There was energy crisis that hit the United States, and this was the main reason why the Department of Energy, (DOE) was established. The crisis required a quick response mechanism that would restitute a unified body to look at the energy problem. The department was set up in August 4, 1977 after the then president, Jimmy Carter penned down the Organization Act. According to the Fernald (n.d), “Department of Energy (DOE) Organization Act (Public Law 95-91), centralizing the responsibilities of the Federal Energy Administration, the Energy Research and Development Administration, the Federal Power Commission and other energy-related government programs into a single presidential cabinet-level department.” The DOE establishment was mainly to necessitate the creation of energy policies that would come up with a national strategy to coordinate energy issues. The agency was given the responsibility of developing both short term and long times energy programs, markets the American energy, and the responsibility to engage in high-risk energy research. The most challenging responsibilities were the development of energy conservation plans and strategic plan on nuclear weapon research.
The end of Cold War of the 1990s led to change of strategy as many nations changed the need to produce nuclear weapons in favor of environmental remediation. The then secretary of energy, James Watkins set up the Office of Environmental Restoration and Waste Management to resolve the environmental hazards posed by nuclear weapons. After the formation of the office that was later renamed as DOE Office of Environmental Management, the DOE Ohio Field Office was established as a multifaceted site to direct necessary environmental remediation, manage energy waste, and stabilize the nuclear energy production (Fernald, n.d). The from the brief background information on the formation of DOE, it is evident that energy responsibilities and policies change in response to needs of the moment. This audit plan seeks to establish the relevance of the DOE in a bid to assess whether the office has to its responsibilities as bestowed to it by the Organization Act (Public Law 95-91).
Poor Supply Management
Among the reasons, why the DOE was set up is to indulge in high-risk research into nuclear energy weapon and nuclear energy. The DOE Isotope Program is the only American agency that supplies isotopes for research in the field of medicine, commerce, research, and the security agencies. Nonetheless, the DOE has faced difficulty in analyzing market demand the 300 isotopes; more specifically, the helium-3 isotope. The failure by the DOE to respond to the shortage of research isotopes will not only compromise the agency’s development agenda but also other organizations. The DOE has a poor supply management strategy that will compromise the performance of energy development initiatives. As Trager, (2012) opine, “If the DOE can’t ensure a supply of these essential isotopes and maintain a good pricing structure, then the US’s entire energy policy will be badly affected and so will its national security.”
This audit plan therefore affirms the inadequacy of the DOE to live up to its responsibility of supplying critical research components in the development of energy resources. This being the core of theist establishment, the DOE ought to respond to this predicament by reviewing its supply chain management inadequacies. The energy challenge remains a top priority in the country especially given the environmental concerns that affect the globe. The DOE needs to review its policies and respond to the energy challenges that curtail the success of its research programs.
The DOE’s Performance Record
Transforming the Energy Sector
The DOE has four main goals to strengthen the energy sector. To begin with, DOE seeks to transform the energy system of the US. The transport industry in America consumes 95% fossil fuel while the overall fossil fuel consumption stands at 80%. These percentages are bound to hold for the next two and half decades as no plans are in place to change the order. With the increasing use of fossil fuels, the carbon footprint is likely to increase in the coming years unless something is done. In this regard, the DOE calls for change in paradigm in the way the US manipulates its energy resources. The DOE has therefore lived up to its responsibility by developing transformational strategies to move to green energy. According to US Department of Energy, (2012) there are solar breakthroughs as “Alta Devices single-junction thin-film Gallium Arsenide (GaAs) photovoltaic technology recently achieved a National Renewable Energy Laboratory (NREL)-confirmed world record 28.3% conversion efficiency,” (p. 9). Other projects in the transformation plans include the development of plant energy, the development of airbone wind technology to harness wind power in high altitude areas among other programs.
The transformation of the energy sector faces challenges in three main areas. To begin with, improving energy delivery requires further investment in innovation technologies to integrate electric cars and intermittent power. Increasing green transport in the American roads also faces technicalities due to the need to increase reliability of vehicle batteries that power the green cars. The existing batteries are inadequate in supplying high-energy requirements or sports utility cars at lower cost. The third challenge is the extraction of clean and safe natural gas. Extraction of clean gas energy is critical to the US economy due to its ability to create new jobs, diversify the energy portfolio, ability to stimulate the economy, and ability to cut down the importation of crude oils from abroad. The challenges impeding the realization of benefits from clean energy are safety of the extraction process. Plans to increase safety in the process require long-term assessment of its benefits in the future.
Science and Engineering Enterprise
The second goal of DOE is to support research at the most basic levels in science and engineering. This initiative will enhance the development of new technologies to sustain the activities of the DOE. The most recent outcomes of the investment have been the development of modern solar cell using advanced optics and nanotechnology. This has been achieved at relatively low cost and high performance. General Electric (GE) Co. employs DOE’s Advanced Light Sources to create new technologically advanced batteries. GE is now setting up a huge battery plant in New York, which will create 300 new jobs for the American people. Another successful venture taken by the DOE is the creation of superfast computer search engine in the DOE’s Lawrence Berkeley National Laboratory to fasten the speed of information retrieval in massive databases. A German-based firm is now using the software to fasten the speed of drug discovery while other firms have started using the software to analyze the performance of computer networks. Other successful venture has been to development of lean-burn engines for motor vehicles and the fact that DOE scoped 36 of the possible 100 awards given by the R&D Magazine.
The challenge in achieving the second goal can be categorized into two. To begin with, the global competition from developed nations poses economic challenges for the DOE’s initiatives. This is because the nations bring competition in a wide range of activities. Keeping pace with the competition requires innovation in production, storage, and usage of energy resources beyond what is currently available. The other challenge is the development of technological workforce. The need for research in energy resources calls for a trained workforce in the relevant fields. Both private and public organizations complete for available labor. Training scientists, engineers, and researchers in the field are expensive.
A Secure America
The third objective of the DOE is to secure the future of Americans and the world at large, which is the primary reason why the National Nuclear Security Administration was set up. The aim of this body is to prevent the proliferation of nuclear weapons and prevention of global acts of terror. This follows the threat passed by the 1990s Cold War’s nuclear weapons. An additional responsibility of the DOE is to clean up the environmental mess of the war. “Through engagement with the International Atomic Agency and directly with other international and interagency partners, the Department has a leading role in nonproliferation and cooperative threat-reducing program,” (US Department of Energy, 2012, p. 12). This third objective is wide because of the sensitive security nature of nuclear weapon and terror threats. The DOE, in response, has developed a number of strategies to address the issue. They include:
- National Nuclear Security Administration (NNASA) in conjunction with DOE have the responsibility to ratify and implement New Strategic Arms Reduction Treaty (START) that was forwarded by President Obama to Senate in 2010.
- US-Russia commitment to a peaceful nuclear cooperation signed in 2011
- Strengthening of rules on sensitive exports following 7-year negotiation in the 46-member Nuclear Supplier Group, (NSG)
- The Global Threat Reduction Initiative, (GTRI)
- Setting up of radiation detection system
- Dismantling weapons through the Weapon Dismantlement and Disposition program
- Uranium disposition, and other initiatives (US Department of Energy, 2012, pp. 12-15).
The challenges facing the third objective given the diversity of the programs are very serious. The new START is a challenge to implement due to the bipartisan nature in the ratification of the program. Moreover, the Russian program requires a commitment of $400 million pledge made by the US towards the PMDA. The Russia Federation is also expected to give the remaining $2.5 billion that remains. The other problem is building nuclear storage facilities (US Department of Energy, 2012, p. 15).
Effective Management of the DOE Operations
The aim of the fourth goals is to establish a working framework that would effectively enable the agency to meet its obligations. The Secretary in charge of DOE asked all those who serve in the DOE that they should all seek to achieve excellence in operation for the agency to live up to its mission not only at the head office, but also at all other site offices. In the YR 2011, the agency set the following management initiatives:
- Horizontal integration; Secretary of Energy, Chu, created Associate Deputy Secretary position to have more avenues of driving the mission of the agency. The focus of the FY 2011 was to create an enabling environment for the horizontal integration of the various departments within DOE.
- Project management; the DOE has realized benefits of improving performance through the project and contract management. In this regard, the US Department of Energy, (2012) observes “The Office of Science, for example, exceeded the target for completing more than 90% of capital asset projects at the original scope and within 110% of the baseline,” (p. 15).
- Employee recruitment time; the DOE has attracted the best professionals in the labor market. The Federal Time highly ranked the DOE time-to-hire rate in 2011. The agency boosts of a 100 days reduction up from 174 while at the same time setting up system to track and report data on the best managers to hire. Other achievements include:
- Reduction of support service contracts
- Transparency in financial management
- Strategic sourcing
- Website reform, and
- Fleet reduction among other achievements
The four goals set by the DOE have been achieved in amid the existing challenges. The DOE has tried to live up to its obligatory roles by trying as much as possible to use the available resources to streamline the energy sector in the US. Regardless of the economic challenges, the audit plan reports the success of DOE against its own set standards. Even though inadequacy of the supply chain cannot cope with the increasing demand of isotopes, the new management structure would respond to the problems. With the huge success of the agency for the time it has been in operation, the public can only expect more from the DOE. The four-goal strategy will further raise the management of the agency for the American citizens to continue benefiting from DOE’s responsibilities. To demonstrate this success, the audit plan will now highlight the financial and other figures to demonstrate the achievements.
Financial Statement Analysis
By preparing the financial statements, the DOE seeks to improve the financial management. The financial department of the agency is responsible for improving the integrity and objectivity. According to the US Department of Energy, (2012) recalls that “The financial statements have been prepared to report the financial position and results of operations of the entity, pursuant to the requirements of 31 U.S.C 3515 (b) (United States Code),” (p. 16). The preparation of the fiscal results is also in accordance to the provisions of the generally accepted accounting principle, (GAAT). The agency’s balance sheets for the FY ending 2011 indicate the postulated environmental liability balances over the past five years. Since 2007, DOE has grown in terms of total asset and liabilities. Assets have grown from $130.7 billion to $182 billion in 2011. On the other hand, liabilities have grown from $337.8 in 2007 to $371.4 billion in 2011(US Department of Energy, 2012, p.56).
The agency’s debts reduced from an ending balance of $25,070 million in 2010 to $20,762 million in 2011. More funds in terms of deferred revenues for Nuclear Waste Fund (NWF) increased from $29,531 in 2010 to 31,779 million in 2011 (US Department of Energy, 2012, p.58). Other financial data reported for the FY 2011indicate growth of the DOE in many spheres. The above data show that the US is increasing its investment in the development of nuclear energy. This happens when the agency is also increasing its assets and liabilities growth while at the same time reducing debts.
This audit plan focused on the aim of setting up the DOE in 1977. The agency has grown and as such, it is in order to assess the growth of DOE based on its purpose of formation. The assessment aims at establishing whether DOE has achieved its mandated responsibilities in the wake of modern energy challenges. From the discussion above, DOE has proved to be an effective department in the US because of the aforementioned achievements. Except for a few instances when agency has failed to achieve its obligations; the case of supply of isotopes to researchers, the growth track is excellent. The financial statements indicate growth in assets and liabilities growth since 2007. Moreover, DOE has made tremendous efforts in cutting down its debts and increased investment in nuclear energy. The four-goal strategy has been effective in bringing sanity in the management of the various initiatives of DOE. This audit plans therefore affirms that the DOE has positively influenced the American people and the world at large.