* Did not evaluate failed loan to Solyndra
* Chu: will review ideas, but program is working
* Republicans: Investigation will continue (Adds quotes, details, background)
By Roberta Rampton
WASHINGTON, Feb 10 The U.S. Energy Department relies on too many consultants and committees for managing its loans and needs to beef up its management, concluded a review commissioned by the White House in the wake of publicity over failed solar panel maker Solyndra.
Herb Allison, a former investment banker known for his work helping government agencies manage large, complex financing programs, reviewed the energy loan program and recommended an overhaul in oversight of the $23.769 billion portfolio.
Over the lifespan of the loans, the Energy Department has estimated that $2.9 billion may go unpaid, in line with Allison's valuation of $2.7 billion.
Allison cautioned in the review released on Friday that the assessment was a snapshot of the portfolio rather than a forecast of eventual losses. The review was done in 60 days and did not include a detailed look at each loan's performance and risks, he said.
Allison, who helped both Republican and Democratic administrations fix problems stemming from the 2008-09 financial crisis, did not review the Energy Department's $535 million loan guarantee to Solyndra, which filed for bankruptcy last year and has become a sore spot in the 2012 U.S. election campaign.
The 75-page report is unlikely to quell criticism of President Barack Obama over the failed loan, which features in at least two attack ads on television, and is regularly reviled in speeches by Republican presidential candidates.
But it gives the Obama administration grounds to show it is learning from its experience in clean energy loans, said Salo Zelermyer, a senior counsel at the Energy Department during President George W. Bush's administration.
"They can hold up a large report done by a reputable outside official, a third party," said Zelermyer, now with Bracewell & Giuliani, a lobbying and law firm.
STRUGGLING TO FILL VACANCIES
Energy Secretary Steven Chu said he would review the recommendations to find ways to strengthen the program.
But he said the program was working as intended, and noted that the review rated the overall risk of the loan portfolio as "slightly lower" than the department's projections.
"We have always known that there were inherent risks in backing innovative technologies at full commercial scale, and it is very likely that there will be other companies in the portfolio that won't succeed, but the vast majority of companies are expected to pay the loans back in full, on time, and with about $8 billion in interest," Chu said in a statement.
Allison said the Energy Department had struggled to fill vacancies in key positions overseeing the loan portfolio. "At least one manager is acting head of several departments," he said.
Decisions on loans should be made by individual managers with expertise, Allison said, instead of using a committee process "where collective responsibility can obscure individual accountability."
UNLIKELY TO BE THE LAST WORD
Allison's report is unlikely to be the last chapter in the Solyndra saga.
The Senate Energy committee has invited Allison to testify next month on his analysis and recommendations, said its chairman, Jeff Bingaman.
The Energy Department's inspector general - an internal but independent watchdog - has been investigating Solyndra in tandem with the FBI, which raided the company in September.
Republicans in the U.S. House of Representatives have mounted an investigation into the loan, and vowed on Friday to continue to fight the White House for access to additional documents and testimony.
"This report reveals broad-based weaknesses, but it does not answer some of the most fundamental questions about how these risky bets were made over the objections of experts," said Fred Upton and Cliff Stearns of the House Energy and Commerce Committee, which has led the probe.
Allison's recommendations will not likely temper the political criticism, said David Victor, a political scientist at the University of California, San Diego.
"By design, these loans are to help commercialize technologies that the private sector, on its own, won't invest in fully. Thus, by design, they carry risk. Some will fail," Victor said. (Editing by Peter Cooney)