The Paducah Sun
The Paducah Sun
Paducah, Kentucky
Thursday, March 29, 2001

DOE sites' cleanup wasting funds under bidding plan: report
Bechtel Jacobs replies that it isn't possible to subcontract all work on a bid basis, especially during a transition period.

By Bill Bartleman bbartleman@paducahsun.com--270.575.8650

The Bechtel Jacobs Co. wasted $44.1 million in public funds last year by failing to subcontract most of the cleanup work at the Paducah Gaseous Diffusion Plant and two other Department of Energy sites, according to the DOE inspector general.

The company has a $2.5 billion contract to clean up waste at the sites. Inspector General Gregory Friedman's 15-page audit report said Bechtel Jacobs Co. was awarded the contract in 1997 because it promised that within two years, staff would be reduced by 80 percent and 93 percent of the cleanup and management work would be subcontracted.

As of last September, Friedman said, 58 percent of the work was being done through competitive bidding.

DOE concluded that using a competitive-bidding, fixed-price method would speed cleanup work in addition to saving money. The other method is to pay contractors unlimited amounts based on expenses. Under the traditional method, there is no incentive to save money or do the work in a timely manner, the report said.

Friedman based the $44.1 million potential savings on the estimates that competitive bidding would save 29.7 percent. The audit report gave no breakdown of how much work was being done by competitive bidding at Paducah, Portsmouth, Ohio, or Oak Ridge, Tenn., the three facilities covered under the contract.

A problem cited by Friedman is that DOE officials did not incorporate the savings commitments made by Bechtel Jacobs into the contract. Failure to put the commitments into writing limits DOE's ability "to hold the contractor accountable for achieving these goals," Friedman said.

DOE officials in Oak Ridge who oversee the cleanup work disagreed with the conclusions about savings and Bechtel Jacobs' commitment.

Oak Ridge officials said the inspector general, who works independent of DOE managers, failed to take into account that this is DOE's first contract for cleanup work on the fixed-price method. The managers also cited a difficult transition to change contractors on some projects.

"Also, management believed that the audit should have focused on compliance with the actual contract provisions rather than statements made during the selection process," Friedman's report said. DOE managers said that because of the complexity of the cleanup work, the 93 percent subcontractor requirement was not mandated by the contract.

Bechtel Jacobs officials in Oak Ridge issued a statement late Wednesday:

"We agree with DOE-Oak Ridge Operations Office that the audit would have painted a truer picture of our performance if it were focused on our compliance with the contract, rather than statements made during the selection process. We have and continue to meet the commitments of our contract."

Bechtel Jacobs said it would "evaluate opportunities to competitively bid additional work when it is in the best interest of the government."

Bechtel Jacobs also said it has continued contracts with firms that were involved in cleanup work before 1997. An example is work at the Paducah plant to treat contaminated groundwater.

"The firm that has been doing that work has experience and is doing a good job," said Mark Musoff, Bechtel Jacobs spokesman in Oak Ridge. "We saw no need to make a change." He said keeping that firm was "a sound business decision."