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Special Report: OAS-RA-12-14

August 28, 2012

Inquiry into the Procurement of Law Firm Services and Management of Law Firm-Disclosed Organizational Conflicts of Interest by the Department of Energy's Loan Programs Office

We received anonymous complaints alleging various improprieties in the Loan Programs Office related to the procurement of legal services and the management of law firm disclosed conflicts of interest in the Innovative Technology Loan Guarantee Program (Program).  In response, we initiated a special inquiry to review the circumstances surrounding the allegations.  Our inquiry did not substantiate the specific allegations outlined in the complaint.  Absent additional information, we plan no further action regarding the original allegations.  We did, however, identify opportunities to improve transparency over the Program's management of organizational conflict of interest waiver requests.  Specifically, we noted that the Program had not deployed a tracking system for managing law firm waiver requests and had not documented, in an organized system of records, the rationale for denying or approving waiver requests.  The issues observed parallel the findings in prior Loan Guarantee Program reviews.  The lack of a tracking system and documentation supporting the reasons for approving waiver requests in an organized system of records occurred, in large part, because the Program had not established formal documentation procedures.  Given the taxpayer-provided funds at risk in the Loan Guarantee Program, the sensitivity of the Program and its reliance on outside law firm legal advice free from conflicts and impairments, we made recommendations to address the issues identified in our report.  Management concurred with our recommendations and proposed corrective actions.

Topic: Management & Administration