Report: DOE Withheld Data on Bankrupt Green Energy Company

ECOtality received more than $100M in stimulus awards

November 5, 2013

The Department of Energy withheld troubling cost and performance data on a major stimulus award from a federal watchdog before the company servicing the award went bankrupt, according to a report released on Tuesday.

The report focuses on the department’s handling of a pair of federal awards worth about $126 million for ECOtality, a San Francisco-based green energy company that declared bankruptcy in September.

DOE’s inspector general, which authored Tuesday’s report, released an audit in July that expressed concerns about the department’s management of ECOtality’s $100 million stimulus award for the installation of electric vehicle charging stations.

The report revealed that DOE officials neglected to inform the IG in July of material concerns about cost overruns and project shortfalls involving ECOtality’s stimulus award.

"There was adequate opportunity for the Department to provide information about its concerns regarding ECOtality’s ability to meet project objectives prior to the time the Office of Inspector General audit report was finalized," the report stated.

Those concerns included data showing installations were "significantly behind schedule," cost overruns about 200 percent higher than originally budgeted, and concerns that ECOtality would not be able to gather required usage data on 420 of its charging stations.

DOE officials said the omission of that information in communications with the IG prior to its July audit was unintentional.

"Nothing came to our attention to the contrary," the IG said. "However, we are deeply concerned because the information directly related to the objective of our audit, to determine whether the Department had effectively awarded and managed funding to ECOtality."

The report also revealed that DOE continued to pay out a separate ECOtality award for electric vehicle testing even after the company went bankrupt.

ECOtality announced in an August filing with the Securities and Exchange Commission that it had hired restructuring advisers and was eyeing bankruptcy. DOE immediately suspended payments under both of its awards.

However, on Oct. 1 the department lifted that hold and resumed payments under ECOtality’s vehicle testing award.

"We are concerned that the Department had not formally reviewed and documented its determination on ECOtality’s ability to comply with its 2011 award requirements," the IG noted in its report.

DOE said it had the authority to continue the suspension of the award, but opted to resume payments after the portion of the company servicing its testing award was sold to another entity.

"Ecotality provided assurances that the project was not affected" by its decision to declare bankruptcy, the IG noted. DOE insisted that the company would still be able to complete tasks required under its 2011 award.

However, it had not conducted a formal review of the award to definitely determine that that was the case. DOE officials told the IG that they would "reassess" its determination the company will be able to carry out its award in light of the company’s bankruptcy.