Report: In Obama's Chicago, stimulus weatherization money buys shoddy work, widespread fraud

Projects to weatherize homes are a key part of the Obama administration's fusion of stimulus spending and the green agenda. But a new report by the Department of Energy has found serious problems in stimulus-funded weatherization work — problems so severe that they have resulted in homes that are not only not more energy efficient but are actually dangerous for people to live in.

The study, by the Department's inspector general, examined the work of what's called the Weatherization Assistance Program, or WAP, in Illinois. Last year, the Department awarded Illinois $242 million, which was expected to pay for the weatherization of 27,000 homes. Specifically, Energy Department inspectors took a close look at the troubled operations of the Community and Economic Development Association of Cook County, known as CEDA, which is the largest recipient of weatherization money in Illinois with $91 million to weatherize 12,500 homes.  (Cook County is, of course, home to Chicago.)

The findings are grim. “Our testing revealed substandard performance in weatherization workmanship, initial assessments, and contractor billing,” the inspector general report says. “These problems were of such significance that they put the integrity of the entire program at risk.”

Department inspectors visited 15 homes that were being weatherized by CEDA and paid for by stimulus funds. “We found that 14 of the 15 homes…failed final inspection because of poor workmanship and/or inadequate initial assessments,” the report says. In eight of the homes, CEDA had come up with unworkable and ineffective plans — like putting attic insulation in a house with a leaky roof. In ten of the homes, “contractors billed for labor charges that had not been incurred and for materials that had not been installed.” The report calls billing problems “pervasive,” with seven of ten contractors being cited for erroneous invoicing. And the department found “a 62 percent final inspection error rate” when CEDA inspectors reviewed their own work.

The work was not just wasteful; it was dangerous. Department inspectors found “heat barriers around chimneys that had not been installed, causing fire hazards.” They found “a furnace [that] had not been vented properly.” The found “a shut-off valve that had not been installed on a gas stove.” And they found “carbon monoxide detectors, smoke alarms and fire extinguishers had not been installed as planned.”

And then there was fraud. At ten of the 15 homes visited, Department inspectors found examples in which “a contractor had installed a 125,000 BTU boiler, but had billed CEDA for a 200,000 BTU boiler costing an estimated $1,000. more.” Another contractor “billed for almost four times the amount of drywall actually installed.” And another “installed 12 light bulbs but had billed CEDA for 20.” (The Department found that CEDA paid almost three times the retail price for each light bulb.) “Billing issues appeared to be pervasive,” the report concludes.

The report is in the hands of Republican Sen. Charles Grassley, who has been pushing hard for more accountability in the spending of stimulus money. Grassley has complained about this specific program before, and is not happy with the new assessment. “I am concerned that the Department of Energy and state WAPs are failing to prevent fraud, waste and abuse in the massive amounts of taxpayers dollars spent on weatherization projects,” Grassley writes in a new letter to Energy Secretary Steven Chu. After Grassley earlier expressed concerns about weatherization, the Department assured him that the program had “turned the corner” and “made great strides” in cleaning up its operations. “In light of this report, it is clear that the Department's efforts have been inadequate,” Grassley writes.

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