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Audit Report: OAS-M-14-08

August 6, 2014

Management of Selected Advanced Research Projects Agency-Energy Projects

The Department of Energy's (Department) Advanced Research Projects Agency-Energy (ARPA-E) was created in 2007, as part of the America COMPETES Act.  ARPA-E focuses exclusively on high-impact innovations designed to translate science into breakthrough technologies that allow for genuine transformation in the way we generate, store and utilize energy. Funding is awarded through cooperative agreements to recipients ranging from start-up companies to established corporations and to institutions of higher education. Every recipient is statutorily required to share in the overall costs of their project by contributing a percentage of the total project costs.  In 2009, the American Recovery and Reinvestment Act of 2009 provided $400 million to ARPA-E to launch its first projects. To date, ARPA-E has funded over 362 potentially transformational energy technology projects.

We found that ARPA-E had generally established and implemented project management controls. Through significant involvement with project recipients, ARPA-E established project milestones, monitored progress, and reviewed progress reports and requests for project expense reimbursements. While such controls appeared to be generally effective, our testing revealed that two recipients had failed to obtain required audits and one of them had incurred questionable project costs.

We found that the issues we observed occurred for a variety of reasons, including a misunderstanding and a lack of communication between ARPA-E and the recipient as to the final position or determination regarding allowability of cost-share methods.  Based on the importance of the Department’s mission and ARPA-E’s key role within the Department, we made several recommendations to the Acting Director of ARPA-E.

Topic: Management & Administration