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IG: Erroneous $15 million contractor bonus missing

May. 1, 2012 - 06:43PM   |  
By SEAN REILLY   |   Comments

Almost a decade after demanding that a contractor return a $15 million bonus, Energy Department officials still don't know if that money was ever recouped.

In an audit released this week, the department's inspector general said the contractor, Bechtel National Inc., never reimbursed a "performance fee" that DOE awarded it in 2003 and then later revoked.

The fee was for Bechtel's production of a processing vessel to be used at a radioactive waste treatment plant in the cleanup of Hanford Nuclear Reservation, a former plutonium production site in Washington state.

But Energy Department officials later concluded that the company had failed to meet contract requirements to fully check the vessel for faulty welds. In early 2004, they asked for the money back.

While Bechtel expressed interest in a "mutually acceptable resolution," according to the audit, neither the company nor the government could supply evidence that the money was ever returned.

Bechtel spokeswoman Suzanne Heaston said May 1 that the issue was "taken into consideration" as part of a "global" fee settlement made in connection with a 2009 restructuring of the Hanford contract.

In that settlement, the Energy Department agreed to pay Bechtel more than $102 million for performance up to then, according to a memo from David Huizenga, a DOE senior adviser for environmental management, attached to the IG report.

In his memo, Huizenga raised yet another possibility that Bechtel might have later taken steps to earn the $15 million fee after all. The Energy Department is "working diligently" to resolve the matter, he said, adding that "there have been significant improvements in the process and documentation for contract fee milestones since 2004."

The IG report faulted DOE officials for failing to make sure that Bechtel documented that its welding met specifications. Documentation was missing for 10 of about 2,000 welds, Heaston said, and the testing would have to be redone in any case, "because you can't start up a plant without it."

Bechtel and the Energy Department have strengthened quality assurance oversight, Huizenga said.

The $12 billion treatment plant, now almost two-thirds complete, is supposed to immobilize millions of gallons of radioactive waste by combining them with molten glass and burying the cooled product in steel containers.

Bechtel National is part of Bechtel Corp., the California-based construction giant.

The Hanford project has been the target of whistleblower complaints over safety concerns. While the IG report made no judgment on those complaints, it noted that large parts of the plant could be contaminated if equipment in hard-to-reach areas were to break down prematurely. .

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