The Department of Energy’s contractor for the now-terminated plutonium recycling facility at the Savannah River Site is suing to recoup what it says is nearly $53 million the federal government failed to pay for its work.
CB&I AREVA MOX Services added in its May 2 lawsuit that the Energy Department’s semiautonomous National Nuclear Security Administration (NNSA) “forced” the contractor to take a financial loss while constructing the Mixed Oxide Fuel Fabrication Facility (MFFF). The contractor is seeking the money in the U.S. Court of Federal Claims (CFC).
MOX Services said that from 2016 to 2018 it accrued $530 million in “hotel load” costs,” management and administrative expenses not directly related to construction. These include project management costs, which increased when changes were made to the congressional funding scope and forced MOX Services to modify its plans, according to the suit. Other examples of hotel costs highlighted in the complaint include quality control, information technology, and human resources.
“While NNSA reimbursed most of MOX Services’ incurred costs under the cost reimbursement contract at issue, NNSA refused to modify the contract in a way that enabled MOX Services to earn fee for its work,” MOX Services’ attorneys wrote in the complaint. “In FY16 – FY18, MOX Services performed approximately $530 million in out-of-scope work, the costs of which DOE characterized as hotel load, and was paid no fee on this work.”
MOX Services said it is entitled to 10 percent of the $530 million, or $53 million, under a federal law that covers cost reimbursements in government contracts. Federal Acquisition Regulations (FAR) for government contracts state that, if changes to work scope cause an increase in estimated costs, the contractor is entitled to a fixed-fee reimbursement. MOX Services’ contract with the Energy Department set its reimbursement at 10 percent.
The contractor attempted to recoup the dollars in two claims: a $35 million claim for costs accrued in fiscal 2016 and 2017, and a $17.9 million claim that covers fiscal 2018. The complaint does not mention hotel costs accrued in the current fiscal 2019.
The NNSA denied the first claim on Jan. 31 of this year. The agency is still reviewing the second claim, but MOX Services said it expects it will also be rejected. “Over these three fiscal years, NNSA effectively forced MOX Services to perform tremendous amounts of out-of-scope work that incurred hotel load costs at a guaranteed loss,” the contractor’s legal team wrote.
MOX Services is also seeking interest. It is unclear how much interest and how it will be determined.
The May 2 lawsuit is the latest chapter in a longstanding legal battle involving the MFFF, which was supposed to convert 34 metric tons weapon-usable plutonium into commercial nuclear fuel. MOX Services was hired in 2007 to build and operate the facility at a life-cycle cost of $17 billion. But before terminating the project in October 2018, the federal government reported it would cost three times that amount to complete the mission, including $5 billion already spent.
Since termination, MOX Services has filed this suit and two others hoping to recover costs allegedly associated with its work. A November 2018 lawsuit seeks $326,000 in travel costs. A February 2019 suit seeks $526,895 from a claim MOX Services filed in 2013 over costs associated with electrical rework.
Specifics on the rework were not included in the suit, but the contractor said they were linked to various design changes and other factors out of its control. The NNSA denied the claim, saying it should not have to pay for rework that was needed due to the contractor’s missteps. MOX Services, in its lawsuit, retorted that rework is unavoidable for a project as big as the MFFF.
Separately, the federal government is seeking $19.2 million from MOX Services and subcontractor Wise Services in U.S. District Court for South Carolina. In its February 2019 lawsuit, the government said the two companies worked together to carry out multiple scams that resulted in $6.4 million in fraudulent claims, from 2008 to 2016.
