Billions in funding, not enough oversight resources, IGs tell Congress

Inspectors General from science-based agencies told House lawmakers they are fighting an uphill battle against fraud in grant and other programs as funding flow...

The Energy Department’s inspector general is overwhelmed. It cannot keep up its oversight with the amount of money Congress has appropriated the agency over the last few years.

Energy received a huge budget increase from four laws Congress passed over the last few years: the Infrastructure Investment and Job Act, the Inflation Reduction Act, the CHIPs and Science Act and $1 billion dollars for solar projects in Puerto Rico as part of the 2023 omnibus appropriations bill.

That brings Energy’s total budget from just over $44 billion in 2022 to more than $478 billion, when all the grant authority and other funding is included. All that money goes out through programs or grants, including more than 70 new programs, most of which have new or at least untested internal controls.

Teri Donaldson, Energy’s IG says the money is moving quickly. She said $62 billion already is out the door or the subject of funding opportunities that are available. She said that all creates a host of new risks.

Teri Donaldson is the inspector general of the Energy Department.

“I noted when I took over this job a little over four years ago, the volume of reports all concluding that the Department of Energy lacked appropriate resources for oversight, and essentially all of those, including the department, acknowledging that it lacked appropriate resources for oversight. So it is against that landscape that all of this new money is now going to be distributed,” she told the House Science, Space and Technology Committee on April 19. “The Department of Energy received in the IIJA a cap for most of the IIJA programs of only 3% for oversight, and we received a little more flexibility in IRA, which is positive. But I would point out that those oversight numbers are largely utilized to move the money out the door because they’re classified as administrative expenses, most of which are to help the programs get money out the door. Only a small percentage will actually be for oversight, which is making sure that the funds landed where Congress intended them to land.”

Donaldson added that her shop is dramatically under resourced to conduct oversight already and adding hundreds of billions of dollars only makes things more difficult.

“When I came on board, my shop was already trailing the other CFO Act agencies underresourced historically. All of these new funds came along and now my shop is so dramatically underresourced that I feel compelled to mention this anytime that I’m on the Hill. My shop received zero additional funding in connection with the CHIPS Act, zero additional funding in connection with the $1 billion for Puerto Rico, and we received only small numbers in connection with IIJA and the IRA,” she said. “It’s something that will make it very difficult for us to conduct the audits, inspections and investigations that are going to be so needed as we turn the corner into spending these massive amounts of money.”

Donaldson said her staff already has been coordinating and planning its oversight plans, including holding 27 meetings with Energy mission areas. But those efforts are not enough of a substitute for people and funding.

In her written testimony, Donaldson detailed how her budget is third smallest among all civilian CFO Act agencies, ahead of only the Social Security Administration and the Education Department.

Source: Energy IG Teri Donaldson testimony on April 19.

And Energy’s IG isn’t alone in its financial struggles.

The other IGs who testified from similar science-based agencies say they are facing challenges, but not to the extent of Energy.

Sean O’Donnell, the IG at the Environmental Protection Agency, said the agency received about $100 billion from the IIJA and IRA.

He said Congress gave EPA dedicated funding for oversight under the infrastructure bill, but not from the inflation reduction bill. Additionally, EPA IG’s office is still recovering from a decade of flat or reduced funding.

“The IIJA gave the EPA $60 billion; most of that is going through familiar funding mechanisms like state revolving funds. What we see are capacity issues at both the distribution and the recipients. But the IRA gave the EPA over $40 billion for entirely new programs that are going to entirely new recipients. And unfortunately for us, I think the biggest risk is Congress didn’t fund oversight of this,” O’Donnell said. “One example recently is of the Environmental Justice Office, which went from 12 components of about $12 million to now one component with $3 billion. That’s faster money to newer recipients and we’re very concerned about that and the ability to do effective oversight.”

O’Donnell added EPA leadership supports the reprogramming of funds to help with oversight.

Congress could do more

The other IGs from the National Science Foundation (NSF), NASA and the Transportation Department didn’t mention staffing or resource shortages. But according to Energy’s data, EPA and Transportation are fourth and sixth, respectively, among the CFO Act agencies and NSF is higher than Energy too.

The White House requested $1.6 billion in the 2024 budget request to help federal law enforcement and agency inspectors general handle a growing caseload of pandemic-related fraud claims. This builds on President Joe Biden’s commitment, in his State of the Union address, to triple the number of strike forces tackling COVID-19 fraud at the Justice Department.

Committee lawmakers expressed surprise about the Energy IG’s situation.

Rep. Jay Obernolte (R-Calif.), chairman of the Oversight and Investigations Subcommittee, said he was unaware of Energy’s funding challenges for its IG.

“A couple of things I think it’s become clear to me as a result of this discussion. Number one, perhaps there’s an additional metric we ought to be looking at to figure out whether or not our inspector generals are adequately funded based on the amount of activity that they have to oversee,” Obernolte said. “I think that we here in Congress need to be more mindful when we are awarding grant funding of making sure that we simultaneously award your offices the relatively modest in comparison amount of money that you need to conduct oversight of that funding.”

Without any additional funding on the horizon, the IGs said they will rely on technology, including better data analytics, interagency collaboration and whistleblowers.

Energy’s Donaldson said there are several ongoing actions across her agency and among all agencies to fight back against fraud.

“We’ve launched a large scale data acquisition and monitoring project which will generate leads for audits and inspections. We’ve had approximately 30 meetings with the department. We’re not allowed to consult or advise, but we asked a ton of questions, a lot of them about the 71 new programs. So we’re actively in the coordinating and planning,” she said. “Mr. [Eric] Soskin, [the DoT IG] and I [are] [co-]chairmen of the group of inspectors general that received funding under IIJA. We meet every month with the other inspectors general, share best practices, so we’re doing everything that we can, given our underfunded status.”

Encouraging whistleblowers

Donaldson added she also is building up her data analytics platform and capabilities, but they are in the nascent stages.

EPA’s O’Donnell said he too is relying on data and the merging of databases.

He said the biggest challenge is around pulling data from disparate databases. A recent study found EPA uses 55 different databases to pull information from 100 grant programs.

Additionally, O’Donnell said EPA is encouraging whistleblowers to come forward when they see potential problems. He said he reinvigorated an award program for whistleblowers and initiated a forthcoming program at the EPA OIG that will financially reward EPA employees who blow the whistle on waste, fraud and abuse.

“We are also working with the EPA to ensure that it is meeting its responsibility to promote the reporting of suspected wrongdoing and to vindicate whistleblower rights,” he said in his written testimony. “Last month, we issued a report identifying provisions that the EPA could add to its terms and conditions for grants and subawards. Chief among these were provisions specifically addressing contractors’, grantees’ and subrecipients’ roles and responsibilities with respect to whistleblowers.”


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