Search
Article

U.S. Department of Energy funding for emerging technologies: Opportunities and risks

Jamie Sybert

Partner

JamieSybert@hka.com

Expert Profile

Matt Danner

Director

MattDanner@hka.com

Expert Profile

Originally published in Lawyers Journal, December 27, 2024, p. 5.

There has been a growing focus on developing new technologies to drive progress in the efficient and effective production and utilization of clean energy sources, culminating with the passing of the Infrastructure Investment and Jobs Act (IIJA) in November 2021 and Inflation Reduction Act (IRA) in August 2022. The U.S. Department of Energy (DOE) has subsequently announced significant funding for research and development to reduce the cost of clean energy technology, thereby promoting innovation to address the critical challenges facing our country. The Office of Clean Energy Demonstrations (OCED) was established in December 2021 to facilitate the growth of emerging technologies essential for addressing the most pressing issues.

A significant portion of OCED project funding originates from the 2021 IIJA, and 2022 IRA in the form of grants and cooperative agreements. These grants and cooperative agreements were issued to reduce the cost of new and emerging technologies by mitigating financial risk during development.

OCED manages over $25 billion in funding for clean energy projects, such as advanced nuclear reactor demonstrations, carbon and hydrogen capture, industrial decarbonization technologies, and renewable energy technologies.

At least one Funding Opportunity Announcement (FOA) has been issued for each portfolio. A number of projects have been chosen and are now in the process of being negotiated, with other awards having already been finalized and awarded.


In November 2024, DOE issued “The National Blueprint for a Clean and Competitive Industrial Sector.” This document serves as a roadmap for transitioning the industrial sector to a low-carbon economy, while drawing upon and expanding existing initiatives. The Blueprint outlines five approaches to foster cooperation between the federal government and the private sector and marks a sustained commitment to creating innovative, clean energy technologies.

For companies seeking funding from DOE’s OCED, the application process involves five distinct stages:

Stage 1 – Pre-Application. Companies submit a Notice of Intent, concept paper or pre-application based on the requirements specified in the FOA.

Stage 2 – Application. All eligible parties submit their applications in accordance with the terms outlined in the FOA.

Stage 3 – Selection. OCED evaluates and selects the applications for the fourth stage.

Stage 4 – Negotiation. This stage involves the agreement of project objectives, schedule, and budget, and OCED conducts a risk-based assessment of the company and the project to determine applicable terms and conditions.

Stage 5 – Project Performance. The company executes the project objectives, and OCED performs project monitoring and oversight.

If your client is being considered for an award, understanding the unique compliance and regulatory requirements that accompany federal funding is critical. These requirements introduce new risks and new business processes for companies unaccustomed to receiving government funding.

The key overarching requirement is the effective management of federal funds. Because the demonstration of these capabilities is required during the Negotiation Stage, companies should have the financial management, accounting, subrecipient monitoring and management, procurement, and property management systems in place prior to award to show OCED they can meet the requirements of 2 CFR 200 and 2 CFR 910.

The following items detail key areas where specific compliance requirements need to be met, potentially necessitating revised, new, or upgraded policies, procedures, tools, and processes prior to award.

  • Job Cost Reporting. The accumulation of costs and the generation of reports must provide sufficient detail to trace incurred cost to the agreement scope and funding requirements to demonstrate that funds have been used in accordance with federal regulations and the terms & conditions of the federal award (2 CFR 200.302(a)).
  • Cost Allowability. Written policies and procedures for determining the allowability of incurred costs based on the applicable cost principles are required. The full value of cost-sharing agreements, in which OCED and the awardee share in the investment, are also subject to the allowability requirements, not just the portion paid for by OCED.
  • Compensation. Written policies and procedures for allocating, reporting, and certifying the time and effort expended to federal projects are required. Adequate timekeeping is critical for substantiation of labor costs, requiring employees to complete timesheets in a timely manner with manager approval.
  • Drawdown Procedures. An adequate policy to document your company’s typical drawdown frequency, calculation of the drawdown amount, and roles and responsibilities for invoice submittal and approval is required. Invoices under federal awards require special forms and submittal instructions that are not typical in a commercial environment.

Other areas of concern not detailed here include companies’ purchasing and government property management systems. These systems have additional requirements that must be considered.

Sharing costs with the federal government offers the private sector a significant opportunity and advantage to mitigating the financial risks linked with investing in emerging technologies. Key to securing this funding is a thorough review and understanding of the applicable compliance and regulatory requirements, as well as a commitment to responsible stewardship of public funds.

Investing in grants management strategies and processes upfront is crucial to facilitating a smooth negotiations phase, streamlining financial and reporting obligations, and preparing for a new compliance environment with a unique set of risks. If your company lacks the necessary in-house grant management and compliance expertise, consider hiring outside legal counsel and subject matter specialists to assist in standing up these capabilities.

Jaime Sybert has more than 25 years of experience in government contract cost accounting, pricing, business system compliance, and administration. She has a broad background of advisory experience regarding compliance with the Federal Acquisition Regulation (FAR), Defense Federal Acquisition Regulation Supplement (DFARS), Office of Management and Budget (OMB) Circulars, Cost Accounting Standards (CAS) and alleged non-compliance, and other government acquisition regulations. She has firsthand experience negotiating cost accounting practice changes, external restructuring proposals, termination settlement proposals (TSPs), and indirect cost rate agreements.

Matt Danner has over 15 years of experience in providing government contract compliance, strategy, and advisory services. He has assisted clients with compliance issues related to the Federal Acquisition Regulation (FAR), Cost Accounting Standards (CAS), Defense Federal Acquisition Regulation Supplement (DFARS), Office of Management and Budget (OMB) Uniform Guidance for Federal Awards (2 CFR 200), and Department of Energy Acquisition Regulation (DEAR) supplement.


This article presents the views, thoughts, or opinions only of the author and not those of any HKA entity. The information in this article is provided for general informational purposes only. While we take reasonable care at the time of publication to confirm the accuracy of the information presented, the content is not intended to deal with all aspects of the referenced subject matter, should not be relied upon as the basis for business decisions, and does not constitute legal or professional advice of any kind. HKA Global, LLC is not responsible for any errors, omissions, or results obtained from the use of the information within this article. This article is protected by copyright © 2025 HKA Global, LLC. All rights reserved.

X

Follow HKA on WeChat

关注我们的官方微信公众号

HKA WeChat