Summary

In response to a congressional request, GAO reviewed the Department of Energy's (DOE) system for monitoring alcohol fuels financial assistance projects.

The DOE system for monitoring alcohol fuels projects is effective, but it was put in place 7 months after some of the projects started. As a result, some projects were near completion before effective monitoring began. The system has been identifying and resolving problems but, in some cases, the problems were identified too late. Problems remained unsolved in five study projects, and these projects may be terminated after substantial portions of their funding have been spent. If the projects had been monitored from the time they started, some of the problems might have been resolved or action could have been taken to terminate the projects without a sizeable expenditure of funds. A similar situation could arise with future programs. DOE erroneously made advance payments to 24 alcohol fuels feasibility study grantees who were to be paid on a reimbursable basis. Five grantees voluntarily returned a total of $378,110. However, grantees had spent the balance of the funds by the time the errors were detected. Had the monitoring system been in place, DOE could have detected the errors sooner and taken action to have more advances returned. By making erroneous advances, DOE lost oversight and control over the projects which might have also contributed to the problems. Since 60 percent of the award amount was erroneously advanced and not returned for 19 grants, project monitors were not afforded an opportunity to review billing vouchers. If an audit of the projects which received the erroneous advances shows that funds were misused, DOE should expand the audit.