August 10, 2015

Alleged Misuse of FutureGen 2.0 Project Funds

Under the American Recovery and Reinvestment Act of 2009, the Department of Energy (Department) awarded a $1 billion cooperative agreement to the FutureGen Industrial Alliance for the FutureGen 2.0 Project (Project).  The Project was intended to create the world's first near-zero emissions, commercial-scale, coal-fueled power plant.  As of March 2015, the Department had expended more than $180 million for the Project.

We received a complaint alleging that a Project subrecipient had misused funds in excess of $10 million.  Specifically, the complainant alleged the subrecipient (1) directed employees to mischarge labor to the Project without producing work, (2) spent funds during a period when it was known that there could be no beneficial work performed, (3) improperly billed for labor expenses, and (4) inflated overhead expenditures.

We were unable to substantiate the first two allegations.  We initiated, but did not complete, work associated with the remaining allegations.  During the course of our work, we became aware that the Defense Contract Audit Agency (DCAA) had agreed to conduct an audit of costs incurred for fiscal years 2010, 2011, and 2012.  We were informed by DCAA that the audit would include a review of the subrecipient's internal controls and address whether the subrecipient appropriately billed for labor and overhead expenses, the subjects of the remaining allegations.  As such, we suspended our inquiries into these areas to avoid a duplication of effort.

Topic: Management & Administration