The steep staffing cuts within the Department of Energy’s Office of Clean Energy Demonstrations have rendered it incapable of effectively managing up to $27 billion in project funding from the Infrastructure Investment and Jobs Act, according to a report the U.S. Government Accountability Office released Wednesday.
The report found that as of November, the department had committed more than $18 billion to about 100 projects, including $7 billion for regional clean hydrogen hubs, $5 billion for “industrial demonstrations,” $2.8 billion for advanced nuclear projects and other, smaller amounts for carbon management, rural energy improvements and long-duration storage.
Generally, demonstration projects require a minimum of 50% cost-share by the project awardees, which are often private companies, it said. In some cases, awardees are providing up to 90%.
GAO said 35 of the projects have been identified by the Trump administration for termination, representing $6.4 billion in funding. But as of November, OCED had not yet decommitted any funds for terminated projects, although eight of the 35 terminated awards have begun the close-out process, it said, while some other awardees are pursuing appeals.
GAO emphasized that DOE was bound by law to distribute and oversee the money.
“Since the IIJA appropriated about $21.5 billion dollars of no-year appropriations to DOE for clean energy demonstration projects, DOE will have an ongoing need to solicit and review applications for additional projects,” the report said. “Once these additional projects are underway, DOE will be required to conduct project management and oversight.”
However, the department “does not have a plan to ensure it meets statutory requirements for project management and oversight,” it concluded. It has reduced staff by 85%, cut contract support and engaged in broad reorganization and project review that left the future of the office uncertain.
“OCED’s capacity for day-to-day management has been diminished but remains generally functional,” it said. “However, OCED’s capacity to successfully oversee key project decisions points, such as go/no-go decisions and assessing lessons learned, is severely constrained.”
Key OCED divisions like portfolio strategy and project management lost at least 90 percent of their total workforce, GAO found.
GAO recommended Energy Secretary Chris Wright develop a plan for meeting statutory requirements for project management and assessing lessons learned for clean energy demonstration projects.
In a Jan. 26 letter responding to GAO’s draft report, DOE’s director for the Office of Financial and Audit Management, Tom Griffin, wrote that the department concurs with the report’s conclusion and attached an official response, which said DOE is “currently working to implement an internal realignment that affects functions assigned to [OCED].”
“DOE is identifying statutorily-mandated functions of the office, including the functions discussed in the GAO report, with the objective of ensuring that statutorily-mandated functions are either retained by [OCED] or assigned to a successor organization, as appropriate,” DOE wrote.
In November, DOE moved to eliminate OCED’s parent office – the Office of Infrastructure – as part of an update to its organizational chart that consolidated, eliminated and renamed several offices.
However, last month, President Donald Trump signed a package of appropriations bills, including one that awarded $3.1 billion in funding to the eliminated Office of Energy Efficiency and Renewable Energy, making the status of that reorganization less clear.
DOE did not immediately respond to a request for comment.
“Given the large decrease in staff resources, contract support, and proposed budget, OCED does not have the capacity to be an effective entity, and DOE does not have a plan to ensure it meets statutory requirements for project management and oversight without an effective OCED,” GAO said.
The report states that an OCED official interviewed by GAO “indicated” that the office will likely transfer some projects or project management functions to other offices, with the majority going to the newly created Office of Critical Minerals and Energy Innovations.
