DOE

'Substandard' Ill. program undermines U.S. weatherization effort -- IG

Updated at 6:15 p.m. EDT to include information from a statement by Illinois state officials.

Illinois' weatherization program suffers from poor workmanship, inflated material costs and inadequate inspections, according to the Department of Energy's inspector general.

In a follow-up to a 2009 "management alert" about the program's problems, Inspector General Gregory Friedman conducted an investigation into Illinois' largest local agency conducting weatherization improvements. That agency -- the Community and Economic Development Association of Cook County Inc. -- is expected to receive $91 million of the $242 million DOE awarded to Illinois in a Weatherization Assistance Program grant.

Friedman's latest report details missed gas leaks, improperly updated heating systems and sloppy ductwork, among other things. The litany of problems, according to the report, "put[s] the integrity of the entire Program at risk."

"Substandard weatherization work can pose health and safety risks to occupants and area residents, hinder production, increase costs, and dramatically reduce the likelihood that CEDA's Weatherization Program will achieve its goal to weatherize an estimated 12,500 homes by the end of the grant period," the report says. "Additionally, payment of excessive materials costs to contractors reduced the amount of funding available to weatherize homes of individuals and families with low income and reduces the amount of funding for direct job creation."

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Illinois' efforts are part of DOE's Weatherization Assistance Program, which received $5 billion under the American

Recovery and Reinvestment Act of 2009. The program aims to improve the energy efficiency of low-income homes, but it has often been criticized for its slow pace. White House and DOE officials partly have attributed this lag to the program's sharply increased budget and the inexperience of local agencies like CEDA.

CEDA is one of the largest agencies nationwide participating in DOE's weatherization program and increased its staff significantly to keep up with the influx of stimulus funds. Production tripled in 2010, leading the agency to partner with a slew of new contractors and to increase its staff to 149 employees from 53.

The IG report paints a grim picture of CEDA's efforts. Of the 15 homes IG inspectors visited, 12 failed final inspection because of substandard workmanship. In 10 of the homes, contractors had billed for labor or materials they did not provide. CEDA, meanwhile, did a poor job on inspections, earning a 62 percent final inspection error rate on homes that state officials had reinspected, according to the report.

IG inspectors also found that CEDA approved materials with inflated costs from contractors, with prices for smoke alarms, fire extinguishers and thermostats marked up as much as 200 percent above retail. Compact fluorescent bulbs were almost triple the price; one lamp listed in CEDA's catalogue was $3.50, compared to an average retail price of $1.33.

Illinois and CEDA officials, however, say that many improvements have already been made.

In a statement, Illinois state officials said they had "already taken decisive steps to address issues identified by DOE auditors during their site visits."

"Specifically, the 14 homes DOE identified as failing inspections had not yet been completed at the time of DOE’s visit. CEDA was still conducting final inspections to determine the completeness of the homes," they wrote. "In fact, CEDA did not pass these homes, which demonstrates that their final inspection system actually works."

The Illinois Department of Commerce and Economic Opportunity is now working with CEDA to improve its procurement processes and to monitor any invoicing discrepancies, according to the statement.

"Our work has made Illinois' weatherization program one of the best in the nation," officials wrote. "We look forward to our continued work with DOE to ensure Illinois citizens can get the services they need and deserve."

In a response to the IG report, CEDA officials argued that in reviewing 15 homes, IG officials did not get an adequate sample size. However, DOE is "holding the State accountable for addressing each of the report's recommendations," including monitoring contractors who repeatedly underperform and establishing guidance on the cost of materials.

Click here for the inspector general's report on Illinois' Weatherization Assistance Program.

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