Watchdog Says Biden’s Energy Department Hands Out $56 Million in Unaudited Grants, Warns More Waste, Fraud Likely

More than $56 million in Department of Energy (DOE) grants to 60 for-profit recipients—including billions of dollars under President Joe Biden’s Inflation Reduction Act—are not being audited as required by federal law because DOE isn’t obtaining regular reports on how the money is being spent, according to a government watchdog.

“We found that [DOE’s Office of] Science did not always ensure that for-profit grantees were compliant with audit regulations, including unaudited award expenditures, late audit report submissions, use of incorrect regulations or audit type, and incomplete reporting packages. These issues were due to Science lacking a system or tracking mechanism for monitoring grantees’ expenditures that may require an audit,” reported the DOE Inspector-General (IG).

“Award expenditures totaling $56,835,650 that were not audited, as required … exposes the department to an increased risk of fraud, waste, and abuse. Therefore, we are questioning $56,835,650 in award expenditures as unresolved costs pending audit,” the IG reported.

The failure by DOE to enforce audit requirements on grantees receiving millions of tax dollars “increases the risk of undetected noncompliance with federal program requirements and grant award terms and conditions. Grantees who did not have the required audits performed have a higher risk of charging unallowable costs to the department.,” the IG said.

The IG also warned that the $56 million of unaudited grants may be only a small part of the total of DOE funds going out the door to recipients who aren’t then required to account for how they spent money made possible by major Biden administration programs.

“Although the scope of this audit was grants to for-profit grantees within Science, it is important that the Department consider the report findings across the complex because the Department received significant funding under the Infrastructure Investment and Jobs Act and Inflation Reduction Act of 2022, and some of this funding will be awarded through financial assistance instruments, including grants,” the report said.

A spokesman for Department of Energy Secretary Jennifer Granholm did not respond to The Epoch Times’ request for comment on the IG report.

The IG’s report was based on analysis of 60 DOE grants, including 17 that investigators found had not been audited and none were scheduled. The IG also said that in all 17 instances, “the data provided by Science showed the grantee’s disbursements exceeded the expenditure threshold during the Fiscal Year, but no audit report was submitted to the department. The grantees confirmed to Science that they did not have the required audits, and future audit submission dates were not provided.”

In another 13 cases, the grant recipients were asked by both DOE and the IG for copies of the audit reports they are required to provide, but none of them did so.

The IG report repeatedly stressed the importance of DOE officials ensuring compliance by grant recipients of all required audits and reports on how federal tax dollars are being spent across all of the energy department.

“Oversight of all department grants to for-profit grantees is critical to ensure that the department executes its stewardship responsibilities, including protecting the government and taxpayers. As identified through prior OIG reports, inadequate financial monitoring of receipt costs increases the risk that questionable or unallowable costs could be charged to the department, reducing the amount of funds available to complete projects. These reports demonstrate a need for more stringent monitoring of projects awarded under financial assistance agreements,” the IG said.

The IG also reminded DOE officials of a 2022 report it compiled that noted “the CHIPS and Science Act is expected to increase the Department of Energy’s budget more than $30 billion” and the Inflation Reduction Act to “authorize $25 billion in new spending authority for the department’s energy security programs.”

As a result, the IG warned, “it is imperative that Department leadership recognize the immense risks associated with these new programs and take assertive steps to mitigate the risks.”

Rep. Morgan Griffith (R-Va.), chairman of the House Energy and Commerce Committee’s oversight subcommittee, told The Epoch Times that he is “concerned that the Department of Energy failed to ensure that for-profit grantees were compliant with audit regulations. As more spending flows through DoE by virtue of the Infrastructure Act, the so-called Inflation Reduction Act, etc., I will continue to monitor the implementation of corrective actions necessary to limit waste, fraud, and abuse of taxpayer money.”

And Rep. Debbie Lesko (R-Ariz.), a member of the House Energy and Commerce Committee’s oversight subcommittee, told The Epoch Times that “the American people deserve full transparency from the government on how their hard-earned taxpayer dollars are being spent. It is unacceptable that the Department of Energy has failed to require audits on over $50 million in grant funding. I am fighting to ensure that the Department of Energy is fully accountable to the American people.”