Savannah River Nuclear Solutions (SRNS) is seeking a dismissal of a federal lawsuit accusing the contractor and one of its parent companies of overcharging the government more than $5 million in “unallowable costs.” In papers filed on May 20, SRNS said the Department of Justice misused the Federal Claims Act in filing its lawsuit, and also misinterpreted the contract the Department of Energy has with SRNS, the Savannah River Site’s management and operations contractor.
In its complaint filed on March 19, the federal government alleged that SRNS and Fluor knowingly overcharged the U.S. 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 contract. The federal government calculated 573 claims that violated the contract, spanning from Oct. 8, 2008 to Dec. 31, 2015.
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.
But SRNS and Fluor said in their request for dismissal that the federal government failed to explain how any of the claims made by the contractor can be deemed as false. “DOJ has not pled that any statement regarding the allowability of home office expenses was objectively false, as it has not even identified any specific costs implicated by its generic ‘home office expense’ allegations,” the defendants stated in the motion. “Nor does the Complaint explain how any particular costs would be unallowable in the context of both the language or the Contract and the regulations that govern its interpretation.”
SRNS and Fluor also said the Energy Department had knowledge of the home office claims dating to 2008 when the contract began. “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.” SRNS and Fluor added that the issue is best suited for determination at the Civilian Board of Contract Appeals.
If the defendants lose their case, the federal government could receive three times the amount of the total alleged violation, or $15.6 million, and between $5,500 and $11,000 per violation. There have been no reported rulings or hearings in this case.
Savannah River Nuclear Solutions is a partnership of Fluor, Newport News Nuclear, and Honeywell. Its operations at the site encompass environmental cleanup and national security missions, among others. With extensions, SRNS is in the midst of a 10-year contract worth about $9.8 billion. The contract is due to expire on July 31, 2018.
The Department of Energy declined to comment on the motion from SRNS and Fluor.
