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The DOE began to create and develop the new loan guarantee program under Secretary

of Energy Samuel W. Bodman (“Secretary Bodman”) after EPAct2005 was signed into law in

2005. Initially, a small office was established utilizing three employees from other DOE

organizations under the Chief Financial Officer of the DOE.142

The DOE issued the first

solicitation inviting interested parties to submit a pre-application for federal loan guarantees

relating to projects that employ innovative technologies in August 2006.143

The solicitation

period for pre-applications closed in December 2006. The DOE received pre-applications for

143 projects, including Solyndra’s.

In February 2007, Congress initially appropriated funds of $7 million from borrower fees

to fund the operation of the LGP and provided initial loan guarantee authority for up to $4 billion

of guaranteed loans.144

The Credit Review Board (“CRB”) was established in March 2007 and

chaired by the Deputy Secretary of Energy. The CRB was created to approve major policy

decisions of the LGPO, review LGPO recommendations to the Secretary of Energy regarding the

issuance of loan guarantees for specific projects, and to advise the Secretary of Energy on loan

guarantee matters.

In April 2007, the LGPO was funded, CRB met for the first time, and the technical

review of the pre-application began. The DOE issued a Notice of Proposed Rulemaking for the

LGP in May 2007 to begin the rule making process and allow for public comment on its

proposed regulations. In June 2007, the DOE held a meeting allowing the public to comment on

its proposed regulations for the LGP and began the financial review of the pre-applications


The DOE announced that it named David Frantz (“Frantz”) as Director of the LGP


See Appendix G.5, United States Government Accountability Office, April 20, 2007 Letter to House of
Representatives Subcommittee on Energy and Water Development (B-308715).


See Appendix G.3, DOE Loan Guarantee Solicitation Announcement (DE-PS01-06LG00001), August 8, 2006.


See Appendix G.4, DOE News Release, “Loan Guarantee Provisions from Public Law No. 110-5, the Revised
Continuing Appropriations Resolution”, February 26, 2007.


See Appendix G.6, DOE News Release, “DOE Reports Progress on Loan Guarantee Program”, June 20, 2007.


to manage the LGPO, and that Frantz would report directly to the DOE’s Chief Financial


The LGP also conducted technical and financial review meetings to develop final

recommendations to the CRB for the pre-applications received.147

In October 2007, the DOE’s final rules for the LGP were issued148

and 16 of the initial

143 pre-applicants were selected and invited to submit full applications to the LGPO for further


As a result of the invitations sent, the DOE began to receive and analyze full

applications in April 2008.150

Solyndra submitted its Full Application to the LGPO in parts

beginning in May 2008 through August 2008 with an initial expectation of closing the

transaction in September 2008.

In January 2009, Dr. Steven Chu was appointed as Secretary of Energy (“Secretary Chu”)

and replaced Secretary Bodman, a month prior to the enactment of ARRA. As of January 2009,

the LGPO had 16 federal employees.151

Solyndra received its conditional commitment for its DOE Loan Guarantee in March


and was the first loan guarantee closed by the DOE in September 2009.153

In November

2009, the DOE announced Silver as the new Executive Director of the LGP to oversee the LGP

and report directly to Secretary Chu. Silver was responsible for staffing the program, leading

origination, analysis, and negotiations of the loan guarantees, and managing the full range of the

DOE’s alternative energy investments.154

In July 2010, Nwachuku joined the LGPO as the

Director of Portfolio Management responsible for monitoring and risk management for the DOE

loan and guarantee portfolio. As of September 23, 2010, the LGPO had over 80 federal


See Appendix G.7, DOE News Release, “Energy Department Names Director of its Loan Guarantee Office”,

August 3, 2007.


See Appendix G.10, GAO Report to Congressional Committees, “Department of Energy – New Loan Guarantee
Program Should Complete Activities Necessary for Effective and Accountable Program Management”, July 2008.


See Appendix G.8, Department of Energy 10 CFR Part 609, Loan Guarantees for Projects that Employ
Innovative Technologies; Final Rule, October 23, 2007.


See Footnote 147.




See Footnote 141.


See Appendix G.13, DOE News Release, “Obama Administration Offers $535 Million Loan Guarantee to
Solyndra, Inc.”, March 20, 2009.


See Appendix G.14, DOE News Release, “Vice President Biden Announces Finalized $535 Million Loan
Guarantee for Solyndra”, September 4, 2009.


See Appendix G.15, DOE News Release, “DOE Announces New Executive Director of Loan Guarantee
Program”, November 10, 2009.


employees supported by a number of subject-matter experts engaged on a contract basis.155

According to the LGPO website, the LPG has guaranteed over $35 billion of loans as of January

31, 2012.

Since the LGP was established, the LGP was audited by the GAO and the DOE Office of

Inspector General (“IG”) on several occasions, which identified various issues relating to the

LGP. As a result, delays were incurred with the processing of the existing loan guarantee

applications, including Solyndra’s application, while the LGPO addressed issues identified.

These reports identified a number of positive and negative findings of the LPG and are

summarized below:

IG Special Report (September 2007)156

– This report concluded that there were a
number of steps that should have been taken to foster the success of the LGP,
including finalizing a staff plan, developing risk mitigation strategies, implementing
and executing a monitoring system, and promulgating procedures relating to loan

GAO Report (July 2008)157

– This report concluded that the DOE was not well
positioned to manage the LGP effectively and maintain accountability because it had
not completed a number of key management and internal control activities. The
report noted that the LGP had not sufficiently determined the resources it would need
or completed detailed policies, criteria, and procedures for evaluating applications,
identifying eligible lenders, monitoring loans and lenders, estimating program costs,
or accounting for the program.

IG Audit Report (February 2009)158

– This report found that while the Program had
developed and implemented some key programmatic safeguards, the Program had not
completed a control structure necessary to award loan guarantees and to monitor
associated projects. Specifically, the Program had not finalized policies and
procedures, formally documented portions of its applicant reviews, or formalized
procedures for disbursing loan proceeds.

GAO Report (July 2010)159

– This report found that performance measures developed
for the LGP did not reflect the full scope of program activities. In addition, the report


See Footnote 141.


See Appendix G.9, IG Special Report (DOE/IG-0777), “Loan Guarantees for Innovative Energy Technologies”,

September 2007.


See Footnote 147.


See Appendix G.12, IG Audit Report (DOE/IG-0812), “The Department of Energy’s Loan Guarantee Program
for Innovative Energy Technologies”, February 2009.


See Appendix G.16, GAO Report to Congressional Committees, “Department of Energy – Further Actions are
Needed to Improve DOE’s Ability to Evaluate and Implement the Loan Guarantee Program”, July 2010.


noted that the LGP had treated applicants inconsistently and lacked mechanisms to
identify and address their concerns.

IG Audit Report (March 2011)160

– This report found that the LGP could not always
readily demonstrate, through systematically organized records, including
contemporaneous notes, how it resolved or mitigated relevant risks prior to granting
loan guarantees. The report noted other areas of needed improvement where the LGP
had not updated its policies and procedures to include improvements in its loan
processing to provide for consistent use of lessons learned and provided financial
oversight of its independent advisors to ensure the allowability and reasonableness of

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