Bechtel and AECOM Energy & Construction fined for fraudulent work at US Hanford site28 September 2020
US federal prosecutors on 22 September announced a settlement involving the Hanford Nuclear Reservation, a Manhattan Project-era facility near Richland, Washington, and two companies that previously worked at the site.
?????Under the terms of the settlement, Bechtel National Inc, AECOM Energy & Construction Inc. (AECI, now part of Amentum), and their subsidiary Waste Treatment Completion Company LLC together agreed to pay the United States nearly $58 million for improperly billing the federal government for thousands of hours of work that were not performed. The two companies had for years been building a nuclear waste treatment plant to clean up waste stored at the heavily contaminated Hanford site.
“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,” Assistant US Attorney Joseph Harrington said in a press release. Both contractors denied any liability in regard to further legal actions as part of the agreement.
Barbara Rusinko, president of Bechtel’s Nuclear, Security & Environmental global business unit, said in a press release: “As a company, we felt it was in the best interest of the project and our customer to resolve this matter so that we can avoid the distractions and expenses of a protracted legal proceeding.”
AECOM Energy and Construction Inc. (AECI) was part of AECOM’s former Management Services business, which was sold in January of 2020 and now operates as Amentum. AECOM, therefore, was not a party to the settlement agreements, and said agreements such as the corporate monitor agreement referenced in the DOJ press release are agreements that bind the defendants and not AECOM. AECOM added that it has no current or future involvement in the WTP project. Its role in the settlement process was limited to certain obligations in the agreement under which AECI was sold to Amentum. The net impact of the settlement and associated matters to AECOM’s cash flow and financial results is expected to be immaterial.
Hanford was established during World War II as part of the Manhattan Project effort to create an atomic bomb and during the Cold War, Hanford produced about two-thirds of the plutonium for the US nuclear arsenal. This resulted in some 56 million gallons of highly radioactive waste contained in 177 ageing underground storage tanks. Construction of the Waste Treatment Plant (WTP) began nearly 20 years ago, and has been hampered by design and safety issues.
The case was precipitated by four whistleblowers in late 2016 who revealed time card fraud in which the companies billed the Department of Energy (DOE) for work that was never completed. Between 2009 and 2019, Bechtel and AECOM admitted to overcharging DOE for “unreasonable and unallowable idle time” by craft workers, the government said. Company executives admitted they continued to overbill DOE “even after Bechtel and AECOM knew they were under investigation for the improper billing practices,” the government added.
This was the second settlement agreement between federal regulators and Bechtel and AECOM. The companies agreed to pay $125 million in November 2016 for allegations that they “knowingly violated quality standards at Hanford and used substandard materials" in constructing portions of the Waste Treatment Plant.
As part of the latest settlement, Bechtel and AECI entered into a three-year independent corporate monitor agreement. The companies face an additional $10 million penalty if they violate the terms of that agreement. The four whistleblowers will receive $13.7 million of the $57.7 million settlement amount, the government said. About $26 million of the settlement will be paid to DOE as restitution, so that it is available for use in the ongoing Hanford efforts.
Updated to state that AECOM Energy and Construction Inc. (AECI) was part of AECOM’s former Management Services business, which was sold in January of 2020 and now operates as Amentum