Energy Dept. weatherization programs rife with waste, fraud, inspector general audits show
Shortly after taking office, President Barack Obama defended the weatherization portion of the stimulus bill in a February 2009 CBS interview, saying it would immediately put people back to work, reduce energy costs and lay the groundwork for future energy independence.
“What would be a more effective stimulus package than that?” said Obama at the time. “That’s exactly the kind of program that we should be funding.”
In total, the stimulus program allocated about $5 billion to the cause of home weatherization, outfitting homes with the latest green technology in order to reduce energy prices.
It’s now three years later, and it appears the weatherization program has gone down a road of waste, fraud and abuse.
Take Illinois, Obama’s home state, as an example.
Illinois’ share of the weatherization program in 2009 was $242 million over three years, with a goal of weatherizing 27,000 homes for $9,000 each. The program is overseen by the Department of Commerce and Economic Opportunity (DCEO), along with 35 other local agencies. Roughly half of the operations were run through the Community and Economic Development Association of Cook County.
Despite the generous weatherization stimulus, the Illinois legislature decided to create its own, state-run program. Thus, in 2009, the Urban Weatherization Initiative was created, with $425 million to spend over five years.
The state program is also run through the DCEO within the newly-created Office of Urban Assistance. (RELATED: Solyndra execs to plead Fifth in hearing)
But in October 2010, Gregory H. Friedman, Inspector General at the Department of Energy, issued a scathing report on Illinois’ weatherization program funded with stimulus dollars.
Among his findings were that 14 out of 15 “weatherized” homes failed final inspection because of poor workmanship and 12 out of 15 homes contained substandard work that could have “resulted in significant property damage or injury to the homeowners.”
But Friedman’s report didn’t stop there.
In one weatherized home, 11 out of 14 items the weatherization contractor installed failed inspection. Another home had an improperly installed exhaust system that turned out to be a potential fire hazard.
The audit also found that the number of gas leaks discovered was “alarming.”
Worst still, Friedman reported that contractors hired to weatherize homes charged homeowners prices significantly higher than market value for the items they installed.
“For example, CEDA’s published prices for smoke alarms, fire extinguishers, and thermostats ranged from about 120 percent to 200 percent over the average retail price,” reads the audit report. “Neither CEDA nor State officials could justify such large mark-ups on materials.”
The IG’s audit also turned up erroneous billing practices, where contractors would over-charge for services that were never carried out.
“Additionally, a contractor had installed one carbon monoxide detector, but had billed CEDA for 3; another contractor had installed 12 light bulbs, but had billed CEDA for 20; and, yet another had failed to install a gas shut-off valve, but had billed for the work. In addition, a contractor had billed for almost four times the amount of drywall actually installed,” reads the report.
When contacted by TheDC, a DOE spokesperson Bill Gibbons said, “The weatherization programs are creating thousands of jobs, helping families save money, and deploying new clean energy technologies in local communities around the country.”
“We always expected that it would take some time to get these programs fully up and running in the beginning, but we are on track to significantly exceed the 600,000 home goal set for the program,” Gibbons added. “The Department takes any reported case of abuse or poor performance very seriously, but these have been the exception rather than the rule and we have taken aggressive actions to address the issues and hold those responsible accountable.”
Still, one member of the advisory board overseeing the state program, Republican state Sen. Dan Duffy, resigned from the non-voting position in March 2011 because he so incensed at what he saw to be an obvious waste of taxpayer money
“The more questions I asked, the more I was told ‘Dan, you don’t really have a vote,’” Duffy told TheDC.
“I guess I don’t understand, when the state of Illinois literally cannot pay its bills and is going bankrupt, is this really the best use of money?” Duffy added. “I don’t care if its state or federal. Why are we spending millions of dollars with absolutely no credibility of how the spend that money?”
The story of Illinois’ weatherization program, however, doesn’t stop there.
The state-run program is being promoted by four separate public relations firms. Two of those firms have close ties to the Obama administration.
One of the firms, Jascula-Terman and Associates, Inc. of Chicago is headed by Chairman and CEO Rick Jascula; and President and CFO Jim Terman*. In 2008, they provided pro bono services to Rev. Jeremiah Wright, at the request of Obama’s close friend and adviser David Axelrod.
In 2010 former White House Chief of Staff Rahm Emanuel went to Jascula-Terman for help during his mayoral campaign.
The DCEO also hired Avis Lavelle, of A. Lavelle Consulting, to do press work for the program. A former press secretary for Mayor Richard Daley, Lavelle is considered to be a close friend of Michelle Obama and Valerie Jarrett. She did not return TheDC’s request for comment.
But Illinois isn’t the only state that struggled with its weatherization program. Delaware suspended its program altogether after only nine months when it became apparent the fraud and mismanagement was getting out of control.
A state audit in Tennessee, which received more than $100 million in stimulus funds for weatherization, also found rampant waste and abuse. The 260-page report uncovered problems very similar to those in Illinois: work was done improperly and funds went to homeowners not even eligible for the program.
Illinois, Delaware and Tennessee are only three examples, but numerous reports show the mismanagement is widespread throughout then entire nationwide program.
“It was a set up for failure,” Duffy told TheDC.
*Editor’s note: Payment information has been removed.