Advanced Fossil Energy: Information on DOE-Provided Funding for Research and Development Projects Started from Fiscal Years 2010 through 2017

One aspect of DOE's mission is to secure U.S. leadership in energy technologies. To that end, DOE funds R&D for energy projects, including for advanced fossil energy (innovative technologies for coal, natural gas, and oil). DOE provides funding for R&D projects, including large projects designed to demonstrate the commercial viability of technologies. Also, DOE is authorized to make loan guarantees to support certain energy projects through its Loan Guarantee Program, which is administered by its Loan Programs Office.

GAO was asked to review DOE's funding for advanced fossil energy projects. This report describes DOE's funding for advanced fossil energy R&D projects started from fiscal years 2010 through 2017 and the types of projects and recipients that received funding, among other objectives. For purposes of this report, GAO used the term funding to mean obligations.

GAO analyzed relevant laws, regulations, and guidance; DOE data on R&D funding for fiscal years 2010 through 2017; and DOE documents. GAO also interviewed DOE officials in the Office of Fossil Energy, the National Energy Technology Laboratory, and the Loan Programs Office.

The Department of Energy (DOE) provided $2.66 billion in funding, or obligations, for 794 research and development (R&D) projects started from fiscal years 2010 through 2017 to develop advanced fossil energy technologies. Such technologies include processes for converting coal into synthesis gas composed primarily of carbon monoxide and hydrogen, and recovering methane from gas hydrates. Of the $2.66 billion, DOE provided $1.12 billion in funding for 9 later-stage, large demonstration projects, which were to assess the readiness for commercial viability of carbon capture and storage (CCS) technologies. CCS involves capturing man-made carbon dioxide at its source and storing it permanently underground. DOE provided the remaining $1.54 billion in funding for 785 other projects in amounts that were relatively small—over half were for less than $1 million.

Six demonstration projects researched CCS technologies using coal, while three used other fuels. The nine demonstration projects received funding ranging from $13 million to $284 million. As shown in the figure, three projects implementing CCS technologies were active as of the end of fiscal year 2017. Also, DOE withdrew its support for four projects, and two projects were withdrawn by the recipients—all before completion. These projects did not reach completion due to several factors, such as a lack of technical progress, or changes in the relative prices of coal and natural gas that made the projects economically unviable.

Of the 785 other projects, about 89 percent involved R&D of coal technologies, such as coal gasification—the conversion of carbon-containing material into synthesis gas. The other 11 percent of the 785 projects involved R&D of oil and gas technologies, such as the development of technologies to find, characterize, and recover methane from gas hydrates.

For more than 100 years, three fossil fuel sources—coal, oil, and natural  gas—have made up at least 80 percent of total U.S. energy consumption,  according to the Department of Energy’s (DOE) Energy Information  Administration. Furthermore, in 2017, about 63 percent of U.S. electricity  generation was from fossil fuels—including coal, oil, and natural gas— and fossil fuels made up about 95 percent of transportation fuels in the  United States. While fossil fuels are associated with some negative  environmental impacts—such as carbon dioxide (CO at its source and storing it underground, converting carbon- containing material (i.e., coal) into synthesis gas composed primarily of  carbon monoxide and hydrogen, and recovering methane from gas  hydrates. Within DOE, the Office of Fossil Energy (FE) carries out  federal R&D programs on advanced fossil energy technologies, among  other things. FE’s primary mission is to ensure reliable fossil energy  resources for clean, secure, and affordable energy while enhancing  environmental protection. In addition, the National Energy Technology  Laboratory (NETL)—overseen by FE—implements a broad spectrum of  energy and environmental R&D programs; has expertise in coal, oil, and  natural gas; and performs contract and project management, among  other things. In addition, the laboratory coordinates and oversees R&D  projects for FE.

In addition to its R&D programs, DOE administers the Title XVII Loan  Guarantee Program (LGP) for innovative energy technologies through its  Loan Programs Office. One of the goals of the LGP is to encourage  commercial use in the United States of new or significantly improved  energy-related technologies. Title XVII of the Energy Policy Act of 2005  (EPAct), as amended, authorizes DOE to provide loan guarantees for  certain energy projects in several categories, including advanced fossil  energy technology. Under the LGP, to encourage such innovative energy  projects, the federal government agrees to reimburse lenders for the  guaranteed amount of loans if the borrowers default. If borrowers default  on the loans, the federal government can be exposed to substantial  financial risks.

You asked us to review DOE’s funding for advanced fossil energy  projects. This report describes 1) DOE’s funding for advanced fossil  energy R&D projects that started from fiscal years 2010 through 2017 and  the types of projects and recipients that received funding, and 2) DOE’s  loan guarantees, if any, for advanced fossil energy projects from fiscal  year 2006 through August 2018. For the purposes of this report, we use  the term funding to mean obligations.

To address the first objective, we reviewed relevant laws, regulations, and  DOE guidance. We analyzed DOE advanced fossil energy R&D project  data for fiscal years 2010 through 2017. We focused our review on 794  advanced fossil energy R&D projects that received funding through NETL  because the 794 projects represent all of the advanced fossil energy R&D  projects in our scope started from fiscal years 2010 through 2017. We  used fiscal year 2010 as the start date because DOE officials told us that  DOE’s current data management system came into use for the R&D  projects that started in fiscal year 2010. We used fiscal year 2017 as the  end date because that was the most recent complete year for which data  were available. DOE provided us with a spreadsheet that included key  project information—such as the name of the recipient of the R&D funding  and the project start date—as well as obligations data for each project  started during the period of our review by summing the obligations for the  project from each year. We reported on DOE’s funding for these R&D  projects; DOE generally provided financial assistance for these projects  through grants or cooperative agreements. Because advanced fossil  energy R&D financial assistance for the Small Business Innovation  Research and Small Business Technology Transfer programs, as well as  for the DOE national laboratories, are not obligated through NETL, we  excluded these projects from our scope. To assess the reliability of the  funding data, as well as the specific project information for the 794 R&D  projects, we interviewed data specialists at DOE Headquarters, FE, and  NETL and reviewed DOE internal guidance for the maintenance of  agency data. We found the data to be sufficiently reliable for our  purposes. We also reviewed DOE websites and documentation, including  fact sheets, and interviewed officials from FE and NETL. To characterize the recipients of advanced fossil energy R&D funding, we coded each  recipient into one of three categories: university, industry or other. We  developed definitions for making the coding determination for each  recipient; more information on this process, including the full definitions, is  in appendix I.

To describe the status of DOE’s advanced fossil energy loan guarantees,  we reviewed relevant laws, regulations, and guidance, as well as past  GAO reports describing DOE’s administration of the loan program. We  analyzed information that DOE provided on applications for loan  guarantees for advanced fossil energy projects under the LGP and other  related information for fiscal year 2006 through August 2018. We used  fiscal year 2006 as the start date because it was the first year that DOE  issued an advanced fossil energy project solicitation—an announcement  of opportunities for loan guarantees for advanced fossil energy projects— and we used August 2018 as the end date in order to provide the most  up-to-date information possible. We also reviewed the advanced fossil  energy project solicitations issued by DOE during this timeframe. To  assess the reliability of the summary information, we interviewed LGP  staff who maintain the information for advanced fossil energy  applications, and reviewed DOE documentation. We found the data to be  sufficiently reliable for our purposes. In addition, we interviewed officials  from the Loan Programs Office who work on the LGP. For further details  on our scope and methodology, see appendix I.

We conducted this performance audit from March 2017 to September  2018 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

This section provides an overview of 1) DOE’s administration of its  advanced fossil energy R&D program, and 2) DOE’s Loan Guarantee  Program (LGP).

DOE’s Administration of Its Advanced Fossil Energy R&D Projects

Within DOE, FE carries out DOE’s program for fossil energy R&D, which  includes federal research, development, and demonstration efforts on  advanced power generation; power plant efficiency; water management;  and carbon capture and storage (CCS) technologies. CCS is a process  that involves capturing man-made CO at its source and storing it  permanently underground. The program for fossil energy R&D also  includes the development of technological solutions for the development  of U.S. unconventional oil and gas domestic resources, such as from  shale formations. FE also oversees the operations, infrastructure, and  R&D at NETL, among other things. NETL officials told us that NETL has  dual roles: it serves as project manager for advanced fossil energy R&D  projects that receive federal assistance, and, as a DOE national  laboratory, it also conducts applied research. FE and NETL collaborate  on the selection and administration of the awards for advanced fossil  energy R&D projects, according to DOE officials.

DOE’s efforts to administer its program for advanced fossil energy R&D  take place across a spectrum of activities, including providing financial  assistance for large demonstration projects. In the 1980s and early  1990s, DOE’s fossil energy R&D program primarily focused on reducing  emissions of harmful pollutants from coal-fired power plants, particularly  sulfur dioxide and nitrogen oxide. For example, DOE began its large  demonstration projects of advanced coal technologies in the mid-1980s;  this work focused on R&D to mitigate acid rain and to reduce the  pollutants released from coal combustion. More recently, DOE has  provided funding for advanced fossil energy R&D to reduce COemissions by developing beneficial uses for COfrom coal-fired power  plants, and to improve methods for CCS, among other things. As we have  previously reported, CCS is a key technology that shows potential for  reducing CO Specifically, CCS  technologies separate and capture CO from other gases produced when  combusting or gasifying coal, compress it, then transport it to  underground geologic formations such as saline aquifers—porous rock  filled with brine—or oil and natural gas reservoirs, where the captured  CO in large quantities: the Boundary Dam plant in  Canada and the Petra Nova plant in Texas. Both plants retrofitted CCS  technology to existing plants. A third fossil-fueled, electricity-generating  operation, the Kemper County Energy Facility in Mississippi, was  scheduled to begin CCS operations in 2016, but cost overruns and delays  in construction and operations led to the suspension of the plant’s CCS  component in June 2017. Each of these power plants using CCS systems  may be described as a first-of-its-kind venture, using technologies  developed at a pilot scale ramped up to commercial scale. It is not  unusual for projects in the demonstration phase of the R&D process to  experience higher-than-anticipated costs, delays, and other challenges,  according to a 2017 Congressional Research Service report.

DOE generally uses announcements of opportunities for federal financial  assistance to competitively solicit potential applicants of advanced fossil  energy R&D projects. According to DOE officials, the department sets  priorities for its advanced fossil energy R&D funding each year based in  part on the amount appropriated for FE R&D and on FE’s R&D plans, as  well as any direction that Congress may have specified for certain types  of technology R&D. DOE’s advanced fossil energy R&D projects typically  lasted for multiple years.

DOE sets milestones for technical progress for each year of a project to  ensure that funding recipients accomplish a specific R&D objective or set  of objectives, according to DOE officials. The recipient may submit some form of report on its progress on the R&D as well as accomplishments to  DOE for review and approval to continue. DOE officials told us they  review the progress of the recipient at each phase and the project  continuation is subject to the recipient’s technical progress, the recipient’s  compliance with all of the other terms—including any financial terms—of  the agreement, and the availability of DOE’s funds, based on  congressional appropriations.

The LGP was originally designed to address a fundamental impediment  to innovative and advanced energy projects: securing enough affordable  financing to survive the period between developing innovative  technologies and commercializing them. As we have previously reported,  these projects have risks, such as technology risk—the risk that the new  technology will not perform as expected—and execution risk—the risk  that the borrower or project will not perform as expected. Because the  risks that commercial lenders must assume to support new technologies  can put the cost of private financing out of reach, companies may not be  able to commercialize innovative technologies without the federal  government’s financial support.

Federal loan guarantee programs such as the LGP can help companies  obtain financing because the federal government agrees to reimburse the  lender for the guaranteed amount if a borrower defaults. Section 1703 of  EPAct authorizes DOE to provide loan guarantees for projects that avoid,  reduce, or sequester air pollutants or man-made emissions of  greenhouse gases and employ new or significantly improved technologies  as compared to commercial technologies in service in the United States  at the time the guarantee is issued. EPAct describes several categories  of projects that are eligible for guarantees under the program, including,  among others, renewable energy systems, efficient end-use energy  technologies, advanced nuclear facilities, advanced fossil energy  technology, and CCS technologies. DOE’s Loan Programs Office, which  administers the LGP, had issued three loan guarantees under Section  1703 supporting nuclear technologies as of August 2018, but none  supporting advanced fossil energy or any other technologies.

DOE Provided $2.66 Billion in Funding for 794 Advanced Fossil Energy R&D Projects Started from Fiscal Years 2010 through 2017 DOE Provided $1.12 Billion in Funding for Nine Large Demonstration Projects Started from Fiscal Years 2010 through 2017

DOE provided $2.66 billion in funding for 794 advanced fossil energy  R&D projects started from fiscal years 2010 through 2017. These 794  projects included 9 later-stage large demonstration projects and 785 other  advanced fossil energy R&D projects. DOE provided $1.12 billion in  funding to nine large projects aimed at demonstrating the commercial  viability of CCS technologies. DOE provided $1.54 billion in funding to  785 other R&D projects for both coal and oil and gas technologies, mostly  to universities and industry, located in 46 states and the District of  Columbia.

For nine large demonstration projects started from fiscal years 2010  through 2017, DOE provided $1.12 billion in funding. These projects  received that funding from appropriations from the American Recovery  and Reinvestment Act of 2009 (Recovery Act) and supported efforts to  reduce the financial and technical risks of commercial CCS, according to  a 2017 report by the Congressional Research Service. Six  demonstration projects researched CCS technologies using coal, while  three used other fuels, namely methane, ethanol, and petcoke.  Recipients were generally required to provide a certain percentage of the  cost of each R&D project, called cost share. Specifically, to receive  funding, recipients of funding for the nine large demonstration projects  agreed to pay at least $610 million in cost share for the demonstration  projects. Three of those demonstration projects remained active at the  end of fiscal year 2017. Four projects had their support withdrawn by  DOE, and two were withdrawn by the recipient. These projects ended due  to several factors such as a lack of technical progress, the closure of the  Recovery Act appropriations account on September 30, 2015, and  changing economic conditions—such as decreased natural gas prices  which resulted in changes in the relative prices of coal and natural gas.

The nine large demonstration projects represented over 40 percent of the  $2.66 billion in advanced fossil energy R&D funding for the 794 projects  (see fig. 1).

Of the $1.12 billion in funding for the advanced fossil energy  demonstration projects, DOE provided $616 million in funding for three  large demonstration projects that started in fiscal year 2010 and that  remained active as of the end of fiscal year 2017.

Petra Nova Parish Holdings of Texas has a demonstration project  underway that has retrofitted an existing coal-fired power plant in  Texas with post-combustion carbon capture technology, according  to DOE documentation. The objective of this project is to  demonstrate the ability to capture 90 percent of the CO According to DOE documentation, DOE’s  involvement with the project is scheduled to conclude in  December 2019. The Petra Nova project captured and stored its  first 1 million metric tons of CO in November 2017, according to  DOE officials.

Archer Daniel Midlands of Illinois had a demonstration project  underway to capture CO per year  using dehydration and compression processes and sequester it in  the Mt. Simon Sandstone formation (a saline reservoir) in Illinois.  DOE provided $141 million in funding for the project from fiscal  years 2010 through 2017. DOE’s involvement with the project is  scheduled to conclude in September 2019, according to DOE  documentation. During calendar year 2017, the project captured  and stored over 500,000 metric tons of CO  emitted from two large steam-methane reformers, which produce  hydrogen from methane, for its demonstration project in Texas.  The captured gas is compressed and sent via pipeline to oil fields  in eastern Texas to be used for enhanced oil recovery and thereby  sequestered, according to DOE documentation. DOE provided  $284 million in funding for the project from fiscal years 2010  through 2017. DOE’s involvement under this demonstration  project’s award concluded the last day of fiscal year 2017.

DOE Provided $1.54 Billion in Funding for 785 Other R&D Projects Started from Fiscal Years 2010 through 2017 to Support Advanced Fossil Energy

DOE provided $1.54 billion in funding for 785 other advanced fossil  energy R&D projects started from fiscal year 2010 through 2017. For  these 785 R&D projects, DOE provided: on average, $2.0 million per project; a median of $0.8 million per project;  less than $5 million to 91.8 percent (721) of the 785 projects; and  less than $1 million to 58.1 percent (456) of the projects.

For projects started from fiscal years 2010 through 2017, total funding for  projects by fiscal year started ranged from less than $100 million to more  than $300 million (see fig. 2).

As noted earlier, recipients of DOE’s R&D funding were generally  required to provide cost share to support the cost of each R&D project.  For 661 of the 785 projects, the initially agreed-upon dollar amount to be  covered by recipients was $617 million in cost-share. Recipients did not  provide a cost-share for the remaining 124 of the 785 projects, which  were predominantly grants without cost share requirements, according to  DOE officials.

According to DOE data, DOE provided the largest amount of funding for  projects started in 2010 because DOE received a supplemental  appropriation for fossil energy R&D through the Recovery Act. DOE  provided funding for 72 of the coal technologies research projects— totaling $237 million—using appropriations from the Recovery Act,  according to DOE data.

Of the 785 R&D projects for which DOE provided funding, most advanced  fossil energy projects researched coal technologies rather than oil and  gas, and recipients of the funding were generally universities and industry  groups that were distributed across the country.

Most of DOE’s 785 Advanced Fossil Energy Projects Researched Coal Technologies

Of the 785 projects, 698 (about 89 percent) involved coal technologies,  receiving $1.40 billion (about 91 percent) of the $1.54 billion in funding  DOE provided for the projects. The remaining projects and funding  supported R&D for oil and gas technologies, according to DOE’s  categorization of the projects by fuel type (see table 1).

Within each fuel type, projects researched various technology types, such  as R&D on coal gasification systems and the mitigation of methane  emissions from natural gas infrastructure. The funding for the 785 R&D  projects ranged from $5,000 for a research conference (oil and gas) to  $125 million for a research facility focused on next-generation CCS  technologies (coal). so that it does not  change phases, but rather undergoes drastic density changes over small ranges of  temperature and pressure. Such cycles have shown the potential for increased heat-to- electricity conversion efficiencies, high power density, and simplicity of operation  compared to existing steam-based power cycles. $5,000 for a research conference to $29 million for the University of  Texas at Austin’s active project on the deep-water characterization and  scientific assessment of gas hydrates. Specifically, DOE identified the  following four categories as oil and gas-related research areas:

Gas Hydrates: The development of technologies to find,  characterize, and recover methane from gas hydrates through  field testing, numerical simulation, and laboratory experimentation,  among other things. For example, DOE provided the University of  California-San Diego $350,000 in funding for a 3-year active  project to characterize the baselines and changes in gas hydrate  systems.

Natural Gas Infrastructure: The monitoring of the U.S. natural  gas pipeline network, which includes more than 300,000 miles of  interstate and intrastate transmission pipelines. For example, DOE  provided the University of Pittsburgh $1.2 million in funding for a  3-year active project on multi-functional fiber sensors for pipeline  monitoring and methane detections.

Onshore Unconventional Resources: The production of  hydrocarbons―primarily natural gas―from shale formations. For  example, DOE provided the Ground Water Protection Council, of  Oklahoma, $13 million for an 8-year project for data management  and regulatory approaches related to hydraulic fracturing and  geologic sequestration of CO The R&D projects in this area included research on geologic  uncertainty prediction of oil and gas, and improvement of subsea systems  reliability through automation and advanced technology.

Recipients Were Generally Universities and Industry Groups That Were Distributed Across the Country

The recipients of the funding for the 785 advanced fossil energy R&D  projects were mostly universities and industry groups that were located in  47 states and the District of Columbia. Of these recipients, approximately  51 percent were universities; 43 percent were industry groups; and 5  percent were other entities, including other federal agencies, such as the  U.S. Geological Survey (see table 2).

While university recipients received funding for a majority of projects,  industry recipients received a majority of the funding (see table 3).

Recipients were located in 47 states and the District of Columbia. The  three states with the highest number of projects with recipients located in  their states were Texas (100), California (61), and Ohio (53). The three  states where recipients received the most funding were Texas (about  $169 million), Alabama (about $161 million), and California (about $152  million) (see fig. 3).

DOE Made No Loan Guarantees for Advanced Fossil Energy from Fiscal Year 2006 through August 2018

Although DOE issued three solicitations for applications for advanced  fossil energy loan guarantees—most recently in fiscal year 2014, for up to  $8 billion in loan guarantees—DOE had not guaranteed any loans for  advanced fossil energy as of August 2018. Specifically, the 2006 and  2008 advanced fossil energy solicitations were for projects that involved  coal-based power generation and that would incorporate CCS, coal  gasification, or other beneficial uses of carbon, among other things.  However, neither solicitation resulted in any loan guarantees, in part  because during this timeframe of the late 2000s, natural gas prices fell,  causing a shift in the market, which led to such coal-related projects no  longer being economically competitive, according to DOE officials.  According to the fiscal year 2014 solicitation, applicants could use any  fossil fuel—including coal, oil, or natural gas—that would reduce, avoid,  or sequester greenhouse gases.

In response to the 2014 advanced fossil energy solicitation, DOE officials  told us that DOE had received 19 applications total. According to DOE  officials:

Five fossil energy applicants were actively moving through the  process of review as of August 2018. For example, in January  2018, one applicant issued a press release stating that it was  pursuing a $1.9 billion loan guarantee to support the development  of infrastructure for a proposed underground storage facility for  natural gas liquids and intermediates.

Nine fossil energy applicants had been idle or not following up  with the Loan Programs Office.

Three applicants did not meet certain eligibility requirements.

Two companies withdrew their applications—one in 2014, and one  in 2018.

Of the five advanced fossil energy applicants actively in the process of  DOE review, DOE offered a conditional commitment to guarantee up to  $2 billion in loans to one applicant—Lake Charles Methanol—in  December 2016. As we have previously reported, a conditional  commitment is one where DOE commits to issue a loan guarantee if the  applicant satisfies specific requirements. According to information on  the DOE website, the Lake Charles Methanol plant in Louisiana would  produce methanol from the gasification of petcoke, and capture and  transport the CO to Texas for enhanced oil recovery. According to DOE  documentation, the Lake Charles project planned to leverage the work  and experience gained from the earlier DOE demonstration project by  Leucadia Energy.

We provided a draft of this report to DOE for review and comment. DOE  provided technical comments, which we incorporated as appropriate.

As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees, the Secretary of Energy, and other interested  parties. In addition, the report will be available at no charge on the GAO  website at http://www.gao.gov.

If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or ruscof@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made major contributions to  this report are listed in appendix II.

Appendix I: Objectives, Scope, and Methodology

In this report, we describe 1) the Department of Energy’s (DOE) funding  of advanced fossil energy research and development (R&D) projects  started from fiscal years 2010 through 2017 and the types of projects and  recipients that received funding, and 2) DOE’s loan guarantees, if any, for  advanced fossil energy projects from fiscal year 2006 through August  2018. You asked us to review DOE’s funding for advanced fossil energy  projects.

To address the first objective, we reviewed relevant laws, regulations, and  DOE guidance. We analyzed DOE advanced fossil energy R&D project  data for fiscal years 2010 through 2017. We focused our review on  advanced fossil energy R&D projects that received funding through the  Office of Fossil Energy’s (FE) National Energy Technology Laboratory  (NETL) because the 794 projects represent all of the advanced fossil  energy R&D projects in our scope started from fiscal years 2010 through  2017. We used fiscal year 2010 as the start date because DOE officials  told us that DOE’s current data management system came into use for  the R&D projects that started in fiscal year 2010. We used fiscal year  2017 as the end date because that was the most recent complete year for  which data were available. DOE provided us with a spreadsheet that  included key project information—such as the name of the recipient of the  R&D funding and the project start date—as well as obligations data for  each project started for the period of our review (fiscal years 2010  through 2017), by the fiscal year during which the project was started, by  summing the obligations for the project from each year. We reported on  DOE’s funding for these R&D projects; DOE generally provided financial  assistance for these projects through grants or cooperative agreements. In addition,  NETL’s in-house R&D work was outside of the scope of our review. To  assess the reliability of the funding data, as well as the specific project  information for the 794 R&D projects, we interviewed data specialists at  DOE Headquarters, FE, and NETL and reviewed DOE internal guidance  for the maintenance of agency data. We found the data to be sufficiently  reliable for our purposes. We also reviewed DOE websites and  documentation, including fact sheets, and interviewed officials from FE  and NETL.

To characterize the kinds of groups that received advanced fossil energy  R&D funding, we developed the following definitions for coding each  recipient:

University: any institution of higher education, such as a public or  non-profit private college, junior college, or university.

Federal financial assistance means assistance that non-federal entities receive or  administer in the form of grants, property, cooperative agreements, food commodities,  direct appropriations, or other assistance, and can also include loans, loan guarantees,  interest subsidies, and insurance, depending on the context, but does not include amounts  received as reimbursement for services rendered to individuals in accordance with OMB- issued guidance. 2 C.F.R. § 200.40. See also 31 U.S.C. § 7501(5). A grant agreement is  generally defined as a legal instrument of financial assistance between a federal awarding  agency and a non-federal entity that is used to enter into a relationship the principal  purpose of which is to transfer anything of value from the federal awarding agency to the  non-federal entity to carry out a public purpose authorized by law, and not to acquire  property or services for the federal awarding agency’s direct benefit or use. 2 C.F.R. §  200.51. A cooperative agreement is distinguished from a grant in that it provides for  substantial involvement between the federal awarding agency and the non-federal entity in  carrying out the activity contemplated by the federal award. 2 C.F.R. § 200.24. For  purposes of our report, we use the term awards to refer to both grants and cooperative  agreements. organized primarily for profit. Industry includes some organizations  that were founded as non-profit corporations but call themselves  “companies” and/or describe “serving clients.”

Other: any entity not associated with a university or industry.

Other includes groups such as other federal government  agencies, as well as non-profit corporations and other entities  which we could not identify conclusively as either industry or  universities.

We used these three categories, and their definitions, to guide us in the  coding process. After developing these definitions, three analysts  independently coded each recipient as a university, industry, or other. Our  method was to examine the identifying information on each recipient’s  website and decide which category best described the entity. We also  had an independent analyst check the coding category that we had  assigned to each recipient and verify that we had made a reasonable  coding decision.

To describe the status of DOE’s advanced fossil energy loan guarantees,  we reviewed relevant laws, regulations, and guidance, as well as past  GAO reports describing DOE’s administration of the loan program. We  also reviewed summary information that DOE provided on applications for  loan guarantees for advanced fossil energy projects. We analyzed  information that DOE provided on applications for loan guarantees for  advanced fossil energy projects under the Loan Guarantee Program  (LGP) and other related information for fiscal year 2006 through August  2018. We used fiscal year 2006 as the start date because it was the first  year that DOE issued an advanced fossil energy project solicitation—an  announcement of opportunities for loan guarantees for advanced fossil  energy projects—and we used August 2018 as the end date in order to  provide the most up-to-date information as possible. We also reviewed  the advanced fossil energy project solicitations DOE issued during this  timeframe. To assess the reliability of the summary information, we  interviewed LGP staff who maintain the information for the advanced  fossil energy applications, and reviewed DOE documentation. We found  the data to be sufficiently reliable for our purposes. In addition, we  interviewed officials from the Loan Programs Office who work on the  LGP.

Appendix II: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Karla Springer (Assistant  Director), Rebecca Makar (Analyst-in-Charge), TC Corless, Cindy Gilbert,  Carol Henn, Kirk Menard, Patricia Moye, Sheryl Stein, and Sara Sullivan  made key contributions to this report. Also contributing to this report were  Carolyn Blocker, Marcia Carlsen, Nirmal Chaudhary, Jaci Evans, Ryan  Gottschall, Keesha Luebke, and John Yee.

Fossil fuels—coal, oil, and natural gas—will likely continue to be the major source of U.S. energy. The Department of Energy funds research and development (R&D) for innovative fossil fuel technologies.

In the period we reviewed, the department provided $2.66 billion for 794 such projects. Among other things, we found:

42% of the funding ($1.12 billion) went to 9 later-stage demonstration projects on carbon capture and storage technologies, which could reduce greenhouse gas emissions. Of the 9 projects, 6 used coal and 3 used other fuels.

Most of the rest of the funding ($1.40 billion) went to 698 other coal R&D projects.


NASA Contractor Whistleblowers: Steps Taken to Implement Program but Improvements to Timeliness and Guidance Needed

NASA obligated over $18 billion in contracts and more than $1 billion in grants in fiscal year 2016, and it relies on a significant number of contractor and grantee employees to accomplish its work. These employees are legally protected from reprisal—such as demotion or firing—for whistleblowing.

GAO was asked to review NASA's whistleblower reprisal protections for contractor and grantee employees. This report addresses, among other things, the extent to which (1) NASA's Inspector General investigated contractor and grantee whistleblower reprisal complaints; (2) NASA's Administrator reviewed reprisal complaints in a timely manner; and (3) NASA communicated the applicable whistleblower reprisal protections to contractors. GAO reviewed NASA and its Inspector General's policies and guidance; reviewed a generalizable sample of 100 contracts from all NASA centers with contracts in fiscal year 2016; and interviewed relevant officials and contractors, grantees, and advocacy groups.

From 2008 through June 2017, National Aeronautics and Space Administration (NASA) contractor and grantee employees submitted 48 reprisal complaints such as alleged firing or demotion for reporting fraud, waste, or abuse within the government. NASA's Inspector General addressed all 48 complaints, completed investigations for 6 of those complaints, and forwarded investigation reports to the NASA Administrator, who is responsible for making a final determination of whether reprisal occurred. The Administrator determined that none of the complaints qualified for protection under the law.

Further, in 5 of the 6 cases forwarded by the OIG, the Administrator was required by statute to make a final determination of reprisal within 30 days. GAO found that the Administrator did not meet this required time frame for all 5 cases and had no documented response for one of them (see figure for all 5 cases). According to officials from NASA's Office of General Counsel, each case must be handled on a case by case basis to ensure due process and 30 days is insufficient time to issue an order of final determination of reprisal. However, in order to ensure that whistleblower reprisal complaints are handled within required timeframes, NASA would have to monitor and evaluate its processes for making final determinations of reprisal, but it has not yet taken this step. Consequently, NASA does not know what changes may be needed to ensure that it is meeting the statutory 30-day requirement.

NASA communicates whistleblower protections to contractors through inclusion of a required contract clause. For example, GAO found that almost all—98 percent—of contracts would be expected to include a whistleblower clause as required by statute. However, certain elements of NASA whistleblower protection guidance have contributed to a different understanding of reprisal protections among officials at headquarters, a NASA center, and the Inspector General. For example, a July 2014 procurement notice and contract clause language resulted in different interpretations about when the protections apply. Federal internal control standards require that an entity should communicate necessary quality information internally to meet the objectives of its mission. Without additional clarity in its guidance on when the protections apply, NASA centers and procurement officials will be at risk of inconsistent implementation of the law.

GAO is making three recommendations to NASA, including evaluating the process for reviewing reprisal complaints to ensure it is meeting the required timeframe and clarifying guidance on when protections apply to contractor employees. NASA agreed with the recommendations and plans to develop a documented process to ensure it reviews reprisal complaints in a timely manner and clarify guidance as appropriate, among other things.

When contractor and grantee employees report fraud, waste, abuse, and  mismanagement, agencies should ensure they are prepared to fully  investigate reprisal complaints—such as demotion or firing—for  whistleblowing. Agencies also need to make a formal determination on  whether reprisal occurred. Employees of contractors and grantees  conduct a significant amount of work for the National Aeronautics and  Space Administration (NASA). Given the sometimes enormous safety  risks involved in space exploration, having an established process in  place to investigate reprisal claims helps ensure NASA is able to act  quickly whenever a whistleblower reports experiencing reprisal. In fiscal  year 2016, NASA obligated over $18 billion in contracts to support  acquisitions such as satellites and the construction of a solar plant; and  more than $1 billion in grants for things such as science, technology,  engineering, and math education initiatives and a student stipend for  space-related research.

Although some protections for contractor employee whistleblowers have  existed for years, section 2409 of Title 10, U.S. code (the statute), was  amended in 2008, 2013, and 2014 to give contractor and grantee  employee whistleblowers at NASA enhanced protection from reprisal. The  statute establishes that an employee of a contractor, subcontractor,  grantee, subgrantee, or personal services contractor may not be subject  to reprisal for disclosing certain whistleblower complaints to certain  authorities.

You asked us to evaluate NASA’s implementation of whistleblower  reprisal protections. This report addresses the extent to which (1) NASA’s  Inspector General has investigated contractor and grantee whistleblower  reprisal complaints, including meeting statutory timeliness requirements,  and developed guidance for the investigations; (2) NASA’s Administrator  meets statutory timeliness requirements to review reprisal complaints; (3)  NASA communicated externally and internally about the applicable  contractor whistleblower reprisal protections; and (4) NASA  communicated with grantees the applicable whistleblower reprisal  protections.

To assess the extent to which NASA’s Office of Inspector General (OIG)  investigated reprisal complaints and developed guidance for the  investigations, and the NASA Administrator met timeliness requirements,  we obtained NASA guidance and relevant documentation. We conducted  interviews with agency officials, including officials from the OIG and the  Office of General Counsel on behalf of the Administrator about their  processes and practices to conduct duties outlined in the statute. We  reviewed data provided by the NASA OIG on the total number of  whistleblower allegations of fraud, waste, abuse, misconduct, or  mismanagement and reprisal complaints; the number of contractor and  grantee employee whistleblower allegations and reprisal complaints; and  the outcomes or decisions reached by the OIG of a reprisal complaint  from fiscal years 2008, the year the enhanced protections were put in  place, through 2017. We assessed the reliability of these data by asking  the NASA OIG to describe the source(s) of information used and steps  taken to identify the numbers provided, and limitations and caveats that  would affect our use of these data—such as the data being self-reported  by the OIG and Administrator. Based on these steps, we determined the  data to be sufficient for our purposes of determining the extent to which  the complaints were addressed.

To assess the extent to which NASA communicates whistleblower  protections externally, to contractors and grantees, we identified new  fiscal year 2016 contract awards over $300,000 as reported in the  Federal Procurement Data System-Next Generation (FPDS-NG). We  selected contracts that were not only over the simplified acquisition  threshold (generally $150,000), but were over $300,000 to account for  possible exceptions and to ensure that we were sampling contracts that  would be required to include a whistleblower reprisal clause. To  determine whether the required NASA Federal Acquisition Regulation  (FAR) Supplement clause 1852.203-71 (NFS clause) or other potentially  applicable clauses were included in NASA contracts, we selected for  review a generalizable random sample of 100 contracts from a total of  270 contracts. The sample is projectable to NASA fiscal year 2016  contracts; however, making a legal determination of compliance would  require a case by case review, which we did not do for contracts not in  our sample. The 100 contracts consist of a random selection of 10  contracts from each NASA center that awarded new contracts in fiscal  year 2016; for those centers that did not have 10 contracts, we selected  all contracts. The remaining contracts were pulled from NASA Shared  Services Center (NSSC), because that center does the most contracting.  We estimated the percent of NASA contracts expected to include  whistleblower clause(s) as the weighted average of results from the 10  contracting centers. Additionally, we selected a non-generalizable random  sample of 10 grants awarded by NASA in fiscal year 2016 for review to  determine whether NASA grants included a mechanism notifying grantee  employees of their whistleblower rights and reprisal protections. For both  the sample of contracts and grants, we conducted data reliability checks  by comparing the data to the documentation and concluded the data were  sufficiently reliable for our purposes to determine if relevant whistleblower  reprisal protections information was communicated externally.

To assess internal communication about whistleblower protections, we  reviewed relevant documentation, including guidance, and conducted  interviews with procurement officials, NASA Headquarters, NASA’s Office  of General Counsel, and Chief Counsels at Johnson Space Center (JSC),  NSSC, and Marshall Space Flight Center. We also conducted interviews  with contractors, grantees, and whistleblower advocacy groups. For  additional information on our scope and methodology, see appendix I.

We conducted this performance audit from March 2017 to March 2018 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

and individuals made by an employee who  believes he or she has witnessed certain  wrongdoing, such as gross mismanagement  Reprisal Complaint: Following a disclosure,  a complaint that an employee has  experienced reprisal as a result of the  disclosure, such as demotion or discharge.

For contractor and grantee employees at NASA, whistleblower  protections have changed over time. For example, by statute, in 2007,  NASA contractor employees were protected against reprisal if they  disclosed information relating to a substantial violation of law related to a  contract. However, in 2008, amendments to the whistleblower statute  provided protections only to those contractor employees at NASA who  reported “a substantial and specific danger to public health or safety.” In  2013, the statute was amended again to include disclosures of gross  mismanagement of a NASA contract or grant, a gross waste of  Administration funds, and abuse of authority relating to a NASA contract  or grant, or a violation of law, rule, or regulation related to a NASA  contract or grant. In 2014, the statute was further amended with the only  significant change to protect grantee and subgrantee employees. See  table 1 for detailed description of the 2008, 2013, and 2014 amendments  of the statute.

Under the current statute, the NASA Office of Inspector General and  Administrator have different responsibilities. Since the 2014 amendments,  contractor, subcontractor, grantee, and subgrantee employees are  protected from reprisal if they disclose to certain persons or bodies  information they reasonably believe is evidence of gross mismanagement  of a federal contract or grant, a gross waste of federal funds, an abuse of  authority relating to a federal contract or grant, a substantial and specific  danger to public health or safety, or a violation of law, rule, or regulation  related to a federal contract or grant. Additionally, contractor employees  may make whistleblower disclosures to several entities, including a  management official at the contractor. Figure 1 depicts the disclosure  process and the complaint process.

NASA OIG Role: Upon receiving a reprisal complaint, the OIG must  evaluate whether a reprisal complaint is covered under the statute. In  addition to the steps described in figure 1 for investigating complaints,  there are instances when the OIG does not investigate. The OIG might  not investigate for a variety of reasons, such as in cases where the  complaint is already under investigation by another authority such as  another OIG, or otherwise does not allege a violation of the law, such as if  whistleblower disclosure does not constitute gross fraud, waste, abuse or  mismanagement. If the OIG determines the case is not covered under the  statute, it may then notify the complainant that no further action will be  taken on the reprisal complaint.

Administrator Role: Upon receipt of the NASA OIG investigation report,  the NASA Administrator (the head of agency) has 30 days to determine  whether the contractor made a prohibited reprisal and issue an order  denying or granting relief. According to NASA officials, during the 30-day  period after the agency head receives the OIG report, the agency practice  has been to ask the OIG for any additional investigative work and also  afford the complainant and the contractor an opportunity to submit a  written response to the OIG report. Any person adversely affected or  aggrieved by the administrator’s order may, within 60 days of issuance,  obtain a limited review by the U.S. circuit court of appeals.

Agency Procurement Official Role: Under the NFS regulations, NASA  contracting officers are also responsible for inserting an NFS  whistleblower clause into applicable contracts that requires contractors  communicate to their employees their rights under the statute. The NFS  whistleblower clause lays out the responsibility of contractors to  communicate to their employees their rights under the statute, in writing  and in their predominant native language. All contracts over the simplified  acquisition threshold awarded on or after July 29, 2014, require a  whistleblower clause. The statute also requires NASA to make best  efforts to include a clause providing for the applicability of the 2013  amendments in contracts awarded before July 1, 2013—the effective date  of the 2013 amendments—that have undergone major contract  modifications. The terms “best efforts” and “major modifications” are not  defined in the statute. Unlike provisions affecting contractors, the statute  does not require NASA to ensure that grantees or subgrantees notify  employees in writing of their rights under the statute.

NASA OIG Investigated Reprisal Complaints within Required Time Frames and Recently Updated Incomplete Guidance

From 2008 to June 2017, NASA OIG addressed whistleblower reprisal  complaints within required time frames, according to OIG officials. At the  time we initiated this review, the OIG’s guidance for handling reprisal  complaints had been updated to reflect most statutory changes; however,  it did not include guidance regarding subgrantees. During the course of  our review, the OIG updated the investigation guidance in October 2017  to include subgrantee employees.

NASA OIG Handled Reprisal Complaint Investigations within Required Time Frames

NASA OIG completed 6 reprisal investigations within required time  frames. The OIG received 277 whistleblower disclosures leading to 48  reprisal complaints from 2008 through June 2017, and handled those  complaints within required time frames, according OIG officials. For the 6  of those reprisal complaints that were investigated, the OIG used  extensions. OIG officials said that extensions may be necessary for a  number of reasons, including that the complaint may be highly technical  in nature, requiring the OIG to find subject matter expertise to better  understand the nature of the whistleblower complaint and whether it  constitutes gross fraud, waste, abuse, or mismanagement.

When the OIG receives a reprisal complaint, complainants are asked to  fill out a whistleblower complaint form and an investigation is initiated.  See figure 2 below for the process by which the OIG conducts its  investigations.

In addition, there were 5 complaints currently under investigation and 37  complaints during this time frame that the NASA OIG did not investigate  because the OIG deemed them to be frivolous, determined they were not  covered under the statute, or the complaint was handled in another  forum, such as the court system or by another OIG. Complaints were  deemed frivolous for several reasons, including if the complainant did not  want to disclose his or her identity and proceed with the claim, or the  whistleblower disclosure happened after the reprisal. OIG officials told us  that when cases are disposed of without an investigation, the OIG notifies  the complainant of the decision in writing. Figure 3 shows the disposition  of the 48 reprisal complaints received from 2008 through June 2017.

The OIG has developed guidance for conducting investigations, which  includes a chapter on contractor and grantee whistleblower reprisal  complaints. Although most changes to the statute (such as to whom  reprisal may be reported) had been incorporated into the investigation  guidance, the initial guidance provided to us by the OIG did not include a  2014 statutory requirement to extend protections to subgrantees. During  the course of our review, in October 2017, the OIG updated its guidance  for investigating reprisal complaints to include subgrantee employees.  Because subgrantees are now protected by statute, including them in the  investigation policy will help ensure they are consistently extended  protections through OIG investigations.

In addition to its guidance, OIG officials said they have developed training  specific to whistleblower investigations for new investigators, conducted  internal training for investigators, and external training for contractor  employees. Additionally, the OIG Investigators’ Central Field Office  conducts periodic training for investigators that includes any updates to  whistleblower protections. With regard to external training, the OIG  officials said that investigators at some of the NASA centers—with the  largest contract activity—have conducted on-site training for some  contractors. This training is conducted as part of general fraud awareness  training.

NASA Administrator Did Not Meet the Required Time Frames for Reprisal Complaint Review

The Administrator failed to meet the required review time frame and issue  an order of final determination of reprisal for 5 completed investigations  received from the OIG from 2008 through June 2017. In all 5 cases, the  Administrator took longer than the 30 days to issue an order. In one of  those 5 complaints, an official from the Office of General Counsel was  unable to provide us with the issued order and said he did not believe one  was completed, and could not provide an explanation as to why an order  was not completed. For the 5 reprisal complaints, figure 4 shows the  number of days from when the Administrator received an OIG report of  findings to the time when an order of final determination was  documented.

In addition to the 5 complaints mentioned above, there was another OIG  investigation of a reprisal complaint that did not require response from the  administrator within 30 days, but was finalized within our review time  frame, for a total of 6 completed OIG investigations of reprisal complaints.  For 3 of the 6 complaints, the OIG found that reprisal had occurred and  reported those findings to the administrator for final determination of  reprisal. The Administrator determined that none of these 3 complaints  qualified for protection under the law. For 2 of these complaints, the  Administrator found that they did not qualify for protections because they  fell under the 2008 version of the statute and failed to allege a violation  specific to public health and safety. In 2017, a court affirmed the  Administrator’s position. For the third complaint, the Administrator  determined reprisal could not be substantiated due to the complainant not  meeting the standards of evidence under the statute.

Further, we found that NASA does not have a standard process in place  for the Administrator to review cases that qualify for protections under the  statute and issue an order of final determination. According to an official  from the Office of General Counsel, the agency has no standard process  to ensure the contractors are afforded due process, among other things.  The official from Office of General Counsel said the Administrator may  need to conduct an additional investigation in some cases. He said that  each case is different and would have to be handled on a case by case  basis. In addition, the official said the Administrator may need to conduct  hearings, independent of the OIG. Moreover, the official from Office of  General Counsel highlighted concern that the Administrator’s office does  not have the resources to conduct additional investigative work, which he  said is a key contributor for the office’s inability to meet the 30-day  timeline to issue an order of final determination. Despite acknowledging  these challenges, the Administrator does not have a formal process or  criteria to monitor and evaluate the way the office handles issuing an  order of final determination of reprisal to ensure that it meets the statutory  time requirements.

Because the Administrator took longer than 30 days to respond to all  reprisal complaints, including one where the Office of General Counsel  failed to provide evidence that the Administrator responded at all, there  may be the unintended consequence of disincentivizing future  whistleblowers from making disclosures who fear their complaint will not  be handled timely. Internal controls require that management should  establish and operate monitoring activities to monitor the internal control system, evaluate the results, and take appropriate action to address  issues on a timely basis. Without monitoring, evaluating, and taking  appropriate corrective action based on the way the Administrator or his or  her designee makes a final determination of reprisal, there is no  assurance that whistleblower reprisal complaints will be handled within  required time frames in the future.

NASA Almost Always Communicates Whistleblower Protections to Contractors, but Internal Guidance Is Unclear

In almost all of the contracts we reviewed, NASA had met its obligation to  ensure its contractors are communicating whistleblower protections to  their employees through a whistleblower contract clause. We also found  that NASA has put in place guidance to its contracting workforce on the  protections, and guidance on when to include the whistleblower clause in  contracts. However, we found that some NASA officials have interpreted  this guidance differently. Further, NASA’s guidance does not reflect an  agency-wide policy on when to include the whistleblower clause when  modifying a contract.

Whistleblower Clause Included in Almost All Contracts, but a Few Were Missing the Required Clause

In most cases, NASA included a clause regarding whistleblower reprisal  protections in applicable contracts to ensure contractors communicate  rights to its employees. But we found that the clause was not included in  all relevant contracts in our review. Based on our review of a  generalizable sample of contracts, we estimate that 98 percent of  contracts would be expected to include a whistleblower clause at the time  new contracts were awarded in applicable contracts in 2016, and 2  percent would not. Within our sample, 4 contracts did not have a  whistleblower reprisal clause. After we shared our contract file review  findings with NASA officials, they modified 3 of the 4 contracts to include  the missing required whistleblower clause. For the remaining contract, the  contractor performance was complete, the contract had been closed, and  no further action will be taken.

According to NASA procurement officials, human error, combined with its  former contract writing system, could explain why the contracts in our  sample did not have the required clause. They explained that the former  contracting writing system relied on templates and did not automatically  include the NFS clause into all contracts. Under this system, contracting  officers used templates that included a list of all potential or applicable  NFS and FAR clauses, which are incorporated through a manual process.  Officials said that if a clause were included in the templates, it is unlikely  that it would be removed because doing so would require supervisory  approval.

NASA procurement officials told us that the agency launched a new  contract writing system in June 2017. They said that under the new  contract writing system, contracting officers use a logic system that  prepopulates each contract with required clauses. They said that the new  automated system will likely lead to fewer human errors because inserting  the clause will not be a manual process. Because the new system is still  being implemented, we were unable to evaluate whether the risk of  human error has been reduced or eliminated to ensure applicable  contract awards have the clause.

Under the previous and current systems, NASA contracts are to undergo  various levels of review prior to award—including attorney review—at the  centers or headquarters based on risk level and dollar thresholds. For  example, contracts awarded by JSC valued at over $50 million are to be  reviewed by headquarters. NASA procurement officials stated that they  conduct procurement management reviews, and centers conduct annual  self-assessments; however, at one center, officials pointed out that these  reviews have not previously included whether a whistleblower clause is  included in new contracts or major modifications. They said this is  because reviews typically focus on known issues or program risk, and  inclusion of the whistleblower clause has not been previously identified as  an issue or risk. Contractors we spoke with were generally aware of their  responsibilities to communicate reprisal protections to their employees  because their contracts with NASA included the required NFS  whistleblower clause. In response to our review, NASA procurement  officials said they plan to include a review of the inclusion of NFS  whistleblower clause in future compliance reviews as an area of  emphasis and will instruct centers to include whether the clause is  included in applicable contracts as part of the centers’ self-assessment  process.

NASA’s Guidance Contributes to Different Understanding of Reprisal Protections

Three elements of NASA’s whistleblower reprisal protection guidance—its  procurement notice, NFS clause, and definition of major modification— contribute to potential confusion or inconsistent application of  whistleblower reprisal protections.

First, in July 2014, NASA notified its contracting officials of the changes to  the NFS required by the 2013 amendments to section 2409 Title 10 of the  U.S. code through a procurement notice 04-80, but this notice has been  interpreted differently by officials in NASA Headquarters, a NASA center,  and the OIG. Procurement notices are drafted by NASA Headquarters,  reviewed and approved by NASA general counsel and NASA’s Office of  Procurement. The NASA centers, acting through their procurement  offices and, as needed their legal counsel, review and implement the  notices.

After the procurement notice was issued, some NASA officials interpreted  it differently. For example, in one instance, a NASA center Chief  Counsel’s office attorney advised a center procurement official that  reprisal protections found in the 2013 amendments extend to contractors’  employees working on contracts awarded before the effective date of the  amendments. This is true, he said, regardless of whether the contract  contains any clause explicitly making the 2013 amendments applicable.  However, both the OIG and the Administrator’s counsel have expressed a  different understanding of the statute conveyed in the notice, stating that  a clause making the 2013 amendments applicable must be in a contract  in order for the complainant to be protected under the statute. Later, the  attorney from the center Chief Counsel’s office revised his understanding  of the statute and concluded the procurement notice was not accurate as  written.

Second, NASA personnel have different understandings about whether  the NFS clause is sufficient for contractor employees to be covered by the  statute. The NFS clause instructs contractors to inform their employees in  writing of contractor whistleblower employee rights; but, unlike the FAR  clause that is used to implement similar legislation for other agencies, the  NFS clause does not state that employees working on the contract are  subject to the whistleblower rights and remedies. The attorney from a  NASA center said that the NFS clause is enough to ensure contractor  employees are given rights under the statute. However, OIG officials have  said that without including that element of the clause, employees working  under NASA contracts awarded prior to the effective date of the 2013  amendments may not be covered by those amendments. See table 2 for  description of the clauses and their differences.

Third, the lack of agency-wide guidance for when to include the clause in  major modifications leads to different implementation of the requirement.  The 2013 amendments require that NASA makes best efforts to include a  whistleblower clause in contracts undergoing a major modification.  NASA’s July 2014 procurement notice also encourages contracting  officers to include the NFS whistleblower clause when issuing major  modifications to contracts awarded before July 29, 2014. However, it  does not specify what a major modification is under this statute, and the  statute itself does not define “major.” According to NASA procurement  officials at headquarters and at two NASA centers, it is at the discretion of  the NASA Centers’ offices of procurement and contracting officers to  decide if a clause is inserted into modifications, and whether they are  considered major. Procurement officials and the contracting officers we  spoke with told us that there is no definition of major modifications in the  law, regulation, or NASA Headquarters or Center policies or guidance.  NASA procurement officials said this is because it could be different for  each contract and the contracting officer makes the determination based  upon the facts related to the situation. Nevertheless, without  communicating the factors to consider when determining whether a  modification is major and whether that contract should or should not  include the clause, NASA and the Centers’ procurement officials are at  risk of potential inconsistent incorporation of the clause among applicable  contracts.

One attorney in NASA’s General Counsel’s Office said there may be  costs associated with asking a contractor to insert new clauses—such as  the whistleblower clause—into an existing contract during a major  modification because it would require a bilateral negotiation between the  contractor and the agency. However, one contractor we spoke with said  that there would be no cost to adding the clause and that doing so would  not be an issue because the whistleblower clause is consistent with the  internal whistleblower policies and practices of the institution. Further, he  said that the institution he represents would be hesitant to argue against  inclusion of the NFS clause in its contracts with NASA.

Internal control standards require that an entity should internally  communicate necessary quality information in order to meet requirements  of the mission. These 3 areas of potential confusion related to NASA’s  current guidance could result in different application of the law, unless  they are clarified.

NASA Has Not Established a Mechanism to Communicate Whistleblower Protections to Grantees

Although whistleblower protections are now extended to grantee  employees by statute, NASA does not have a mechanism in place to  communicate the protections to grantees or subgrantee employees.  Unlike the requirement for NASA to ensure contractors communicate  whistleblower reprisal rights to their employees in writing and in the  employees’ predominant language, the statute does not prescribe a  similar requirement for NASA to ensure that grantees communicate  whistleblower reprisal rights to their employees. During the grant  application process, NASA requires grantees to attest that they will not  require grantee employees to sign confidentiality agreements that would  prohibit them from reporting fraud, waste, and abuse.

NASA officials said that grant awards do not include a mechanism, such  as a term or condition, to encourage NASA grantees to notify their  employees of their whistleblower reprisal protections. In the 10 NASA  grants from fiscal year 2016 that we reviewed, there was no requirement  included for grantees to communicate these protections to employees.  However, we found that all 10 grants included a statement that each  award was subject to all applicable laws and regulations of the United  States in effect on the date of award, including the Uniform Guidance. For  federal grants in general, the Uniform Guidance provides a government- wide framework for grants management. Within this guidance, there is a  reference to the whistleblower protections in the statute; however, it does  not explicitly describe the statute’s requirements.

The grant advocacy group and representatives of three NASA grantees  we spoke with were aware that some protections exist and noted that  many grantees have their own whistleblower policies, but were not aware  of the specific protections provided by the statute, which indicates that  opportunities exist for improving communications between NASA and its  grantees about these protections. Further, representatives of the grant  advocacy group noted that the whistleblower protections for grantee  employees were not specifically mentioned at recent annual meetings  where grantees and federal officials discuss issues that affect grantees.  Internal controls require that management externally communicate the  necessary quality information to achieve the entity’s objectives. Without  additional communication about the protections provided by the statute,  grantees may not fully understand or appreciate the significance of the  rights afforded to their employees, and grantee employees may not be  aware of their whistleblower reprisal protections, which could hinder their  willingness to report instances of fraud, waste, and abuse.

Because contractor and grantee employee whistleblowers risk reprisal  after disclosing potential fraud, waste, abuse and mismanagement,  ensuring they are protected from retaliation or adverse consequences is  critical. Without monitoring and evaluating the timeliness of reviewing and  responding to reprisal complaints, the Administrator may not be prepared  to determine reprisal on future cases within the statutorily required 30  days.

Additionally, although NASA has developed guidance related to  contractor protections, this guidance has led to inconsistent interpretation  of the law and could potentially lead to inconsistent application of how  contractor protections for employees are conveyed. More clear guidance  would help contracting officers determine when to incorporate the NFS  clause into major modifications to ensure consistency throughout the  agency.

Finally, because unlike contracts, there is no similar clause for grants,  NASA is in the position to help ensure grantees know their employees’  rights against reprisal if they observe and disclose fraud, waste, abuse or  mismanagement. However, NASA has not effectively communicated to  grantees information about these provisions and as a result grantees and  their employees may not be fully aware of these protections.  Consequently, if they witness fraud, waste, abuse or mismanagement,  they may not be willing to disclose those for fear of reprisal.

We are making three recommendations to NASA:  The Administrator should monitor, evaluate, and make appropriate  corrective actions, such as a documented process, to ensure it reviews  reprisal complaints in a timely manner. (Recommendation 1)

The Administrator should review NASA’s guidance or develop other  guidance, including defining major modification, to clarify when  whistleblower protections are conveyed. (Recommendation 2)

The Administrator should communicate whistleblower protections to  grantees and subgrantees and their employees. (Recommendation 3)

We provided a draft of this product to NASA for review and comment.  NASA provided written comments on a draft of this report. In its written  comments, reprinted in appendix II, NASA concurred with all three  recommendations. In its response to our recommendations NASA agreed  to develop and document a process to ensure it reviews reprisal  complaints in a timely manner to ensure all parties’ due process rights are  protected, review existing procurement policy and clarify guidance as  appropriate, and update NASA grant guidance to communicate  whistleblower protections to grantees, sub-grantees and their employees.

As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees and members. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-4841 or oakleys@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix III.

To assess the extent to which National Aeronautics and Space  Administration’s (NASA) Office of Inspector General (OIG) has  investigated contractor and grantee whistleblower reprisal complaints and  developed guidance for the investigations, we reviewed data provided by  the NASA OIG on the total number of whistleblower allegations of fraud,  waste, abuse, misconduct, or mismanagement and reprisal claims. We  also reviewed the number of contractor and grantee employee  whistleblower allegations and reprisal complaints provided by the OIG  and the outcomes or decisions reached by the OIG of a reprisal complaint  from fiscal years 2008 through 2017. We assessed the reliability of these  data by asking the NASA OIG to describe the source(s) of information  used and steps taken to identify the numbers provided, and limitations  and caveats that would affect GAO’s use of the data—such as the data  being self-reported by the OIG and Office of General Counsel. Based on  these steps, we determined the data to be sufficient for our purposes of  determining how the complaints were addressed. Additionally, we  reviewed relevant documentation to assess the extent to which the NASA  OIG was conducting investigations and communicating findings to the  NASA Administrator within required time frames. To determine the extent  NASA OIG developed guidance, we interviewed or obtained written  answers from OIG officials about their processes and practices for  investigating whistleblower reprisal complaints. We reviewed the  guidance and training and other materials that NASA OIG uses to  implement whistleblower protection investigations. We also visited  Johnson Space Center (JSC)—selected because it had the highest  number of reprisal cases from 2008 through 2017—to discuss policies  and procedures specific to that center with OIG investigators and the OIG  program manager for whistleblower protections. Because they are also a  part of the Investigators’ Central Field Office, we also spoke with  investigators at Marshall Space Flight Center and Kennedy Space  Center.

To assess the extent to which NASA’s Administrator meets the statutory  timeliness requirements to review reprisal complaints, we reviewed the  timeliness of the Administrator’s final determination to ensure that NASA  was meeting statutory requirements. Specifically, we reviewed relevant  documentation to assess the extent to which the Administrator was  making final determination of reprisal in 30 days—the required review  period specified by statute. We reviewed the Administrator’s  documentation on the final disposition of reprisal investigations and  compared the date of the Administrator’s final decision to the date of  receipt of the reprisal investigations from the NASA OIG. We also  conducted interviews with the Office of General Counsel, who spoke on  behalf of the Administrator.

To assess the extent to which NASA communicated the applicable  whistleblower reprisal protections externally with contractors, we reviewed  a generalizable sample of NASA contracts to determine the extent a  required whistleblower clause was included. We used the Federal  Procurement Data System-Next Generation (FPDS-NG) to generate a  sample of contract actions over $300,000 that were awarded by NASA in  fiscal year 2016. We selected contracts that were not only over the  simplified acquisition threshold (generally $150,000), but were over  $300,000 to account for possible exceptions and to ensure that we were  sampling contracts that would be required to include a whistleblower  reprisal clause. From the 270 contracts identified, for purposes of  examining the inclusion of NASA Federal Acquisition Regulation  Supplement (NFS) clause 1852.203-71 (or other potentially applicable  clauses) in NASA contracts, a legal requirement, we selected a  generalizable random sample of 100 contracts. The sample is projectable  to NASA fiscal year 2016 contracts; however, we did not make a case by  case legal determination for contracts not in our sample. We randomly  selected 10 contracts from each center that awarded new contracts in  2016, and for those centers that did not have 10 contracts, we selected all  contracts. The remaining contracts were then pulled from the NASA  Shared Services Center (NSSC) because that center does a majority of  NASA’s contracting. We asked for contracts awarded in fiscal year 2016  to ensure we were sampling contracts that are required to have the  clause and would be reasonably accessible by NASA. We excluded  interagency contracts and task or delivery orders awarded using blanket  purchase agreements to ensure we sampled base contracts awarded by  NASA, not other agencies.

We estimated the percentage of NASA contracts expected to include  whistleblower clause(s) as the weighted average of results from the 10  contracting centers. Because we followed a probability procedure based  on random selections, our sample is only one of a large number of  samples that could have been drawn. Because each sample could have  provided different estimates, we express the uncertainty associated with  any particular estimate as a 95 percent confidence interval. This is the  interval that, with repeated sampling, would be expected to contain the  actual population value for 95 percent of the samples we could have  drawn. As a result, we are 95 percent confident that this confidence  interval contains the true percentage of contracts expected to include  whistleblower clause(s); however, to assess legal compliance we would  have to make a case by case determination, which we did not do. We  conducted data reliability checks on the FPDS-NG dataset by comparing  it to contract documentation obtained from contract files and determined it  was sufficiently reliable for our purposes. Additionally, we conducted  interviews with NASA procurement officials and contracting officers at  multiple locations including NASA Headquarters, NSSC and JSC to  discuss any additional measures NASA takes to communicate  whistleblower protections to its contractors and their contractor  employees. To further assess internal communication, we reviewed  relevant documentation, including guidance, and conducted interviews  with procurement officials, NASA’s Office of General Counsel, and Chief  Counsels at JSC, NSSC, and Marshall Space Flight Center.

To assess the extent to which NASA communicated the applicable  whistleblower reprisal protections with grantees, we reviewed a non- generalizable sample of grants awarded by NASA in fiscal year 2016 to  determine whether NASA grants included a mechanism notifying  grantees of their employees’ whistleblower rights and reprisal protections.  We used FPDS-NG to identify a non-generalizable random sample of 10  grants awarded by NASA in fiscal year 2016 for review to determine  whether any of the selected grants included a mechanism to  communicate whistleblower reprisal protections to grantee employees.  We conducted data reliability checks on the FPDS-NG data by comparing  it to grant documentation obtained from grant awards and determined it  was sufficiently reliable for our purposes. Additionally, we conducted  interviews with NASA grant making officials to discuss any additional  measures NASA takes to communicate whistleblower reprisal protections  to its grantees and their grantee employees.

Finally, in order to learn about contractor and grantee experiences during  NASA’s implementation of enhanced whistleblower protections, we  conducted interviews with or received written answers to questions from a  selected group of NASA contractors and grantees. Using FPDS-NG data,  we selected institutions with the highest and lowest contracts (including  small business contracts) and grants by obligations in 2016. Using these  selection criteria, we selected three contractors and three grantees to  meet with based on the amount of funds obligated in 2016. We ultimately  interviewed or obtained written answers from all selected contractors and  grantees. Additionally, we spoke with two advocacy groups, one about  grants and one about contracts.

Appendix II: Comments from the National Aeronautics and Space Administration

Appendix III: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Penny Berrier (Assistant  Director), Mary Diop, Lorraine Ettaro, Alexandra Gebhard, Kurt Gurka,  Stephanie Gustafson, Julia Kennon, Jordan Kudrna, Kate Lenane,  Roxanna Sun, and Khristi Wilkins made key contributions to this report.

NASA relies on contractor employees to fulfill its mission—and these employees are legally protected from reprisal, such as demotion or firing, for whistleblowing. But is the agency fulfilling its duty to investigate reprisal complaints from these employees in a timely manner?

Since 2008, NASA has not made a final determination of whether or not a reprisal occurred in the required 30-day time frame, nor has the agency evaluated its process for reviewing those complaints in a timely manner. We recommended that NASA take steps to ensure that it meets its 30-day time frame.