The Department of Energy’s Loan Programs Office (LPO) provides debt financing in the form of loans and loan guarantees to support innovative clean energy, advanced transportation, and tribal energy projects in the United States. To help carry out its mission, the LPO utilizes contractors and third-party advisors to assist with loan application processing, which increases the risk for conflicts of interest.
Given the LPO’s reliance on contractors and third-party advisors, we initiated this audit to determine whether the LPO had an
effective framework in place for managing conflicts of interest for contractors providing support and advisory services to its Office.
We found that the LPO did not have an effective framework in place for managing conflicts of interest for contractors providing support to the LPO. Specifically, the LPO was not aware of all the relationships that could cause conflicts of interest. We also found that the LPO did not ensure adequate management of conflict of interest disclosures and waiver requests, and did not ensure its prime contractor fully implemented key aspects of its strategy for managing potential conflicts of interest.
These issues occurred because the LPO did not have controls in place to identify and manage conflicts of interest. Specifically, the LPO had not developed and implemented a formal, centralized tracking system or policies and procedures for managing conflicts of interest. Additionally, the LPO relied upon third-party advisors and other contractors to self-identify conflicts of interest and did not ensure adequate oversight of its prime contractor.
To address the issues identified in this report, we have made two recommendations that, if fully implemented, should help ensure that decisions about awarding and managing loans and loan guarantees are in the Government’s and the public’s best interest.
