First Federal Attempt to Demonstrate a Synthetic Fossil Energy Technology, A Failure

EMD-77-59: Published: Aug 17, 1977. Publicly Released: Aug 17, 1977.

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Questions were raised by Congress concerning the Energy Research and Development Administration's (ERDA) administration of a contract to demonstrate a process for converting coal to clean boiler fuel, efforts to safeguard against organizational conflicts of interest in awarding and administering contracts for fossil energy demonstration plants, and reasons for rejecting a proposal for a gasification demonstration plant.

The first Federal attempt to demonstrate a synthetic fossil energy technology by converting coal to a clean burning liquid fuel had many technical and managerial problems. It failed in its initial phase despite a $10 million cost overrun and a 14 1/2 month time overrun and was terminated on June 15, 1977. ERDA considered possible organizational conflicts of interest in awarding and administering contracts for the demonstration plants, but did not require disclosure of interest statements or conflict of interest clauses in awarding such contracts. ERDA rejected the gasification demonstration plant proposal primarily because the company was unwilling to accept the 50-50 Government industry cost-sharing requirements.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: To avoid repetition of the failure of the first attempt, the ERDA Administrator should: 1) adequately resolve significant technical problems before the demonstration plant phase is begun; 2) require the development and formal approval of project plans before projects are started and when changes are proposed; and 3) require the establishment and implementation of formal project monitoring systems which would enable ERDA management to track project progress and costs. To preclude possible organizational conflicts of interest, ERDA should develop and implement procedures requiring a formal, documented analysis of possible conflicts of interest before awarding research and development contracts.

    Agency Affected:


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