A federal appeals court ruled this week that Bechtel National is not due reimbursement from the U.S. government for $500,000 in legal fees the company incurred prior to settling discrimination litigation brought by two former employees at the Energy Department’s Hanford Site in Washington state.
In an opinion issued Tuesday, a three-judge panel for the U.S. Court of Appeals for the Federal Circuit agreed with a lower court that Bechtel would have to show the discrimination lawsuits had “very little likelihood of success” had the cases gone to trial.
Bechtel is building the Waste Treatment Plant, which will convert radioactive waste held in underground tanks at Hanford into a more stable glass-like substance for disposal. Two former employees on the project sued the company in 2010 and 2012 for sexual and racial discrimination, as well as alleged harassment after they filed their complaints.
Bechtel settled the suits out of court and then sought $500,000 in Energy Department reimbursement for defending itself against the claims. It did not seek reimbursement for the actual payouts, “likely because the settlement amounts were covered by insurance,” the appeals court said.
After the Energy Department provisionally found the reimbursement acceptable, a DOE contracting officer in May 2016 issued a notice of intent to disallow the costs apparently because the discrimination cases had a chance of success. In its response two months later, Bechtel argued the case cited by the agency actually would allow reimbursement of legal expenses. But the contracting officer’s final decision in September 2016 affirmed the earlier ruling.
Because the government had already reimbursed Bechtel, it would subtract the amount from future payments under the $14.7 billion Waste Treatment Plant contract that runs through 2022.
Bechtel challenged the Energy Department decision in May 2017 with the U.S. Court of Federal Claims, which 11 months later issued a summary judgment in favor of the government. The contractor then took its case to the Federal Circuit.
Bechtel is reviewing the court’s opinion, which involves a longstanding question of contractual interpretation, said company spokeswoman Staci West.
