Federal government sues Washington Closure Hanford

December 6, 2013 

— The federal government filed a civil lawsuit Friday against Washington Closure Hanford, accusing it of falsely claiming credit for awarding small-business subcontracts worth millions of dollars.

The Hanford nuclear reservation contractor is required by the Department of Energy to award subcontracts to small businesses, including women-owned small businesses. But in three subcontracts that Washington Closure used to meet those requirements, the businesses did not qualify, federal prosecutors said.

Instead, the businesses that were awarded the work passed it through to another subcontractor, Federal Engineers and Constructors (FE&C), according to the legal complaint. FE&C, Sage Tec and Sage Tec’s owner also were named in the lawsuit.

The claims of improper subcontracting were originally made by Savage Logistics of Richland and its owner, Salina Savage, in 2010 after the company failed to win a bid.

The U.S. Department of Justice indicated in August that it would intervene in part of that lawsuit, which it did Friday.

It also added allegations that Washington Closure breached its contract with DOE by making allegedly false statements about its small business subcontracting.

Friday was a day off for Washington Closure and officials were not immediately available to comment. Laura Shikashio, the owner of Sage Tec, could not be reached.

Dick French, an owner of FE&C, has previously called Savage’s allegations without merit.

“Teaming arrangements are common and are encouraged on many projects at Hanford,” French said in court documents filed earlier. No company has been asked to serve as a “front company” for FE&C and all the companies it has teamed with have done an appropriate share of the work, he said.

In the first subcontract at issue, Washington Closure awarded a $4.8 million “truck and pup” subcontract to Phoenix Enterprises Northwest four months after it was formed as a small, woman-owned business. The work required hauling contaminated material to a central Hanford landfill. But the Small Business Administration later determined that Phoenix was affiliated with FE&C, which was ineligible for the bid as advertised. Issues included that its owner was a full-time employee of FE&C, Phoenix used FE&C’s state contractor registration and insurance policy, and Phoenix had no employees or receipts, according to the legal complaint.

Rather than rebid the work, Washington Closure agreed not to claim the small-business credit.

However, Washington Closure then claimed almost $2.8 million of small business credit for modifications to the subcontract, the legal complaint said. The other two subcontracts at issue were awarded by Washington Closure to Sage Tec of Richland with FE&C as a partner.

A $4.5 million subcontract was awarded in November 2010 to clean up chromium contamination near Hanford’s C Reactor. However, Sage Tec had no relevant experience, no equipment and no employees other than its owner, according to the legal complaint. All it had to offer was its name and status as woman-owned small business.

FE&C employees, who stayed on that company’s payroll, performed the work, prosecutors said.

Two years later, Washington Closure awarded Sage Tec a $15 million subcontract for environmental cleanup in the Hanford 300 Area just north of Richland, knowing that Sage Tec, still with only a single employee, proposed to do less than 2 percent of the work, according to the legal complaint. The Department of Justice lawsuit is asking that money paid by mistake by the federal government be repaid and for triple damages for two counts of false claims filed against all the defendants.

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