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Grassley Shines Light on Egregious Spending by Navy on Energy-Efficiency Projects

Press Release

Location: Washington, DC

Making the case that important findings of independent audits ought to result in accountability, Senator Chuck Grassley is asking a top Navy official about her rejection of recommendations in an audit regarding a contract which failed to meet cost-effectiveness standards.

"The truth is, these projects have been a license to waste the taxpayers' money." Grassley said. "They need to be stopped, and decision makers need to be held accountable."

Grassley said contracts like this one show why people at the grass roots are so legitimately frustrated with wasteful government spending. In a letter to Assistant Secretary of the Navy for Energy, Installations and Environment, Jackalyne Pfannenstiel, who is responsible for the decisions that led to the contract awards, Grassley said that by the government's own standards that carry the force of law, these $90 million photovoltaic projects were not cost effective. "In fact, they were a gross waste of the taxpayers' money," he wrote.

Recognizing the obligations of the Assistant Secretary's position to abide by the law and responsibly manage taxpayer money, Grassley said, "For reasons I do not yet understand, you appear to have willingly abandoned those responsibilities to further the energy "goals' advocated by the Secretary of the Navy."

The subject of the Naval Audit Service Report (N2011-0060) driving Grassley's questions is a $90 million contract awarded for photovoltaic projects in Florida, Mississippi, Texas and Virginia using money appropriated by the American Recovery and Reinvestment Act of 2009. Based on a careful review of all relevant facts, the audit concluded that these projects were a waste of money and recommended that they be cancelled.

Following the September 2011 release of a separate but related audit conducted by the Inspector General for the Department of Defense, Grassley raised questions directly with the Navy last November. The Navy response said, "There is no absolute requirement on Federal agencies that renewable energy projects be cost-effective in order to be executed." In his letter today, Grassley asked for the law and regulation that exempt such projects from cost-effectiveness standards.

Grassley said the Naval Audit Service Report spells out the dramatic degree to which these projects fail on cost-effectiveness. With an average payback of 124 years, ranging from a low of 70 all the way up to 324 years and a savings-to-investment ratio in the 0.04-0.20 range, these projects were not even close to meeting energy efficiency standards established in law and regulation. And because the photovoltaic panels have an expected useful life of 25 years, the audit report states, "recovery of investment is impossible … . The panels will never pay for themselves."

Grassley said he has notified both Secretary of Defense Leon Panetta and Acting Inspector General Lynne M. Halbrooks about his questions regarding the Navy's response to this audit.

During a recent Senate Budget Committee hearing in on defense spending, Grassley urged Panetta to examine audit recommendations and pursue reforms. He said the Defense Secretary could prevent the problems identified by auditors from being buried in the bureaucracy and never addressed.

For several years, Grassley has been calling on auditors for the Defense Department's Inspector General to issue stronger recommendations and said their work is a mission of the highest importance.

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