IG concludes Navy missteps on solar panel projects costly
October 20, 2011
SASEBO NAVAL BASE, Japan — The Department of the Navy used taxpayer funds from the American Recovery and Reinvestment Act of 2009 to install solar panels at Marine Corps and Navy installations without first determining if the panels would pay for themselves over the life of their energy production.
As it turns out, they won’t, and taxpayers are out about $25 million as a result, according to a recently released Defense Department Inspector General report.
In the report, the Navy also was criticized for neglecting to look into other types of energy projects that might have made better use of the funds.
The IG looked at three photovoltaic projects at 12 Navy and Marine Corps installations, including Camp Pendleton and other sites in California and Hawaii.
The Recovery Act and applicable energy legislation and policies require that energy projects be cost-effective, and thereby justifiable.
“Officials incorrectly concluded that cost effectiveness was not required for planning Recovery Act energy projects,” the report said. “As a result, the Department of the Navy will not recover $25.1 million of the $50.8 million invested.”
The audit was launched in November 2009 as contracts were already being awarded, about nine months after the legislation was passed, Gary Comerford, a spokesman for the inspector general’s office, said in an email to Stripes last week. The audit was part of the act’s internal checks and balances, intended to evaluate the Defense Department’s implementation of the act, according to the report.
The IG reviewed the Navy’s procedures for planning and selecting energy projects as well as data and internal controls, according to the report released Sept. 22. They discovered a number of missteps, starting with the fact that Navy officials did not justify potential projects through economic analysis, were not well-equipped to handle swift timelines, and lacked effective strategies to meet legislative goals as well as a coherent policy for planning and selecting energy projects.
Furthermore, despite acknowledging that solar projects in general are not cost-effective, the Navy pushed forward on the projects anyway and did not complete the proper planning documentation before issuing solicitations and awarding project contracts, the report said.
Comerford acknowledged that the Navy has made vast improvements since.
“While problems were found and failures were identified by the auditors, the Department of Navy has taken steps to improve its energy programs by restructuring existing offices and establishing new energy offices, developing strategies and policies, and implementing a new project selection tool,” Comerford said.
The report recommends comprehensive policy developments and obtaining cost off-setting rebates to further recoup some of the funds and ensure it doesn’t happen again. It also suggests officials from the Department of Defense look into those responsible for choosing and planning the projects to see if administrative action is warranted.
In an email to Stripes, Navy energy spokeswoman Lt. Richlyn Neal defended the service’s track record of 20 years of success in cost-effective energy projects. She said those involved in the selection and planning of the projects no longer work for the Navy.
“We have had great success with conservation efforts,” Neal said. “In 2011, the Dept. of the Navy tripled its total photovoltaic generation from the previous year and is on track to double it again in 2012.”
In their response to the inspector general’s office, the Navy and Marine Corps disagreed with the recommendation to review the actions of officials responsible, Comerford said. Department officials have until Oct. 24 to make their final comments to the inspector general’s office so they can determine whether further action should be taken.
“Since Navy and Marine Corps officials did not comply with Recovery Act project selection instructions and energy legislation and policies, we believe administrative reviews are necessary and will improve the integrity of the energy program’s control environment,” Comerford said.
The Inspector General's report on solar panel projects is posted online.