February 9, 2012
Alleged Misuse of American Recovery and Reinvestment Act Grant Funds by the Western Arizona Council of Governments
The Department of Energy's (Department) awarded a 3-year American Recovery and Reinvestment Act of 2009 (Recovery Act) Weatherization Assistance Program (Weatherization Program) grant for approximately $57 million to the State of Arizona (Arizona), which in turn awarded a $5.9 million weatherization grant to a sub-grantee the Western Arizona Council of Governments (WACOG). The grant funds awarded to WACOG were designated for weatherizing homes in western Arizona. The Office of Inspector General received a complaint alleging a pattern of wasteful spending of Recovery Act Weatherization Program funds and mismanagement of the Program at WACOG. We initiated an inspection to determine whether Weatherization Program funds were used and administered for intended purposes and whether WACOG complied with relevant Federal and State regulations and program guidelines. We were unable to substantiate the allegations that WACOG engaged in a pattern of wasteful spending or that it mismanaged the Weatherization Program. We did, however, observe several issues related to procurement of goods and services and the accuracy of Recovery Act reporting that should be addressed. We found that WACOG had made approximately $133,000 in capital expenditures without the prior approval from Arizona as required by Office of Management and Budget (OMB) Circular A-87. Also, WACOG paid a landlord $104,470 for rental property renovation without seeking required competitive bidding or conducting a required review of fair market values of rental property. Additionally, contrary to Federal procurement policy WACOG's purchase threshold policy was based on the cost per item rather than the aggregate cost of the total purchase and WACOG's purchase records did not always contain evidence of a cost or price analysis as required by OMB Circular A-110. Finally, we found both Arizona and WACOG were not accurately reporting completed housing units in compliance with Department Weatherization Program guidelines.