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Audit Report: OAS-RA-12-04

January 20, 2012

The Department's Management of the Smart Grid Investment Grant Program 

The Energy Independence and Security Act of 2007 charged the Department of Energy (Department) with establishing the Smart Grid Investment Grant (SGIG) program.  More recently, the American Recovery and Reinvestment Act of 2009 (Recovery Act) provided the Department's Office of Electricity Delivery and Energy Reliability with $3.5 billion to fund the SGIG program and to assist in modernizing the Nation's power grid.  The SGIG program was to facilitate the installation of state-of-the-art information technologies and, ultimately, improve grid reliability and enable consumers to reduce the amount of energy used.  The program required that the portion of a recipient's project paid for with Federal funds not exceed 50 percent of the total project cost.  The Department awarded all of its available grant funds to 99 recipients, with awards ranging in value from $397,000 to $200 million.
Although the Department had taken a number of positive actions, our audit revealed several opportunities to enhance management of the SGIG program.  The problems that we discovered could jeopardize achievement of Recovery Act goals.  In particular, we found that Department officials approved Smart Grid projects that used Federally-sourced funds to meet cost-share requirements.  In addition, one recipient was reimbursed twice for the same costs related to transportation.  Furthermore, three of the five cyber security plans (required to be submitted by grantees) which we reviewed were incomplete, and did not always sufficiently describe security controls and how they were implemented.  The issues we found were due, in part, to the accelerated planning, development, and deployment approach adopted by the Department for the SGIG program.  Without improvements, there remains a risk that the goals and objectives of the Smart Grid program may not be fully realized.  From a business management perspective relating to taxpayer-provided funding, we questioned reimbursements totaling more than $2 million for activities related to the use of Federal funds to meet cost-share obligations and duplicate cost reimbursement.

Topic: Financial Assistance