Hanford contractors pay over $57 million to settle fraud claims

Hanford

HANFORD, Wash. — Hanford contractors Bechtel and AECOM have agreed to pay $57.75 million to resolve claims that they fraudulently overcharged the U.S. Department of Energy (DOE) for operations at the Hanford Waste Treatment Plant (WTP), according to a news release from U.S. Justice Department’s Eastern District of Washington.

Management at Bechtel and AECOM were accused of knowing about and failing to prevent inflated labor hours being charged to the DOE and falsely billing the DOE for work that was not actually performed. Federal officials said these actions or lack thereof were violations of the False Claims Act.

Between 2001 and today, the DOE has paid billions of dollars to Bechtel and AECOM to have them design and construct the WTP in order to treat hundreds of millions of gallons of dangerous radioactive waste currently stored at the Hanford Site. To construct, operate and maintain the WTP, both companies employed hundreds of electricians, millwrights, pipefitters and other skilled tradesmen known as “craft” workers.

As part of the settlement secured by the U.S. Attorney’s Office for the Eastern District of Washington, Bechtel and AECOM admitted to a detailed Statement of Facts setting forth their actionable conduct.

A news release said between 2009 and 2019, Bechtel and AECOM admitted to overcharging DOE for “unreasonable and unallowable idle time” experienced by craft personnel. The companies further admitted to failing to schedule and carry out adequate work to keep craft personnel sufficiently occupied and productive, resulting in excessive idle time.

Bechtel and AECOM also admitted that their management knew that craft personnel were experiencing idle time due to management’s failure to assign sufficient work, and that this idle time could, at times, last “several hours.”

Finally, Bechtel and AECOM admitted that they improperly billed DOE labor costs for the unreasonable idle time and continued doing so for years, even after Bechtel and AECOM knew they were under investigation for the improper billing practices.

“Completing the WTP is not only critical to public safety and the environmental health of the Pacific Northwest, but is an urgent and critically important ongoing public health concern, which the DOE and the State of Washington have appropriately made a top priority,” said Joseph H. Harrington, First Assistant United States Attorney (FAUSA) for the Eastern District of Washington. “It is stunning that, for nearly a decade, Bechtel and AECOM chose to line their corporate pockets by diverting important taxpayer funds from this critically essential effort.”

DOE Inspector General Teri Donaldson noted that Bechtel, AECOM and their subsidiary Waste Treatment Completion Company engaged in a “massive scheme to submit tens of millions of dollars of false claims to the U.S. government for unallowable and unjustified costs over a period of years – a pattern of conduct that continued even after U.S. authorities notified the defendants that these costs were unallowable.”

Donaldson added, “I would like to extend my deep gratitude to our dedicated colleagues at the U.S. Attoney’s Office for their excellent work in holding the defendants responsible for their continuing pattern of unacceptable and irresponsible conduct. Our colleagues at the U.S. Attorney’s Office worked tirelessly with Special Agents of the Office of Inspector General in putting the evidence together and building the strong case that led to this significant settlement.”

This is the second time that Bechtel and AECOM have been the subject of the DOJ’s fraud enforcement actions and have agreed to pay a large sum to resolve allegations of fraud and overcharging on the WTP project.

In November 2016, the USAO announced that Bechtel and AECOM then agreed to pay $125 million to resolve claims that they knowingly violated quality standards at Hanford and used substandard materials in constructing portions of the WTP, and also improperly used federal funds to lobby Congress to, among other things, try to cut the DOE’s budget for independent oversight of work on the WTP.

As part of the settlement, Bechtel and AECOM also entered into a 3-year independent corporate monitor agreement, which requires Bechtel and AECOM to pay for a full-time independent monitor and assistant monitor selected by the USAO. These monitors will have broad access to Bechtel’s and AECOM’s systems, meetings, personnel and other information pertaining to labor charging.

The contractors will face additional liquidated damages of up to $10 million if they violate the terms of the monitoring agreement, provide false information or fail to immediately correct any identified DOE contract issues. They also agreed to fully cooperate and assist the United States in its ongoing investigation and enforcement efforts against individual officers and managers that facilitated or participated in the false labor billing practices.

According to court documents, the false craft labor billing case began in late 2016 when four whistleblowers, who were employed at the WTP, came forward with allegations of labor mischarging. In May 2017, these individuals, known as “relators”, filed a qui tam complaint under seal in the U.S. District Court (EDWA).

When a relator files a qui tam complaint, the False Claims Act requires the United States to investigate the allegations and elect whether to intervene and take over the action or to decline to intervene and allow the relator to go forward with the litigation on behalf of the United States. The relator is generally able to then share in any recovery.

In this case, according to court documents, the United States intervened in the action in February 2020, and the United States, Bechtel and AECOM reached this settlement following the intervention. Pursuant to the settlement agreement, the relators will receive $13,750,000 of the settlement amount. Another $25,789,039 of the settlement amount has been designated as restitution, meaning that it will be returned to DOE so that it is available for use in the ongoing Hanford efforts.