Energy IG issues management alert over weatherization program

After examining state records and visiting five Illinois homes undergoing weatherization improvements funded by the 2009 American Recovery and Reinvestment Act, staff from the Energy Department's Office of the Inspector General found problems so serious they issued a management alert before finishing the audit.

OIG is conducting similar audits of the Energy Department's Weatherization Assistance Program in North Carolina, Pennsylvania and Virginia. The program aims to help low-income families reduce their energy bills by financing improvements that make their homes more energy efficient. The program received $5 billion in Recovery Act funds and has thus far awarded $2.4 billion in weatherization grants to every state, the District of Columbia and five U.S. territories, according to department records.

"Because of the unprecedented level of funding and the risks associated with spending vast amounts of money in a relatively short period of time," OIG has initiated a series of audits to evaluate the program's internal controls at both federal and state levels, wrote Inspector General Gregory Friedman in a Dec. 3 memo to senior officials, which was released on Monday.

Auditors found both state and federal officials failed to adequately monitor and inspect work being performed in Illinois. In addition, state officials lacked an automated system for tracking problems discovered during on-site visits. Federal officials didn't find these shortcomings because they failed to perform their own on-site monitoring and inspection visits as often as required.

The failures jeopardize more than public funds. When OIG staff visited five homes in various stages of weatherization to develop a better understanding of the program, they discovered a gas leak on a newly installed furnace. While state officials and the weatherization contractor took immediate steps to warn the homeowners and fix the leak and other installation problems, "officials did not report any plans to conduct additional monitoring, testing or tracking of the work of the involved local inspector or weatherization contractor," the IG reported.

"While there is no guarantee that federal-level monitoring or state inspections will identify all problems, such activities are essential to evaluate program performance, deter inappropriate actions by contractors, identify poor workmanship that could lead to hazardous conditions, and place participants on notice that standards are important and must be enforced," the IG wrote.

Illinois has received $242 million to weatherize 26,933 homes. Thirty-five local agencies received those funds to determine the eligibility of recipients, award contracts for the work, and conduct final inspections to ensure and certify that the work meets requirements.

State officials eventually plan to hire 21 additional staff to improve program administration, but a state hiring freeze has put those plans on hold, Friedman noted.

The IG recommended Energy officials perform on-site monitoring as required by the program, take steps to improve state accountability and implement a system to track major findings from local agency-monitoring visits to their final resolution.

Department officials agreed with all the IG's recommendations. Officials estimated they would complete on-site monitoring of all grantees by Sept. 30, 2010.