Calendar Year 2020

I am pleased to present the Office of Inspector General’s combined Fiscal Year 2009 Annual
Performance Report and Fiscal Year 2010 Annual Performance Plan.
On February 17, 2009, the American Recovery and Investment Act of 2009 (Recovery Act)
was enacted. Under the Recovery Act, the Department of Energy received just under $40
billion for various energy, environmental and science programs and initiatives. The
Recovery Act also created the Recovery Accountability and Transparency Board, in
recognition of the need for effective oversight to protect taxpayer’s interest. Under the
statue, the Department of Energy’s Inspector General is a member of the Board
In support of the objectives outlined in the Recovery Act, this office has developed and is
executing a multi-phase strategy designed to provide the most effective oversight possible of
Recovery Act activities, with available resources. Our goal is to work with Department
management to maximize the Recovery Act’s efforts to achieve accountability and
transparency.
Moving forward, we plan to continue our focus on helping management achieve the
programmatic objectives of the Recovery Act, as they apply to the Department of Energy.
We also plan to address other Departmental Management Challenges identified by this
office, including: Contract Administration, Cyber Security, Energy Supply, Environmental
Cleanup, Human Capital Management, Safeguards and Security, and Stockpile Stewardship.

The Department of Energy's (Department) Office of Energy Efficiency and Renewable Energy
established the Solar Technology Pathway Partnerships (Solar TPP) program as part of an effort
to make solar energy cost-competitive with conventional forms of electricity by 2015. The
program focused on new solar energy photovoltaic systems. To implement the program, the
Department, beginning in 2007, established cooperative agreements with 12 for-profit financial
assistance recipients who in turn established partnerships with universities, non-profit
organizations, and the Department's national laboratories. To date, cooperative agreements with
9 of the 12 original recipients remain active. Of the three cooperative agreements that had been
discontinued, two were terminated due to concerns about their viability and the other recipient
withdrew before beginning work.

In February 2009, the President signed the American Recovery and Reinvestment Act of
2009 (Recovery Act) into law. Part of the Recovery Act's purpose, relevant to the
Department of Energy (Department), was to invest in environmental protection.
Accordingly, the Department's Oak Ridge Office of Environmental Management (EM)
received $216 million of Recovery Act funds to perform environmental cleanup activities at
the National Nuclear Security Administration's (NNSA) Y-12 National Security Complex
(Y-12). These funds were allocated to seven projects addressing material disposition,
deactivation and demolition, and remediation. Y-12 is managed and operated by Babcox
&Wilcox Y-12 Technical Services, LLC (B&W Y-12). The NNSA Y-12 Site Office (Site
Office) is responsible for overseeing B&W Y-12, including its management of these
projects.
Due to the importance of the Recovery Act's investment in environmental protection, we
initiated this audit to determine whether Y-12 is effectively managing its environmental
cleanup activities funded by the Recovery Act. During the audit we reviewed three of
Y-12's seven EM Recovery Act funded projects, which accounted for $164 million of the
$216 million total funding. As of August 2010, Y-12 had awarded 428 subcontracts with a
total value of $39 million to support the three projects we reviewed. We analyzed nine of
these subcontracts valued at a total of $10 million.

Attached is the subject letter prepared by KPMG LLP, our contract auditors. The letter
contains 23 new findings (see letter, Exhibit A) and 4 repeat findings (see letter, Exhibit B)
that were issued during the course of the Fiscal Year 2010 audit of the Department of Energy's
(Department) Consolidated Financial Statements. Management generally concurred with and
provided planned corrective actions for most of the recommendations listed in the
Management Letter and management's comments are included in each finding.
No Departmental position is required for the findings in this report. However, the
recommendations are open and should be tracked in the Department's Audit Report Tracking
System.
We appreciate the cooperation of your staff during the review.

The purpose of this management alert is to convey concerns regarding state-level implementation
of the Department of Energy's State Energy Efficient Appliance Rebate Program (Rebate
Program), which promotes the purchase of ENERGY STAR® qualified appliances.
The Office of Inspector General (OIG) recently received an allegation concerning potential abuse
of the program in the State of Georgia. Our investigation confirmed that an individual purchased
multiple hot water heaters and returned them to the store, yet applied for and inappropriately
received rebates under the Rebate Program. While we cannot confirm whether or not this was an
isolated circumstance, our fundamental concern is that the Georgia program may currently lack
sufficient safeguards to deter certain types of fraudulent or non-compliant rebate submissions. If
similar process vulnerabilities exist in other jurisdictions, the Rebate Program could be exposed
to abusive practices on a broad scale. For this reason, we are bringing this matter to your
attention for expedited consideration.