DOE Loan Programs: Information on Implementation of GAO Recommendations and Program Costs
Published: 2016-03-03T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: DOE's Loan Programs Office administers the LGP for certain renewable or innovative energy projects and the ATVM loan program for projects to produce more fuel-efficient vehicles and components. Both programs can expose the government to substantial financial risks if borrowers default. DOE considers these risks in calculating credit subsidy costs. The law requires that the credit subsidy costs of DOE loans and loan guarantees be paid for by appropriations, borrowers, or some combination of both.
This testimony summarizes (1) DOE's progress in addressing GAO's prior recommendations related to the implementation and oversight of its loan programs and (2) GAO's 2015 report on the credit subsidy costs of the DOE loan programs.
This statement is based on a body of work that GAO completed between February 2007 and April 2015. GAO made numerous recommendations in these reports and obtained updates from agency officials. GAO is not making any new recommendations in this testimony.
section_title: What GAO Found
paragraphs: The Department of Energy (DOE) has made efforts to improve the implementation and oversight of its loan programs and, to date, has taken actions to address 15 of 24 of GAO's prior related recommendations. DOE's Loan Guarantee Program (LGP), authorized by Congress in 2005, was designed to encourage certain types of energy projects (e.g., nuclear, solar, and wind generation; solar manufacturing; and energy transmission) by agreeing to reimburse lenders for the guaranteed amount of loans if the borrowers default. DOE's Advanced Technology Vehicles Manufacturing (ATVM) loan program, authorized by Congress in 2007, was designed to encourage the automotive industry to invest in technologies to produce more fuel-efficient vehicles and their components. In 2007, 2008, and 2010—which covered the early stages of the LGP—GAO made 15 recommendations to address numerous concerns where DOE had moved forward with that program before key elements were in place. For example, in its February 2007 report, GAO found that DOE's actions had focused on expediting program implementation—such as soliciting preapplications for loan guarantees—rather than ensuring the department had in place the critical policies, procedures, and mechanisms needed to better ensure the program's success. DOE has implemented 11 of the 15 recommendations. In 2011, 2012, and 2014, as Congress expanded the loan programs, GAO made 9 additional recommendations to address concerns about DOE making loans and disbursing funds without having sufficient engineering expertise, sufficient and quantifiable performance measures for assessing program progress, or a fully developed loan monitoring function, among other things. Although DOE generally agreed with most of the 9 recommendations, to date it has implemented only 4 of them.
In an April 2015 report, GAO found that DOE estimated the credit subsidy costs of the loans and loan guarantees in its portfolio—that is, the total expected net cost to the government over the life of the loans—to be about $2.2 billion as of November 2014, including about $807 million for five loans on which borrowers had defaulted. The estimated $2.2 billion in credit subsidy costs was a decrease from DOE's initial estimates totaling about $4.5 billion. GAO found that changes in credit subsidy cost estimates varied by loan program and the type of technology supported by the loans and loan guarantees, among other factors. Specifically, defaults on loan guarantees for two solar manufacturing projects and one energy storage project were largely responsible for an increase in the credit subsidy cost estimate for the LGP's portfolio from $1.33 billion when the loan guarantees were issued to $1.81 billion as of November 2014. Borrowers also defaulted on two ATVM loans, but the credit subsidy cost estimate for the ATVM loan program's portfolio decreased from $3.16 billion to $404 million as of November 2014, mainly because of a significant improvement in the credit rating of one loan. In DOE's portfolio, 21 of the 30 projects had guaranteed revenue streams provided for under a long-term contract, such as a power purchase agreement, but none of the five defaulted loans supported projects with such a contract. GAO also found that administrative costs of the loan programs totaled about $312 million from fiscal year 2008 through fiscal year 2014; these costs are not included in credit subsidy costs.

section_title: Letter
paragraphs: I am pleased to be here today to discuss the Department of Energy’s  (DOE) loan programs. The Loan Guarantee Program (LGP), authorized  by Congress in 2005, was designed to encourage investment in new or  significantly improved technologies in energy projects because funding for  such technologies can be difficult to obtain. Similarly, the Advanced  Technology Vehicles Manufacturing (ATVM) loan program, which  Congress authorized in 2007, was designed to encourage the  automotive industry to invest in new technologies for more fuel-efficient  passenger vehicles and their components. Congress has authorized DOE  to make tens of billions of dollars in loans and guarantees under these  programs. Congress has also appropriated billions of dollars to cover  associated credit subsidy costs—the net present value of the difference  between projected cash flows to and from the government over the life of  the loans or guarantees. If borrowers default on the loans, the federal  government can be exposed to substantial financial risks.
DOE provides information related to the costs of its loan programs in  reports, financial statements, and budget documents. Other entities,  including Congress and the public, rely on this information to weigh the  benefits of these programs, but the complexity of this information can lead  to confusion if users of this information are not aware of the context. For  example, DOE reported in November 2014 that the loan programs had  earned more than $810 million in interest and that DOE expected to earn  $5 billion in interest payments over the life of the loans and loan  guarantees. However, in part because this report did not include the  interest that DOE pays the government to finance its lending, the  information on expected interest earnings has been misinterpreted in  several media accounts as projecting $5 billion in profits for the DOE loan  programs. We have examined this and other issues related to DOE’s loan  programs in a series of reports and testimonies. (See a list of related  GAO products at the end of this statement.)
My testimony today draws on this body of work, in which we have  reported on our concerns about DOE’s implementation and oversight of  the programs and recommended actions for improvement. I will focus my  remarks today on (1) DOE’s progress in addressing our prior  recommendations related to the implementation and oversight of its loan  programs and (2) our most recent report on the credit subsidy costs of the  DOE loan programs.
For this statement, we relied on our reports that were issued from  February 2007 through April 2015. Detailed information about the scope  and methodology used to conduct our prior work can be found in each of  our issued reports. Regarding the status of prior recommendations, we  followed up with agency officials to determine what actions they had  taken. The work on which this statement is based was conducted 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: Since issuing its first loan guarantee in 2009, DOE’s Loan Programs  Office, which administers the LGP and ATVM program, has issued a total  of more than $30 billion in loans and loan guarantees. The LGP was  originally designed to address a fundamental impediment to innovative  and advanced energy projects: securing funding. Projects that entail  risks—either that new technology will not perform as expected or that the  borrower or project itself will not perform as expected—can face difficulty  securing enough affordable financing to survive the period between  development and commercialization of innovative technologies. Because  the risks that commercial lenders must assume to support new  technologies can put the cost of private financing out of reach, companies  may not be able to commercialize innovative technologies without the  federal government’s financial support.
To accurately account for the expected and actual costs of federal loan  programs, agencies estimate the costs of a program in accordance with  the Federal Credit Reform Act of 1990 by calculating credit subsidy costs  for loans and loan guarantees, excluding administrative costs. DOE  estimates the credit subsidy cost for each loan or loan guarantee by,  among other things, projecting disbursements to the borrower as well as  interest and principal repayments from the borrower, and adjusting these  projected cash flows for the risk of default and other factors. Paying the  credit subsidy cost is either the responsibility of the borrower or the  program, depending on whether Congress has provided appropriations to  cover such costs.
For the LGP, Title XVII of the Energy Policy Act of 2005 (EPAct)— specifically section 1703—authorized DOE to guarantee loans for energy  projects that (1) use new or significantly improved technologies as  compared with commercial technologies already in service in the United  States and (2) avoid, reduce, or sequester emissions of air pollutants or  man-made greenhouse gases. Congress provided DOE $34 billion in loan  guarantee authority for section 1703 loan guarantees. Initially, Congress  provided no appropriation to cover the credit subsidy costs of loan  guarantees under section 1703, requiring all borrowers receiving a loan  guarantee to pay to offset the credit subsidy costs of their own projects. In  February 2009, Congress passed the American Recovery and  Reinvestment Act of 2009 (Recovery Act), which amended Title XVII by  adding section 1705, under which DOE could guarantee loans for projects  using existing commercial technologies. For section 1705, the Recovery  Act provided $2.5 billion to cover credit subsidy costs, which DOE  estimated would suffice to cover those costs for about $18 billion in loan  guarantees. In April 2011, Congress appropriated $170 million to pay  credit subsidy costs for a subset of projects under section 1703,  specifically, energy efficiency and renewable energy projects. DOE  estimated this appropriation would cover those costs for about $848  million in loan guarantees. As table 1 shows, DOE had about $28.7 billion  remaining in loan guarantee authority under section 1703 as of November  2014. At that time, it also had three open solicitations for loan guarantee  applications that accounted for much of that remaining authority. The  ATVM loan program remains open to applications on a rolling basis and  had about $16 billion remaining in loan authority as of November 2014.
section_title: DOE Has Made Efforts to Improve Loan Program Implementation and Oversight by Implementing Some but Not All Related GAO Recommendations
paragraphs: DOE has made efforts to improve its loan program implementation and  oversight and, to date, has taken actions in response to 15 of our 24 prior  recommendations. (See app. I for details on the status of each of the 24  recommendations we have made concerning the DOE loan programs). In  2007, 2008, and 2010—which covered the early stages of the LGP—we  made 15 recommendations to address numerous issues where DOE had  moved forward with the program before key elements were in place.  DOE implemented 11 of our 15 recommendations from this period. For  example:  In our February 2007 report, we found that DOE’s actions had  focused on expediting program implementation—such as soliciting  preapplications for loan guarantees—rather than ensuring the  department had in place the critical policies, procedures, and  mechanisms necessary to better ensure the program’s success.  We made five recommendations addressing these concerns. DOE  agreed with and implemented all 5 of these recommendations by  establishing key policies and procedures and issuing final program  regulations, among other things.
In contrast, in our July 2010 report, we found that, among other  things, DOE had favored some applicants by, for example,  deviating from its stated review procedures. DOE did not concur  with—and has not taken actions to address—our recommendation  that it take steps to ensure that its implementation of the LGP  treats applicants consistently.
As Congress expanded the DOE loan programs to include 1705 projects  and ATVM, we issued additional reports in 2011, 2012, and 2014  highlighting our concerns about DOE making loans and disbursing funds  without having sufficient expertise and performance measures, among  other things. Our reports included recommendations to address these  issues from February 2011 through May 2014. To date, DOE has  implemented four of the nine recommendations but has not addressed  the remaining five. For example:  In February 2011, we found that DOE was using ATVM staff with  largely financial, and not technical, expertise to evaluate the  progress of projects to produce more fuel-efficient passenger  vehicles and their components. We recommended that DOE  accelerate efforts to engage sufficient engineering expertise to  verify that borrowers are delivering projects as required by the  loan agreements. DOE implemented our recommendation by  changing its budgeting practices for monitoring ATVM loans to  better ensure that funds would be available to engage  independent engineering expertise; DOE also changed its policy  for engaging technical expertise to align with the Title XVII LGP  policy.    Also in our February 2011 report, we found that DOE did not  have sufficient performance measures that would enable the  department to fully assess whether the ATVM program had  achieved its program goals, including protecting taxpayers’  financial interests. We recommended that DOE develop sufficient  and quantifiable performance measures for its program goals.  DOE disagreed with this recommendation and took no steps to  implement it. As a result, Congress does not have important  information on whether the funds DOE has spent so far are  furthering the program’s goals and, consequently, whether the  program warrants continued support.
DOE generally agreed with most of the additional recommendations we  made in our March 2012 and May 2014 reports as the programs  expanded, but it has not fully implemented them. For example, in May  2014 we found that DOE adhered to its monitoring policies inconsistently  or not at all because the Loan Programs Office was still developing its  organizational structure, including its staffing. We recommended that  DOE fully develop its organizational structure by staffing key loan  monitoring positions, among other things. DOE agreed and has taken  steps to identify key staffing positions but, as of February 2016, most of  these positions remain unfilled. Filling these positions would help DOE  carry out activities critical to monitoring these loans.
section_title: Estimated Net Costs of DOE’s Loan Programs Include about $2.2 Billion in Credit Subsidy Costs, Plus Administrative Expenses
paragraphs: In our April 2015 report, we found that DOE estimated the credit subsidy  costs of the loans and loan guarantees in its portfolio to be about $2.2  billion as of November 2014, including about $807 million for five loans  on which the borrowers had defaulted. At that time, the portfolio consisted  of 34 loans and loan guarantees in support of 30 projects in a diverse  array of technologies. We also found that administrative costs totaled  about $312 million from fiscal year 2008 through fiscal year 2014.  The estimated $2.2 billion in credit subsidy costs was a decrease from  initial DOE estimates totaling about $4.5 billion, and we found that  changes in credit subsidy cost estimates varied by loan program and the  type of technology supported by the loans and loan guarantees, and by  other factors, such as the availability of a steady stream of revenue for a  project. Specifically, defaults on loan guarantees for two solar  manufacturing projects and one energy storage project were largely  responsible for an increase in the credit subsidy cost estimate for DOE’s  LGP portfolio from $1.33 billion (when the loan guarantees were issued)  to $1.81 billion as of November 2014. Borrowers also defaulted on two  ATVM loans, but the credit subsidy cost estimate for DOE’s ATVM loan  program’s portfolio decreased from initial DOE estimates totaling about  $3.16 billion to $404 million as of November 2014, mainly because of a  significant improvement in the credit rating of one loan. This decrease  was enough to more than offset the increases from the defaults in DOE’s  overall loan portfolio. See table 2 for changes in DOE’s credit subsidy  cost estimates.
We found in our April 2015 report that most projects in DOE’s portfolio  have completed construction and are in operation—producing power or  automobiles, for instance. None of the projects with loans in default had  revenue streams that were provided for under long-term contracts for the  sale of energy produced by the project pursuant to a power purchase  agreement, offtake agreement, or similar contractual language. Power  purchase agreements and offtake agreements generally guarantee a  stream of revenue to the project owner for 20 or 25 years after the project  begins generating electricity, effectively ensuring a buyer for the produced  power. In DOE’s portfolio, 21 of the 30 projects supported by the program  included power purchase or offtake agreements.
Regarding administrative costs, our April 2015 report found that such  costs for the programs have totaled about $312 million from fiscal year  2008 through fiscal year 2014, including approximately $251.6 million for  LGP and $60.6 million for the ATVM loan program. We also found that,  for the LGP, the fees DOE has collected have not been sufficient to cover  all of its administrative expenses for the program, in part because the  maintenance fees on the current loan guarantees were too low to cover  ongoing monitoring costs. As a result, some of the administrative  expenses have been paid with taxpayer funds. DOE addressed the low  maintenance fee levels by changing the fee structure in its new  solicitations, announced from December 2013 to December 2014, to  allow increased maintenance fees—up to $500,000 per year. DOE  officials told us that the new fee structure should allow DOE to cover a  greater portion of LGP monitoring costs on new loan guarantees.  However, the actual fee amounts will depend on the individual loan  guarantees and negotiation of the loan guarantee agreements, making  predictions of future fee income a challenge. It is now too early to tell  whether DOE’s actions will result in sufficient funds to offset LGP’s future  administrative costs.
Chairmen Weber and Loudermilk, Ranking Members Grayson and Beyer,  and Members of the Subcommittees, this completes my prepared  statement. I would be pleased to respond to any questions that you may  have at this time.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: If you or your staff members have any future questions about this  testimony, please contact me at (202) 512-3841 or ruscof@gao.gov.  Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this statement. Key contributors  to this testimony include Karla Springer, Assistant Director; Michael  Krafve; Cynthia Norris; Barbara Timmerman; and Jarrod West.
section_title: Appendix I: Status of GAO Recommendations on Department of Energy Loan Programs
paragraphs: GAO-07-339R  Recommendation  The Secretary of Energy should ensure that the  department, before selecting eligible projects for  loan guarantees, establishes policies and  procedures to account for loan guarantees.
Action taken  In May 2007, the Department of Energy (DOE)  implemented this recommendation when its Office of  Finance and Accounting established standard operating  procedures for accounting and reporting for DOE loan  programs (SOP 1.4). Among other things, the  procedures enable DOE to account for payments  received from applicants for administrative costs, which  is important because the Energy Policy Act of 2005,  which established the Loan Guarantee Program (LGP),  requires that borrowers be charged fees to cover DOE’s  costs to administer the program. DOE established the  procedures before it issued the first loan guarantee in  2010, meeting the intent of our recommendation.
The Secretary of Energy should ensure that the  department, before selecting eligible projects for  loan guarantees, establishes policies and  procedures for developing subsidy and  administrative cost estimates.
In March 2009, DOE issued a Credit Policies and  Procedures Manual that lays out policies and  procedures for estimating subsidy costs and defines  administrative costs. In addition, according to DOE, in  November 2008 the Office of Management and Budget  approved the LGP’s model for calculating the credit  subsidy costs of loan guarantees. DOE’s solicitations  describe how it will charge these administrative costs to  applicants. These actions meet the intent of our  recommendation.
The Secretary of Energy should ensure that the  department, before selecting eligible projects for  loan guarantees, establishes policies and  procedures for selecting lenders and loans to  guarantee and for monitoring lenders and loans  once the guarantees have been issued.
Closed - Implemented  DOE satisfied our recommendation to establish policies  and procedures for selecting lenders and loans to  guarantee and for monitoring lenders and loans once  the guarantees have been issued. On October 23, 2007,  and December 4, 2009, DOE issued final rules that  incorporated policies and procedures for the issuance of  solicitations, submission of applications, and the  evaluation of loan guarantee applications. The rules also  lay out the requirements for eligible lenders. In addition,  on March 5, 2009, DOE issued a credit policies and  procedures manual for the program that provides further  detail on policies and procedures for selecting lenders  and loans to guarantee. The manual also provides  policies and procedures for credit monitoring of projects  once loan guarantees have been issued.
The Secretary of Energy should ensure that the  department, before selecting eligible projects for  loan guarantees, issues final program regulations  that protect the government’s interests, manage  risk, and ensure that borrowers are aware of  program requirements.
Closed - Implemented  On October 23, 2007, and December 4, 2009, DOE  issued final rules implementing its Title XVII LGP for  innovative energy technologies. The rules elaborate on  the program established by Title XVII by defining the  technologies and types of projects covered by the  program, as well as the financial structure required for  projects. Issuing a rule is in keeping with the intent of  our recommendation to provide greater protection of the  government’s interests because this rule, like other  regulations, cannot be changed without public or  congressional input and carries the force of law.
The Secretary of Energy should ensure that the  department, before selecting eligible projects for  loan guarantees, further defines program goals  and objectives tied to outcome measures for  determining program effectiveness.  GAO-08-750  Recommendation  The Secretary of Energy should direct the Chief  Financial Officer to amend application guidance to  clarify the program’s equity requirements to the 16  companies invited to apply for loan guarantees and  in future solicitations before substantially reviewing  LGP applications.
Closed - Implemented  DOE has taken actions to define program goals and  performance measures in order to determine program  effectiveness.
Status  Closed - Implemented  DOE substantively addressed our recommendation with  its October 2009 and August 2010 solicitations, which  provided an expanded definition of equity that also  addressed exclusions.
The Secretary of Energy should direct the Chief  Financial Officer to amend application guidance to  further develop and define performance measures  and metrics to monitor and evaluate program  efficiency, effectiveness, and outcomes before  substantially reviewing LGP applications.
Closed - Implemented  Since our 2008 recommendation, DOE developed nine  performance measures to evaluate the program’s  efficiency and outcomes, implementing our  recommendation.
The Secretary of Energy should direct the Chief  Financial Officer to amend application guidance to  improve the LGP’s full tracking of the program’s  administrative costs by developing an approach to  track and estimate costs associated with offices  that directly and indirectly support the program and  including those costs as appropriate in the fees  charged to applicants before substantially  reviewing LGP applications.
In October 2008, the Loans Programs Office (LPO)  began using a DOE software system to track  administrative costs within the office, including, for  example, staff salaries and travel associated with  reviewing the applications for various solicitations. In  addition, DOE staff in the field office that was reviewing  the greatest number of loan guarantee applications  reached an agreement with the program concerning  performance of and reimbursement for this work.
The Secretary of Energy should direct the Chief  Financial Officer to amend application guidance to  include more specificity on the content of  independent engineering reports and on the  development of project cost estimates to provide  the level of detail needed to better assess overall  project feasibility before substantially reviewing  LGP applications.
Since our 2008 recommendation, DOE increased the  content guidelines for engineering reports in later  solicitations, partly implementing our recommendation.  However, the actions taken by DOE did not fully address  the intent of our recommendation.
The Secretary of Energy should direct the Chief  Financial Officer to clearly define needs for  contractor expertise to facilitate timely application  reviews before substantially reviewing LGP  applications.
Closed – Implemented  To facilitate timely action on applications for loan  guarantees, DOE developed “standing source” lists of  contractors with legal, engineering, financial, and  marketing expertise. Listed contractors were determined  by DOE to be capable of providing specific services that  DOE identified. Such contractors were available for  selection, under a competitive process, to review  projects under consideration for loan guarantees.  Developing the standing list helped ensure that DOE  would have the necessary expertise readily available  during the review process.
The Secretary of Energy should direct the Chief  Financial Officer to complete detailed internal loan  selection policies and procedures that lay out roles  and responsibilities and criteria and requirements  for conducting and documenting analyses and  decision making before substantially reviewing  LGP applications.
In March 2009, DOE issued a Credit Policies and  Procedures Manual that established detailed internal  loan selection policies and procedures, including roles  and responsibilities for LGP staff, and criteria for  conducting analyses and decision making, but the  manual did not provide detailed guidance for  documenting analyses. In October 2011, LGP revised its  Credit Policies and Procedures manual to also include  specific instructions to LGP staff to document their  analyses and decisions in LGP’s records management  system.
GAO-10-627  Recommendation  The Secretary of Energy should direct the program  management to develop relevant performance  goals that reflect the full range of policy goals and  activities for the program, and to the extent  necessary, revise the performance measures to  align with these goals.
Action taken  According to DOE officials, LGP adheres to and  supports the current DOE Strategic Plan. However, LGP  could not provide documentation or evidence of either  an improvement in alignment between DOE  performance goals and LGP policy goals or the revision  of LGP performance measures. We continue to believe  that relevant and revised performance goals and  measures would improve DOE’s ability to evaluate and  implement the LGP.
The Secretary of Energy should direct the program  management to revise the process for issuing loan  guarantees to clearly establish what circumstances  warrant disparate treatment of applicants so that  DOE’s implementation of the program treats  applicants consistently unless there are clear and  compelling grounds for doing otherwise.
DOE did not concur with the recommendation and has  not taken action to implement it.
The Secretary of Energy should direct the program  management to develop an administrative appeal  process for applicants who believe their  applications were rejected in error and document  the basis for conclusions regarding appeals.
DOE did not concur with the recommendation and has  not taken action to implement it.
The Secretary of Energy should direct the program  management to develop a mechanism to  systematically obtain and address feedback from  program applicants, and, in so doing, ensure that  applicants’ anonymity can be maintained, for  example, by using an independent service to  obtain the feedback.  GAO-11-145  Recommendation  The Secretary of Energy should direct the ATVM  Program Office to accelerate efforts to engage  sufficient engineering expertise to verify that  borrowers are delivering projects as agreed.
In September 2010, DOE created a mechanism for  submitting feedback—including anonymous feedback— through its website.
Status  Closed – Implemented  Since issuance of our report in February 2011, DOE  changed its budgeting practices for monitoring ATVM  loans to better ensure that funds would be available to  engage independent engineering expertise when  needed. DOE also changed its policy for engaging  technical expertise, making it the same as for the Title  XVII LGP.
The Secretary of Energy should direct the ATVM  Program Office to develop sufficient and  quantifiable performance measures for its three  goals.
In its original comments to our report, and in a  subsequent statement of its management decisions,  DOE stated that it disagreed with our recommendation.  DOE stated its belief that the ATVM program adhered to  the requirements of the statute authorizing the program  and that the performance measures we suggested  would greatly expand the scope of the program—DOE  stated it would not develop any new measures not  specified by Congress.
GAO-12-157  Recommendation  The Secretary of Energy should direct the  Executive Director of the Loan Programs Office to  commit to a timetable to fully implement a  consolidated system that enables the tracking of  the status of applications and that measures  overall program performance.
Action taken  DOE did not concur with the recommendation and has  not taken action to implement it.
The Secretary of Energy should direct the  Executive Director of the Loan Programs Office to  ensure that the new records management system  contains documents supporting past decisions, as  well as those in the future.
DOE concurred with this recommendation but has not  provided us with information regarding its  implementation.
The Secretary of Energy should direct the  Executive Director of the Loan Programs Office to  regularly update the LGP’s credit policies and  procedures manual to reflect current program  practices to help ensure consistent treatment for  applications to the program.
In December 2015, DOE published its revised LPO  credit policies and procedures manual, which sets the  basic criteria for the determination of eligibility,  underwriting of loan and loan guarantee requests, and  the management of closed loans and loan guarantees.
GAO-14-367  Recommendation  The Secretary of Energy should direct the  Executive Director of the Loan Programs Office to  fully develop its organizational structure by staffing  key monitoring positions.
Action taken  DOE officials told us that they developed short- and  long-term plans for staffing key loan monitoring positions  and risk mitigation positions within the Portfolio  Management Division and Risk Management Division,  respectively. In February 2016, DOE provided us with  evidence that it had identified 24 key positions in these  two divisions; however, most of these positions remain  unfilled, so the recommendation status remains open.
The Secretary of Energy should direct the  Executive Director of the Loan Programs Office to  fully develop its organizational structure by  updating management and reporting software.
In February 2016, DOE officials provided us with  evidence that they had completed and implemented  updates for their management and reporting systems.
The Secretary of Energy should direct the  Executive Director of the Loan Programs Office to  fully develop its organizational structure by  completing policies and procedures for loan  monitoring and risk management.
In February 2016, DOE officials provided us with  evidence that they developed, revised, reviewed, and  implemented the majority of their portfolio monitoring  and risk management policies and procedures.  However, some key work processes (e.g., Alleged  Fraud, Waste, or Abuse reporting and Risk Assessment  processes) are still under development, so the  recommendation status remains open.
The Secretary of Energy should direct the  Executive Director of the Loan Programs Office to  evaluate the effectiveness of DOE’s monitoring by  performing the credit review, compliance, and  reporting functions outlined in the 2011 policy  manual for DOE’s loan programs.
In February 2016, DOE officials told us that the Risk  Management Division evaluates the effectiveness of  DOE’s monitoring via annual internal assessments.  DOE began the first of these annual assessments in  October 2015 and provided GAO with updated  procedures for conducting these assessments.
section_title: Related GAO Products
paragraphs: DOE Loan Programs: Current Estimated Net Costs Include $2.2 Billion in  Credit Subsidy, Plus Administrative Expenses. GAO-15-438. Washington,  D.C.: April 27, 2015.
DOE Loan Programs: DOE Has Made More Than $30 Billion in Loans  and Guarantees and Needs to Fully Develop Its Loan Monitoring  Function. GAO-14-645T. Washington, D.C.: May 30, 2014.
DOE Loan Programs: DOE Should Fully Develop Its Loan Monitoring  Function and Evaluate Its Effectiveness. GAO-14-367. Washington, D.C.:  May 1, 2014.
Federal Support for Renewable and Advanced Energy Technologies.  GAO-13-514T. Washington, D.C.: April 16, 2013.
Department of Energy: Status of Loan Programs. GAO-13-331R.  Washington, D.C.: March 15, 2013.
DOE Loan Guarantees: Further Actions Are Needed to Improve Tracking  and Review of Applications. GAO-12-157. Washington, D.C.: March 12,  2012.
Department of Energy: Advanced Technology Vehicle Loan Program  Implementation Is Under Way, but Enhanced Technical Oversight and  Performance Measures Are Needed. GAO-11-145. Washington, D.C.:  February 28, 2011.
Department of Energy: Further Actions Are Needed to Improve DOE’s  Ability to Evaluate and Implement the Loan Guarantee Program.  GAO-10-627. Washington, D.C.: July 12, 2010.
Department of Energy: New Loan Guarantee Program Should Complete  Activities Necessary for Effective and Accountable Program  Management. GAO-08-750. Washington, D.C.: July 7, 2008.
Department of Energy: Observations on Actions to Implement the New  Loan Guarantee Program for Innovative Technologies. GAO-07-798T.  Washington, D.C.: April 24, 2007.
The Department of Energy: Key Steps Needed to Help Ensure the  Success of the New Loan Guarantee Program for Innovative  Technologies by Better Managing Its Financial Risk. GAO-07-339R.  Washington, D.C.: February 28, 2007.
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