KENNEWICK — Taxpayers may have been overcharged for work at the Hanford vitrification plant because required audits were not done, according to a new report.
The vitrification plant contractor failed to audit costs of many subcontracts, as required, over about 18 years, according to a report released Friday by the Department of Energy Office of Inspector General.
The lack of audits raises questions about whether fair prices were paid — specifically if subcontractors were paid for costs not covered by their contracts, according to the report.
Hanford site contractor Bechtel National paid nearly $2 billion for subcontracts that are considered “flexibly priced” between the start of its Department of Energy contract in late 2000 and mid 2018. Bechtel was awarded a contract in late 2000 to building and start up the world’s largest radioactive waste treatment plant.
T he $17 billion vitrification plant will treat radioactive waste left from the past production of plutonium at Hanford for the nation’s nuclear weapons work.
It has subcontracted some of the work out to other companies, as is routine at the nuclear reservation.
Bechtel is required under its contract to audit subcontractors’ costs if they are flexibly priced.
Flexible prices are those in which the costs to do the work determine all or part of the amount of federal money paid to the subcontractor.
For instance, the hours of labor needed to complete the work or costs of materials could determine the amount paid.
The Office of Inspector General found that more than $1 million had been paid for each of 110 flexibly priced subcontracts since 2000, but only 23 of those had been audited.
Their combined value was just over $1.9 million, accounting for most of the nearly $2 billion paid by Bechtel for flexibly priced contracts.
In addition, those subcontracts were required to be audited yearly for a total of 641 annual audits, but only 102 annual audits, or 16 percent, had been done.
Many of the audits that were completed were not effective or reliable, the IG report said.
Bechtel told investigators that it used an invoice review process to fulfill the requirements of the audit clause.
But investigators said that was inadequate, with many items on it one-page invoice review only verifying the accuracy of the math in the invoice.
Bechtel also failed to properly classify which subcontracts were flexibly priced and were required to be audited and which had fixed prices, meaning a set amount was agreed upon to pay to the subcontract.
A Defense Contract Audit Agency audit sampled 92 subcontracts and found that Bechtel had not correctly identified 26 of them as flexibly priced.
