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Watchdog: Energy Department Mismanaged Some R&D Investments

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The Energy Department’s research investment programs aren’t effectively managed, occasionally leading to overspending, a federal watchdog found.

The department’s Office of Science distributes Small Business Innovation Research and Small Business Technology Transfer awards, given to companies working on specific energy-themed technology projects. The Advanced Research Projects Agency-Energy also builds cooperative agreements with small businesses developing new technology. Those programs need to do a better job guaranteeing awardees meet their development goals and ensuring funding is allocated efficiently, among other steps, according to an inspector general’s audit.

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For instance, three funding recipients hadn’t kept detailed enough records of project expenses, the audit found. The department also didn’t ensure three recipients underwent required audits, or that they had secured participation from a research institution, which is a requirement for some rewards. The Office of Science didn’t always require final expenditure reports from recipients and didn’t always explain why it occasionally waived those “closeout requirements,” the report said.

In one instance, SixPoint Materials, an ARPA-E awardee, had been tracking employees hours on a timesheet but ultimately cashed in on the award based on a fixed percentage of employee time. The OIG concluded that out of $357,000 SixPoint racked up in labor and other expenses, ARPA-E was charged about $42,000 extra—“an amount we questioned as unallowable,” the report said.

The report comes about a month after President Donald Trump’s budget blueprint proposed eliminating ARPA-E altogether, and cutting research dollars across agencies so the private sector can take the lead on research and development.

The IG recommended the department train award recipients to “adhere to record-keeping requirements,” ensure recipients submit deliverables before closing out the award, and document any instances in which the closeout requirements are waived.

Department management concurred with the recommendations, though it expressed concern the companies named in the report as examples of mismanagement could “negatively impact” business and “potentially discourage small businesses from participating in federal research and development programs.”

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