[Federal Register Volume 75, Number 103 (Friday, May 28, 2010)]
[Notices]
[Pages 30014-30017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-12886]


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DEPARTMENT OF ENERGY


Office of Energy Efficiency and Renewable Energy; Energy 
Efficiency and Conservation Block Grant Program

AGENCY: Office of Energy Efficiency and Renewable Energy, Department of 
Energy.

ACTION: Notice.

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SUMMARY: This document advises the public that a class deviation to the 
Department of Energy (DOE) Financial Assistance Rules, particularly the 
regulations that deal with programmatic changes, and DOE policies and 
procedures on the use of warranted Contracting Officers to administer 
financial assistance agreements, has been approved for the Energy 
Efficiency and Conservation Block Grant (EECBG) program. This class 
deviation gives authority to EECBG Program Managers to approve the 
following processes for financial assistance agreements made using 
Recovery Act funding to State, city, county, and Tribal recipients in 
support of the formula EECBG program: Administer financial assistance 
awards for approval of programmatic changes under the Changes section 
of the Financial Assistance Rules; review of subsequent budget 
submittals for consistency with the requirements of Office of 
Management and Budget's (OMB) Cost Principles for State, Local and 
Indian Tribal Governments (questions on allowability, allocability and 
reasonableness of budgets and individual cost elements will be 
forwarded to the Contracting Officer for adjudication), remove and/or 
modify National Environmental Policy Act (NEPA) restrictions, including 
guidance on NEPA requirements; and amend agreements for administrative 
activities such as lifting conditions based on approval of Strategies. 
The class deviation does not apply to non-formula awards.

DATES: This class deviation is effective June 14, 2010.

FOR FURTHER INFORMATION CONTACT: Mr. Tyler Huebner, U.S. Department of 
Energy, Office of Weatherization and Intergovernmental Programs, 
Mailstop EE-2K, 1000 Independence Avenue, SW., Washington, DC 20585-
0121. E-mail: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background
II. Discussion
III. Determination

I. Background

    The DOE, Office of Energy Efficiency and Renewable Energy (EERE), 
has experienced historic growth and unprecedented workload challenges 
as a result of the passage of the American Recovery and Reinvestment 
Act of 2009 (Recovery Act). The Recovery Act provides critical funding 
to be spent in support of the economy, creating jobs and serving the 
public purpose by advancing the development and adoption of renewable 
and energy efficiency technology.
    The Recovery Act included conditions on the use of its funding for 
all awards. These conditions included

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applying the Davis-Bacon Act to financial assistance and adding Buy 
American requirements for steel, iron and manufactured goods. In 
addition, the Recovery Act did not provide for waivers or deviations 
from any statutory or regulatory requirement normally associated with 
acquisitions and financial assistance activities. Of particular 
importance for the EECBG Program, waivers or deviations were not 
provided from the National Environmental Policy Act (NEPA) or the 
Office of Management and Budget (OMB) Guidance for Grants and 
Agreements.
    Under the Recovery Act, EERE is charged with spending over $16 
billion dollars across the entire EERE portfolio, including $2.7 
billion for EECBG Program. The EECBG Program, funded for the first time 
by the Recovery Act, represents a Presidential priority to deploy the 
cheapest, cleanest, and most reliable energy technologies we have--
energy efficiency and conservation--across the country. The EECBG 
Program, authorized in title V, subtitle E, of the Energy Independence 
and Security Act of 2007 (EISA), is intended to assist U.S. cities, 
counties, States, territories, and Indian Tribes to develop, promote, 
implement, and manage energy efficiency and conservation projects and 
programs designed to:
     Reduce fossil fuel emissions;
     Reduce the total energy use of the eligible entities; and
     Improve energy efficiency in the transportation, building, 
and other appropriate sectors.
    See EISA section 542(b). Through formula and competitive grants, 
the EECBG Program empowers local communities to make strategic 
investments to meet the nation's long-term goals for energy 
independence and leadership on climate change.
    In support of the EECBG Program, EERE and the procurement offices 
(Procurement) at the Golden Field Office, Oak Ridge Operations Office, 
and Yucca Mountain Project Office have been charged with managing over 
2,200 block grants to cities, counties, States and Tribal governments. 
In order to obligate funds quickly and expedite the process of 
developing strategies and budgets, the majority of the grants were 
awarded on a partially conditioned basis. That is, awards were 
conditioned upon NEPA approval and included requirements for post-award 
submission of strategies and budgets. To lift all conditions so that 
grantees may expend all grant funds, awards must be amended at least 
once and often multiple times. While this practice of conditioning the 
awards may reduce the risk of misuse of Recovery Act funds, it creates 
a tremendous workload on the program and procurement offices.
    Although numerous standard processes have been streamlined and/or 
waived, including lifting NEPA restrictions via a letter issued by the 
Contracting Officer (rather than through a grant amendment) and waiving 
approval of budget changes as authorized by 10 CFR 600.230(c), 
additional relief is necessary to ensure that the funds are released to 
the grantees expeditiously in accordance with the intent of the 
Recovery Act.

II. Discussion

    According to DOE's Financial Assistance Rules, 10 CFR Part 600, and 
as reflected in the DOE's Guide to Financial Assistance, a warranted 
Contracting Officer is required to sign all financial assistance awards 
and amendments including awards to States, cities, counties and Tribes 
receiving formula funds as part of the EECBG program. For EECBG, this 
may require as many as 10,000 actions to release conditions fully on 
the awards and permit use of Recovery Act funds. Given the limited 
number of Contracting Officers within DOE and particularly within the 
procurement offices processing EECBG workload, there is a limit to the 
number of awards that can be made or amended in the near term under the 
current regulatory requirements and DOE policies.
    EERE has examined the financial assistance award and administration 
process to determine what additional approaches can be used in the 
short term to support timely processing of the extraordinary workload 
while maintaining the due diligence and rigor that expenditures of 
public funds requires. EERE recommended that the DOE Senior Procurement 
Executive/Director, Office of Procurement and Assistance Management 
approve a class deviation to allow EECBG Program Managers to have the 
authority to approve the following processes:
    (1) Administer financial assistance awards for approval of 
programmatic changes under 10 CFR 600.230(d);
    (2) Review of subsequent budget submittals for consistency with the 
requirements of OMB Circular A-87. Questions on allowability, 
allocability and reasonableness of budgets and individual cost elements 
will be forwarded to the Contracting Officer for adjudication.
    (3) Remove and/or modify NEPA restrictions, including guidance on 
NEPA requirements; and
    (4) Amend agreements for administrative activities such as lifting 
conditions based on approval of Strategies.
    In order to ensure that the grant file is complete and there is a 
record of approvals, the EECBG Program Manager approval must be in 
writing and the Contracting Officer must be copied on all such 
approvals.
    Each program manager must have filed either a public financial 
disclosure report (SF 278) or a confidential financial disclosure 
report (OGE 450), depending upon the individual's position at the 
Department, and it must be confirmed that the individual does not have 
any conflicts of interest that have not been remedied. Prior to 
receiving a delegation as discussed herein, each program manager must 
have completed two financial assistance classes (Basic Financial 
Assistance and Cost Principles--see the Acquisition Career Management 
Program Manual for further information). EECBG must provide a written 
request to the Head of the Contracting Activity (HCA) for the Golden 
Field Office identifying the person, demonstrating satisfaction of 
these qualifications, and stating the need for the delegation. For 
awards administered by other than the Golden Field Office, that 
office's cognizant HCA will be asked to concur on the EECBG Program 
Manager's delegation of authority for awards under that office's 
purview.
    Although there are risks that the funds may be used 
inappropriately, overall EECBG awards are generally low-risk awards. 
The awards are to cities, counties, States and Tribes which are 
generally low risk recipients. Many of the recipients have other 
Federal awards and have established processes that provide systemic 
support for proper use of Federal funds. The total dollar amount of 
each award is established by a formula that limits the DOE's liability 
for cost overruns or underestimation of costs included in the proposed 
budget. Risk is further limited as the grantee must first have an 
approved energy efficiency and conservation strategy pursuant to EISA 
545(b) (hereafter, Strategy). Projects must be for an eligible activity 
under EISA 544 and require DOE approval for work to begin. Each entity 
expending over $500,000 in a fiscal year is subject to the Single Audit 
Act, and DOE has the right to perform other nonduplicative audits on 
the grants. Together, these measures limit the risk to DOE of misuse of 
funds.
    To limit the risk of misuse of funds associated with the delegation 
of authority to approve certain post-award processes to EECBG Program 
Managers, the following actions remain unchanged:

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    (1) Contracting Officers will review the initial award package 
(including budget and proposed activities) and issue the initial award 
obligating the funds.
    (2) The annual audit contained in OMB Circular A-133 remains in 
effect and will serve as additional oversight of expenditures.
    (3) A NEPA Compliance Officer (NCO) will determine whether the NEPA 
requirements have been satisfied for a recipient's project.
    The process for approving the actions that occur after a 
Contracting Officer has made the initial award is the following:
    (1) Upon receiving a package from the recipient, the agreement's 
assigned Federal Technical Project Officer (TPO) determines if the 
package involves one of the actions listed above (i.e., approval of the 
Strategy, award modification such as a scope change, or NEPA letter 
modification).
    (2) If the TPO determines the package involves one of the above 
actions, (s)he completes a technical evaluation (or drafts a letter 
lifting the NEPA condition), along with a brief risk assessment of the 
grantee (see OWIP Monitoring Plan and the DOE Guide to Financial 
Assistance), completes a review of the recipient's budget consistent 
with OMB Circular A-87, and submits the documentation to the EECBG 
Program Manager.
    (3) The cognizant EECBG Program Manager reviews the technical 
evaluation and risk assessment and either approves via signature, or 
requests the TPO to:
    a. Revise the technical evaluation, and/or gather more information 
from the grantee;
    b. Submit the package to a Specialist in Procurement for a peer-
review prior to approval by the EECBG Program Manager or designee; or
    c. Submit the package to Procurement for full review and approval 
by a Contracting Officer, per 10 CFR part 600.
    (4) Following approval by the EECBG Program Manager, the TPO will 
maintain a file with information on the action including a memo 
explaining the change and any award documents (e.g., budget). The TPO 
notifies Procurement of the completed action, providing a copy of the 
approval as noted above.
    (5) As a part of the closeout process, a Contracting Officer will 
incorporate the EECBG Program Manager's approvals into the award so 
that the final electronic record is complete.
    The competitive portion of the EECBG program is not included in 
this deviation request. The twenty-five awards made under what is now 
being called the Retrofit Ramp-Up program will not be following the 
same processes for full unrestricted use of funds.
    This modified financial assistance administration process would 
provide for due diligence in review of initial and final scopes of the 
work performed under the EECBG formula, in keeping with the goals and 
objectives of the Recovery Act while operating in accordance with DOE's 
Financial Assistance Rules and OMB guidance on financial assistance.

III. Determination

    At the request of the Office of EERE on May 12, 2010, the Senior 
Procurement Executive of the Department of Energy and as the Acting 
Director of the Office of Procurement and Assistance Management (OPAM), 
Patrick M. Ferraro, executed the ``Determination and Findings to 
Deviate from 10 CFR Part 600'' which authorizes a class deviation to 
Department of Energy policies and procedures as described therein. As 
required by 10 CFR 600.4(d), that Determination is set forth below, and 
will take effect on June 14, 2010.

    Issued in Washington, DC, on May 21, 2010.
Cathy Zoi,
Assistant Secretary, Energy Efficiency and Renewable Energy.

U.S. Department of Energy

Office of Energy Efficiency and Renewable Energy

Energy Efficiency Conservation Block Grant Program Determination and 
Findings To Deviate From 10 CFR Part 600

    In accordance with paragraph 2.8 of the delegation of authority 
from the Secretary of Energy to the Director, Office of Procurement and 
Assistance Management (OPAM) as Senior Procurement Executive of the 
Department of Energy, the Director may:

Enter into, approve, administer, modify, close-out, terminate and 
take such other actions as may be necessary and appropriate with 
respect to any financial assistance agreement, sales contract, or 
similar transaction, whether or not binding DOE to the obligation 
and expenditure of public funds. Such action shall include the 
rendering of approvals, determinations, and decisions, except those 
required by law or regulation to be made by other authority.

    The DOE Financial Assistance Rules, at 10 CFR 600.4(c)(ii), 
authorize the Director of OPAM to approve or deny requests for a 
class deviation.

Findings

    This memorandum presents all findings associated with U.S. 
Department of Energy, Office of Energy Efficiency and Renewable Energy 
(EERE)'s request for a class deviation. EERE has experienced historic 
growth and unprecedented workload challenges as a result of the passage 
of the American Recovery and Reinvestment Act of 2009 (Recovery Act). 
Changes to normal procedures are required to meet the goals and 
objectives of the Recovery Act.
    a. The Contracting Officer is defined in 10 CFR 600.3 as the DOE 
authorizing official to execute awards on behalf of DOE and who is 
responsible for the business management and non-program aspects of the 
financial assistance process.
    b. Recipients are required by 10 CFR 600.230 to obtain the prior 
approval of the awarding agency whenever any of the following actions 
is anticipated:
    (1) Any revision of the scope or objectives of the project 
(regardless of whether there is an associated budget revision requiring 
prior approval).
    (2) Need to extend the period of availability of funds.
    (3) Changes in key persons in cases where specified in an 
application or a grant award. In research projects, a change in the 
project director or principal investigator shall always require 
approval unless waived by the awarding agency.
    (4) Under nonconstruction projects, contracting out, subgranting 
(if authorized by law) or otherwise obtaining the services of a third 
party to perform activities which are central to the purposes of the 
award. This approval requirement is in addition to the approval 
requirements of Sec.  600.236 but does not apply to the procurement of 
equipment, supplies, and general support services.
    c. The Recovery Act appropriated $2.7 billion dollars for the 
Energy Efficiency and Conservation Block Grant (EECBG) program. The 
EECBG is intended to assist U.S. cities, counties, States, territories, 
and Indian Tribes, to develop, promote, implement, and manage energy 
efficiency and conservation projects and programs designed to:
     Reduce fossil fuel emissions;
     Reduce the total energy use of the eligible entitles; and
     Improve energy efficiency in the transportation, building, 
and other appropriate sectors.
    d. The EECBG program is carried out through the award of formula 
grants. The program regulations define the eligible applicants and the 
formula for the total amount of the awards. The competitive award 
portion of the EECBG is not included in this deviation.

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    e. The EECBG program has dramatically increased the workload placed 
on DOE procurement offices to award and administer the grants executed 
for the program.
    f. Delegation of certain non-monetary administrative actions to DOE 
program managers will increase the speed of expenditures of Recovery 
Act funds under the EECBG to speed goals of the Recovery Act.
    g. Appropriate controls, oversight and monitoring are available to 
decrease the risk of misuse of funds by the recipients without the 
Contracting Officers involvement in approval of programmatic changes 
and other administrative actions.

Determination

    Based on the above findings and in accordance with the authority 
granted to me as the Senior Procurement Executive of the Department of 
Energy and as the Director of OPAM, I have determined that a class 
deviation to Department of Energy policies and procedures governing 
financial assistance is appropriate and necessary to meet the goals and 
objectives of the Recovery Act while at the same time providing 
required due diligence and rigor that support DOE's execution of its 
fiduciary responsibilities.
    I have determined the deviation to 10 CFR Part 600, in particular 
10 CFR 600.230, and DOE policies and procedures on the use of warranted 
Contracting Officers to administer financial assistance agreements is 
in the best interest of the EECBG program and the use of Recovery Act 
funds. The deviation is approved subject to the above findings and the 
process outlined in the attached memorandum.
    This class deviation applies to financial assistance agreements 
made using Recovery Act funding to State, city, county or Tribal 
recipients in support of the EECBG program. It does not apply to non-
formula awards.
    This class deviation is not effective until fifteen days after a 
notice is published in the Federal Register; see 10 CFR 600.4(d).

Patrick M. Ferraro,

Acting Director, Office of Procurement and Assistance Management.
[FR Doc. 2010-12886 Filed 5-27-10; 8:45 am]
BILLING CODE 6450-01-P