Last month, the Department of Energy (“DOE”) Office of Inspector General (“OIG”) issued a special report on the DOE’s use of data analytics to reduce the risk of fraud, waste, and abuse within DOE programs. As noted in our prior post (“More Cases and Expanded Data Analytics: A Closer Look at DOJ’s FY 2023 False Claims Act Statistics”), the Department of Justice has successfully used data analytics to identify and develop fraud cases, and the DOE OIG appears poised to adopt a similar approach—despite several implementation challenges.

Citing the significant influx of funds DOE has received through recent spending bills, the OIG report emphasized a need for the DOE to adopt data analytics and data-driven management to conduct oversight—moving away from a “pay and chase” model to a predicative, proactive approach to combatting fraud. However, the OIG found that DOE generally lacks the ability to perform comprehensive and timely analytics given that relevant data is maintained in a multitude of systems across the DOE complex. Without a coordinated approach for data standards, the OIG found that DOE’s ability to monitor contract costs and manage fraud risks is likely to be hampered.

The report’s findings are consistent with comments made by DOE Inspector General Ms. Teri L. Donaldson in October 2022 at the DOE Contractor Attorneys’ Association Fall Conference. Notably, Ms. Donaldson indicated that the OIG is interested in gaining a potentially unfettered right to access contractor data to identify areas of enforcement. She alluded to a new approach under which the OIG would gain access to and comb through contractor data systems to identify potential impropriety and risk areas for enforcement. However, these efforts appear to have been somewhat stunted as a November 2023 OIG report stated that DOE has not “fully cooperated” with the OIG’s efforts to collect payroll-related data from contractors to conduct data analytics. DOE’s FY 2025 Budget in Brief also cited a lack of funding for the OIG’s oversight activities and program audits, which the OIG claimed hinders its ability to perform necessary detection activities, including greater implementation of data analytics.

Despite these challenges, the March report noted efforts to increase data literacy within DOE, including establishing a Data Analytics Working Group comprising Headquarters and Field Office personnel, intended to leverage and integrate various data analytics efforts across DOE. In concurring with the report’s findings, DOE management also committed to using the Enterprise Data Management Program (created in September 2023) to work toward a more robust, enterprise-wide data analytics program.

Although DOE’s implementation of data analytics remains in its early stages, contractors would be wise to similarly embrace a data-driven approach by identifying and monitoring high-risk programs, vendors, and other transactions to increase early detection and bolster compliance efforts.