Following an extended back and forth with the Department of Energy, contractor Bechtel has only been required to repay a sliver of the $5.5 million in costs challenged in a federal audit for its work over several years at the Hanford Site in Washington state.
A final determination, issued by DOE Contracting Officer Ronald Cone on Oct. 24, concluded that only a little over $30,000 of Bechtel expenses submitted for construction of the Waste Treatment and Immobilization Plant from fiscal 2009 through fiscal 2013, were not allowed under the contract.
Documents obtained by Weapons Complex Monitor noted that an audit on WTP-related bills had initially questioned $5.5 million in expenses listed on Bechtel invoices.
After the June audit by CohnReznick, Bechtel submitted additional information to justify its costs at the project. In a July 26 decision, Cone said Bechtel should within 30 days repay roughly $2.23 million of the costs that were disputed by DOE and its Office of River Protection at Hanford.
The Energy Department had sought repayment for expenses in areas involving worker relocation, subcontractor costs, outside services, and travel documentation, according to Cone’s July correspondence. Bechtel had not shown sufficient documentation to justify the costs, according to DOE.
The Cone letters of July and October made no mention of litigation costs being an issue in the billing dispute. Bechtel National in May sued the Department of Energy in U.S. Court of Federal Claims over its refusal to reimburse third-party litigation costs “that have historically been reimbursed by the United States.” As of early December, both parties were seeking summary judgment in the lawsuit.
Office of River Protection spokeswoman Yvonne Levardi said Tuesday that DOE and Bechtel were still reviewing the detailed, disputed costs for fiscal 2009 to 2013, but followed that with a Thursday email statement that a final determination had been made.
A copy of the October ruling by Cone, provided by Bechtel, indicated DOE had decided that, among other things, a “Project Assignment Incentive” of more than $1.73 million was an allowable expense under the contract.
While not explicitly defined in the Cone letter, it appears the project assignment incentive concerns various staffing-related expenses at the Waste Treatment Plant. The PAI section of the letter refers to converting worker assignments from temporary to permanent and certain recruitment incentives and relocation requests.
The October determination by Cone also allowed $411,000 in previously questioned subcontractor expenses.
“Incurred cost audits are a standard government process for reviewing costs that have been billed to the government and ensuring they are reimbursable under the terms of the contract,” a Bechtel spokesperson said in a Thursday evening email. “Of the $2.73 billion in claimed costs for fiscal years 2009 to 2013, $30,098 were determined to be non-reimbursable and have been refunded to the government.” Costs are sometimes billed in different years from when they are incurred, officials said.
“These costs were primarily to cover workforce recognition events that thanked employees for meeting key safety and progress accomplishments,” the Bechtel spokesperson added.
While DOE contracts are public documents, specific details surrounding billing and payment are usually not public record, said one source with knowledge of such matters. The sources said this sort of back-and-forth on costs is commonplace under the Federal Acquisition Regulation (FAR).
“It’s the sort of thing that might be ongoing at all sites,” a second source said, apparently referring to all locations within the DOE weapons complex.
The WTP was originally seen as a pilot plant to treat 10% of the waste. When construction of the Waste Treatment and Immobilization Plant began at the Hanford Site in 2001, operations were expected to start in 2019 and the project to cost $12.2 billion. In December 2016, DOE upped the cost estimate by $4.5 billion for the plant that will solidify up to 56 million gallons of radioactive and chemical waste left by decades of plutonium production operations at Hanford.
A federal court order requires the WTP to begin full operations by the close of 2036. Processing of low-activity waste must begin by 2023, though Bechtel would forfeit millions of dollars in fees if processing does not begin in 2022.
