Fort Knox is trying to reduce its energy costs, but in doing so it has mishandled about $270 million in energy efficiency projects, according to a report by the Department of Defense’s inspector general.
The DOD’s IG reported that Fort Knox officials contracted with the local utility in 1996 to “install new, energy-efficient equipment and systems or upgrading existing ones and pay for these upgrades with savings” on the fort’s energy bills.
Federal agencies are allowed to finance energy efficiency projects through guarantees from utilities, which are paid back through savings on agencies’ energy bills. This allows federal agencies to upgrade facilities without paying huge upfront capital costs.
A good deal for Fort Knox, but a bad deal for the Nolin Rural Electric Cooperative Corporation, which guaranteed the fort’s energy-savings projects.
DOD’s IG found that Fort Knox did not “did not properly award and administer 108 task orders, valued at about $270 million.” The IG also noted that Fort Knox officials could not even prove the projects actually had sufficient energy savings to pay back the utility company’s investment as required.”
“[A]nd they have no assurance they received fair and reasonable prices,” the IG reported. “Furthermore, the lack of adequate internal controls increases the risk of fraud, waste, and abuse.”
Fort Knox disagreed with the DOD IG’s reported findings. The fort’s public works director told the IG that “the report appears to inaccurately assert that detailed energy savings calculations were not considered” for projects and that energy savings “were generally calculated for facilities using acceptable engineering standards.”
The IG does note that “Fort Knox officials provided a chart showing a decline in gas and electricity usage per square foot of space for the entire base since 2003, below the goal established by the Energy Policy Act of 2005.”
But the IG retorted that “no verification of actual savings was computed for each project.” This means that “Fort Knox officials have no assurance the projects actually achieved the projected savings.”
“[W]e do not dispute that gas and electricity usage has declined for the base as a whole as shown in the chart provided. However, our concern is whether the individual projects completed using the UESC met the intent of the program and achieved sufficient energy savings to pay back the investment,” the IG noted.
The DOD is the country’s largest energy user, consuming 827 trillion British thermal units of energy in 2012. It’s no surprise that federal laws and executive orders have aimed at reducing DOD energy usage over the years.
Current laws and executive orders “require and enable federal agencies to implement energy-efficiency, water-conservation, and renewable-energy projects” noted DOD’s IG, adding that current rules force federal facilities to reduce their energy consumption 30 percent by 2015.
Some efforts of the Pentagon to cut its energy use and diversify its fuel supply to cut costs has garnered criticism from lawmakers and defense analysts. One example is the Navy’s costly “Great Green Fleet,” which uses costly biofuels to power its ships.
“Given tightening budgets, it makes little sense to waste money on inefficient, overpriced energy sources when we could use those same funds to help support critical maintenance services for the warfighter,” Pennsylvania Republican Sen. Pat Toomey said in 2013.
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