DOE Didn’t Report Ecotality Concerns Prior to Its Bankrupcty, Audit Finds
The US Department of Energy did not report concerns about Ecotality five months before the electric vehicle charging company, which had won $135 million in federal funding, filed for bankruptcy, according to an audit by a government watchdog group.
DOE knew as early as May that Ecotality was not on track to meet its September milestone for completing planned EV charger installations, according to a special report conducted by Gregory Friedman, an inspector general with the Office of the Audits and Inspections. The DOE didn’t report that information even as the Office of Inspector General was in the midst of conducting an audit on the funding for Ecotality, according to the report.
The government watchdog group says it’s deeply concerned because although the failure to disclose concerns appears unintended, the information was directly related to the objective of its initial audit. Disclosure of concerns about Ecotality would have led the auditors to evaluate company’s ability to fulfill its obligations, the report says.
Ecotality and its subsidiaries received three financial awards over a six-year period from the DOE, including two multi-year projects valued at about $35 million that were awarded in 2005 and 2011 to evaluate and test specific vehicles. The company also received an Recovery Act grant for $100 million to deploy EV charging infrastructure and to collect and analyze EV usage information. For each award, Ecotality was required to share in the cost of the projects — 20 percent for the vehicle testing awards and 50 percent for the Recovery Act grant, the audit says.
DOE first became aware of Ecotality’s problems in May. The following month, agency officials notified Ecotality that it would be required to submit a corrective action plan to address problems. In July, the DOE submitted comments to the audit group asserting that previous modifications to the award made Ecotality’s production and installation goals achievable.
In August, shortly after the government watchdog group released its audit report, Ecotality informed the DOE that it was in financial distress and may not be able to meet its obligations under the Recovery Act grant. The DOE responded within a day by suspending payment under that award and directing Ecotality not to incur additional costs.
Just days later, Ecotality said in a filing with the US Securities and Exchange Commission it would not generate sufficient revenue to support its operations in the second half of 2014 and would explore restructuring and selling the business. In September, Ecotality filed for bankruptcy.
The report notes that while the DOE moved swiftly to suspend funding of Ecotality’s Recovery Act award, it did not take similar action for the remaining ongoing project. For example, the DOE had not suspending payments under the company’s 2011 $26 million award to test EVs, the report says.
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