Recovery Act: Status of Science-Related Funding
Released: 2011-11-30T00:00:00

Letter

Summary of Science- Related Recovery Act Funding

Of the four agencies that received over $40 billion in funding for science- related activities under the Recovery Act, DOE received the largest amount of funds. Table 1 shows Recovery Act funding, obligations, and expenditures for these agencies.

Of the $35.2 billion it received under the Recovery Act for science-related projects and activities, DOE reported that it had obligated $34.6 billion (98 percent) and spent $18.9 billion (54 percent) as of September 30, 2011.

This is an increase from March 10, 2011, when DOE reported that it had obligated $33.1 billion and spent $12.5 billion. Table 2 shows Recovery Act funding, obligations, and expenditures for DOE’s program offices.

Our Recovery Act recommendations have focused primarily on the following four DOE programs and projects:

The EECBG program, which provides grants to states, territories, tribes, and local communities for projects that improve energy efficiency, reduce energy use, and reduce fossil fuel emissions.

The Office of Environmental Management, which cleans up contaminated sites across the country where decades of nuclear weapons research, development, and production left a legacy of dangerously radioactive, chemical, and other hazardous wastes.

The LGP, which guarantees loans for energy projects that (1) use either new or significantly improved technologies as compared with commercial technologies already in use in the United States and (2) avoid, reduce, or sequester emissions of air pollutants or man-made greenhouse gases.

The Weatherization Assistance Program, which enables low-income families to reduce their utility bills by making long-term energy- efficiency improvements to their homes by, for example, installing insulation, sealing leaks, and modernizing heating or air conditioning equipment.

Table 3 shows Recovery Act funding, obligations, and expenditures for these DOE programs as of September 30, 2011.

The Recovery Act provided about $3.2 billion for DOE’s EECBG, funding the program for the first time since it was authorized in the Energy Independence and Security Act (EISA) of 2007.

DOE awarded this funding as follows:

About $1.94 billion as formula grants to more than 2,000 local communities—including cities, counties, and tribal communities.

About $767 million as formula grants to the states, five territories, and the District of Columbia.

About $40 million for Administrative and Training/Technical Assistance.

About $453 million through competitive grants to local communities.

Our April 2011 report on the EECBG program focused on the approximately $2.7 billion awarded through formula grants. In that report, we found that more than 65 percent of EECBG funds had been obligated 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 their 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 recipients’ 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.

We also found that DOE did not always collect information on the various methods that recipients use to monitor contractors and subrecipients. As a result, DOE does not always know whether the monitoring activities of recipients are sufficiently rigorous to ensure compliance with federal requirements. In addition, DOE officials have experienced challenges in assessing the extent to which the EECBG program is reducing energy use and increasing energy savings. Most recipients report estimates to comply with program reporting requirements, and 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 software tool to estimate energy savings, DOE does not require that recipients use the most recent version.

Based on these findings, we recommended 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 who use DOE’s estimation tool use the most recent version. DOE generally agreed with our recommendations and has taken steps to implement them. DOE took action on our first recommendation by collecting additional information related to subrecipient monitoring, in order to help ensure that they comply with the terms and conditions of the award. These changes will help improve DOE’s oversight of recipients. DOE implemented our second recommendation by making changes to the way it collects data to apply a unified methodology to the calculation of impact metrics. DOE officials also said the calculation of estimated impact metrics will now be performed centrally by DOE by applying known national standards to existing recipient-reported performance metrics.

Environmental Cleanup Projects

The Recovery Act provided about $6 billion to expand and accelerate cleanup activities at numerous contaminated sites across the country.This funding substantially boosted the Office of Environmental Management’s annual appropriation for cleanup, which has generally been between $6 billion and $7 billion. As of September 30, 2011, DOE had obligated all of the $6 billion in Recovery Act funding. DOE officials told us that they planned to have 92 percent of the funds spent by September 30, 2011, and DOE had expended about 88 percent (nearly $5.3 billion) by that time.

As of May 2011, DOE had selected 109 projects for Recovery Act funding at 17 DOE sites in 12 states. DOE designated 80 percent of this funding to speed cleanup activities at four large sites: the Hanford Site in Washington State, Idaho National Laboratory, the Oak Ridge Reservation in Tennessee, and the Savannah River Site in South Carolina. DOE generally chose to use Recovery Act funds for cleanup projects that could be started and finished quickly. The majority of the projects selected also had existing contracts, which allowed the department to update and validate new cost and schedule targets within a short time frame. DOE generally funded four types of projects: (1) decontaminating or demolishing facilities, (2) removing contamination from soil and groundwater, (3) packaging and disposing of transuranic and other wastes, and (4) supporting the maintenance and treatment of liquid tank wastes. According to DOE officials, as of the end of May 2011, DOE had completed 28 Recovery Act projects.

In July 2010, we reported that DOE has faced challenges in both managing Recovery Act projects and measuring how Recovery Act funding has affected cleanup and other goals. that one-third of Recovery Act-funded environmental cleanup projects did not meet cost and schedule targets, which DOE attributed to technical, regulatory, safety, and contracting issues. DOE took steps aimed at strengthening project management and oversight for Recovery Act projects, such as increasing project reporting requirements and placing tighter controls on when funds are disbursed to sites. By October 2010, DOE had made improvements in both cost and schedule performance.

GAO, Recovery Act: Most DOE Cleanup Projects Appear to Be Meeting Cost and Schedule Targets, but Assessing Impact of Spending Remains a Challenge, GAO-10-784 (Washington, D.C., July 29, 2010). very different and potentially misleading information. Second, DOE had not yet developed a clear means of measuring how cleanup work funded by the act would affect environmental risk or the land and facilities requiring DOE cleanup. Third, it is unclear to what extent Recovery Act funding will reduce the costs of cleaning up the DOE sites over the long term. DOE’s estimate of $4 billion in life-cycle cost savings resulting from Recovery Act funding was not calculated in accordance with Office of Management and Budget’s guidance on benefit-cost analysis or DOE’s guidance on life-cycle cost analysis. Our analysis indicated that those savings could be 80 percent less than DOE estimated. Without clear and consistent measures, it will be difficult to say whether or how Recovery Act funding has affected DOE’s cleanup goals.

DOE officials define footprint reduction as the “physical completion of activities with petition for regulatory approval to follow.” longer relevant since the Office of Management and Budget now requires contractor and subcontractor jobs to be reported online.

Loan Guarantee Program for Innovative Technologies

In February 2009, the Recovery Act amended the LGP, authorizing DOE to also guarantee loans for some projects using commercial technologies. Projects supported by the Recovery Act must employ renewable energy systems, electric power transmission systems, or leading-edge biofuels that meet certain criteria; begin construction by the end of fiscal year 2011; and pay wages at or above market rates. The Recovery Act originally provided nearly $6 billion to cover the credit subsidy costs for projects meeting those criteria.reduction of $3.5 billion of this funding to be used for other purposes. According to our analysis of DOE data, as of September 30, 2011, DOE’s LGP had obligated about 78 percent of the remaining $2.5 billion in Recovery Act funds, leaving $552 million unobligated. The Recovery Act required that borrowers begin construction of their projects by September 30, 2011, to receive funding, and the unobligated funds expired and are no longer available to DOE.

GAO-10-627.

Consequently, we reported that DOE’s program management could improve its ability to evaluate and implement the LGP by implementing the following four recommendations: (1) 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; (2) revise the process for issuing loan guarantees to clearly establish what circumstances warrant disparate treatment of applicants; (3) develop an administrative appeal process for applicants who believe their applications were rejected in error and document the basis for conclusions regarding appeals; and (4) develop a mechanism to systematically obtain and address feedback from program applicants and, in so doing, ensure that applicants’ anonymity can be maintained.

In response to our recommendations, DOE stated that it recognizes the need for continuous improvement to its LGP as those programs mature but neither explicitly agreed nor disagreed with our recommendations. In one instance, DOE specifically disagreed with our findings: the department maintained that applicants are treated consistently within solicitations. Nevertheless, the department stated that it is taking steps to address concerns identified in our report. For example, with regard to appeals, DOE indicated that its process for rejected applications should be made more transparent and stated that the LGP continues to implement new strategies intended to reduce the need for any kind of appeals, such as enhanced communication with applicants and allowing applicants an opportunity to provide additional data to address deficiencies DOE has identified in applications. DOE directly addressed our fourth recommendation by creating a mechanism in September 2010 for submitting feedback—including anonymous feedback—through its website. We tested the mechanism and were satisfied that it worked.

We have an ongoing mandate under the 2007 Revised Continuing Appropriations Resolution to review DOE’s execution of the LGP and to report our findings to the House and Senate Committees on Appropriations. We are currently conducting ongoing work looking at the LGP, which will examine the status of the applications to the LGP’s nine solicitations and will assess the extent to which has DOE adhered to its process for reviewing loan guarantees for loans to which DOE has closed or committed. We expect to issue a report on LGP in early 2012.

Weatherization Assistance Program

The Recovery Act provided $5 billion for the Weatherization Assistance Program, which DOE is distributing to each of the states, the District of Columbia, five territories, and two Indian tribes. The $5 billion in funding provided by the Recovery Act represents a significant increase for a program that has received about $225 million per year in recent years.

During 2009, DOE obligated about $4.73 billion of the $5 billion in Recovery Act weatherization funding to recipients, while retaining the remaining funds to cover the department’s expenses. Initially, DOE provided each recipient with the first 10 percent of its allocated funds, which could be used for start-up activities, such as hiring and training staff, purchasing equipment, and performing energy audits of homes. Before a recipient could receive the next 40 percent, DOE required it to submit a plan for how it would use its Recovery Act weatherization funds. By the end of 2009, DOE had approved the weatherization plans of all 58 recipients and had provided all recipients with half of their funds.

In our May 2010 report,buildings can improve production numbers quickly, state and local officials have found that expertise with multifamily projects is limited and that they lack the technical expertise for weatherizing large multifamily buildings. We also found that state agencies are not consistently dividing weatherization costs for multifamily housing with landlords. In addition, we found that determination and documentation of client income eligibility varies between states and local agencies and that DOE allows applicants to self-certify their income. We also found that DOE has issued guidance requiring recipients of Recovery Act weatherization funds to implement a number of internal controls to mitigate the risk of fraud, waste, and abuse, but that the internal controls to ensure local weatherization agencies comply with program requirements are applied inconsistently. we found that although weatherizing multifamily In our May 2010 report, we made eight recommendations to DOE to clarify its weatherization guidance and production targets. DOE generally concurred with the recommendations, has fully implemented two of them and taken some steps to address a third. For example, we recommended that DOE develop and clarify weatherization program guidance that considers and addresses how the weatherization program guidance is impacted by the introduction of increased amounts of multifamily units.

DOE has issued several guidance documents addressing multi-family buildings that, among other things, provide guidance on conducting energy audits on multi-family units. We also recommended that DOE develop and clarify weatherization program guidance that establishes best practices for how income eligibility should be determined and documented and that does not allow the self-certification of income by applicants to be the sole method of documenting income eligibility. In response to our recommendation, DOE issued guidance that 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. Finally, DOE agreed with our recommendation that it have a best practice guide for key internal controls, but DOE officials stated that there were sufficient documents in place to require internal controls, such as the grant terms and conditions and a training module, and that because the guidance is located in on the website, a best practice guide would be redundant. Therefore, DOE officials stated that they do not intend to fully implement our recommendation. Nonetheless, DOE distributed a memorandum dated May 13, 2011, to grantees reminding them of their responsibilities to ensure compliance with internal controls and the consequences of failing to do so. We will continue to monitor DOE’s progress in implementing the remaining recommendations.

We expect to issue a report on the use of Recovery Act funds for the Weatherization Assistance Program and the extent to which program recipients are meeting Recovery Act and program goals, such as job creation and energy and cost savings, as well as the status of DOE’s response to our May 2010 recommendations by early 2012.

Commerce

Of the over $1.4 billion Commerce received under the Recovery Act for science-related projects and activities, Commerce reported that it had obligated nearly all of it (98 percent) and spent $894 million (62 percent) as of September 30, 2011. Table 6 shows Recovery Act funding, obligations, and expenditures for Commerce.

As part of our February 2010 report,Recovery Act grants from Commerce’s National Institute of Standards and Technology had to delay or recast certain scheduled engineering or construction-related activities to fully understand, assess, and comply with the Recovery Act reporting and other requirements. In contrast, Commerce’s National Oceanic and Atmospheric Administration officials said federal requirements did not impact the processing of Recovery Act acquisitions. we found that some recipients of Of the $1 billion NASA received under the Recovery Act for science- related projects and activities, NASA reported that it had obligated nearly $1 billion (100 percent) and spent $948 million (95 percent) as of September 30, 2011. Table 4 shows Recovery Act funding, obligations, and expenditures for NASA.

In a March 2009 report, we found that NASA large-scale projects had experienced significant cost and schedule growth, but the agency had undertaken an array of initiatives aimed at improving program management, cost estimating, and contractor oversight. However, we also noted that until these practices became integrated into NASA’s culture, it was unclear whether funding would be well spent and whether the achievement of NASA’s mission would be maximized. In our most recent update of that report, we found that, although cost and schedule growth remained an issue, Recovery Act funding enabled NASA to mitigate the impact of cost increases being experienced on some projects and to address problems being experienced by other projects. In several cases, NASA took advantage of the funding to build additional knowledge about technology or design before key milestones.

In our July 2010 report,agencies’, use and oversight of noncompetitive contracts awarded under the Recovery Act. We found that most of the funds that NASA had obligated under Recovery Act contract actions, about 89 percent, were obligated on existing contracts. We found that officials at several agencies said the use of existing contracts allowed them to obligate funds quickly. Of the funds NASA obligated for new actions, over 79 percent were obligated on contracts that were competed. We also found that NASA undertook efforts to provide oversight and transparency of Recovery Act-funded activities. For example, NASA issued guidance to the procurement community on the implementation of the Recovery Act, prohibited the commingling of funds, and increased reporting to senior management. we reviewed NASA’s, as well as other Of the $3 billion it received under the Recovery Act for projects and activities, NSF reported that it had obligated nearly all of the $3 billion (almost 100 percent) and spent $1.4 billion (46 percent) as of September 30, 2011. Table 5 shows Recovery Act funding, obligations, and expenditures for NSF.

In our October 2010 report, we reviewed the effectiveness of new and expanded activities authorized by the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act of 2007 (America COMPETES Act). The act authorized NSF’s Science Master’s Program, later funded by the Recovery Act. This program, along with 24 new programs and 20 existing programs, was funded to increase federal investment in basic scientific research and science, technology, engineering, and mathematics (STEM) education in the United States. The Science Master’s Program awarded 21 grants in fiscal year 2010, totaling $14.6 million. We found that evaluating the effectiveness of federal basic research and STEM education programs such as those authorized by the act can be inherently difficult. We also found that NSF was taking steps to evaluate the long-term effectiveness of their funded projects. As part of its broader initiative to pilot and review new approaches to the evaluation of its programs, NSF developed goals and metrics for activities in its education portfolio to reflect its increased expectations for evaluation of its funded projects.

Chairman Broun, Ranking Member Tonko, and Members of the Subcommittee, this completes my prepared statement. As noted, we are continuing to monitor agencies’ use of Recovery Act funds and implementation of programs. I would be happy to respond to any questions you may have at this time.

Contact and Acknowledgments

For further information regarding this testimony, please contact me at (202) 512-3841. Tanya Doriss, Kim Gianopoulos, Carol Kolarik, Holly Sasso, Ben Shouse and Jeremy Williams made key contributions to this testimony.

Related GAO Products

Recovery Act Education Programs: Funding Retained Teachers, but Education Could More Consistently Communicate Stabilization Monitoring Issues. GAO-11-804. Washington, D.C.: September 2011.

Recovery Act: Status of Department of Energy’s Obligations and Spending. GAO-11-483T. Washington, D.C.: March 17, 2011.

Recovery Act: Energy Efficiency and Conservation Block Grant Recipients Face Challenges Meeting Legislative and Program Goals and Requirements. GAO-11-379. Washington, D.C.: April 2011.

NASA: Assessments of Selected Large-Scale Projects. GAO-11-239SP. Washington, D.C.: March 3, 2011.

Recovery Act: Opportunities to Improve Management and Strengthen Accountability over States’ and Localities’ Uses of Funds. GAO-10-999. Washington, D.C.: September 2010.

Recovery Act: Contracting Approaches and Oversight Used by Selected Federal Agencies and States. GAO-10-809. Washington, D.C.: July 15, 2010.

Recovery Act: Most DOE Cleanup Projects Appear to Be Meeting Cost and Schedule Targets, but Assessing Impact of Spending Remains a Challenge. GAO-10-784. Washington, D.C.: July 2010.

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 2010.

Recovery Act: States’ and Localities’ Uses of Funds and Actions Needed to Address Implementation Challenges and Bolster Accountability. GAO-10-604. Washington, D.C.: May 2010.

Recovery Act: Increasing the Public’s Understanding of What Funds Are Being Spent on and What Outcomes Are Expected. GAO-10-581. Washington, D.C.: May 27, 2010.

Recovery Act: Factors Affecting the Department of Energy’s Program Implementation. GAO-10-497T Washington, D.C.: March 4, 2010.

Recovery Act: Project Selection and Starts Are Influenced by Certain Federal Requirements and Other Factors. GAO-10-383. Washington, D.C.: February 10, 2010.

Recovery Act: GAO’s Efforts to Work with the Accountability Community to Help Ensure Effective and Efficient Oversight. GAO-09-672T. Washington, D.C.: May 5, 2009.

American Recovery and Reinvestment Act: GAO’s Role in Helping to Ensure Accountability and Transparency for Science Funding. GAO-09-515T. Washington, D.C.: March 19, 2009.

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