Spending Too Carefully?
As economic malaise lingers, so does what was cast as the remedy, the Recovery Act money, according to a new audit by the inspector general of the Department of Energy.
The American Recovery and Reinvestment Act, passed in February 2009, allocated $3.1 billion for distribution by state energy offices to improve energy efficiency and spur the use of renewable energy. But by July 9 of this year, only about 7.2 percent had been spent, the audit indicates.
Released on Wednesday afternoon, the audit is the third in a series; earlier ones found similar problems in two other Recovery Act energy programs. One was for weatherizing houses and apartments, and the other was for making energy improvements in publicly owned buildings. And the reasons were similar: a vast increase in funds that the government bureaucracy was not equipped to administer and a welter of rules intended to assure that federal money was spent carefully, fairly and with appropriate environmental controls.
Some projects were subject to laws on historic preservation, “buy American” provisions and the Davis-Bacon Act, which requires that workers on a federal project be paid the prevailing local wage. In some cases, when programs envisaged new kinds of work, no one was sure what the prevailing wage was.
In the latest case, though, the inspector general, Gregory H. Friedman, identified another problem: the states could not arrive at good estimates of how effective the spending would be. At one point, state officials said their spending would cut national energy use by 88 percent, which was “not realistic or achievable,’’ the audit said.
It says that even as financing grew to $3.1 billion from $25 million, the Energy Department had only seven project officers to oversee the work, and that those seven were already not meeting the requirement to visit each state at least once every three years when the money was awarded. Seven states had not been visited in five years, according to the audit. The department has hired 13 more project officers, the audit said.
The new spending also required competitive bidding, which added three to six months to the spending process, the auditors said.
The inspector general followed the usual practice of giving an advance copy to Energy Department officials and asking them to respond. Department officials countered that while only a small fraction had been spent, three-quarters had been approved, a step that should allow companies that anticipate receiving the money to begin hiring.
Mr. Friedman said, however, that in stimulus spending, the crucial step is actually disbursement.
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