Hanford report highlights risk of fraud and mismanagement

By Annette Cary / Tri-City Herald

RICHLAND — Millions of taxpayer dollars are at risk at the Hanford nuclear reservation if the Department of Energy does not oversee the site’s contractors and subcontractors more aggressively, according to a new report.

The DOE Office of Inspector General released a new report this week summarizing the numerous findings of fraud, mismanagement and safety concerns it has detailed in the past seven years at Hanford.

“The Hanford Site has been plagued with mismanagement, poor internal controls and fraudulent activities, resulting in monetary impacts totaling hundreds of millions of dollars by the various contractors involved at the site,” the Office of Inspector General report said.

From fiscal 2012 through fiscal 2018, the office has conducted 38 investigations and 24 audits and inspections at Hanford.

The 580-square-mile Hanford nuclear reservation was used to produce plutonium for the nation’s nuclear weapons program during World War II and the Cold War. Since then a massive environmental cleanup program has been underway, with spending of as much as $2.4 billion annually.

By pointing out the many problems with contract oversight, quality assurance, project management, safety and outright fraud at the site, the Office of Inspector General hopes to prompt DOE to strengthen its oversight of federal operations and contractors at Hanford, it said.

Although DOE has made improvements as investigation results have been released over the past seven years, weaknesses continue that result “in an unacceptable level of risk of inappropriate charges to the government,” the new report said.

Energy Secretary Rick Perry said in a statement that he has “sought to end the type of waste, fraud and abuse detailed in the inspector general’s compilation of previous reports on Hanford.”

“The reports have historically provided the department with valuable recommendations, over 85 percent of which have been implemented,” he said.

Of the 25 audits covered in the new report, seven were issued during the current administration, and five of those have been addressed and closed.

The new report will be helpful as DOE continues “to aggressively address” issues at Hanford and other DOE environmental cleanup sites, Perry said.

DOE has suggested that the Office of Inspector General prepare similar reports for other department sites, according to DOE.

At Hanford, the new report encompassed the government credit card and other purchasing fraud, with investigations and sentencing wrapping up by fiscal 2013.

Multiple workers were found to have charged purchases like televisions and home appliances for their own use to the federal government, or taken kickbacks for making purchases from certain vendors. In one case, a worker made purchases on paper from his family’s company but did not deliver the goods for which the government paid.

Investigations led to a jail sentence for one worker, the seizure of assets, and agreements that required payment of more than $1 million in restitution.

The new report also covered the Hanford timecard fraud scandal.

Some workers were found to be paid by the federal government for hours not worked under an informal agreement. They were offered overtime payment for full eight-hour shifts at the Hanford tank farms, even though they routinely left after completing assignments sooner.

Current tank farm contractor Washington River Protection Solutions paid $5.3 million and former tank farm contractor CH2M Hill Hanford Group paid $18.5 million to settle allegations they submitted false claims for overtime pay. Both denied wrongdoing.

Contract oversight issues covered by the report included allegations that Bechtel National and URS, which was purchased by AECOM, charged DOE for materials and services for the vitrification plant under construction that failed to meet strict nuclear quality standards.

The companies paid $125 million in a settlement agreement with the Department of Justice, which also settled some improper lobbying allegations against Bechtel. Neither admitted wrongdoing.

Another Office of Inspector General report questioned delays in moving radioactive cesium and strontium stored underwater in central Hanford to dry storage. The change would not only address safety issues raised about an aging concrete pool, but would save about $6.2 million a year, the report said.

Some Recovery Act money meant to stimulate the economy under the Obama administration was misspent at Hanford, according to a 2013 investigation.

It found that $1.5 million more than needed was spent on purchasing or leasing modular structures for offices and other uses for new employees as staffing ramped up quickly. Some structures went unused and others were underused, according to the report.

DOE has taken actions in response to audits that have included withholding incentive pay to contractors.

It has turned to industry experts to independently assess programs to assure that quality standards are met. It also has increased federal oversight to help protect against fraudulent practices.

There also have been questions raised about whether workers feel free to raise issues of safety without fear of retaliation. Issues range from reporting chemical vapors to allegations that practices were not being followed to ensure the vitrification plant would operate safely and effectively.

DOE’s response has included developing new training for managers and supervisors and establishing a DOE-wide Safety Culture Improvement Panel made up of leadership from across the department.