DOE Oversight of Demonstration and Deployment Projects

DOE OIG Reports

Published March 30th, 2026

Detected March 31st, 2026

Summary

The DOE Office of Inspector General issued Audit DOE-OIG-26-25 finding that the Department of Energy's Office of Nuclear Energy failed to effectively manage the $1.36 billion Carbon Free Power Project, a NuScale Small Modular Reactor demonstration. The project was terminated in November 2023, with approximately $183 million in Government funds spent without achieving key results and $143.5 million at risk due to front-loaded cost-share arrangements.

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What changed

The OIG audit identified four major management failures: Nuclear Energy did not effectively evaluate critical risks prior to award, structure awards to monitor risks, perform sufficient oversight, and ensure costs were allowable. These failures were attributed to not following existing requirements and guidance regarding merit reviews, project performance risk, risk management, reducing perceived bias, and enforcing award terms. The Department agreed to front-load cost-share contributions, placing the Government at risk of losing nearly $143.5 million when the project terminated.

Compliance officers at DOE and other agencies administering large demonstration and deployment awards should review the OIG's findings and ensure existing requirements for merit reviews, risk evaluation, and oversight are followed. While no formal compliance deadline exists, the OIG recommended that DOE senior leadership take action to prevent additional taxpayer funds from being put at risk on similar projects.

What to do next

Review existing requirements for merit reviews, project performance risk, and risk management for financial assistance awards
Ensure cost-share arrangements are structured to mitigate Government exposure to early termination risks
Implement enhanced oversight procedures for first-of-a-kind demonstration projects exceeding $1 billion

Source document (simplified)

Audit: DOE-OIG-26-25

Opportunities Exist to Improve the Department’s Oversight of Demonstration and Deployment Projects

Office of Inspector General

March 30, 2026

March 24, 2026

Opportunities Exist to Improve the Department’s Oversight of Demonstration and Deployment Projects

The Department of Energy’s Office of Nuclear Energy (Nuclear Energy) awarded a $1.36 billion cost-share financial assistance award to the Carbon Free Power Project, LLC in October 2020 to demonstrate and commercially deploy an economically competitive and viable first-of-a-kind NuScale Power, LLC Small Modular Reactor plant at the Idaho National Laboratory. In November 2023, the Carbon Free Power Project (Project) was terminated by mutual agreement between the Carbon Free Power Project, LLC and NuScale Power, LLC. We performed this audit to determine whether Nuclear Energy effectively managed the Project and to share lessons that can be applied to current and future awards and Department efforts.

We found that Nuclear Energy did not effectively manage the Project, and lessons learned can be applied to future awards. Specifically, we found that Nuclear Energy did not effectively evaluate critical risks prior to award, structure the award to monitor risks, perform sufficient oversight of the Project, and ensure costs were allowable. We attributed these issues to Nuclear Energy not following existing requirements and guidance regarding merit reviews, project performance risk, risk management and evaluation, reducing perceived bias, and enforcement of award terms. Also, Nuclear Energy agreed to front-load the cost-share, placing the Government at risk of losing almost $143.5 million since the Project terminated.

As a result, Nuclear Energy’s project management failures may have contributed to the Project’s termination. The weaknesses in addressing risks throughout the Project’s life cycle placed Nuclear Energy and the taxpayer at a higher-than-necessary risk of project failure. While Nuclear Energy stated that the Project achieved some useful results in progressing deployment of Small Modular Reactors in the United States, the Project’s key objective was not met, and Government funds of approximately $183 million were spent without key results. We believe that the Department’s senior leadership should take action to ensure that additional taxpayer funds are not put at risk.