Did Obama Administration Cut Corners For a Green Energy Company?


Energy Department 'Treated Applicants Inconsistently'

The loan guarantee agreement was among 10 examined by the GAO last year, and Congress' investigative arm singled out Solyndra as one of five applications that had received conditional approvals before outside experts had finished vetting the deals. The auditors said the Energy Department had "treated applicants inconsistently, favoring some and disadvantaging others."

Silver called the decisions to make conditional commitments without full legal reviews routine, and said the arrangements did not subject taxpayers to heightened risk. By the time of the Solyndra closing, six months after Chu's announcement, he said, all required reviews had taken place.

"A conditional commitment is only an interim step to a loan guarantee. It is not a loan guarantee itself," said Silver. "Final legal reports would not be expected at conditional commitment. It would only be expected at final close."

The GAO audit contradicts that, stating that before DOE makes a conditional commitment to guarantee a loan, its "procedures call for engineering, financial, legal, and marketing reviews of proposed projects as part of the due diligence process for identifying and mitigating risk."

The vetting of applicants for government financial packages is not merely a technical, bureaucratic concern. "If you don't have really strong processes in place, and if you're under pressure to get a lot of these dollars allocated, you can make unproductive decisions and ones that ultimately put taxpayers' dollars at risk," said Rusco, director of the GAO's natural resources and environment team.

Obama's desire to shift the nation into more environmentally friendly sources of energy while creating jobs during a recession have fueled a raft of projects involving billions of federal dollars.

Against that backdrop, Solyndra was to be an early prototype for government-boosted private sector innovation. The company was the first recipient of an energy loan guarantee through the Obama administration's $787 billion package of economic stimulus programs. It was the Energy Department's first loan guarantee since the 1980s.

When announcing the Solyndra loan guarantee two months after Obama took office, the Energy Department boasted of its speed. Secretary Chu had set a target of May -- three months into his own tenure -- to announce his initial loan commitment, "but today's announcement significantly outpaces that aggressive timeline," the Energy Department noted in a press release.

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"Secretary Chu credited the Department's loan team for their work accelerating the process to offer this conditional commitment in less than two months, demonstrating the power of teamwork and the speed at which the Department can operate when barriers to success are removed," it said.

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