AUGUSTA — The controversy over a $3 million energy grant that went to a politically connected group may lead to a new law to subject state and federal grants to a competitive process.

The Legislature’s Government Oversight Committee voted unanimously Tuesday to begin the process of writing legislation that would make it difficult to award grants and contracts to unqualified applicants, citing as an example the money awarded to the Maine Green Energy Alliance by the agency that runs state energy programs.

“I just find it hard to believe that we don’t have anything in place in this state” that prevents political meddling or favoritism in the awarding of grants, said Rep. David Burns, R-Whiting, co-chairman of the committee. “Am I the only one that’s amazed by that fact? It just boggles my mind.”

The suggested legislative changes grew out of an audit of the alliance by the Legislature’s Office of Program Evaluation and Government Accountability, which found the agency was not capable of handling the $3 million stimulus grant. The alliance folded in January after news reports revealed it had signed up only 50 of a projected 1,000 homes for energy-efficiency upgrades.

The audit found it was “an organization that was not yet set up to administer, account for and make decisions about use of those funds in the manner expected of entities that spend public funds,” although the audit also found that no funds were missing or used inappropriately.

The alliance’s grant was part of a $30 million federal grant to the Efficiency Maine Trust for energy-efficiency programs. It was awarded, despite misgivings among Efficiency Maine Trust staff, after a lawyer in Democratic Gov. John Baldacci’s office urged that the alliance be included in the state’s grant application to the federal government. The alliance’s founder, Tom Federle, was Baldacci’s former legal counsel and a prominent Democrat.

Beth Ashcroft, head of OPEGA, said Tuesday that awarding grants that way “immediately puts the state at risk or liability for whatever that group is going to do as a subgrantee.”

“In this particular case, we got different stories about how that all came to be,” Ashcroft said. “But it did seem like if there had been a process in place before incorporating by name an entity into the grant application, there had been some process to make sure we selected them based on their qualifications, their capacity, their experience, or background or whatever, I’m not sure the Maine Green Energy Alliance would have ever made its way into the subgrantee.”

The state is at financial risk now because of the grant to the alliance. An audit conducted for the federal government by Macdonald Page & Co. questioned $272,000 of the $513,000 spent by the alliance. If the alliance can’t document that those funds were properly spent, the state will have to pay back the amounts in question to the federal government.

The legislation being proposed by the Government Oversight Committee would protect state agencies from political pressure to award grants to unqualified but politically connected organizations — something welcomed Tuesday by Efficiency Maine Trust Executive Director Michael Stoddard. He said the trust’s directors would consider adopting similar rules for vetting potential grantees at Wednesday’s board meeting.

“By adopting these recommendations, we will have guidance in place that allows us to move quickly and efficiently” to apply for federal grants, “but will also isolate us from undue influence,” Stoddard said.

The Government Oversight Committee also voted Tuesday to tighten up the law concerning confidentiality of OPEGA’s reports prior to their public release.

Currently, it is a crime to divulge those reports before their public release to lawmakers. That move came after some details of OPEGA’s report on the alliance were leaked before members of the Government Oversight Committee had seen it. Only staff and board members of the Efficiency Maine Trust and the Maine Green Energy Alliance, as well as Gov. Paul LePage’s office, had copies of the audit at that point.

Federle, the alliance’s founder, spent almost two and a half hours in front of the committee. He said the organization lacked the administrative structure to carry out the grant during its first six months and that he and others had failed to see that hiring a large number of Democrats for the staff would create appearance problems. But in the end, he said, the alliance’s work had brought “almost half a million dollars of direct economic activity” to Maine.

“I don’t think the money was wasted,” Federle said. “There were certainly lots of lessons learned and there were mistakes.”

Email: mainecenter@gmail.com. Web: pinetreewatchdog.org.

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