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Examination Report: OAS-RA-13-19

April 30, 2013

Selected Sub-grantees of the Department of Energy's American Recovery and Reinvestment Act of 2009 – Illinois State Energy Program

The Department of Energy's (Department) State Energy Program (SEP) provides grants to states, territories, and the District of Columbia to support energy priorities and fund projects that meet their unique energy needs.  The American Recovery and Reinvestment Act of 2009 (Recovery Act) significantly expanded the SEP by providing an additional $3.1 billion.  The Illinois Department of Commerce and Economic Opportunity (DCEO) was allocated $101.3 million in Recovery Act SEP funds, and allocated the funds to 8 separate programs funding more than 138 projects.   Office of Inspector General contracted with an independent certified public accountant firm to perform examinations of four selected sub-grantees to test compliance with Federal and State laws, regulations and program guidance. 

The examinations found that the Association of Illinois Electric Cooperatives did not adequately monitor member cooperatives to ensure delivery of energy efficiency upgrades or services performed for which rebates were issued.  Additionally, Bley, LLC did not comply with Recovery Act requirements to separately track costs and maximize competition in equipment purchases, and Funk Linko, Inc. did not properly account for its cost matching and maximize competition in equipment purchases.  Further, Abengoa Bioenergy Operations, LLC (Abengoa) could not fully support that it had complied with Recovery Act requirements to separately identify costs, pay prevailing wages in accordance with the Davis-Bacon Act, and ensure competition in awarding subcontracts.

In addition to compliance issues identified, we are concerned about Illinois' practice of providing Recovery Act funds to projects that had already been completed.  Although not expressly prohibited, we questioned whether providing funds for completed projects met the intent of the Recovery Act to stimulate the economy and create or save jobs.  The Department concurred with the recommendations and committed to implementing corrective actions.  Regarding Illinois' practice of providing Recovery Act funds to completed projects, the Department responded that the costs were incurred during the allowable timeframe for the grant, andstated that it had been assured by DCEO that all other projects were consistent with the intent of the Recovery Act legislation and that the costs were incurred within the Recovery Act timeframe.