recovery  Act) was enacted in February 2009, the Department of the Treasury has  paid out approximately $205.4 billion of the Recovery Act funds for use by  states and localities. The Recovery Act directed states to use the funds for  various purposes, including to preserve and create jobs; assist those most  affected by the recession; and invest in transportation, environmental  protection, and other infrastructure to provide long-term economic  benefits. Of the Recovery Act funds, about $3.2 billion were provided as  grants to states, territories, federally recognized Indian tribes and local  communities through the Department of Energy’s (DOE) Office of Energy  Efficiency and Renewable Energy’s newly funded Energy Efficiency and  Conservation Block Grant program (EECBG). DOE provides EECBG  funds to grant recipients to develop, promote, and manage projects to  improve energy efficiency and reduce energy use and fossil fuel emissions  in local communities. DOE further encourages EECBG recipients to  develop new and innovative approaches; prioritize energy efficiency and  conservation; develop projects in a cost-effective manner that will  stimulate the economy; and to the extent possible, to develop programs  that will continue beyond the funding period.
DOE provides EECBG funds to grant recipients in two forms: through  formula grants and competitive grants. Of the $3.2 billion, DOE awarded  about $2.7 billion through formula grants to local communities and states.  About 61 percent of the total EECBG funds ($1.94 billion) was awarded as  formula grants to more than 2,000 local communities—including cities,  counties, and tribal communities—and about 24 percent of the total  EECBG funds ($767 million) was awarded to the states, five territories,  and the District of Columbia. About 1 percent of the total EECBG funds  ($40 million) was allocated to Administrative and Training/Technical  Assistance. In addition to the approximately $2.7 billion in formula grants,  DOE awarded about 14 percent of the total EECBG funds ($453 million)  through competitive grants to local communities.
This report, the ninth in a series of bimonthly GAO reviews, responds to a  mandate in the Recovery Act, which requires that GAO conduct such  reviews of funds made available under the act to determine how funds are  used, including whether funds are achieving the stated purposes of the act.  The Recovery Act also requires GAO to comment on estimates of jobs  created or retained as reported by recipients. Over the past 2 years, our  bimonthly reviews of Recovery Act programs have covered a wide range  of programs including Medicaid, education, Head Start, highways and  transit, housing construction and tax credit assistance, emergency food  and shelter, justice assistance and community-oriented policing,  workforce investment, and environmental and energy projects.
In this report, we reviewed and updated recipients’ information available  on the EECBG program, focusing on the approximately $2.7 billion  awarded through formula funding to eligible states and local and tribal  communities. Specifically, our objectives were to determine (1) how  EECBG funds are being used, and what challenges, if any, EECBG  recipients face in obligating and spending their funds; (2) actions DOE  officials and EECBG recipients are taking to provide oversight of EECBG  funds and challenges, if any, they face in meeting Recovery Act and other  requirements; (3) the extent to which EECBG recipients and the EECBG  program are meeting Recovery Act and EECBG program goals for energy  savings and what challenges, if any, recipients have encountered in  measuring and reporting energy savings; and (4) how the quality of  estimates of jobs created and retained reported by Recovery Act  recipients, particularly EECBG recipients, has changed over time.
To address these objectives, we reviewed relevant federal laws and  regulations, as well as DOE guidance documents. We analyzed DOE’s  EECBG program data from DOE databases. We interviewed EECBG  program officials, including about 30 project officers, technical monitors,  and contractors in the field offices responsible for managing and  monitoring awards. We also interviewed representatives from several  energy and public service organizations, including the National  Association of State Energy Officials (NASEO), the National Association of  Counties (NACo), and the U.S. Conference of Mayors (USCM). In addition,  we e-mailed questions to a sample of 91 purposefully selected city and  county recipients that are eligible to receive EECBG funding. We received  responses from 49 recipients to questions on the various aspects of our  objectives, such as obligating and spending funds, guidance, best  practices, monitoring, and challenges experienced. The responses from  this nonprobability sample of recipients are not generalizable to the 2,185  EECBG states, cities, counties, and tribal grant recipients eligible for  formula funding nationwide. To comment on recipients’ estimates of jobs  created or retained, we analyzed the quality of estimates of jobs created or  retained provided by recipients. The Recovery Act requires that nonfederal  recipients of Recovery Act funds—including grants, contracts, and loans— submit quarterly reports. These reports include a list of each project or  activity for which Recovery Act funds were expended or obligated and  information concerning the amount and use of funds and jobs created or  retained by these projects and activities, among other information. The  latest of these recipient reports covered the activity as of the Recovery  Act’s passage through the quarter ending December 31, 2010. We assessed  these reports for completeness and reliability and found them sufficiently  reliable for the purposes of this report.
Our oversight of programs funded by the Recovery Act has resulted in  more than 10 related products in or after December 2010 and more than 90  related products with numerous recommendations since we began  reporting on the Recovery Act (see the Related GAO Products list for  reports issued in or after December 2010 and GAO’s Web site for a list of  all GAO reports related to Recovery Act funding). In addition to the  objectives outlined above, this report updates agency actions in response  to recommendations from previous bimonthly and recipient reporting  reviews that have not been fully implemented (open recommendations),  including our prior recommendations regarding the use of Recovery Act  funds for the Weatherization Assistance Program (see app. III).
We conducted this performance audit from September 2010 to April 2011  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.
subsections: section_title: Background
paragraphs: The goals of the Recovery Act are to preserve and create jobs and promote  economic recovery; to assist those most impacted by the recession; to  provide investments needed to increase economic efficiency by spurring  technological advances in science and health; to invest in transportation,  environmental protection, and other infrastructure that will provide long- term economic benefits; and to stabilize state and local government  budgets, in order to minimize and avoid reductions in essential services  and counterproductive state and local tax increases.
The EECBG program was authorized in the Energy Independence and  Security Act of 2007 (EISA), which intended to move the United States  toward greater energy independence and security and to increase the  production of clean renewable fuels, among other things. The EECBG  program was funded for the first time by the Recovery Act, through  formula and competitive grants. Through the program, DOE allocates  formula grants to the 50 states, the District of Columbia, and five  territories; to city and county recipients based on their resident and  commuter populations; and to Native American tribes based on population  and climatic conditions. Applicants eligible for formula funding include  cities or city-equivalent units of government, such as towns or villages  with populations of at least 35,000; counties, which include county- equivalent units of local government, such as parishes or boroughs with  populations of at least 200,000; and all Indian tribes and any Alaska Native  village. A city or county is also eligible for direct funding if it is one of the  10 highest-populated cities or counties of the state in which it is located.
The EECBG program has broad goals for energy-related outcomes. DOE  encourages EECBG recipients to develop new and innovative approaches  to meet the purposes of the program: to prioritize energy efficiency and  conservation; develop projects in a cost-effective manner that will  maximize benefits over time; stimulate the economy; leverage other public  or private resources; promote energy market transformation; and to the  extent possible, to develop programs that will provide sustainable, and  measurable energy savings, job creation, and economic stimulus benefits  that will continue beyond the funding period.
DOE announced the funding opportunity for interested applicants to  submit applications for EECBG formula grant funding on March 26, 2009.
DOE required applicants to submit an Energy Efficiency and Conservation  Strategy (EECS) that described their strategy for achieving the Recovery  Act’s goals of the program. DOE had 120 days to review and approve or  disapprove recipients’ EECSs. DOE’s funding announcement also required  that recipients select projects from the 14 eligible activities identified in  Section 544 of EISA, shown in table 1.
The Recovery Act increased the importance of transparency and  accountability in its use of funds. Accordingly, DOE requires grant  recipients to report grant-level expenditure information and performance  information including hours worked, energy cost savings, and percent of  work completed as well as other figures, through a Web-based application  called the Performance and Accountability for Grants in Energy (PAGE)  system within 30 calendar days of the end of each quarter year. PAGE  allows recipients to electronically submit and manage grant performance  and financial information to DOE. In addition, grant recipients are  required to report through www.FederalReporting.gov within 10 days after  the end of each quarter. This information is made available to the general  public through the Recovery.gov Web site.
section_title: Grant Recipients Are Using EECBG Funds Primarily for Three Activities but Face Several Challenges in Obligating and Spending These Funds
paragraphs: Grant recipients are using EECBG funds primarily for three activities:  energy-efficiency retrofits, financial incentive programs, and building and  facilities programs. However, recipients have reported several challenges  that have delayed their efforts to obligate and spend these funds.
subsections: section_title: Grant Recipients Have Allocated Almost Two- Thirds of EECBG Funds to 3 of the 14 Eligible Activities
paragraphs: Grant recipients have allocated most EECBG funds to 3 of the 14 activities  that DOE designated as eligible for EECBG funding in accordance with  EISA. As shown in table 2, recipients have allocated nearly two-thirds (65.1  percent) of EECBG funds for three types of activities: (1) energy-efficiency  retrofits (36.8 percent), which includes activities such as grants to nonprofit  organizations and governmental agencies for retrofitting existing facilities to  improve energy efficiency; (2) financial incentive programs (18.5 percent),  which includes activities such as rebates, subgrants, and revolving loans to  promote energy-efficiency improvements; and (3) energy-efficiency and  conservation programs for buildings and facilities (9.8 percent), which  includes activities such as installing storm windows or solar hot water  technology. Some EECBG recipients are using their awards to fund projects  in all three of these categories. For example, according to information  reported through PAGE, New York City plans to use $31 million of its $80.8  million award to fund energy-efficiency retrofits at municipal buildings such  as schools, courthouses, police precincts, and firehouses. It has also  allocated $16.1 million to a financial incentive program that will provide  loans to capital-constrained building owners for energy-efficient retrofits to  residential, commercial, or industrial buildings. New York City designated  another $2 million for buildings and facilities projects and will fund a retro- commissioning program at city facilities designed to identify efficiency  measures and address anomalies in energy use, equipment schedules, and  control sequences that may cause energy waste. As indicated in table 2,  these three activities account for 48 percent of all the projects funded  through the EECBG program, or 3,674 out of 7,594 total projects.
According to DOE officials, a number of factors explain why energy- efficiency retrofits, financial incentive programs, and buildings and  facilities programs account for such a large portion of all EECBG-funded  projects. DOE officials told us that some recipients had previously  identified needed improvements to their buildings and facilities.  Recipients also told us that EECBG funds allowed them to undertake  planned facilities projects that previously lacked the requisite funding.  DOE officials told us that other recipients allocated EECBG funds to these  projects to save money on future energy bills and many recipients chose  retrofit programs because these programs allowed them to use EECBG  funds to engage their broader communities by retrofitting commercial and  residential buildings, in addition to government facilities. DOE also  encouraged recipients to pursue these projects. In the EECBG program’s  funding announcement, DOE asked recipients to “prioritize energy  efficiency and conservation first as the cheapest, cleanest, and fastest  ways to meet energy demand” and to “develop programs and strategies  that will continue beyond the funding period.” Energy efficiency retrofits  and buildings and facilities projects meet both of these goals.
Although financial incentive programs appear to be the second highest  funded activity—receiving over 18 percent of EECBG funds—the data for  this activity require further explanation. According to DOE officials,  approximately 73 percent of activities classified as financial incentive  programs are subgrants made by state governments to units of local  government within the state. Such subgrant recipients can use these  funds for any of the 14 eligible activities, such as lighting, retrofits, and  transportation. The state awarding the subgrant can report details of the  activities funded by subgrant recipients. However, the state government  reports these details in narrative fields within DOE’s PAGE system while  the primary activity type, reflected in table 2, is simply classified as  “financial incentive programs.” High-level summary data on these activities  may give the impression that over 18 percent of EECBG funds are  allocated to financial incentive programs however, nearly three-quarters of  these funds may ultimately be used for any of the 14 eligible activities.  Although DOE collects information on how these funds are ultimately  used, these data are not readily available.
DOE has obligated all EECBG funds to recipients, and recipients are  beginning to obligate and spend these funds. The Recovery Act required  DOE to obligate all funds to recipients by September 30, 2010, and DOE  has done so. DOE staff told us that recipients have completed the planning  stages of their projects and they expect that recipient spending will soon  hit a peak before leveling off as funds are expended. As of December 2010,  recipients reported obligating approximately $1.7 billion, 57 percent of  their EECBG budgets, and reported spending more than $655 million,  approximately 23 percent of their EECBG budgets. DOE officials expect  recipients’ spending to increase significantly in forthcoming reporting  periods as work begins or increases on more projects. The table below  shows the total funds budgeted, obligated, and spent and the percentages  of budgeted funds spent for each eligible activity.
section_title: EECBG Recipients Face Several Challenges in Obligating and Spending Recovery Act Funds and Meeting DOE’s New Obligating and Spending Milestones
paragraphs: Some recipients and others have identified several challenges that have  delayed spending of Recovery Act funds under this newly funded EECBG  program. DOE has made efforts to help recipients address some of these  challenges, including launching a Technical Assistance Program and  Solution Center to provide recipients with one-on-one assistance, an  online resource library, training, webcasts, and a peer-exchange forum for  sharing best practices and lessons learned.
subsections: section_title: Inexperienced DOE Program Administrators
paragraphs: Because the EECBG program is relatively new—authorized by EISA in  2007 but not funded until the Recovery Act was passed in 2009—some  DOE administrators had little previous experience with the program and  its requirements. DOE’s Inspector General reported that some of the DOE  staff assigned to review EECBG grant applications lacked financial  assistance experience and failed to obtain the information necessary to  issue awards, which required additional requests for documentation that  further delayed awards. The Inspector General also reported that the  program lacked a permanent Program Director until April 2010. Some  EECBG project officers—the DOE staff primarily responsible for  overseeing and interacting with EECBG recipients—told us that they faced  a steep learning curve during the initial months of the program, when they  began working with recipients to resolve obstacles to applying for funds  and address questions about meeting requirements and reporting  outcomes. Several project officers compared managing the EECBG  program to flying a plane while it is still being built.
section_title: Limitations in Recipient Staff and Resources
paragraphs: In addition, several DOE project officers told us that some recipients’  efforts to effectively manage grants and spend funds have been  complicated by staff and resource limitations. Some recipients lack the  staff and resources needed to comply with EECBG and Recovery Act  requirements. For example, a project officer told us that one county has  only two staff members who were entirely responsible for managing the  grant and meeting reporting requirements, in addition to their regular  workload. The economic downturn exacerbated some recipients’ staffing  challenges as budget shortfalls led to furloughs and hiring freezes. For  example, one county reported to DOE that staffing shortages due to  budget cuts had delayed its planned retrofit projects. Another recipient  reported project delays due to a furlough that closed the city government  and prevented the city council from approving their plans for a financial  incentive program.
section_title: Jurisdictional Requirements
paragraphs: Some recipients also told us that they experienced local jurisdictional  requirements that delayed their ability to spend Recovery Act funds.  DOE’s Inspector General reported that local budget and procurement  requirements prevented some recipients from obligating funds until DOE  made the entire award amount available. In addition, several project  officers told us that some recipients cannot initiate their proposed  EECBG-funded projects until their spending decisions and budgets are  approved by local officials, which can delay projects and spending for  months or even longer in localities where local officials only meet  quarterly or twice a year. In response to questions about spending delays,  one recipient told us that although local procedures can be time- consuming, these procedures also protect tax dollars. Another recipient  told us that DOE needs to take local procedures into consideration so that  spending milestones are more flexible and realistic. Both representatives  from NACo told us that although recipients are grateful for the opportunity  to implement critical projects that they previously could not have funded,  DOE has not adapted guidance and deadlines to the needs, timelines, or  procedures of local governments and that this has created some  challenges. Some project officers expressed similar views in our meetings  with them, stating that the federal government in general lacked an  appreciation of city and county government processes. Both USCM  representatives also told us that although DOE’s guidance and support had  improved significantly, this lack of understanding of how city governments  worked had a negative impact on the success of the program.
section_title: Reporting Requirements
paragraphs: Additionally, some recipients told us that meeting the reporting  requirements for EECBG Recovery Act funds is time-intensive and that  requiring recipients to submit similar information through PAGE and  FederalReporting.gov makes the reporting process unnecessarily  duplicative. For example, one recipient told us that the required reporting  for EECBG takes two to three times longer than other federal grants.  Some recipients told us that the EECBG program’s reporting requirements  were more cumbersome than other federal grant programs. One recipient  with decades of federal grant experience told DOE’s Recovery Act help  line that although DOE staff had been very helpful in providing  information, the reporting requirements for EECBG Recovery Act funds  were the most onerous he had experienced in 20 years of government  work despite regularly applying for millions of dollars in federal grants.  Another recipient told us that his city canceled one of its planned projects,  a geothermal system, because the reporting requirements would have been  too burdensome. Similarly, project officers told us that some small  recipients were so overwhelmed with the reporting requirements that they  declined their awards. However, the vast majority of recipients accepted  their awards.
section_title: Delays in Acquiring Needed Materials and Products
paragraphs: Some recipients have also faced challenges in acquiring needed materials  and products in a timely manner. EECBG recipients have created a large  demand for energy-efficient materials. As a result, some of the materials  and products needed to complete projects are out of stock or on back  order, which can delay the implementation of these projects and the  spending of funds allocated for these projects. For example, project  officers told us that shortages of lighting and heating, ventilation, and air  conditioning (HVAC) systems products have delayed some of the projects  requiring these items. Both NASEO representatives told us that shortages  were also an issue for solar and energy-efficient lighting projects.
section_title: DOE Established New Obligating and Spending Milestones for Recipients
paragraphs: When DOE announced funding opportunities through the EECBG program  in March 2009, it stated that recipients must obligate all funds within 18  months of their effective award date and spend all funds within 36  months of their effective award date. These original time frames require  recipients that were awarded grants in fall 2009—the majority of  recipients—to obligate 100 percent of their funds by spring 2011 and to  spend these funds by fall 2012.
However, in April 2010 DOE determined that many recipients were not on  a trajectory to obligate and spend all of their funds within this time frame.  DOE sent letters to all EECBG recipients outlining new obligation and  spending milestones in an effort to increase obligating and spending rates  among recipients and ensure that all funds are spent before the 36-month  deadline. DOE’s new milestones encouraged recipients to obligate 90  percent of their funds by June 25, 2010, spend 20 percent of their funds by  September 30, 2010, and spend 50 percent of their funds by June 30, 2011.  Officials from the Office of Weatherization and Intergovernmental  Programs (OWIP), the DOE office which manages the EECBG program,  told us that DOE and the Administration expressed an urgency to spend  funds quickly, thereby creating jobs and stimulating the economy— primary purposes of the Recovery Act.
These OWIP officials told us that many recipients found the milestone  letters useful to facilitate local procurement processes and overcome  other barriers to obligations and payments. DOE initiated Operation Clear  Path to meet the September 2010 spending milestone by contacting 600  targeted recipients through telephone calls and helping these recipients  develop strategies and tactics to accelerate their spending. An internal  DOE newsletter reported that Operation Clear Path was yielding real gains  by reaching out to recipients of grants over $3 million. DOE cited recent  spending increases among targeted recipients as evidence that this  approach was succeeding. For example, one city moved $600,000 from a  revolving loan fund to a lighting retrofit, bringing the city’s spending up to  31 percent. Additional examples given from other cities include $10 million  spent to capitalize a revolving loan fund and $4 million spent on a lighting  equipment purchase.
However, many recipients have had difficulty meeting these new  milestones. According to DOE’s data, about 41 percent of recipients met  DOE’s new milestone of spending 20 percent of EECBG funds by  September 30, 2010 (see table 4).
Furthermore, some project officers told us that DOE’s new spending and  obligation milestones confused recipients. These project officers stated  that some recipients were concerned about the consequences they would  face for not being able to meet the new milestones. Although DOE officials  told us that there were no repercussions for recipients that failed to meet  these milestones, some project officers told us that some recipients did  not understand this and were concerned that they might lose their funding.  In some cases, project officers told us that they too were unsure of the  consequences of recipients’ failing to meet these milestones.
In addition, some representatives from NASEO told us that these new  milestones were not consistent with the timelines set in the terms and  conditions of award agreements that DOE had already approved. Some  project officers told us they are concerned that DOE is sending conflicting  messages by encouraging recipients to spend funds more quickly than the  time frame recipients had agreed to in the terms of their grants. Further,  DOE’s Inspector General reported in August 2010 that DOE’s new  obligating and spending milestones “may increase the risks associated  with ensuring compliance with regulatory requirements… as well as,  maintaining effective financial control over the expenditure of funds.”
DOE has initiated a second round of telephone calls to targeted recipients,  some of which may have been contacted during the first round of follow- up telephone calls, in an effort to increase spending to meet DOE’s new  milestone of spending 50 percent of EECBG funds by June 30, 2011. DOE  staff continue to work with recipients and project officers to share best  practices, overcome challenges, and ensure that the EECBG program  advances the goals of energy efficiency and job creation. However, it is  still unclear whether this effort will overcome the challenges recipients  face in obligating and spending EECBG funds and meeting DOE’s new  milestones.
section_title: DOE and Recipients Are Taking Actions to Provide Oversight of EECBG Funds but Report Facing Challenges in Meeting Recovery Act and Other Program Requirements
paragraphs: Both DOE and recipients are taking a variety of actions to provide  oversight of EECBG funds, with some recipients providing much more  rigorous oversight than others. DOE and recipients reported having  experienced technical, staffing, and expertise challenges that hinder their  ability to meet Recovery Act and program requirements. DOE is taking  steps to address many of these challenges.
subsections: section_title: DOE and Recipients Are Taking a Variety of Actions to Provide Oversight of EECBG Funds, and the Level of Recipient Oversight Varies
paragraphs: DOE and recipients are using a variety of oversight actions for EECBG  funds such as program office monitoring and oversight by the DOE Chief  Financial Officer (CFO) and the Inspector General. Recipients are also  providing oversight, and the level of this oversight may vary by the  recipient’s resources and the nature of the project.
subsections: section_title: DOE’s Oversight Actions
paragraphs: DOE’s framework for oversight is its programwide monitoring plan that  was issued in August 2009 and revised in March and June 2010. According  to DOE documentation, DOE developed the plan to, among other things,  provide a structure for oversight of recipients’ procedures and processes,  ensure consistent application of program and reporting standards, and  provide clear and transparent guidelines. As outlined in the monitoring  plan, OWIP oversees the administration and oversight of EECBG funds.  The office plans and budgets programmatic requirements and resources,  develops standardized monitoring practices, provides expertise to review  and analyze performance measures, and helps provide guidance and  technical expertise to meet programmatic requirements, among other  activities. Specifically, OWIP has issued guidance to help recipients and  DOE program staff meet Recovery Act and program  requirements such as Buy American, Davis-Bacon, and monitoring  requirements, as well as to help to ensure that funds are spent efficiently.  OWIP also develops and hosts Web seminars on specific topics such as  designing retrofit and appliance rebate programs.
To monitor recipients’ use of funds, DOE project officers act as the  primary support to recipients, as well as liaisons between recipients and  DOE. DOE’s monitoring plan directs project officers to gather key  program data from recipients, provide information on training and  technical assistance opportunities, and coordinate monitoring activities. In  addition to project officers, DOE also uses other monitoring staff such as  technical monitors, contract specialists, and staff accountants. The plan  and guidance also identify goals and actions for three primary components  of oversight and monitoring: (1) desktop monitoring, (2) on-site  monitoring, and (3) worksite visits. Specifically:    Desktop monitoring: According to DOE, all EECBG grant awards are to be  reviewed through quarterly desktop monitoring—remote monitoring  conducted by the project officer. This includes examining recipients’  financial and other reports to assess progress and determine compliance  with federal requirements, as well as examining recipients’ planned goals  and objectives and the reporting and tracking of resources expended by  the recipient and subrecipients. DOE also directs project officers and  other monitors to use information gained from desktop monitoring for  further monitoring and potential corrective action.
On-site monitoring: DOE conducts periodic on-site monitoring of grant  recipients. On-site monitoring primarily occurs at the recipient and  contractor levels and can also include field inspections on projects that  have achieved milestones since the previous visit. Prior to on-site  monitoring, monitors also review the previous findings of other DOE  project officers and monitoring staff to determine deficiencies and to  determine what steps are being taken to resolve the issues. During on-site  monitoring, project officers review what specific internal controls  recipients have in place, such as segregation of duties, accounting  standards and practices, and payment procedures. Monitoring staff also  interview contractors to determine if follow-up procedures were used and  deficiencies were corrected.
Project worksite reviews: DOE monitoring staff also visit some worksites  during on-site monitoring to review the progress of activities at the  project, facility, or building being completed. Staff also review the quality  of work performed and compliance with federal requirements, such as the  Buy American provision. DOE officials stated that worksite reviews were  conducted as determined necessary by the project officer, though project  officers made an effort to visit at least one worksite during every on-site  visit.
Overall, DOE officials stated that they planned to prioritize their  monitoring based on the size of the grant rather than on the expected risk  of the project. For example, all recipients with over $2 million in Recovery  Act funds—which as a group, represent about 70 percent of all EECBG  Recovery Act formula funds—receive significantly more on-site  monitoring than would recipients of grants of under $250,000. Table 5  shows the frequency of DOE’s planned monitoring activities.
To conduct and track monitoring activities, DOE monitoring staff make  extensive use of a Web-based application, the PAGE system. For example,  DOE monitoring staff use PAGE data to inform and target further  monitoring actions such as on-site monitoring. Additionally, DOE has also  created a monitoring tool within PAGE that compiles the checklists used  by project officers to determine the compliance of recipients with the  program’s statutes and requirements. DOE guidance states that through  the use of PAGE, monitoring staff can target recipients with low spending  rates or reporting delays for additional follow-up to help ensure that funds  were spent in a timely manner. Project officers also stated that they use  financial data reported in PAGE to identify potential areas of concern for  further analysis.
Overall, DOE officials stated that they have almost met their desktop  monitoring goals with a rate of over 90 percent of their planned  monitoring complete, and based on their current rate, are on track to meet  on-site monitoring goals (see table 6). DOE officials stated that they do not  currently track the number of worksite reviews, but that all initial on-site  monitoring visits also include a worksite review.
In addition to desktop monitoring and site visits, several DOE officials  reported almost meeting their planned staffing goals for project officers  and other monitoring staff. Specifically, as of December 20, 2010, these  DOE officials reported that approximately 60 project officers, 20 contract  specialists, and 35 full-time equivalents (FTE) of contractor support were  assigned to administer the EECBG program. These staff members are  located in Washington, D.C.; Oak Ridge, Tennessee; Golden, Colorado; and  Las Vegas, Nevada. As of December 2010, DOE officials stated they had  met their staffing goals with the exception of one field office, which had  recently lost several of its staff. These DOE officials said they hoped to fill  those positions soon.
DOE monitoring also includes specific financial management oversight in  DOE field offices, as well as independent oversight through DOE’s  Inspector General. Specifically, financial management oversight is  conducted by the DOE Office of the CFO in the Golden, Colorado, and Oak  Ridge, Tennessee, field offices. In addition, the project officers in the Las  Vegas, Nevada, field office also oversee disbursements of DOE funds. Data  on the disbursement of funds are then made available to DOE employees,  including headquarters employees and the CFO. DOE’s Inspector General  also provides oversight of the EECBG program and has issued a report on  the status of implementation of EECBG, as well as the management  controls over the development and implementation of PAGE. Along with  issuing such reports, DOE’s Inspector General takes actions to investigate  allegations related to fraud, waste, and abuse for the EECBG program. To  date, DOE’s Inspector General has received four complaints regarding the  use of EECBG funds and is handling two of them through ongoing  investigations, while the other two were sent back to the program office  for resolution. A DOE Inspector General official stated that the complaints  are related to potential conflicts of interest and potential ethics violations.  Additionally, while not investigating EECBG directly, DOE’s Inspector  General recently issued a management alert related to DOE’s State Energy  Efficient Appliance Rebate Program. Some recipients also used EECBG  funds to help fund rebate programs. In its alert, DOE’s Inspector General  identified an incident in which a consumer in Georgia was able to  purchase water heaters at a store, return them, and still inappropriately  apply for and receive a rebate through the state’s rebate program. DOE’s  Inspector General report noted that the incident showed that if similar  process vulnerabilities exist in other jurisdictions, then the rebate program  could be exposed to abusive practices on a broad scale.
section_title: Recipients’ Oversight Actions
paragraphs: The extent of recipients’ oversight through the monitoring of Recovery Act  funds may depend on the individual recipient’s resources and the nature of  the project. Broadly stated, federal law, federal regulations, and DOE  guidance require that recipients comply with applicable laws, including  provisions in the Recovery Act, such as Buy American, and other federal  requirements, including regulatory and procedural requirements.  Recipients are responsible for informing subrecipients of all applicable  laws and other federal requirements and ensuring their subrecipients’  compliance with program, fiscal, and audit requirements. The Single Audit  Act, as amended, requires recipients passing on the funds to subrecipients  to monitor the subrecipients’ use of the federal funds through site visits,  limited scope audits, and other means. DOE did not require recipients to  conduct any specific oversight actions but instead released guidance on  October 26, 2010, identifying a number of best practices for monitoring by  recipients to ensure their and their subrecipients’ compliance with federal  requirements for monitoring. Further, DOE has also provided additional  resources regarding the monitoring of subrecipients, such as workshops  and guidance.
We found that recipients contacted are using various methods to meet  applicable laws and other federal requirements, and recipients, DOE  officials, and project officers stated that some recipients are providing  substantially more rigorous monitoring than others. For example, while it  is required that recipients monitor subrecipients, in response to our  questions, one recipient did not indicate that it monitored subrecipients  and instead stated that it included terms in their contracts that required  contractor adherence to applicable federal requirements. Other recipients  reported actively monitoring funds but using relatively limited techniques  such as reviewing invoices and other reports submitted by vendors. DOE  officials acknowledged that many recipients are resource constrained,  limiting their ability to monitor and ensure compliance with applicable  federal requirements, and DOE would need to evaluate on a case-by-case  basis whether the grant recipient’s subrecipient monitoring system is  sufficient to meet compliance requirements. However, officials stated that  DOE does not gather specific information on recipient monitoring  practices except during on-site visits. Additionally, because less than 25  percent of grants under $1 million are to receive on-site visits, DOE does  not have specific information on monitoring for many recipients. DOE  officials stated that they focused monitoring efforts on recipients of larger  grants because they were more likely to have subrecipients. DOE officials  also said that they adopted standard, well-accepted audit sampling  practices to achieve the most effective coverage in verifying monitoring  practices and conducted additional on-site reviews of recipients that have  demonstrated cause for concern such as not filing quarterly reports.  Officials stated that if they identified a concern during an on-site visit, they  would work with the recipient to develop an alternative system to monitor  subrecipients.
While some recipients reported less rigorous monitoring activities, in  other instances, recipients reported having detailed monitoring practices  with multiple components. For example, one recipient reported collecting  monthly progress reports, which included financial reports, from all  subrecipients, vendors, and contractors, as well as conducting site visits.  Additionally, the recipient reported that their auditor and grant services  staff also conducted internal audits of all Recovery Act programs. Another  recipient also reported using a variety of monitoring practices such as  inspections, site visits, and regular billing of vendors. The recipient’s staff  also reported that they planned to use third-party oversight of site visits in  the coming year and that they had recently hired a grant compliance  analyst who would be administering a subrecipient monitoring plan in the  coming year.
Some grant sizes and project types may not lend themselves to the same  level of oversight as others. DOE project officers stated that some larger  projects included specific monitoring requirements in the contract to help  ensure that the project met key goals including achieving project  outcomes and ensuring that funds were used efficiently. For example,  project officers stated that some recipients were able to use expertise  provided by contractors that perform energy-savings work to generate  energy-cost savings to help determine estimated versus achieved energy  savings. Other smaller contracts, however, were not large enough to  include these types of oversight. In another instance, one recipient noted  that because the grants with subrecipients they were using were so small,  ranging from $8,000 to $55,000, that the recipient did not see the need to  conduct internal and financial audits but did report conducting on-site  visits on some projects.
section_title: DOE Officials and Recipients Reported Technical, Staffing, and Expertise Challenges That Hinder Efforts to Ensure Requirements Are Met
paragraphs: DOE officials and some recipients reported experiencing technical,  staffing, and expertise challenges that hinder the ability of both DOE and  recipients to provide oversight to ensure that Recovery Act and program  requirements are met, but DOE is taking steps to address many of these  challenges.
subsections: section_title: Technical Challenges
paragraphs: Some DOE project officers and recipients reported experiencing technical  challenges using PAGE. For example, project officers told us that  monitoring was challenging because of the extensive amount of time that  they spent helping recipients use the PAGE system, which recipients  found cumbersome and difficult to use. In particular, some project officers  said that they provide ongoing support during reporting cycles to help fix  reporting errors and, in some cases, help walk recipients through the  reporting process and help fix reporting errors. For example, some DOE  project officers in one field office told us that during the reporting  period—the last week of the quarter and the following 2 months—project  officers spent approximately 70 to 85 percent of their time helping  recipients fill out their PAGE and federal reporting forms. Other project  officers with the same office also told us that recipients often cannot  figure out how to enter data into PAGE and do not understand the  reporting system. In another field office, a DOE project officer stated that  almost all of the initial PAGE reports for each quarter were initially  rejected for issues such as missing or incorrect data entries and that  recipients reported having difficulties with entering data in every field.  Some recipients have also reported difficulties using PAGE—for example,  though not asked about PAGE issues specifically in our structured  questions, one recipient stated in a response regarding challenges faced  that “PAGE reporting is the biggest challenge” while another recipient  noted that “technical glitches” in PAGE made reporting more challenging.
Incorrect data entered into PAGE has also limited project officers’ ability  to monitor recipients. For example, some project officers stated that some  recipients continued to enter incorrect information in PAGE for data fields  such as total hours worked and estimated energy savings—key project  measures used to help gauge project progress and status—in part due to  difficulties recipients had understanding PAGE data fields. Specifically,  some project officers stated that some PAGE data field names were  difficult to interpret, confusing some recipients. Some project officers also  stated that recipients entered incorrect job information using incorrect job  calculation formulas or that they entered incorrect energy data and that  DOE project officers had to spend time locating the errors and working  with the recipient to ensure that the correct data were entered. In previous  work looking at EECBG, as well as the State Energy Program and  Weatherization Assistance Program, we have also reported on both DOE  monitoring staff and recipients having problems with PAGE that hindered  DOE’s ability to administer the program. Specifically, we previously  reported that some DOE staff and recipients noted that the time and effort  that project officers spent with recipients to help them understand and  navigate the PAGE system significantly increased the administrative  burden of the program.
In reviewing PAGE’s development process, DOE’s Inspector General  found significant issues, noting that DOE did not seek input from grant  recipients in designing PAGE because it had to be developed and  implemented so quickly. The Inspector General’s report noted that user  input significantly increases the likelihood that the system will meet user  needs and also helps avoid rework costs due to a lack of functionality.  Similarly, we previously reported on the importance of eliciting the users’  needs to identify and prioritize system requirements. Without gathering  this information, programs and systems may not meet the needs of their  users.
DOE officials stated that they have implemented a number of  improvements to both the administration of PAGE, and the system itself,  to help address user concerns and that they are currently implementing  more changes. For example, DOE established a PAGE hotline to assist  users and gather users’ feedback and also provided training videos for  recipients using PAGE. DOE officials also stated that they recently  implemented a new software tool to gather and prioritize user feedback  from large numbers of recipients to better address users’ major concerns.  Additionally, DOE officials said that among other improvements, they plan  to incorporate a new interface in the next few months for DOE staff to  review data reported in PAGE, which was designed to improve usability of  the system. DOE officials stated that these improvements will take time to  implement and have to be carefully considered so as not to negatively  affect other PAGE functions. For example, PAGE is also used for recipient  reporting by DOE’s Weatherization Assistance and State Energy programs.  DOE officials also stated that they have had to adapt their process to  handle the large number of PAGE users, in contrast to the previous  system. Specifically, DOE officials stated that approximately 50 state users  and a limited number of federal staff used the previous system, while  PAGE had 4,292 recipient and 411 federal users as of December 8, 2010.
section_title: Staffing and Expertise Challenges
paragraphs: Some DOE officials, monitoring staff, and grant recipients, as well as all  stakeholders we contacted, stated that some recipients are also  encountering staffing and expertise challenges that have limited their  ability to monitor the use of Recovery Act funds and ensure effective and  efficient use of funds while also meeting Recovery Act and other federal  requirements. As noted previously, some project officers stated that some  recipients may lack sufficient resources and staffing for program oversight  such as monitoring. Some DOE officials also acknowledged the significant  recipient workload associated with monitoring. These officials stated that  the biggest overall challenge to monitoring was the need to determine the  right amount of information to collect from recipients so as to ensure  recipient compliance with applicable federal requirements while not  burdening recipients with reporting requirements. These officials also  stated that they took steps to decrease the reporting burden on recipients,  including decreasing certain monitoring requirements. Further, these DOE  officials also stated that some recipients said that they might have trouble  ensuring compliance with program requirements due to limited staffing  and were focused on Recovery Act requirements such as Davis-Bacon and  Buy American. Finally, the NASEO and USCM representatives we spoke  with stated that some recipients have expressed concerns about  complying with Davis-Bacon requirements, especially with limited staff  and a large number of projects. For example, both USCM representatives  stated that while some city and county projects already had Davis-Bacon  or Buy American requirements before the Recovery Act, they were  typically on much larger projects in excess of $30 million, such as  transportation projects, with dedicated resources to ensure compliance  with these requirements.
Some DOE monitoring staff and the NASEO and USCM representatives  stated that some recipients found compliance with federal laws, including  Recovery Act provisions, such as those for financial management  monitoring and Davis-Bacon, difficult because of a lack of previous  expertise with those requirements. Additionally, some DOE monitoring  staff stated that some recipients have limited experience with federal  grants and faced a steep learning curve with implementing projects, and  that this inexperience has limited monitoring efforts, making it more  difficult to ensure that funds were spent properly. For example, several  DOE staff in one field office stated that, in particular, those recipients that  did not have previous experience performing a Single Audit Act report  tended to have more trouble meeting EECBG requirements than others  due to inexperience. Additionally, some DOE project officers also stated  that some smaller recipients with fewer staff did not have specific  expertise in energy management and that this made it more difficult to  monitor programs. Further, these DOE project officers also noted that  certain project types, such as energy loan programs, may have fewer  tangible outcomes than others such as building retrofits, and are thus  more difficult to monitor, especially without specific staff expertise.  Additionally, certain Recovery Act requirements can also prove more  difficult to ensure compliance with than others. For example, both NASEO  representatives stated that some recipients found compliance with the Buy  American provision difficult, especially for items with multiple  components such as air conditioners.
DOE is taking steps to address staffing and expertise challenges by  expanding support to recipients. Some DOE officials and the NASEO and  USCM representatives stated that DOE’s administration of EECBG was  initially limited during the program’s early stages and that this hindered  early program administration including oversight. Overall, the NASEO and  USCM representatives stated that while the DOE program office has  improved significantly in providing support such as guidance to recipients,  the program was significantly impacted by these early delays. DOE has  gradually expanded the amount of support provided to recipients. For  example, while DOE project officers continue to provide individualized  support to recipients, DOE has also developed a Technical Assistance and  Solution Center to provide information related to monitoring recipient  activities such as project implementation. Through the Technical  Assistance and Solution Center, DOE has provided near daily Web  seminars on specific energy topics while also helping connect recipients  with specific technical expertise. Further, DOE continues to issue  programwide guidance to help recipients comply with Recovery Act and  program requirements. For example, on January 4, 2011, DOE issued  guidance to help recipients determine the eligibility of recipient programs  for Recovery Act funds. DOE has also hosted seminars with recipients and  subrecipients to help identify and share monitoring best practices. Finally,  DOE is working with the Office of Management and Budget (OMB) to  update OMB’s Compliance Supplement to its guidance for the Single Audit  Act (Cir. No. A-133) regarding EECBG program requirements.
section_title: DOE Has Faced Challenges in Determining the Extent to Which the EECBG Program is Meeting Recovery Act and Program Goals for Energy Savings
paragraphs: EECBG program recipients reported using EECBG grant funding to  develop projects designed to achieve a variety of benefits in line with  Recovery Act and program goals, including reducing total energy use and  increasing energy savings for local governments and residents. For  example, some recipients we contacted reported anticipating energy  savings and reduced overall energy usage from such projects as powering  the electrical needs for a large city park with solar panels; maximizing the  use of day lighting in government buildings; installing more energy- efficient technology in households and businesses; replacing convention  center light fixtures with light-emitting diode (LED) bulbs to reduce  energy usage; and updating and remodeling a 40-year-old public building  with more energy-efficient products, including new windows and doors,  and HVAC systems.
Furthermore, DOE officials told us that some recipients are already  reporting achieving benefits consistent with Recovery Act and program  goals. For example, DOE reported that according to initial recipient self- reporting through December 2010, EECBG recipients have upgraded more  than 10,000 buildings, installed 40,000 efficient street lights, and upgraded  more than 100,000 traffic signals. DOE has put some examples of program  successes on its Web site. For example, a small town in southwestern  Wyoming used its EECBG funds to convert its streetlights to LED fixtures.  Town officials reported better lighting quality and visibility, less light  pollution, and lower energy use that has reduced lighting-related energy  costs by almost two-thirds. In North Carolina, local officials used EECBG  funds to convert an abandoned grocery store into an energy-efficient  community training center and classroom. By installing a more energy- efficient roof, new insulation, and HVAC systems, local officials said they  anticipate achieving substantial energy savings. Another recipient in  Oklahoma used EECBG funds to purchase five wind turbines. According  to the recipient, the new wind energy technology has offset the electrical  costs for all town-owned buildings, and the recipient reported anticipating  saving $24,000 annually.
However, DOE officials have experienced challenges in assessing whether  the EECBG program is meeting Recovery Act and program goals for  energy savings because most recipients do not measure energy savings by  collecting actual data and several factors affect the reasonableness of  energy-savings estimates. Additionally, while DOE officials say they have  anecdotal examples of program successes, DOE lacks actual programwide  data on energy savings. DOE guidance requires that recipients report  impact metrics—which include energy savings, energy cost savings,  renewable-energy generation, and emissions reductions—on a quarterly  basis and verify cumulative totals when grants are closed out, but it does  not require that these impact metrics be based on actual, as opposed to  estimated, data. Furthermore, according to some DOE officials, there  have been only a few opportunities for recipients to collect actual energy- savings data because in most cases actual data are only available after a  project has been completed, and recipients are just beginning to complete  projects. These officials said that instead of collecting actual energy- savings data, most recipients report estimates to comply with program  reporting requirements.
As part of the quarterly review process, DOE’s monitoring plan appendix  requires project officers to assess whether recipients’ estimates of impact  metrics, including energy savings, are reasonable and to determine  whether grant recipients have an adequate procedure in place to collect,  verify, and report these data. Project officers are further instructed, as part  of this quarterly review process, to review recipients’ reported impact  metrics and determine whether they are within a range of values that DOE  would expect. For example, DOE’s EECBG desktop review guidance  instructs project officers to consider rejecting recipients’ quarterly reports  in cases where the estimates entered by recipients appear too low or too  high.
According to DOE officials, several factors affect the extent to which  estimates are reasonable. One factor is the variance in the type and  robustness of methodologies that recipients use to develop estimates.  DOE guidance allows recipients flexibility in how they estimate impact  metrics, such as energy savings. For example, DOE’s Program Notice 10- 07B requires that recipients “take care to account for other determinant  factors (e.g., weather variation)” when recipients develop estimates. DOE  officials said that they prefer that recipients rely on certain estimation  methods and tools that DOE would expect to produce more accurate and  sophisticated estimates of grant project results—such as contractor- or  engineering-supplied estimates of project savings or estimates calculated  with the Environmental Protection Agency’s Portfolio Manager tool. For  recipients that are not able to use methods or tools that are specific to  their grant projects, DOE has provided recipients with tools that DOE  officials believe are capable of calculating “high-level” estimates of energy- related impact metrics. Since the beginning of the EECBG program in  2009, DOE has updated and refined its estimating tool and underlying  assumptions several times and may update the tool and assumptions in the  future as well. While DOE officials said they believe that estimates  calculated with the current version of this tool are more accurate than  those calculated with previous versions, DOE does not require that  recipients who use its estimating tool to use the most updated version  when calculating and reporting estimates. Consequently, some recipients  may use DOE’s earlier, less refined tool to develop estimates of energy- related impact metrics.
Another factor that affects DOE officials’ ability to assess reasonableness  is the fact that the agency recommends but does not require, that  recipients report the methods or tools used to calculate estimates, so DOE  officials do not know which recipients are using older versions of DOE’s  estimation tool or other methods to estimate energy-related impact  metrics. Knowing which method or version of a tool recipients used to  calculate estimates may be more important for smaller grant recipients, as  DOE officials told us they believe that smaller grant recipients who do not  have the expertise at hand or resources to hire energy-efficiency experts  are more likely to use a DOE-supplied estimation tool. Without knowing  the methods being used by recipients to estimate energy-related impacts,  DOE cannot identify instances where the method along with the  associated assumptions being used in calculating estimates may need to be  more carefully reviewed.
A third factor that DOE officials said can affect the development and  reporting of reasonable estimates is the level of expertise available to  recipients to develop impact metrics, as this can vary. According to DOE  officials, some EECBG recipients are receiving federal grants for the very  first time through the EECBG program, which was implemented in March  2009. Some communities may have limited (if any) direct experience with  federal grant program requirements, and likewise have limited experience  in measuring and reporting impact metrics. As a result, DOE officials  reported that some recipients have had difficulty developing their  estimates. In addition, DOE officials said that some recipients may also  have made errors in reporting their estimates of energy-related impact  metrics. For example, DOE officials said that some recipients may be  incorrectly aggregating impact metrics from multiple project sites and, as  a result, producing errors in the estimated energy-related impacts.
In December 2010, DOE issued guidance to recipients outlining the steps  DOE and recipients must take to formally close out EECBG grants. As part  of this process, project officers are required to review recipients’ final  quarterly performance report and federal financial report for  completeness and reasonableness. However, this guidance does not  specify how project officers should assess reasonableness. DOE officials  said that the agency is in the process of drafting internal closeout guidance  for its project officers that will outline the procedures the project officers  must follow to formally close out a grant. According to DOE officials, the  upcoming internal closeout guidance intends to recommend, but not  require, that recipients confirm they are reporting the most accurate data  available at the time of closeout. DOE officials told us that once a grant is  closed out, the agency does not require and cannot legally obligate the  recipients to capture additional energy-savings data. For the few grants  that have been closed, DOE expects its project officers to rely on their  own expertise to assess the reasonableness of the estimates, according to  DOE officials. For example, one project officer told us that as a project is  completed, he determines whether the reported energy savings are  reasonable by comparing the estimate when the project is completed to  the recipient’s original estimates, saying that he expects the estimates to  be comparable unless the recipient has changed the scope of the project  or received updated information from vendors or engineers. Even if the  scope of the project has not changed or no new information has been  provided, differences may be observed if recipients used an earlier version  of the DOE tool to prepare an initial estimate and then used the updated  DOE tool to compute the energy savings at the end of the project. Given  that DOE may not know what method the recipient used to estimate  energy savings, project officers may not be able to determine the level of  review necessary to ensure reasonable reporting. Additionally, some of the  project officers noted that they do not have the technical expertise to  independently verify energy-savings estimates.
To determine overall program outcomes, DOE officials told us they plan to  conduct a program-wide evaluation measurement and verification study  after the end of the EECBG program, which will be designed to measure  and report the program’s energy savings and cost savings. However, this  effort is still in the design phase. As part of this study, the officials said  that they would need to capture more than a year’s worth of data to  account for weather and seasonal variations that impact energy needs.  While DOE collects some information regarding expected energy savings,  officials noted that they were uncomfortable reporting these numbers  before completing the study, which may be as long as 2 to 3 years after the  projects are completed.
section_title: Oversight of Recipient Reporting Data Quality Continues for the Sixth Round of Reporting
paragraphs: To meet our mandate to comment on recipient reports, we have continued  monitoring data that recipients reported for Recovery.gov, including data  on jobs funded. This time we focused our review on the EECBG recipient  data in addition to the national data. Analyzing these data can help in  improving the accuracy and completeness of the Recovery.gov data and in  planning analyses of recipient reports. Overall, this round’s results were  similar to those we observed in previous rounds. According to  Recovery.gov as of January 30, 2011, recipients reported on over 209,400  awards across multiple programs indicating that the Recovery Act funded  approximately 585,654 jobs during the quarter beginning October 1, 2010,  and ending December 31, 2010. This included 2,051 prime reports  associated with EECBG recipients. As reported by the Recovery  Accountability and Transparency Board, job calculations are based on the  number of hours worked in a quarter and funded under the Recovery  Act—expressed in FTEs.
subsections: section_title: Analysis of Sixth Round Recipient Reporting Data Shows Data Quality Remains Relatively Stable
paragraphs: Using the sixth reporting period data, we continued our monitoring of errors  or potential problems by repeating the analyses and edit checks reported in  our previous reports. We reviewed 71,643 prime recipient report records  from all programs posted on Recovery.gov for this sixth round. This was, for  the first time, a decrease of 6,068 prime recipient reports or about an 8  percent drop from round five. The size of this decline in reporting was  somewhat mitigated by the number of prime recipients reporting for the  first time in round six. In round five, 7,465 recipients identified that round as  their final report and did not report in round six. This was more than three  times the number of prime recipients reporting for the first time in round six  and suggests that further decreases in the number of recipients reporting in  the next quarter are likely. For our analyses, in addition to this sixth round  of recipient report data, we also used all the previous rounds of data as  posted on Recovery.gov as of February 2, 2011.
In examining recipient reports, we continued to look for progress in  addressing limitations we noted in our prior reports. In those prior rounds,  we reviewed data logic and consistency and reviewed unusual or atypical  data. Data logic and consistency provide information on whether the data  are believable, given program guidelines and objectives; unusual or  atypical data values indicate potential inaccuracies. As with previous  quarterly report rounds, these reviews included (1) the ability to link  reports for the same project across quarters and (2) concerns in the data  logic and consistency, such as reports marked final that show a significant  portion of the award amount not spent. We continued to see minor  variations in the number or percent of reports appearing atypical or  showing some form of data discrepancy. For example, we continued to  find a small number of prime recipient reports for which there were  potential linkage issues across quarters. For this latest round, there was a  slight increase from 1.5 percent to 2.2 percent in the number of prime  reports appearing across all quarters showing a skip in reporting for one  or more quarters. This may impact the ability to track project funding and  FTEs over quarters. The number of reports marked “final” for which there  appeared to be some discrepancy, such as reports marked “final” but for  which project status was marked as less than 50 percent completed,  continued to be quite small and unchanged from the previous round.
We continued to examine the recipient reports’ agency review flag field as  part of our examination of data logic and consistency, since we have noted  inconsistencies between agencies’ accounts of their review process and  the data shown in that field. Prime recipient report records include a  review flag indicating whether or not a federal agency reviewed the record  during the data quality review time frames. Prior analyses suggested that,  for some agencies, the data in this field might not correctly reflect the  extent of their review process. However, this did not seem to be the case  for the EECBG program. EECBG program data in this field in this sixth  round showed that 93 percent of the prime recipient reports were marked  as reviewed by DOE, which was generally consistent with accounts of  agency officials about their review process. However, we continue to  observe some inconsistency when another data field on recipient reports,  which shows whether or not a correction was initiated, is considered in  conjunction with agency and recipient review flags. A correction could be  initiated by either the prime recipient or the reviewing agency. Logically,  one might expect that if a correction was made, it would have been  initiated by a reviewer, and therefore the review flag should also be set to  “yes.” In this sixth round, as in the prior round, 10 percent of all prime  recipient reports for all programs had this correction flag set to “yes” even  though the review flags indicated that neither the agency nor prime  recipient had reviewed those reports.
As part of our focus on EECBG recipient reports for this sixth round of  reporting, we examined reported FTE data since they can provide insight  into the use and impact of the Recovery Act funds. Recipient reports of  FTEs, however, cover only direct jobs funded by the Recovery Act. They  do not include the employment impact on suppliers (indirect jobs) or on  the local community (induced jobs). Our analyses of EECBG reporting  for the last five quarters showed a steady increase in the number of FTEs  reported in each quarterly reporting period. As shown in figure 1, there  was also a similar steady increase in the percent of EECBG recipients  reporting funding at least a partial FTE with Recovery Act funds.
For further discussion of FTE data limitations, see GAO, Recovery Act: Recipient  Reported Jobs Data Provide Some Insight into Use of Recovery Act Funding, but Data  Quality and Reporting Issues Need Attention, GAO-10-223 (Washington, D.C.: Nov. 19,  2009), 6-9. gathered from DOE officials in headquarters and DOE project officers in the  field, continues to be addressed by DOE officials at all levels. As we noted in  September, some confusion may have existed about the acceptability and use  of some methods for calculating FTEs over the course of the reporting  periods. This decision is also based on some irregularities and  inconsistencies we observed in our analyses of the FTE data across quarters  and the relationship of the hours worked, as reported to DOE by recipients,  with the FTE values the recipients directly reported to  FederalReporting.gov. DOE officials indicated that they continue to assess  compliance with and encourage recipients to follow the DOE and Office of  Management and Budget (OMB) guidance on how to correctly report FTEs.  Moving forward, as these issues in reporting methods are addressed, it is  likely that the comparability and reliability of the figures may improve.
section_title: Quality Reviews Performed on EECBG Data by DOE and Prime Recipients Included a Focus on Updated OMB Guidance Requirements
paragraphs: Each quarter, DOE performs quality assurance steps on the data that  recipients provide to FederalReporting.gov, including checks that are  performed centrally across all their Recovery Act programs and review done by EECBG project officers at the program level. Based on these  reviews, DOE officials reported that most recipients of Recovery Act have reported to FederalReporting.gov in previous rounds and now  understand the reporting process, resulting in the reporting proceeding  more smoothly.
As in previous rounds, DOE performed several checks of the data centr as information became available. For example, officials compared the  amount recipients reported as funds awarded with agency internal  records. They also compared jobs data from DOE’s PAGE reporting  system with FTEs reported to FederalReporting.gov. When discrepancies  were found, project officers were instructed to contact recipients to make  the necessary corrections. DOE followed up with grant recipients who did  not report to FederalReporting.gov. For the sixth round, DOE reported  36  recipients to OMB as not in compliance. Of these, 34 are EECBG grant  recipients. Several are tribal recipients that a reporting online is particularly challenging.  re in remote locations where  EECBG project officers’ efforts also helped ensure the quality of  information recipients reported to FederalReporting.gov. For example,  one group of project officers we interviewed reported spending a large  portion of time helping recipients complete reporting requirements and  ensuring the quality of reports. Project officers cited helping recipients  understand terminology, such as distinguishing between vendors and  recipients of subawards. They reported taking steps, including following  up when large increases in job numbers were reported, reports were  missing, a recipient in a remote location had difficulty submitting reports,  or recipients had questions about definitions.
DOE officials notified both recipients and reviewers, such as project  officers, of the need to ensure that narrative descriptions met  requirements laid out in OMB’s September 2010 guidance. On September  29, 2010—a few days after OMB’s guidance was released but before  recipients started reporting for the quarter—DOE e-mailed both recipients  and project officers instructions related to the guidance. The e-mail to  recipients informed recipients of the need to provide sufficiently clear  descriptions to facilitate the public’s understanding, and stated that overly  general or unclear award descriptions could be considered material  omissions. Similarly, the e-mail to reviewers restated the guidance. It  instructed reviewers to make sure they read the descriptions in the  narrative data fields, and provide a comment to the recipient if they  believed clarification was required. DOE also included this information in  its webinars on recipient reporting designed for grant recipients and  contractors. Further, it included a step in the reviewers’ checklist to  determine if the narrative descriptions provided clear and complete  information on the award’s purpose, scope, and activities.
DOE officials also reported that during the last three quarters’ reviews  they have focused on ensuring that reports marked “final” correctly reflect  that status. They have reached out to educate recipients on what that  designation means and to ensure that those marked “final” are correctly  identified. This includes looking at the amount reported as spent. DOE’s  quality assurance process flags reports in which it appears the designation  may not be correct based on financial analyses, and encourages recipients  to make needed corrections during the continuous corrections process.
section_title: Conclusions
paragraphs: The Recovery Act pledges unprecedented transparency and accountability  in its use of funds. In light of this pledge, the ability of the EECBG program  to ensure compliance with applicable laws, including the Recovery Act  and program requirements is critical, and will help determine the extent to  which the program is meeting Recovery Act and program goals. DOE and  recipients are taking steps to monitor the use of funds to help ensure that  Recovery Act and program requirements are met, but DOE assesses  recipients’ monitoring practices only in a limited number of cases.  Because of this limited assessment, DOE is not always able to identify  when recipients’ monitoring practices are sufficient to ensure compliance  with applicable federal requirements. If DOE is not aware of recipients’  monitoring practices, it cannot ensure that they have effective monitoring  practices in place.
In addition to ensuring that Recovery Act and program requirements are met,  DOE must also be able to determine the extent to which the EECBG program  is meeting Recovery Act and program goals for energy-related outcomes, such  as energy savings. Because actual energy-savings data are often unavailable,  DOE must rely on estimates. DOE takes some steps to assess the  reasonableness of energy-related estimates, but without knowing which  methodology or tool recipients used, it is difficult to do such an assessment.  For example, without knowing if recipients who used DOE’s estimating  tool—which has been revised in the past and may be revised again in the  future—were using the best available information for calculating metrics in  the most recent version, project officers cannot be sure that recipients used  sound estimating methods. Without more information regarding the  recipients’ estimating methods, DOE’s assessment of the reasonableness of  these estimates may not be sufficient to support the defensible development  of programwide estimates of energy-related impacts, and therefore, the  assessment of progress toward program goals.
section_title: Recommendations for Executive Action
paragraphs: To better ensure that EECBG funds are used to meet Recovery Act and  program goals, we are recommending that the Secretary of Energy take  the following two actions:    Explore a means to capture information on the monitoring processes of all  recipients to make certain that recipients have effective monitoring  practices.
Solicit information from recipients regarding the methodology they used  to calculate their energy-related impact metrics and verify that recipients  who use DOE’s estimation tool use the most recent version when  calculating these metrics.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Department of Energy for review  and comment. DOE’s comments are reproduced in appendix II. DOE  agreed with GAO’s recommendations, stating that “implementing the  report’s recommendations will help ensure that the Program continues to  be well managed and executed.” DOE also provided additional information  on steps it has initiated or planned to implement. In particular, with  respect to our first recommendation, DOE elaborated on additional  monitoring practices it performs over high dollar value grant recipients,  such as its reliance on audit results obtained in accordance with the Single  Audit Act and its update to the EECBG program requirements in the  Compliance Supplement to OMB Circular No. A-133. However, these  monitoring practices only focus on larger grant recipients, and we believe  that the program could be more effectively monitored if DOE captured  information on the monitoring practices of all recipients.
We are sending copies of this report to appropriate congressional  committees, the Secretary of Energy, the Director of the Office of  Management and Budget, and other interested parties. The report will also  be available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staffs have any questions about this report, please contact  Mark E. Gaffigan at (202) 512-3841 or gaffiganm@gao.gov, or Yvonne D.  Jones at (202) 512-6806 or jonesy@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 who made major contributions to this report  are listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
subsections: section_title: Objectives
paragraphs: We took a number of steps to address our objectives, which were to  determine (1) how Energy Efficiency and Conservation Block Grant  (EECBG) funds are being used, and what challenges, if any, do EECBG  recipients face in obligating and spending their funds; (2) actions  Department of Energy (DOE) officials and EECBG recipients are taking to  provide oversight of EECBG funds and challenges, if any, they face in  meeting Recovery Act and other requirements; (3) the extent to which  EECBG program recipients and the EECBG program are meeting  Recovery Act and EECBG program goals for energy savings, and what  challenges, if any, have recipients encountered in measuring and reporting  energy savings; and (4) how the quality of estimates of jobs created and  retained reported by Recovery Act recipients, particularly EECBG  recipients, has changed over time.
section_title: Scope and Methodology
paragraphs: To address these objectives, we reviewed and analyzed relevant federal  laws and regulations, as well as federal agency guidance related to  program goals, use of funds, monitoring, and reporting outcomes. We  interviewed agency officials and about 30 staff members in DOE field  offices that have some role in managing and monitoring awards including  project officers, technical monitors, contract specialists and contractors,  and compliance officers, as well as those that provide direct support  including attorneys and accountants, to discuss the roles and  responsibilities for managing awards, project management guidance and  communication, activities undertaken and challenges faced in providing  support to recipients with obligating and spending funds, monitoring, and  reporting outcomes. We also met with officials from the DOE Office of  Inspector General to better understand their role in the expanded grant- awarding process and in monitoring recipients. We also interviewed  representatives from associations and organizations, including the  National Association of Counties (NACo), the National Association of  State Energy Officials (NASEO), and the U.S. Conference of Mayors  (USCM) to better understand best practices identified and challenges  faced by recipients in using funds, monitoring projects, and reporting  outcomes.
We also reviewed reports prepared by DOE and analyzed data from DOE’s  iPortal database on the number of grant awards, amount of obligations  and expenditures, and number of users. In addition, we reviewed reports  prepared by DOE and analyzed data from DOE’s PAGE database on the  number and type of program activities. We assessed the reliability of the  program data we used by reviewing DOE documentation and Inspector  General reports on the Performance and Accountability for Grants in  Energy (PAGE) system; interviewing knowledgeable DOE officials about  the quality and potential limitations of the data and what checks and  controls were in place to ensure data accuracy; and performing edit  checks on iPortal and PAGE data. We determined the data were  sufficiently reliable for our purposes.
In addition, we developed a set of questions to be administered to a  nonprobability sample of 50 grant recipients eligible to receive formula  funding. These questions addressed various aspects of our first three  objectives, such as obligating and spending funds, guidance, best  practices, internal controls, monitoring, working with DOE officials, and  challenges faced in implementing projects. We pre-tested and revised  these questions and sent them in an e-mail to 50 EECBG grant recipients in  cities and counties in the United States. Using October 2010 data from  DOE’s iPortal and PAGE information systems, and from data gathered  from Recovery.gov, we purposefully identified and selected a sample of  city, county, and tribal recipients that included a range of grants by project  activity types (e.g., building retrofit, incentive program); award size; state;  different DOE project officers and monitors; and different stages of  completion. We received responses from 25 of the 50 city and county grant  recipients. No tribal communities responded. The responses from  recipients in this sample are not generalizable to the 2,185 state, city,  county and tribal recipients receiving formula EECBG funds nationwide.
To obtain additional information regarding our objective addressing  program goals for saving energy and reporting those savings, we selected  another nonprobability sample of 41 EECBG grant recipients and sent  them a similar e-mail questionnaire. We selected a range of recipients for  this sample similar to the sample previously described. In addition,  however, these recipients were selected because they had completed  many, if not all, projects in their award as of October 2010. We selected  these recipients in order to obtain information on best practices, strengths  and weaknesses in reporting outcomes and challenges in measuring jobs,  and cost and energy savings. The questionnaire sent to this sample of  recipients included questions addressing these topics along with a few of  the same questions asked of the other recipient sample. We received  responses from 24 of the 41 grant recipients in the sample. One tribal grant  recipient in our sample responded. The responses from this sample are  also not generalizable to the population of EECBG recipients nationwide.
In making our selection of grant recipients in both samples, we did not  include grant recipients whose grant applications or awards were the  subject of data collection efforts for previous GAO or DOE Inspector  General reports. For both samples, we sent follow-up e-mails to recipients  who did not respond after several weeks to our initial e-mail, encouraging  them to complete the questionnaire. We were not able to conduct further  follow-up activities to improve the response rate in the limited time  remaining for us to complete our data collection field work. We reviewed  responses to questions on guidance and experiences in obligating and  spending funds, oversight and monitoring efforts, and reporting outcomes  as well as best practices and challenges faced in managing and monitoring  projects.
The recipient reporting section of this report responds to the Recovery  Act’s mandate that we comment on the estimates of jobs created or  retained by direct recipients of Recovery Act funds. For our review of the  sixth submission of recipient reports, covering the period from October 1,  2010, through December 31, 2010, we built on findings from our five prior  reviews of the reports, covering the period from February 2009 through  September 30, 2010. To understand how the quality of jobs data reported  by EECBG grant recipients has changed over time, we compared the six  quarters of recipient reporting data that were publicly available at  Recovery.gov on February 2, 2011. We performed edit checks and other  analyses on EECBG grant recipient reports, which included matching  DOE-provided data from iPortal and PAGE information systems on  EECBG recipients. As part of that matching process, we also examined the  reliability of recipient data contained in these DOE information systems.  Our assessment activities included reviewing documentation of system  processes, Inspector General reviews of the systems and conducting logic  tests for key variables. Our matches showed a high degree of agreement  between DOE recipient information and the information reported by  recipients directly to FederalReporting.gov. However, the magnitude of  the differences or lack of agreement with regard to the full-time  equivalents (FTE) are not insignificant. In general, we consider the data  used to be sufficiently reliable, with attribution to official sources for the  purposes of providing background information and a general sense of the  status of EECBG recipient reporting.
To update the status of open recommendations from previous bimonthly  and recipient reporting reviews, we obtained information from agency  officials on actions taken in response to the recommendations.
We conducted this performance audit from September 2010 to April 2011  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.
section_title: Appendix II: Comments from the Department of Energy
section_title: Appendix III: Status of Prior Open Recommendations and Matters for Congressional Consideration
paragraphs: In this appendix, we update the status of agencies’ efforts to implement  the 26 open recommendations, and 5 newly implemented  recommendations from our previous bimonthly and recipient reporting  reviews. New recommendations and agency responses to those  recommendations are included in the program section of this report.  Recommendations that were listed as implemented or closed in a prior  report are not repeated here. Lastly, we address the status of our Matters  for Congressional Consideration.
subsections: section_title: Department of Energy
subsections: section_title: Open Recommendations
paragraphs: Given the concerns we have raised about whether program requirements  were being met, we recommended in May 2010 that the Department of  Energy (DOE), in conjunction with both state and local weatherization  agencies, develop and clarify weatherization program guidance that    clarifies the specific methodology for calculating the average cost per  home weatherized to ensure that the maximum average cost limit is  applied as intended.    accelerates current DOE efforts to develop national standards for  weatherization training, certification, and accreditation, which is currently  expected to take 2 years to complete.    develops a best practice guide for key internal controls that should be  present at the local weatherization agency level to ensure compliance with  key program requirements.    sets time frames for development and implementation of state monitoring  programs.  revisits the various methodologies used in determining the weatherization  work that should be performed based on the consideration of cost- effectiveness and develops standard methodologies that ensure that  priority is given to the most cost-effective weatherization work. To  validate any methodologies created, this effort should include the  development of standards for accurately measuring the long-term energy  savings resulting from weatherization work conducted.
In addition, given that state and local agencies have felt pressure to meet a  large increase in production targets while effectively meeting program  requirements and have experienced some confusion over production  targets, funding obligations, and associated consequences for not meeting  production and funding goals, we recommended that DOE clarify its  production targets, funding deadlines, and associated consequences while  providing a balanced emphasis on the importance of meeting program  requirements.
DOE generally concurred with all of our recommendations and has begun  to take some actions to implement them. With regard to clarifying the  methodology to calculate the average cost per home weatherized, DOE  has taken some action but has not yet provided specific guidance to clarify  this methodology. In response to our recommendation to develop and  clarify guidance on developing national standards for weatherization  training, certification, and accreditation, according to DOE officials, DOE  is making progress toward advancing such standards. For example, DOE  and the Department of Labor released the draft “Workforce Guidelines for  Home Energy Upgrades” for single-family homes in November 2010. DOE  officials expect to finalize the guidelines by early spring 2011.
DOE has taken some steps to address our recommendation that it develop  and clarify guidance to generate a best practice guide for key internal  controls. According to officials, the Weatherization Assistance Program  Technical Assistance Center Web site provides a variety of best practices  on program management, administrative procedures, and technical  standards. However, while the Web site is a central repository for all  relevant resource documents, DOE has not created a dedicated guide on  best practices for key internal controls. In response to our  recommendation to develop and clarify guidance to set time frames for  development and implementation of state monitoring programs, DOE has  taken limited action. DOE officials provided current guidance available on  state monitoring efforts but did not identify any time frames for  development or implementation of state monitoring programs.
With regard to our recommendation on developing and clarifying guidance  for prioritizing cost-effective weatherization work, DOE has taken some  actions. For example, DOE contracted with the Oak Ridge National  Laboratory in 2010 to conduct an assessment of aspects of program  performance such as costs and benefits for program years 2008 to 2010.  The assessment will cover both Recovery Act funds and annual  appropriation funds. Preliminary results may be available in late spring  2011. In response to our recommendation that DOE clarify its production  targets, funding deadlines, and associated consequences, DOE has taken  steps to address this recommendation. According to officials, DOE has  communicated directly with recipients about funding, production, and  other priorities. For example, the Green Light program is in its fourth  round of communications between two DOE offices and recipients. DOE  officials cited these calls as assisting in the identification of barriers  preventing grantees from increasing production and expenditures. In  addition, DOE officials stated that grantees were notified of the  requirement to spend all Recovery Act funds by March 31, 2012. However,  DOE provided no evidence that it has clarified the consequences.
section_title: Newly Implemented Recommendations
paragraphs: We recommended that DOE, in conjunction with both state and local  weatherization agencies, develop and clarify weatherization program  guidance that    establishes best practices for how income eligibility should be determined  and documented and issues specific guidance that does not allow the self- certification of income by applicants to be the sole method of  documenting income eligibility.    considers and addresses how the weatherization program guidance is  impacted by the introduction of increased amounts of multifamily units.
DOE agreed with both of our recommendations and has taken action to  implement them. In response to our recommendation on issuing guidance  and establishing best practices to determine income eligibility, DOE issued  guidance—Weatherization Program Notice 10-18, 2010 Poverty Income  Guidelines and Definition of Income—on September 20, 2010. In this  guidance, DOE clarified the definition of income and strengthened income  eligibility requirements. For example, the guidance clarified that self- certification of income would only be allowed after all other avenues of  documenting income eligibility are exhausted. Additionally, for individuals  to self-certify income, a notarized statement indicating the lack of other  proof of income is required.
Regarding our recommendation on weatherization program guidance for  multifamily units, DOE officials identified several issues that impact the  increased number of multifamily buildings to be weatherized and issued  several guidance documents addressing multifamily buildings. For  example, DOE issued Weatherization Program Notice 11-1, Program Year  2011 Weatherization Grant Guidance in December 2010, which  contained two sections related to multifamily units. One section covered  the eligibility of multifamily units for the weatherization program and the  other section provided guidance on conducting energy audits on  multifamily units. In reviewing the recently issued program guidance for  both recommendations, we have concluded that DOE addressed the intent  of these recommendations.
section_title: Environmental Protection Agency
subsections: section_title: Open Recommendation
paragraphs: We recommended that the Environmental Protection Agency (EPA)  Administrator work with the states to implement specific oversight  procedures to monitor and ensure subrecipients’ compliance with the  provisions of the Recovery Act-funded Clean Water and Drinking Water  State Revolving Fund (SRF) program.
In response to our recommendation, EPA provided additional guidance to  the states regarding their oversight responsibilities, with an emphasis on  enhancing site-specific monitoring and inspections. Specifically, in June  2010, the agency developed and issued an oversight plan outline for  Recovery Act projects that provides guidance on the frequency, content,  and documentation related to regional reviews of state Recovery Act  programs and regional and state reviews of specific Recovery Act projects.  For example, EPA’s guidance states that regions and states should be  reviewing the items included on the EPA “State ARRA Inspection  Checklist” or use a state equivalent that covers the same topics. The plan  also describes EPA headquarters’ role in ongoing Recovery Act oversight  and plans for additional webcasts. EPA also reiterated that contractors are  available to provide training and to assist with file reviews and site  inspections. We are undertaking further review of the states’ use of  Recovery Act funds for the Clean Water and Drinking Water programs. As  part of that work, we will consider EPA’s and the states’ oversight of  Recovery Act funds and, more specifically, progress in implementing  EPA’s guidance.
section_title: Department of Health and Human Services: Office of Head Start
subsections: section_title: Open Recommendation
paragraphs: To facilitate understanding of whether regional decisions regarding  waivers of the program’s matching requirement are consistent with  Recovery Act grantees’ needs across regions, we recommended that the  Director of the Office of Head Start (OHS) should regularly review waivers  of the nonfederal matching requirement and associated justifications.
OHS has not conducted a review of waivers of the nonfederal matching  requirement, but OHS officials stated that the variation is largely due to  differences in regions’ policy in timing: some regional offices grant waivers  at the same time that the grant is made official, whereas other regions  grant waivers later. OHS officials stated that although the OHS central  office has not regularly reviewed grantees’ justifications for waiver  applications for regional variability in the past, they are looking into  tracking this data in their Web-based system consistently across regions.  The process of tracking waivers is not yet complete.
section_title: Open Recommendation
paragraphs: To oversee the extent to which grantees are meeting the program goal of  providing services to children and families and to better track the  initiation of services under the Recovery Act, we recommended that the  Director of OHS should collect data on the extent to which children and  pregnant women actually receive services from Head Start and Early Head  Start grantees.
The Department of Health and Human Services (HHS) disagreed with our  recommendation. OHS officials stated that attendance data are adequately  examined in triennial or yearly on-site reviews and in periodic risk  management meetings. Because these reviews and meetings do not collect  or report data on service provision, we continue to believe that tracking  services to children and families is an important measure of the work  undertaken by Head Start and Early Head Start service providers.
section_title: Open Recommendation
paragraphs: To help ensure that grantees report consistent enrollment figures, we  recommended that the Director of OHS should better communicate a  consistent definition of “enrollment” to grantees for monthly and yearly  reporting and begin verifying grantees’ definition of “enrollment” during  triennial reviews.
OHS issued informal guidance on its Web site clarifying monthly reporting  requirements, but has not clarified yearly reporting requirements.
section_title: Open Recommendation
paragraphs: To provide grantees consistent information on how and when they will be  expected to obligate and expend federal funds, we recommended that the  Director of OHS should clearly communicate its policy to grantees for  carrying over or extending the use of Recovery Act funds from one fiscal  year into the next.
HHS indicated that OHS will issue guidance to grantees on obligation and  expenditure requirements, as well as improve efforts to effectively  communicate the mechanisms in place for grantees to meet the  requirements for obligation and expenditure of funds.
section_title: Open Recommendation
paragraphs: To better consider known risks in scoping and staffing required reviews of  Recovery Act grantees, we recommended that the Director of OHS should  direct OHS regional offices to consistently perform and document Risk  Management Meetings and incorporate known risks, including financial  management risks, into the process for staffing and conducting reviews.
HHS reported OHS is reviewing the risk management process to ensure it  is consistently performed and documented in its centralized data system  and that it has taken related steps, such as requiring the grant officer to  identify known or suspected risks prior to an on-site review.
section_title: Department of Housing and Urban Development
subsections: section_title: Open Recommendation
paragraphs: Because the absence of third-party investors reduces the amount of overall  scrutiny Tax Credit Assistance Program (TCAP) projects would receive  and the Department of Housing and Urban Development (HUD) is  currently not aware of how many projects lacked third-party investors, we  recommended that HUD should develop a risk-based plan for its role in  overseeing TCAP projects that recognizes the level of oversight provided  by others.
HUD responded to our recommendation by saying it will identify projects  that are not funded by the HOME Investment Partnerships Program funds  and projects that have a nominal tax credit award. However, HUD said it  will not be able to identify these projects until it could access the data  needed to perform the analysis, and it does not receive access to those  data until after projects have been completed. HUD currently has not  taken any action on this recommendation because it only has data on the  small percentage of projects completed to date. It is too early in the  process to be able to identify projects that lack third-party investors. The  agency will take action once they are able to collect the necessary  information from the project owners and the state housing finance  agencies.
section_title: Department of Labor
subsections: section_title: Open Recommendations
paragraphs: To enhance the Department of Labor’s (Labor) ability to manage its  Recovery Act and regular Workforce Investment Act (WIA) formula grants  and to build on its efforts to improve the accuracy and consistency of  financial reporting, we recommended that the Secretary of Labor take the  following actions:    To determine the extent and nature of reporting inconsistencies across the  states and better target technical assistance, conduct a one-time  assessment of financial reports that examines whether each state’s  reported data on obligations meet Labor’s requirements.
To enhance state accountability and to facilitate their progress in making  reporting improvements, routinely review states’ reporting on obligations  during regular state comprehensive reviews.
Labor agreed with both of our recommendations and has begun to take  some actions to implement them. To determine the extent of reporting  inconsistencies, Labor awarded a contract in September 2010 to perform  an assessment of state financial reports to determine if the data reported  are accurate and reflect Labor’s guidance on reporting of obligations and  expenditures. Labor plans to begin interviewing states in February 2011  and will issue a report after the interviews are completed and analyzed. To  enhance states’ accountability and facilitate their progress in making  improvements in reporting, Labor has drafted guidance on the definitions  of key financial terms such as obligations, which is currently in final  clearance. After the guidance is issued, Labor plans to conduct a  systemwide webinar on this topic.
section_title: Open Recommendation
paragraphs: Our September 2009 bimonthly report identified a need for additional  federal guidance in defining green jobs and we made the following  recommendation to the Secretary of Labor:    To better support state and local efforts to provide youth with  employment and training in green jobs, provide additional guidance about  the nature of these jobs and the strategies that could be used to prepare  youth for careers in green industries.
Labor agreed with our recommendation and has begun to take several  actions to implement it. Labor’s Bureau of Labor Statistics has developed a  definition of green jobs which was finalized and published in the Federal  Register on September 21, 2010. In addition, Labor continues to host a  Green Jobs Community of Practice, an online virtual community available  to all interested parties. As part of this effort, in December 2010, Labor  hosted its first Recovery Act Grantee Technical Assistance Institute, which  focused on critical success factors for achieving the goals of the grants  and sustaining the impact into the future. The department also plans to  host a symposium in late Spring 2011 with the green jobs state Labor  Market Information Improvement grantees. The symposium will share  recent research and other promising practices to inform workforce  development and training strategies. In addition, the department  anticipates releasing its Internet-based Occupational Information Network  (O*NET) Career Profiler tool in the winter of 2011 for those new to the  workforce. This tool includes the O*NET green leaf symbol to highlight  green occupations. Furthermore, the department’s implementation study  of the Recovery Act-funded green jobs training grants is still ongoing. The  interim report is expected in late 2011.
section_title: Newly Implemented Recommendation
paragraphs: Our September 2009 bimonthly report identified a need for additional  federal guidance in measuring the work readiness of youth and we made  the following recommendation to the Secretary of Labor:    To enhance the usefulness of data on work readiness outcomes, provide  additional guidance on how to measure work readiness of youth, with a  goal of improving the comparability and rigor of the measure.
Labor agreed with our recommendation and has taken steps to implement  it. Labor issued guidance in May and August 2010 to identify requirements  for measuring the work readiness of youth and the methodology for  implementing the work readiness indicators for the WIA Youth Program.  The guidance clarified the changes to the definition of work readiness by  requiring a worksite evaluation conducted by the employer.
section_title: Executive Office of the President: Office of Management and Budget
subsections: section_title: Open Recommendation
paragraphs: To leverage Single Audits as an effective oversight tool for Recovery Act  programs, we recommended that the Director of the Office of Management  and Budget (OMB)  1.  provide more direct focus on Recovery Act programs through the  Single Audit to help ensure that smaller programs with higher risk have  audit coverage in the area of internal controls and compliance;  2.  take additional efforts to provide more timely reporting on internal  controls for Recovery Act programs for 2010 and beyond;  3.  evaluate options for providing relief related to audit requirements for  low-risk programs to balance new audit responsibilities associated  with the Recovery Act;  4. issue Single Audit guidance in a timely manner so that auditors can  efficiently plan their audit work;  5. issue the OMB Circular No. A-133 Compliance Supplement no later  than March 31 of each year;  6.  explore alternatives to help ensure that federal awarding agencies  provide their management decisions on the corrective action plans in a  timely manner; and  7.  shorten the timeframes required for issuing management decisions by  federal agencies to grant recipients.  (1) To provide more direct focus on Recovery Act programs to help ensure  that smaller programs with higher risk have audit coverage in the area of  internal controls and compliance through the Single Audit, OMB updated  its single audit guidance in the OMB Circular A-133, Audits of States, Local  Government, and Non-Profit Organizations Compliance Supplement in  July 2010. This compliance supplement requires auditors to consider all  federal programs with expenditures of Recovery Act awards to be  considered programs with higher risks when performing standard risk- based tests to select programs to be audited. The compliance supplement  also clarified information to assist auditors in determining the appropriate  risk levels for programs with Recovery Act expenditures. OMB officials  have stated that they are in the process of completing the 2011 Compliance  Supplement which they expected to issue by March 31, 2011. As of April 4,  2011, the 2011 Compliance Supplement had not yet been issued. They also  stated that this compliance supplement will continue to provide guidance  that addresses some of the higher risks inherent in Recovery Act  programs. The most significant of these risks are associated with newer  programs that may not yet have the internal controls and accounting  systems in place to help ensure that funds are distributed and used in  accordance with program regulations and objectives.
Since Recovery Act spending is projected to continue through 2016, we  believe that it is essential that OMB provide direction in Single Audit  guidance so that some smaller programs with higher risk would not be  automatically excluded from receiving audit coverage based upon the  requirements in the Single Audit Act. In recent discussions with OMB  officials, we communicated our concern that future Single Audit guidance  provide instruction that helps to ensure that smaller programs with higher  risk have audit coverage in the area of internal controls and compliance.  OMB officials agreed and stated that they plan to continue including  similar language in the Compliance Supplement and performing outreach  training throughout the duration of the Recovery Act.  (2) To address the recommendation for taking additional efforts to  encourage more timely reporting on internal controls for Recovery Act  programs for 2010 and beyond, OMB commenced a second voluntary  Single Audit Internal Control Project (project) in August 2010 for states  that received Recovery Act funds in fiscal year 2010. Similar to the prior  project (which did not get started until October 2009), one of the project’s  goals is to achieve more timely communication of internal control  deficiencies for higher-risk Recovery Act programs so that corrective  action can be taken more quickly. Specifically, the project encourages  participating auditors of states that received Recovery Act funds to  identify and communicate deficiencies in internal control to management  3 months sooner than the 9-month time frame currently required under  OMB Circular No. A-133. The project also requires that management  provide, 2 months earlier than required under statute, plans for correcting  internal control deficiencies to the cognizant agency for audit for  immediate distribution to the appropriate federal agencies. The federal  agency is then to have provided its concerns relating to management’s  plan of corrective actions in a written decision as promptly as possible and  no later than 90 days after the corrective action plan is received by the  cognizant agency for audit. According to OMB officials, 14 states  volunteered to participate in the second project. Each participating state  was to select a minimum of four Recovery Act programs for inclusion in  the project.
We assessed the results of the first OMB Single Audit Internal Control  Project for fiscal year 2009 and found that it was helpful in communicating  internal control deficiencies earlier than required under statute. We  reported that 16 states participated in the first project and that the states  selected at least two Recovery programs for the project. We also reported  that the project’s dependence on voluntary participation limited its scope  and coverage and that voluntary participation may also bias the project’s  results by excluding from analysis states or auditors with practices that  cannot accommodate the project’s requirement for early reporting of  control deficiencies. Overall, we concluded that although the project’s  coverage could have been more comprehensive, the analysis of the  project’s results provided meaningful information to OMB for better  oversight of the Recovery Act programs selected and information for  making future improvements to the Single Audit guidance.
OMB’s second Single Audit Internal Control Project is in progress and its  planned completion date is June 2011. OMB plans to assess the project’s  results after its completion date. As of February 9, 2011, OMB officials  have stated that the 14 participating states have met the milestones for  submitting interim internal control reports by December 31, 2010 and their  corrective action plans by January 31, 2011. We believe that OMB needs to  continue taking steps to encourage timelier reporting on internal controls  through Single Audits for Recovery Act programs.  (3) OMB officials have stated that they are aware of the increase in  workload for state auditors who perform Single Audits due to the  additional funding to Recovery Act programs and corresponding increases  in programs being subject to audit requirements. OMB officials stated that  they solicited suggestions from state auditors to gain further insights to  develop measures for providing audit relief. However, OMB has not yet  identified viable alternatives that would provide relief to all state auditors  that conduct Single Audits. For state auditors that are participating in the  second OMB Single Audit Internal Control Project, OMB has provided  some audit relief in that they have modified the requirements under  Circular No. A-133 to reduce the number of low-risk programs that are to  be included in some project participants’ risk assessment requirements. As  expenditures of Recovery Act funds are expected to continue through  2016, it is important that OMB look for opportunities and implement  various options for providing audit relief in future years.  (4) (5) With regard to issuing Single Audit Guidance in a timely manner,  and specifically the OMB Circular A-133 Compliance Supplement, we  previously reported in December 2010 that OMB officials stated that they  intended to issue the 2011 Compliance Supplement by March 31, 2011. In  January 2011, OMB officials reported that the production of the 2011  Compliance Supplement was on schedule for issuance by March 31, 2011.  As of April 4, 2011, the 2011 Compliance Supplement had not yet been  issued, and we will continue to monitor OMB’s progress to achieve this  objective.  (6) (7) In October 2010, OMB officials stated that, based on their  assessment of the results of the project, they have discussed alternatives  for helping to ensure that federal awarding agencies provide their  management decisions on the corrective action plans in a timely manner,  including possibly shortening the time frames required for federal agencies  to provide their management decisions to grant recipients. However,  OMB officials have yet to decide on the course of action that they will  pursue to implement our related recommendations. OMB officials  acknowledged that the results of the 2009 OMB Single Audit Internal  Control Project confirmed that this issue continues to be a challenge. They  stated that they have met individually with several federal awarding  agencies that were late in providing their management decisions in the  2009 project to discuss the measures that the agencies will take to improve  the timeliness of their management decisions.
section_title: Department of Transportation
subsections: section_title: Open Recommendations
paragraphs: To ensure that Congress and the public have accurate information on the  extent to which the goals of the Recovery Act are being met, we  recommended that the Secretary of Transportation direct the Federal  Highway Administration (FHWA) to take the following two actions:  1.  Develop additional rules and data checks in the Recovery Act Data  System, so that these data will accurately identify contract milestones  such as award dates and amounts, and provide guidance to states to  revise existing contract data.  2.  Make publicly available—within 60 days after the September 30, 2010,  obligation deadline—an accurate accounting and analysis of the extent  to which states directed funds to economically distressed areas,  including corrections to the data initially provided to Congress in  December 2009.
As of the time of this report, the Department of Transportation (DOT) was  in the process of developing its plans in response to these  recommendations.
section_title: Open Recommendation
paragraphs: To better understand the impact of Recovery Act investments in  transportation, we believe that the Secretary of Transportation should  ensure that the results of these projects are assessed and a determination  made about whether these investments produced long-term benefits.  Specifically, in the near term, we recommended that the Secretary direct  FHWA and the Federal Transit Administration (FTA) to determine the  types of data and performance measures they would need to assess the  impact of the Recovery Act and the specific authority they may need to  collect data and report on these measures.
In its response, DOT noted that it expected to be able to report on  Recovery Act outputs, such as the miles of road paved, bridges repaired,  and transit vehicles purchased, but not on outcomes, such as reductions in  travel time, nor did it commit to assessing whether transportation  investments produced long-term benefits. DOT further explained that  limitations in its data systems, coupled with the magnitude of Recovery  Act funds relative to overall annual federal investment in transportation,  would make assessing the benefits of Recovery Act funds difficult. DOT  indicated that, with these limitations in mind, it is examining its existing  data availability and, as necessary, would seek additional data collection  authority from Congress if it became apparent that such authority were  needed. DOT plans to take some steps to assess its data needs, but it has  not committed to assessing the long-term benefits of Recovery Act  investments in transportation infrastructure. We are therefore keeping our  recommendation on this matter open.
section_title: Newly Implemented Recommendation
paragraphs: We recommended that the Secretary of Transportation should gather  timely information on the progress they are making in meeting the  maintenance-of-effort requirement and to report preliminary information  to Congress within 60 days of the certified period (September 30, 2010),  (1) on whether states met required program expenditures as outlined in  their maintenance-of-effort certifications, (2) the reasons that states did  not meet these certified levels, if applicable, and (3) lessons learned from  the process.
On January 27, 2011, the Secretary of Transportation sent a report to  Congress that addressed each reporting element we recommended. DOT  reported that 29 states and the District of Columbia met their planned level  of expenditure and 21 states did not. It also summarized reasons states did  not meet the certified levels, such as a reduction in dedicated revenues for  transportation or a state legislature approving a lower-than-expected level  of transportation funding in the state budget. Finally, DOT’s report  provided its perspectives on lessons learned from the process, including  identifying barriers to effectively implementing the maintenance-of-effort  requirement. For example, it noted that the lack of clarity around statutory  definitions regarding what constituted “state funding” and the substantial  decreases in state dedicated transportation revenues were barriers to  states producing an accurate certification and meeting the certified level.
section_title: Department of the Treasury
subsections: section_title: Newly Implemented Recommendation
paragraphs: The Department of the Treasury (Treasury) should expeditiously provide  Housing Finance Agencies (HFA) with guidance on monitoring project  spending and develop plans for dealing with the possibility that projects  could miss the spending deadline and face further project interruptions.
Treasury officials told us that after they provided additional guidance,  every state HFA and the respective property owners complied with the 30  percent spending rule by the end of calendar year 2010. We concluded that  Treasury and the state HFAs have addressed the intent of this  recommendation.
section_title: Matters for Congressional Consideration
subsections: section_title: Matter
paragraphs: To the extent that appropriate adjustments to the Single Audit process are  not accomplished under the current Single Audit structure, Congress  should consider amending the Single Audit Act or enacting new legislation  that provides for more timely internal control reporting, as well as audit  coverage for smaller Recovery Act programs with high risk.
We continue to believe that Congress should consider changes related to  the Single Audit process.
section_title: Matter
paragraphs: To the extent that additional coverage is needed to achieve accountability  over Recovery Act programs, Congress should consider mechanisms to  provide additional resources to support those charged with carrying out  the Single Audit Act and related audits.
We continue to believe that Congress should consider changes related to  the Single Audit process.
section_title: Matter
paragraphs: To provide HFAs with greater tools for enforcing program compliance, in  the event the Section 1602 Program is extended for another year, Congress  may want to consider directing Treasury to permit HFAs the flexibility to  disburse Section 1602 Program funds as interest-bearing loans that allow  for repayment.
We continue to believe that Congress should consider directing Treasury  to permit HFAs the flexibility to disburse Section 1602 Program funds as  interest-bearing loans that allow for repayment.
section_title: Appendix IV: GAO Contacts and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contacts above, Joshua Akery, Thomas Beall, Andrew  Ching, Holly Dye, Kim Gianopoulos, Sharon Hogan, Thomas James,  Jonathan Kucskar, Kristen Massey, Karine McClosky, Alison O’Neill, Carol  Patey, Brenda Rabinowitz, Beverly Ross, Kelly Rubin, Ben Shouse,  Jonathan Stehle, Kiki Theodoropoulos, Nick Weeks, and Ethan Wozniak  made key contributions to this report.
section_title: Related GAO Products
paragraphs: The following is a list of 10 related products published since the last  mandated GAO report on the Recovery Act. (GAO-11-166, December 15,  2010). For a full list of products related to the Recovery Act, see  http://gao.gov/recovery/related-products/.
Medicaid: Improving Responsiveness of Federal Assistance to States during  Economic Downturns. GAO-11-395. Washington, D.C.: March 31, 2011.
State and Local Governments: Knowledge of Past Recessions Can Inform  Future Federal Fiscal Assistance. GAO-11-401. Washington, D.C.: March  31, 2011.
Recovery Act: Status of Department of Energy’s Obligations and  Spending. GAO-11-483T. Washington, D.C.: March 17, 2011.
Recovery Act: Broadband Programs Awards and Risks to Oversight.  GAO-11-371T. Washington, D.C.: February 10, 2011.
Department of Education: Improved Oversight and Controls Could Help  Education Better Respond to Evolving Priorities. GAO-11-194.  Washington, D.C.: February 10, 2011.
Rail Transit: FTA Programs Are Helping Address Transit Agencies’  Safety Challenges, but Improved Performance Goals and Measures Could  Better Focus Efforts. GAO-11-199. Washington, D.C.: January 31, 2011.
Defense Infrastructure: High-Level Federal Interagency Coordination Is  Warranted to Address Transportation Needs beyond the Scope of the  Defense Access Roads Program. GAO-11-165. Washington, D.C.: January  26, 2011.
Summary of GAO’s Performance and Financial Information Fiscal Year  2010. GAO-11-3SP. Washington, D.C.: January 24, 2011.
Child Support Enforcement: Departures from Long-term Trends in  Sources of Collections and Caseloads Reflect Recent Economic  Conditions. GAO-11-196. Washington, D.C.: January 14, 2011.
Multiple Employment and Training Programs: Providing Information on  Colocating Services and Consolidating Administrative Structures Could  Promote Efficiencies. GAO-11-92. Washington, D.C.: January 13, 2011.