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Taxpayers Sink Deeper in Solyndra Saga: Part Two

Posted By Rachael Slobodien On January 11, 2013 @ 1:01 pm In Energy | Comments Disabled

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As Part One of this series explained, bankrupt or not, Solyndra continues to dig deeper into taxpayers’ wallets [2]. This entry examines two contracts the government awarded to the law firm Morrison & Foerster to assist in the cleanup of the failed Solyndra experiment.

These examples reveal an alarming trend [3], one that doesn’t look like it’ll stop anytime soon—especially considering that one of the contracts was modified as recently as November 2, 2012.

When will the government stop punishing taxpayers for its bad bet—a risk it never should have made—on Solyndra? These contracts demonstrate that just because a company has declared bankruptcy doesn’t mean that taxpayers are off the hook.

Morrison & Foerster: According to the Federal Procurement Data System (FPDS), this contract [4] was initially signed on August 24, 2011; however, the Department of Energy (DOE) has continued to promise funding this project well over a year since Solyndra declared bankruptcy. It’s equally concerning then, that unlike the others, this contract’s FPDS record does not have a category for “completion date.”

Based on the information currently available on the FPDS, it’s difficult to determine the exact amount of award money Morrison & Foerster has spent. However, it is apparent that the government continues to obligate funding for this contract.

For example, information found on USASpending.gov [5] reveals that the government most recently obligated an additional $250,000 for this project on September 6, 2012. According to USASpending.gov, Morrison & Foerster was twice obligated an additional $250,000 before the September 2012 agreement. These three amounts total $750,000 in obligated funds, but the amount of funding offered does not end there.

The initial amount awarded (the contract signed August 24, 2011) and likely spent by the law firm is not reported on the databases available to the public. This is because the FPDS only displays “appropriated” funds. As a contact at the DOE explained, “For some contracts LPO [Loan Programs Office] uses unappropriated funds that are not recorded as obligated on FPDS. FPDS only tracks appropriated funds.”

Since the government had not anticipated a need to allocate funds for the August 2011 award, the government could not have “appropriated” or “obligated” an amount. However, merely because funds are not budgeted does not mean funds were not awarded, nor does this mean funds were not expended.

The way the government distributes and tracks the spending of the obligated or budgeted amounts is a complicated one, greatly lacking in transparency. Fortunately, a source involved with Morrison & Foerster offered a simplified description. As the contact explained, the company submits invoices to the government each month of their contract. The invoices indicate the amount of government money the company has expended; however, the FPDS does not reveal—though it should—the amount of government money the company has spent.

It is also apparent that the government has no need to obligate additional funds until the initial amount obligated (in this case in increments of $250,000) has been or is close to being exhausted.

As the contact explained, if the company has failed to complete the terms of the contract within the agreed upon time frame, the company may be awarded additional funding to complete the project if the amount remaining is less than 75 percent. That’s precisely the case here, and this explains why the firm was obligated an additional $250,000.

Based on the information available, it is estimated that Morrison & Foerster has likely spent at minimum roughly $750,000, and on September 6, 2012, the government obligated an additional $250,000 for this contract. At this time, it is unclear just how much of this $250,000 has been and will likely be spent. Only time will tell. One thing we do know is that the initial amount for this contract was capped at $861,000. In order to be offered an additional amount (the $250,000 offered September 2012), the firm must have at least spent 75 percent of the $861,000.

This means that at the end of the day, taxpayers could be stuck with a bill that totals at most $1.1 million. That is if the contract ever has a completion date.

Amount of initial contract: $861,100. Amount offered to expend: roughly $1.1 million (based on additional obligation amount).

Morrison & Foerster: A second contract was signed on August 31, 2012, almost a full year after Solyndra declared bankruptcy. Coincidentally, the day after the Internal Revenue Service filed an appeal in bankruptcy court, a modification to this contract was made on November 2, 2012. The description of this contract reads [6], “The Department of Energy Loan Programs Office requires continued professional Legal Support Services in connection with the Solyndra LLC loan guarantee.” At this point, the government has promised Morrison & Foerster at least $193,000 to carry out the tasks that the contract stipulates. The amount ultimately awarded could likely increase.

Amount of contract: $193,000. Amount expended: up to $193,000.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2013/01/11/taxpayers-sink-deeper-in-solyndra-saga-part-two/

URLs in this post:

[1] Image: http://blog.heritage.org/wp-content/uploads/solyndra1.jpg

[2] dig deeper into taxpayers’ wallets: http://blog.heritage.org/2013/01/10/taxpayers-sink-deeper-in-solyndra-saga-part-one/

[3] an alarming trend: http://blog.heritage.org/2012/11/06/green-graveyard-an-in-depth-look-at-governments-bad-bets-on-19-now-bankrupt-companies/

[4] contract: https://www.fpds.gov/dbsight/fpdsportal?indexName=awardfull&y=0&x=0&templateName=1.4.4&s=FPDSNG.COM&q=+%09MORRISON+AND+FOERSTER+LLP++PIID%3A%22DELP0000034%22

[5] USASpending.gov: http://usaspending.gov/explore?frompage=contracts&contractorid=090393260&contractorname=MORRISON+AND+FOERSTER+LLP&fiscal_year=all&tab=By%2BPrime%2BAwardee&typeofview=transactions&piid=DELP0000034&agencyid=8900&agencyname=ENERGY%2C+DEPARTMENT+OF

[6] contract reads: https://www.fpds.gov/dbsight/search.do?indexName=awardfull&templateName=1.4.4&s=FPDSNG.COM&q=Solyndra+PIID%3A%22DELP0000081%22+PIID%3A%22DELP0000081%22+PIID%3A%22DELP0000081%22+PIID%3A%22DELP0000081%22+VENDOR_FULL_NAME%3A%22MORRISON+AND+FOERSTER+LLP%22

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