DOE IG Cites Lack of Funding as Contributor to Data Analytics Issues

In the recently released FY 2025 DOE Budget in Brief, Department of Energy (DOE) Office of Inspector General (OIG) Teri Donaldson said she lacks the funding necessary to carry out critical OIG oversight capabilities.*

The DOE OIG request for $149M for FY 2025 represents an increase of $63 million (73%) over the FY 2024 annualized Continuing Resolution amount. However, Donaldson stressed the need for more, especially in light of the high-risk nature of the Department's overall work and the programs established under recent legislation.

“The Department of Energy (Department) Office of Inspector General (OIG) has a long history of being underfunded for enduring mission oversight," Donaldson said. "The passage of recent legislation greatly exacerbated this problem. Specifically, under the Infrastructure Investment and Jobs Act (IIJA), the Inflation Reduction Act (IRA), and the Puerto Rico Energy Resilience Fund legislation, the Department received nearly $100 billion in appropriations. Even more remarkable, the Department’s loan authority increased by an estimated $385 billion, $290 billion of which must be used quickly, as it is set to expire on September 30, 2026. This is unprecedented."

Donaldson also pointed out that $83.6 billion of those appropriations will fund 71 new programs.

"These funds are already moving quickly, and the internal controls are untested," she explained. "Creating additional risks, much of the funding will be disbursed via grants to third party recipients through the states, local governments, and tribes. It remains unclear if these recipients are equipped with sufficient staffing, are adequately trained, or have adequate internal controls to safeguard these federal expenditures. These programs are vulnerable to large scale fraud."

"With the current level of proposed funding, however, the OIG’s oversight would be a fraction of what it should be and would not include any oversight of many of the key areas. Time is not on our side. For these reasons, I must conclude that I am substantially inhibited from performing the duties of my office," Donaldson stressed.

Those duties include identifying and addressing departmental reporting and compliance issues with the newly funded programs, which could be mitigated with the use of data analytics.

In her Special Report on The Department of Energy’s Considerations and Use of Data Analytics, Donaldson discussed the departmental weaknesses in the absence of data analytics and described the agency’s decades-long history of data management issues, specifically those involving acquisition and contract management.

“Since 1990, the GAO has designated the Department’s contract and project management practices as high-risk programs and operations that are vulnerable to waste, fraud, abuse, or mismanagement,” Donaldson said. “Approximately 90 percent of the Department’s budget goes to contractors, and on average 30 percent of that is further disseminated to subcontractors.”

Donaldson's report identified the following weaknesses, potential impacts, and considerations for addressing these weaknesses and moving toward the eventual removal of DOE from the high-risk list:

Weaknesses

• DOE use of data analytics is limited to centralized financial-management and procurement systems and sometimes only consists of maintaining spreadsheets and manual data reconciliation.
• The Department lacks a set of common data standards and a centralized data analytics process. Data stored in multiple systems throughout the agency limits the Department’s ability to perform comprehensive and timely analysis.
• The Department has not "kept pace" with Federal requirements about the use of data analytics. Inconsistencies exist in the collection and use of common financial data.
  • Data collection and information-sharing protocols lead to a “pay and chase” model associated with improper payments. (More than $80M in improper payments was made in FY 2021, an issue that could have been avoided by using a proper data analytics system, according to The Department of Energy’s Payment Integrity Reporting in the Fiscal Year 2022 Agency Financial Report (DOE-OIG-23-22, May 2023).
• Effective data management practices lead to wasted time as data scientists spend 50% of their time obtaining, improving, and validating data.

Potential Impacts

• Lack of effective data and information management practices will negatively impact the agency’s ability to monitor government and contractor costs and performance and manage fraud risks.
• Delayed improvements in data collection and information sharing protocols will hinder progress toward a system focused on prevention, early detection, and response related to the unprecedented new spending and the removal from the GAO’s High-Risk list.
• Limited data management and analytics capabilities will impede the Department’s ability to implement the various aspects of EO 14028, Improving the Nation’s Cybersecurity.

Considerations

1. Develop and implement a data governance structure, strategy, implementation plan, and capstone policy that will inform operating directives, roles, and responsibilities, and how to address the use of data analytics, data interoperability, and data quality.
2. Assess and identify resource needs, including policy, process, workforce, and information technology to modernize the Department’s oversight processes with the use of effective data analytics. 
3. Adopt a coordinated approach for establishing and enforcing common minimum data standards; shared, policy-compliant access to authoritative data; and accountability on implementation via transparency and consistent contract language. 

In response, DOE Management will continue the design of a Data Strategy and Implementation Plan as part of the Enterprise Data Management Program created in late FY 2023. The Office of the Chief Financial Officer, partnering with the Chief Data Officer and Chief Information Officer, will oversee strategic data management. Management will, within funding limitations, continue assessing and identifying resource needs to develop a data governance framework.

Contracting Impacts

Looking ahead, the Department’s Enterprise Risk Management FY 2024 Guidance, which emphasizes the use of data analytics, will provide direction and drive improved effective and efficient management and oversight of the newly-funded programs as well as federal contracts. Department-wide implementation of a Data Strategy and Implementation plan may require a modernized and centralized data network system and internal training. Contractors, subcontractors, and grant recipients can expect more stringent financial compliance and reporting requirement language in existing and future contracts. How the OIG manages this within the confines of its budget appropriations remains to be seen.

*At the time of the IG's statement, the FY 2024 Appropriations Bill had not passed Congress, but was included in the FY 2025 DOE BIB.