Program officials asserted that the failure to disclose the information regarding Ecotality’s difficulties was unintended. Nothing came to our attention to the contrary; however, we are deeply concerned because the information directly related to the objective of our audit, to determine whether the Department had effectively awarded and managed funding to Ecotality. The disclosure of issues that could have impacted project completion would have led us to perform additional audit procedures to evaluate Ecotality’s ability to fulfill its obligations under the Recovery Act award. These issues also could have impacted our overall conclusions regarding Ecotality’s performance under the award.

In response, Department officials stated that they had always strived to fully disclose everything requested and needed for the audit and never intended to omit anything of interest to the Office of Inspector General. While the Department moved swiftly to suspend funding of Ecotality’s Recovery Act award, it had not taken similar action for the remaining ongoing Ecotality project. Notably, the Department had not suspended payments under Ecotality’s 2011, $26 million award to test EVs. Even though certain mitigating actions had been initiated, we found that the Department had not formally reviewed and documented its determination that suspension was not appropriate for the 2011 award.

—OIG special report

OIG’s investigation determined that there was adequate opportunity for the Department to provide information about its concerns regarding Ecotality’s ability to meet project objectives.

DOE officials told OIG that they did not think that the information was relevant to the audit in progress. They also said that they did not believe that the situation was dire because Ecotality had not indicated in communications prior to 7 August that it was in financial distress.

In fact, Ecotality had recently asserted that it had received approximately $7.5 million in capital that would have supported the completion of its obligations under the Recovery Act project. Department officials, in response to questions regarding why the information was not disclosed to us, contended that it was their understanding that they were only responsible for providing feedback on our draft report’s recommendations.

—OIG special report

EV Project difficulties. As early as May 2013, DOE officials concluded that Ecotality would be unable to complete installations on schedule and would not achieve required data collection milestones. In June 2013, the Department notified Ecotality that it would be required to complete a corrective action plan describing how it would meet the overall award requirements. As part of the corrective action plan, DOE required that Ecotality provide several specific documents, including a certification of financial commitment.

OIG said that the documentation revealed that:

• Ecotality would be unable to provide the minimum required data for about 420 charging stations based on its internally developed deployment projections. The most recent project plan included collecting a minimum of 3 months of data from all deployed charging stations; this 3-month minimum was significantly lower than the original project target to collect at least 16 months of data from each installed unit.

• Ecotality proposed extending the deployment milestone from September 2013 to December 2013 (end of project). Ecotality also proposed changing the project’s infrastructure requirements to allow 13,000 EV chargers to be either residential or commercial rather than including at least 8,000 residential and 5,000 commercial units as required. These changes, specifically including the changes in the distribution of residential and commercial units, were important to the project’s goals, OIG observed. The changes would have further limited, if not virtually eliminated, data collection for certain units.

• The cost for some commercial EV chargers was about 200% higher than the original budgeted cost per unit, and about 20% higher than the estimate in the finalized budget. Ecotality had received reimbursement for all 200 of this type of charger, of which only 107 had been installed as of August 2013.

• Although spending was in line with projections, installations had fallen significantly behind schedule.

In summary, Ecotality’s submission revealed data collection concerns, cost overruns, and charger installation delays, issues that were highly relevant to our earlier audit. More importantly, the submission raised serious questions as to whether the nearly $100 million Recovery Act project would be fully successful in meeting project expectations. In September 2013, Department officials commented that they did not plan to approve the proposed corrective action plan from Ecotality as written, and the plan would have required significant modifications. As previously noted, Ecotality had submitted the corrective action plan to the Department, but it had not been approved by the Department at the time of the August SEC filing and subsequent bankruptcy petition.

—OIG special report

Background. DOE’s Vehicle Technologies Program awarded three financial assistance awards to subsidiary companies of Ecotality, Inc. over a 6-year period, including two multi-year projects awarded in 2005 and 2011, valued at about $35 million to evaluate and test specific vehicles. Ecotality also received an American Recovery and Reinvestment Act of 2009 (Recovery Act) grant for about $100 million to deploy an electric vehicle (EV) charging infrastructure and to collect and analyze EV usage information.

Ecotality was required to share in the cost of the projects, 20% for the vehicle testing awards and 50% for the Recovery Act grant.

In an audit of the funding prior to the company’s filing for bankruptcy, the OIG found that DOE’s management and administration of Ecotality’s awards could have been improved. On 7 August, Ecotality notified DOE that it was in financial distress and may not be able to meet its obligations under the Recovery Act award. DOE then suspended payment under that award and directed Ecotality not to incur additional costs. On 16 September, Ecotality filed a petition for Chapter 11 Bankruptcy.

Prior to the Chapter 11 filing, the OIG had initiated a new review to determine whether DOE was aware of, and had disclosed to the Office of Inspector General, pertinent events that occurred prior to the completion of the previous audit related to Ecotality’s ability to meet its obligations. It also sought to determine whether the DOE was effectively managing Ecotality’s awards.

Resources

• DOE OIG Special Report: “Recent Events Related to Ecotality, Inc.” OAS-RA-14-01