Audit claims CH2M Hill wasted $2.1 million

By Annette Cary, Tri-City HeraldJuly 12, 2013 

About $2.1 million in Recovery Act money was wasted at Hanford for temporary offices and other buildings that were not needed or were kept after they were no longer needed, according to an audit report.

The report made no official findings, but suggested DOE consider the audit as it determines the reimbursement to CH2M Hill Plateau Remediation Co. for its costs.

Department of Energy officials responsible for Hanford cleanup disagreed with some key elements of the report by the DOE Office of Inspector General, according to comments included in the report. But DOE had little to say after the report was issued.

"Administering Recovery Act funding at the site was complicated by the large and temporary influx of additional workers needed to complete this work," DOE said in a statement. At the peak of Hanford Recovery Act work, about 3,800 jobs had been created.

Concerns raised in the report have already been addressed, it said.

Hanford was picked for nearly $2 billion in Recovery Act spending because it had projects that were "shovel-read" and could be started quickly.

CH2M Hill was responsible for $1.635 billion of cleanup work, which would about double its work force shortly after it began work as the new contractor responsible for environmental cleanup of central Hanford and groundwater.

It bought 176 facilities, which included mobile facilities with office space for up to 48 employees, restroom structures and shower facilities, for its new workers.

However, seven of the 176 facilities bought by CH2M Hill were not used by Sept. 30, 2011, the date most Recovery Act work at Hanford was completed. The seven facilities cost a total of $1.47 million.

They included two of the large modular offices with space for 48 people and two adjoining restrooms, according to the report.

Some of the modular offices purchased with Recovery Act money were planned to be used later to support consolidation of groundwater operations after construction of new facilities were completed and the trailers that the report criticized for being empty were used as planned in October 2011.

However, the report still argued that with far fewer workers needing offices by fall 2011, other modular facilities should have been available then.

In addition, three shower facilities were not used to support Recovery Act work. In fact, they were not connected to power and water, according to the report.

CH2M Hill acknowledged that these facilities were not used for Recovery Act work and has since moved them to areas where they could be used, according to the report.

There may have been additional underused facilities, but the report said it was unable to draw a conclusion on the overall use rate of leased and purchased facilities because of a lack of records or incomplete records. Human resource records did not list the work locations for hundreds of workers.

However, DOE Hanford officials told auditors that the contractor was not required to document occupancy of specific trailers, and "the Recovery Act time period was characterized by extremely challenging conditions," according to the report.

The audit report also criticized CH2M Hill for being too slow to return leased facilities, spending $598,000 for lease costs after Sept. 30, 2011.

Eleven months after most Recovery Act work had been completed, CH2M Hill had returned 40 of 62 leased facilities. Of the remaining 22 facilities, 10 were transferred to other contractors and 12 were scheduled to be returned by May 2013, the report said.

CH2M Hill said that the costs of assigning multiple crews and paying overtime to immediately demobilize the trailers would have cost more than continuing to lease the trailers as they were gradually returned. It estimated that its method saved $3.9 million.

However, the report found that CH2M Hill was not able to provide documentation to support that amount, nor could it fully document the analysis that management said led it to retain facilities.

The report found that CH2M Hill should have used better planning and estimating practices for leasing and buying facilities during the Recovery Act.

However, it acknowledged "that the Recovery Act work and schedule presented management with tremendous challenges."

"CH2M Hill believes a reasonable, rational and informed purchase decision was made," said spokeswoman Tania Reyes-Mills. What it bought was consistent with Hanford site practices and was verified for reasonableness by DOE and the Defense Contract Audit Agency, she said.

The audit report suggested that DOE make sure that contractors fully document alternative analyses for business decisions related to leased facilities and insure that the process used to buy property is fully justified.

-- Annette Cary: 582-1533; acary@tricityherald.com; Twitter: @HanfordNews

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