- The Washington Times - Thursday, October 17, 2013

A federal program designed to foster clean energy technology has produce a toxic by-product: fiscal waste.

Government contractors working to develop a renewable car battery have been using taxpayer money to pay for food, drinks and entertainment, according to new findings from federal investigators.

In the past five years, the Energy Department has poured more than $1 billion into developing a hydrogen fuel cell. But the agency’s the inspector general warns that 10 percent of that total might have been wasted by contractors’ wining and dining.

“Funds spent on questionable and/or unallowable costs may reduce the amount available to complete project objectives and represents wasted and misused taxpayer dollars,” the IG said.

Investigators found that contractors billed the government for travel expenses, lodging, meals, drinks, inappropriate salaries and entertainment. One person even got money for legal fees related to a fight for control of their company.

The IG said Energy Department officials had excellent oversight of the technical parts of the project — but turned a blind eye toward the nonscientific expenses.

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Department officials “generally relied on certifications from subcontractor officials as to the appropriateness of the costs claimed rather than conducting their own reviews or obtaining more detailed support,” the IG said.

The report of waste has attracted attention on Capitol Hill.

“Any time an inspector general finds wasteful spending, steps should be taken to eliminate the practices that allowed it to happen,” said Robert Dillon, spokesman for Sen. Lisa Murkowski of Alaska, the ranking Republican on the Senate Energy Committee.

“This report is no exception — it is yet another sign that [the Energy Department] needs to do a better job overseeing its financial awards and contractors,” Mr. Dillon said.

For letting contractors run rampant with taxpayer money, the Energy Department wins the Golden Hammer, a weekly distinction given out by The Washington Times to call attention to the worst examples of fiscal waste and abuse by the government.

Energy Department officials vowed to improve oversight of the funds and to try to recover money that was misspent.

Hydrogen fuel cell development has led to 400 patents and kept the U.S. at the forefront of a growing scientific and economic sector, a letter from the Energy Department said, and it added that the agency remains committed to safeguarding taxpayer dollars.

“The program has saved taxpayers more than $30 million since 2009 by terminating or redirecting underperforming projects,” it said.

Investigators took a sample of $68 million and found that $6.6 million — roughly 10 percent — had been wasted. Though the IG’s investigators said they could not extrapolate that the amount was the same across all the fuel cell programs, they were concerned that the rate of wasted taxpayer dollars could be high.

The misspent funds included a contractor who gave $1 million to subcontracting companies owned by family members or in which the contractor had a financial interest.

Several contractors said they received no guidance from the Energy Department, and only met with federal officials to discuss the scientific parts of the projects. Investigators said that the department’s oversight was poor, but they did not absolve the contractors from things such as charging the government for alcohol, something the IG said was clearly banned by federal regulations.

The Energy Department is not the only agency with management shortcomings regarding contractor funds.

Across all departments, wasted money can often be damaging to a program’s credibility, no matter how much it may serve the public’s interest, said Joe Newman, spokesman for the Project On Government Oversight, a government accountability watchdog.

“It’s very difficult at that point when you’re playing a game of negotiating over millions and billions of dollars in a budget to defend something that has a poor track record of oversight,” he said, adding that critics will use any fiscal abuse as ammunition against a program.

• Phillip Swarts can be reached at pswarts@washingtontimes.com.

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