Subcontractors and small businesses should have benefitted more over time from Bechtel National’s multibillion-dollar contract to build the Waste Treatment and Immobilization Plant at the Department of Energy’s Hanford Site in Washington state, DOE’s Office of Inspector General said.
By self-performing so much of the work, “Bechtel reduced subcontracting opportunities for small businesses and other vendors by at least $700 million,” according to the Office of Inspector General (OIG) March 14 audit.
OIG also found other shortcomings with the contract performance. Since the contract started more than 20 years ago, Bechtel billed DOE roughly $2.3 million in unallowed fees, which it self-reported to the agency, according to the report. The government was subsequently credited for the amount.
The OIG also said DOE has done a poor job overseeing the Bechtel contract. The construction contract, initially awarded at a value of $4.3 billion in December 2020, before many federal procurement changes. As of March 2023, it’s worth $15 billion.
Bechtel’s original Waste Treatment Plant contract stipulated that Bechtel and its teaming partners would do 40% of the work. But thanks to a 2009 contract modification, the self-performance rate rose to 60%, OIG said in the report.
“We found that Bechtel is currently exceeding the 60% self-performance objective,” OIG said. “Specifically, we estimate that Bechtel self-performed between 69.90 to 73.75 % of its contract commitments as of September 2021.”
Besides keeping too much work in house, Bechtel often gave contractors too little time to respond to solicitations and also took too little time reviewing subcontractor invoices — seven days rather than 30 days, the Office of Inspector General said.
The audit was done by the DOE Office of Inspector General between June 2022 through November 2023.
“This report misconstrues our performance in subcontracting overall and with small businesses and doesn’t fully represent the changing nature of procured goods and services through the engineering, construction, startup, and commissioning phases of a capital project,” Bechtel spokesperson Staci West said in a Wednesday email reply to Exchange Monitor. “We highly value the contributions of our suppliers and small business partners,” the spokesperson said, adding Bechtel is still looking to improve.
In a letter appended to the audit, Jack Zimmerman, director of DOE’s Environmental Management Consolidated Business Center, agreed with a series of OIG recommendations to provide better coordination with Bechtel and monitoring of the contract.
The plant is scheduled to start solidifying some of Hanford’s less radioactive liquid tank waste into a solid glass-like form in 2025. There are roughly 56 million gallons of radioactive tank waste at Hanford, the residue of decades of plutonium production for the military.
