Weapons Complex Monitor Vol. 30 No. 38
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October 04, 2019

Three Senate Democrats Want DOE to Hold Off on Hanford Contract

By Wayne Barber

Three Democrats on the Senate Appropriations Committee say the U.S. Energy Department should tap the brakes on issuing a multibillion-dollar contract at the Hanford Site in Washington state, to a vendor being sued by the United States under the False Claims Act.

While the lawmakers’ Sept. 27 letter to Energy Secretary Rick Perry is short on details, they suggest Hanford site-wide support services provider Mission Support Alliance (MSA) is on the verge of securing a new contract.

The lead partner in that vendor, Leidos, said this week Mission Support Alliance as an entity is not pursuing the follow-on award. But it acknowledged that it has joined with its partner in MSA in a separate entity to bid on the next contract.

In their letter, Sens. Dianne Feinstein (D-Calif.), Jeff Merkley (D-Ore.), and Patty Murray (D-Wash.) said “it has come to our attention” that the agency is preparing to issue the award at Hanford.

The letter does not identify the specific contract or the company at issue. However, it indicates the award would go to a current contractor at Hanford – citing February litigation filed by the Justice Department under the False Claim Act and Anti-Kickback Act, which would point to the case brought against Mission Support Alliance in U.S. District Court for Eastern Washington.

The suit, stemming from events between January 2010 and 2015, was filed against Mission Support Alliance, Lockheed Martin Corp., Lockheed Martin Services, and former Lockheed and MSA executive Jorge Francisco Armijo. During that time period, MSA was owned by Lockheed Martin, Jacobs, and Centerra Group – the latter of which is the only holdover owner.

The Justice Department claims the defendants used false statements and omitted critical information regarding anticipated profits for Lockheed Martin Services to obtain the $232 million subcontract award for DOE work at Hanford. The suit alleges Armijo and other executives were paid kickbacks in the form of bonuses.

Mission Support Alliance filed a motion to dismiss the case in April, arguing the Energy Department approved its subcontract for information technology services with Lockheed Martin Services, and its specific prices. The Justice Department filed its reply in June, saying the defendants had not tried to disprove the underlying allegations.

The case was scheduled for a motion hearing this week, although it is not clear if the hearing went forward, according to court records.

Leidos acquired the Lockheed Martin interest in MSA in 2016. Jacobs sold its interest in MSA to Leidos in February 2018.

The Democrats’ letter says Congress was informed recently the same vendor would receive the new 10-year support services contract at Hanford: “While we understand the Department has withdrawn the notification explaining that it was made prematurely and in error, we are disturbed by the signal it sends.”

The senators asked Perry to provide the criteria used to evaluate proposals, the status of the government’s case against the contractor, whether that weighed in the award decision, and how DOE can ensure a “level playing field” in its procurements.

“We are committed to working with you to ensure the resources are available to complete the environmental cleanup at Hanford,” but the Energy Department needs to address allegations of waste, fraud, and abuse, the senators said.

Mission Support Alliance, now comprised of Leidos and Centerra, holds the Hanford Site support services contract valued at $4.3 billion. The contractor in May received a six-month extension that will last through late November. Leidos Chairman and CEO Roger Krone said in late July he expected DOE could issue the follow-on award, the Hanford Mission Essential Services Contract, “within a couple of weeks.”

“The [Senate] letter appears to confuse MSA with Hanford Mission Integration Solutions, a new, separate and distinct legal entity [led by Leidos] that did respond to the DOE’s Request for Proposals,” Leidos spokeswoman Melissa Lee Koskovich said by email Wednesday.

Leidos declined to reveal the makeup of the team. A spokeswoman for Centerra, Suzanne Piner, confirmed the government security specialist is part of the new Leidos team.

Leidos has not received notice that its new venture has secured the new 10-year contract, the spokeswoman Koskovich added.

The Energy Department did not comment by deadline on the status of the next contract, which would cover operations including infrastructure and site-wide services, such as emergency response and training, land management, and road maintenance.

As Leidos has previously stated, Koskovich said the Justice Department litigation pertains to events that happened before its acquisition of an interest in Mission Support Alliance, and that it has established a new management team. But Leidos also calls the allegations meritless.

An industry source said Thursday he had never before heard of Congress questioning an Energy Department contract before it was actually issued.

If the business is now awarded to the Leidos-led group, it would seemingly give rivals fodder for a bid protest given members of the U.S. Senate have questioned the propriety of the move.

At least two other teams are rumored to be seeking the mission support contract at Hanford, the source said. One group is led by shipbuilder Huntington Ingalls Industries, which is the lead partner in legacy cleanup at the DOE Los Alamos National Laboratory in New Mexico through its Newport News Nuclear subsidiary. The other is headed by PAE, which does work, such as managing offshore fueling, for the U.S. Navy and nuclear research for the Energy Department, the source said.

PAE spokeswoman Kerry McGinley confirmed in an email the company is part of a joint venture bidding on the contract for infrastructure and support services work at Hanford. Huntington Ingalls declined to comment.

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