Waste of the Day: VA Pre-Paid $68 Million To Energy Contractors

This story originally was published by Real Clear Wire

By Adam Andrzejewski
Real Clear Wire

The Veterans Health Administration gave energy vendors $68 million in prepayments that didn’t comply with federal law, a new audit found.

The prepayments totaled $10 million in FY 2020 and approximately $58 million in FY 2022, using surplus medical facility funds, according to a December audit from the U.S. Department of Veteran Affairs Office of Inspector General.

These one-time payments are acceptable if they shorten the term of an energy savings performance contract in compliance with Federal Energy Management Program guidance, including that energy cost savings must exceed payments in each contract year, the audit stated.

But the VA’s program made a number of one-time prepayments that exceeded the annual amounts, contrary to federal law and Federal Energy Management Program guidance.

“VA is taking on significant risk by not ensuring that a contractor’s energy baseline and savings estimates are validated before awarding the contract and by not adhering to federal payment restrictions,” the audit found. “VHA energy managers need to witness contractor energy baseline measurements, check assumptions, and review calculations to ensure the estimates are reasonable. Once contracts have been awarded and energy upgrades installed, there is no way to retroactively determine baseline measurements for these projects.”

Making these baseline measurements are critical to validating energy savings, and without performing its due diligence up front, VA has no way of measuring how well a contractor is performing and ensuring it’s achieving cost savings for the taxpayer.

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