DOJ to join Hanford subcontracting lawsuit

By Annette Cary, Tri-City HeraldAugust 12, 2013 

The U.S. Department of Justice plans to join a federal lawsuit against Washington Closure Hanford and two subcontractors that alleges unfair practices in the award of Hanford subcontracts.

The lawsuit was filed by Savage Logistics of Richland and its owner, Salina Savage, in 2010, after the company failed to win a bid.

Savage named Washington Closure and Federal Engineers and Constructors of Richland as defendants. The Department of Justice is adding new defendants Sage Tec and Sage Tec's owner, Laura Shikashio.

The department will have 120 days from Aug. 8 to file a legal complaint against the defendants detailing specific allegations, which may not include all of Savage's allegations.

Savage alleged that Federal Engineers and Constructors, or FE&C, conspired with Washington Closure to rig bids and misrepresent the size and independence of subcontractors bidding on Washington Closure work.

That would allow FE&C to continue performing work and getting paid, while Washington Closure could satisfy Department of Energy requirements to subcontract work to small and disadvantaged companies.

FE&C co-owner Dick French described Savage's lawsuit as "frivolous" in 2011.

FE&C has not reviewed the most recent complaint and does not know what allegations Justice plans to pursue, but believes that Savage's allegations are without merit, said FE&C attorney Jessica Blankenship.

"We will continue to vigorously defend the company against her accusations, as we have been doing for the past two years," she said.

The Department of Justice has not indicated which subcontract awarded to Sage Tec is of concern. Some of the court documents are sealed. The Herald was unable to find a working phone number for Sage Tec or its owner.

However, Sage Tec teamed with FE&C to win a Washington Closure subcontract worth up to $5.3 million in 2010. The subcontract covered digging up soil contaminated with chromium near Hanford's C Reactor down to 85 feet deep.

FE&C allegedly sought out small business subcontractors that could serve as front companies to bid on subcontracts set aside for companies smaller than FE&C, the lawsuit said.

It first approached Total Site Services, which refused to become involved, according to court documents. Then it set up an FE&C employee, Jonetta Everano, in business as Phoenix Enterprises Northwest.

Four months after the company was formed, Phoenix won a Washington Closure "truck and pup" subcontract worth about $4.8 million to haul contaminated material to a central Hanford landfill. When the bid was awarded, Phoenix had the same address as FE&C, and FE&C was to perform all operations under the subcontract, the lawsuit said.

The Small Business Administration later determined that Phoenix was affiliated with FE&C, and that FE&C had more than $14 million in receipts, making it too large to be considered for the bid as advertised. Washington Closure said earlier that it did not report the subcontract to DOE as part of meeting its small business subcontracting requirements.

FE&C knew that the subcontract would be extended to 67 weeks, which was information not available to Savage Logistics, the lawsuit said. If Savage Logistics had known the true length of the contract, it would have submitted a bid that was at least $300,000 lower than the winning bid.

Washington Closure favored Phoenix because Everano had previously worked for Washington Closure, and Washington Closure extended the bid dates to help her, the lawsuit said. The extension allowed her company to file documents claiming to be a woman-owned business and complete an agreement with FE&C to provide the company financing, offices, trucks and bonding to bid on the work.

The Department of Justice indicated in court documents that it will not pursue legal action against Phoenix or Everano, who were named in the original complaint.

Everano made repeated requests at FE&C to be allowed to start her own company, FE&C's co-owner, French, said in a 2012 court document. FE&C originally agreed to be a 49 percent owner of Phoenix, but Everano bought that portion of the company. FE&C was paid a total of $265,515 by Phoenix, a small part of the $4.8 million truck and pup contract.

"Teaming arrangements are common and are encouraged on many of the projects at Hanford," French said in the court documents. "Neither Phoenix nor any other company has been asked to serve as a 'front company' for FE&C, and all of the companies we have teamed with have done an appropriate share of the work."

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