Energy Dept. 'Unable to Locate' $500,000 in Equipment Bought With Stimulus Money

By Penny Starr | July 16, 2012 | 4:45pm EDT

Department of Energy ( Starr)

( – An audit conducted by the Energy Department’s Office of Inspector General was "unable to locate" $500,000 worth of equipment purchased with stimulus money by a recipient of funds distributed through the deparment's “Advanced Batteries and Hybrid Components Program,” according to an audit report published by the OIG.

The DOE said it would not be "appropriate" to release the name of stimulus-money recipient where the $500,000 worth of equipment could not be located.

The program was given nearly $2 billion in stimulus funds "to support the construction of U.S. based battery and electric drive component
manufacturing plants." As of June, DOE had "expended" about $1.2 billion of that money and had made grants to "30 for-profit manufacturers," according to the July 10 audit report.

One of the three “conclusions and observations” the OIG made in the report is that more should be done to “ensure recipients adequately safeguard equipment purchased with federal funds,” the audit states.

“We were unable to locate equipment purchased by one recipient totaling about $500,000,” the audit states.

In an expanded section of the audit entitled “Safeguarding Assets,” it states: “While recipients were required to have property accountability systems in place, one of the three recipients we reviewed had not maintained records detailing information such as the location of equipment purchased with Recovery Act funds.

“In the absence of detailed inventory records, we attempted to locate property using information contained in invoices," the audit states. “However, despite the assistance of recipient officials familiar with the premises and knowledgeable about the purchases made, we were unable to locate 20 of the 37 equipment items sampled.

“The missing items were valued at approximately $500,000,” the audit states.

The other two “conclusions and observations” in the audit were:

--"Better define regulations governing the retention of documentation supporting procurement decisions. Regulations currently require for-profit recipients to follow best commercial practices, but do not define such practices. One recipient in our sample had purchased about $24 million in equipment and services without adequately documenting purchasing decisions."

--"Obtain and review required audit reports to ensure the sufficiency of internal controls and compliance with laws and regulations. Of 28 program recipients, 8 had not submitted required reports."

This is the second audit conducted by OIG on the program. The first was in April 2010. The office said a “follow-up” audit was necessary, in part, because it wanted to evaluate “circumstances related to an allegation received by the Office of Inspector General that an employee of one recipient had unduly influenced procurement decisions and violated conflict of interest provisions.”

But, the second audit concluded: “Based on our test work, we were unable to substantiate the allegation related to a potential conflict of interest.”

When asked by for the name of the “recipient” that could not account for the $500,000 in equipment, the following statement was provided by the OIG:

“The focus of the audit was based on Department of Energy’s policy and implementation. It is not appropriate to disclose company names.”

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