A federal judge has partially dismissed claims that the Savannah River Site’s primary contractor, Savannah River Nuclear Solutions (SRNS), and one of its parent companies, Fluor Federal Services (FFS), unjustly benefited from their contract with the Department of Energy.
On March 18, the U.S. Department of Justice sued SRNS, the management and operations contractor for the DOE facility in South Carolina, and Fluor, claiming they had overcharged the government by $5 million by filing 573 unlawful reimbursement claims, spanning from Oct. 8, 2008, to Dec. 31, 2015. The lawsuit charges that the companies knowingly overcharged the federal government to pay for home office expenses and bid and proposal costs – a direct violation of the M&O contract and of the cost transfer agreement that says the allocation of home office costs is unallowable under the deal.
On Dec. 6, U.S. District Judge J. Michelle Childs granted SRNS’ request to dismiss the claim for “unjust enrichment,” meaning SRNS and Fluor wrongfully benefited from the contract. She also dismissed the claim for payment by mistake – a situation in which the federal government alleged it was wrongly required to make payments to SRNS and Fluor.
In her order, Childs called the government’s claims “unpersuasive.” She added, “The fact that the federal government retains the right to raise common law claims like any other plaintiff does not mean that the government is entitled to proceed with common law claims where private plaintiffs would be barred.”
At the same time, Childs denied SRNS’ request for dismissal of the federal claims regarding the home office expenses and bid proposals false charges. However, she is honoring the federal contractor’s request to refer the home office and bid claims to the Civilian Board of Contract Appeals (CBCA) for an advisory opinion on the matter before issuing her ruling. “The motion may be renewed or refiled upon the court’s receipt of the advisory opinion and lifting of the stay,” Childs wrote.
In the initial filing, the federal government outlined multiple incidents in which SRNS supposedly reported illegitimate claims. For example, in the first listed incident, workers from SRNS and Fluor submitted an incurred cost report for nearly $338 million for their 2008 services. But, according to the complaint, the report included $1.19 million in home office costs and nearly $90,000 in bid and proposal costs for a total of more than $1.2 million in unallowable expenses. Subsequent unallowable costs alleged by the federal government include $942,000 in 2009, $906,000 in 2010, $362,000 in 2011, $666,000 in 2012, $254,000 in 2013 and $481,000 in 2014.
On May 20, SRNS asked Childs to dismiss the lawsuit, stating that the “Complaint makes clear that DOE knew that SRNS intended to charge (Fluor) home office expenses, approved those expenses, and made payments on those expenses.”
The federal government is seeking three times the amount of the total violation, or $15.6 million, and between $5,500 and $11,000 per violation. The dismissals do not impact the monetary relief sought, and the federal government could still collect the money.
Neither SRNS nor the Department of Justice commented on the case.
Savannah River Nuclear Solutions is a partnership of Fluor, Honeywell, and Stoller Newport News Nuclear. It conducts a number of missions at the Savannah River Site, including cleanup, building deactivation and decommissioning, tritium production for nuclear weapons, and operation of the Savannah River National Laboratory. The current $9.5 billion M&O contract is scheduled to expire on July 31, 2018.
