DOE’s Chu Can’t Manage Apology, Much Less Department

Chu photoTwo weeks ago Texas Gov. Rick Perry made what many formerly mainstream media pundits thought was his crowning debate gaffe in Michigan, when he could not remember the third of three cabinet departments (after Education and Commerce) he would eliminate if he were elected president.

The one he momentarily forgot, the Department of Energy, should have been the first one on his lips.

Republican presidential candidates like Gov. Perry (as well as Rep. Ron Paul and a couple others) aren’t alone in their view of the DOE as a frenzy of incompetence, waste, fraud, and crony capitalism – better known as (Secretary Steven) Chu’s Chum, which lures scavengers of subvention from the most desperate of bottom-feeders (Solyndra) to those at the top of the chain who need it least (like Duke Energy, Nissan). It’s the enclave where the top fish toggles between his unfailing-but-unfounded belief in catastrophic sea level rise and his view that $8-per-gallon gasoline will protect the world from global warming.

The pursuers of the GOP nomination aren’t the only ones concerned. Lately DOE’s Inspector General, Gregory Friedman, has spoken about the overhaul (elimination would not be in his personal best interest) needed at the agency that was created by the Democrats’ previous incompetent president, Jimmy Carter. A report issued last week advised that the department be dramatically scaled back, both out of necessity from financial pressures but also because of redundancies and excessive overhead costs.

For example Friedman found that DOE oversees 16 research laboratories at a cost of more than $10.4 billion annually, but administrative costs represent $3.5 billion of the laboratories’ outlay. Among Friedman’s recommendations were that a “BRAC-style” commission be created to evaluate DOE’s laboratory and technology complex.

“We concluded that this cost structure, specifically the proportion of scarce science resources diverted to administrative, overhead, and indirect costs for each laboratory, may be unsustainable in the current budget environment,” Friedman wrote.

Obviously that’s before you get to the real bad stuff, a lot of which was exposed (even more than previously) this week in a book by the Hoover Institution’s Peter Schweizer titled Throw Them All Out. His revelations were far-reaching, but DOE loan guarantees and grants were a particularly egregious resource of political aggrandizement. Blogger Doug Ross related this discovery from TTAO

The so-called 1705 Loan Guarantee Program and the 1603 Grant Program channeled billions of dollars to all sorts of energy companies… 

…In the 1705 government-backed-loan program [alone], for example, $16.4 billion of the $20.5 billion in loans granted as of Sept. 15 went to companies either run by or primarily owned by Obama financial backers—individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party. The grant and guaranteed-loan recipients were early backers of Obama before he ran for president, people who continued to give to his campaigns and exclusively to the Democratic Party in the years leading up to 2008. Their political largesse is probably the best investment they ever made in alternative energy. It brought them returns many times over.

This phenomenon did not escape Friedman’s notice, which he testified about earlier this month before a regulatory affairs subcommittee under the House Oversight and Government Reform Committee. He told members “the Loan Guarantee Program had not properly documented, and as such could not always readily demonstrate, how it resolved or mitigated relevant risks prior to granting loan guarantees.” That bumbling, and the administration’s desire to grant favor to Obama cronies like George Kaiser (Solyndra) and Robert Kennedy, Jr., who received a $1.4 billion loan guarantee for BrightSource, should have been a concern.

Friedman also painted a picture of an entire cabinet agency unprepared for the flood of stimulus money it was suddenly given to distribute, and incapable of tracking it both administratively and ethically.

“To date, our Recovery Act-related investigations have resulted in over $2.3 million in monetary recoveries as well as five criminal prosecutions,” he testified. “This includes a series of cases involving fictitious claims for travel per diem resulting in the recovery of $1 million alone in Recovery Act funds.”

In a hearing back in March before another House investigative committee, Friedman also told of “fraudulent claims for rebates,” “weatherization fraud to include mischarging,” and “the directing of contracts and grants to friends and family.”

On Nov. 2 Friedman told Congress members that DOE was overwhelmed by the sudden influx of billions of dollars from the American Recovery and Reinvestment Act of 2009, which came with the expectation that “shovel ready” jobs would receive rapid funding so as to stimulate employment growth.

“The concept of ‘shovel ready’ projects became a Recovery Act symbol of expeditiously stimulating the economy and creating jobs,” Friedman said. “In reality, few actual ‘shovel ready’ projects existed.” 

That didn’t stop the money from flowing to unworthy ventures. One example he cited in the weatherization program found that a contractor favored employees and relatives as beneficiaries, which disadvantaged qualified elderly and handicapped applicants. 

“Weatherization work was often of poor quality,” Friedman testified. “In a recent audit performed at the state level, nine of the 17 weatherized homes we visited failed inspections because of substandard workmanship.”

That program, already known as a boondoggle thanks to outside watchdogs, was just the beginning. Friedman told the committee his office had initiated more than 100 criminal investigations, which involved “various schemes” that included “the submission of false information, claims for unallowable or unauthorized expenses, and other improper uses of Recovery Act funds.” The Inspector General also was not optimistic that his burden would lessen any time soon, since Recovery Act funds are only beginning to be spent. He told the committee he expects investigations to “continue for some time.”

That the Obama administration and Congress members who voted for the stimulus thought Recovery Act funds would rapidly create jobs would be comical if it wasn’t so pathetic. As Friedman explained, “In several states, the very personnel who were charged with implementing the Recovery Act’s provisions had been furloughed due to the economic situations. Ironically, this delayed timely allocation and expenditures of funds intended to boost the U.S. economy.”

Worse, as some of the stimulus-funded programs and jobs reach completion, Friedman said DOE faces the prospect of layoffs for a “Green jobs” agenda that has failed to produce overall improvements in the unemployment rate.

“Of the most immediate concern is how the Department plans to deal with a significant downsizing of the contractor workforce,” Friedman testified. “For example, Recovery Act funding for environmental clean-up activities are nearly exhausted and the Department now confronts the unpleasant task of laying off significant numbers of contractor workforce, many of whom had just recently been hired.” 

And then there are the 1,100 Solyndra workers who were laid off, with thousands more in renewable energy industries who can attribute their jobs to a government-inflated balloon of a sector in the economy, which is bursting before our eyes. The Obama administration’s DOE bears much culpability. While Friedman wouldn’t go that far, he knows changes are necessary. 

“Like all Federal agencies, the Department of Energy has been challenged to ‘think outside its comfort zone’ in the quest for new and better management practices,” he said in testimony. 

It appears Chu is incapable of thinking outside his zone. In his own testimony yesterday before the House Energy and Commerce Committee, he found no need to admit to ineptitude, or corruption, or to apologize about Solyndra. “Was there incompetence? Was there any undue influence? I’d have to say no,” he said. Committee Chairman Cliff Stearns, R-Fla., believes Chu belongs in a different zone: “He probably should be replaced by the president.”

While some presidential candidates think the whole department should be eliminated, at least one environmental group is still defending it.

“Eliminating DOE would slow progress of renewable energy technologies like wind, solar and geothermal, on fuel-efficient vehicles, and on energy-saving appliances and buildings,” the Natural Resources Defense Council posted on its blog.

At the same time NRDC alleged that Gov. Perry, in his momentary debate lapse, forgot his desire to eliminate DOE because it was just a talking point fed to him “by the polluters bankrolling (his) campaign.” 

It’s no surprise the Green extremists are trying to defend the indefensible, as they throw out decoys to draw attention away from the corruption and waste their organizations endorse.

Paul Chesser is an associate fellow for the National Legal and Policy Center.