Conflict of interest? CH2M purchase would give Jacobs 2 Hanford contracts

Jacobs Engineering Group is facing a conflict of interest at Hanford as it prepares to purchase CH2M Hill.

Jacobs already is involved at the Hanford nuclear reservation as one of three owners of a major DOE contractor, Mission Support Alliance. Leidos is the lead owner.

With the purchase of CH2M, Jacobs would also pick up another major Hanford contract, the one held by CH2M Hill Plateau Remediation Co.

But the contract awarded to Mission Support Alliance in 2009 specifically prohibits conflicts of interest with other major Hanford contractors. The contract says Mission Support Alliance owners may not also conduct work under other key contracts.

However, the contract also says that Mission Support Alliance may submit a conflict of interest mitigation plan for DOE to consider.

DOE requested Mission Support Alliance’s plan for ensuring it complies with its contract requirements after it was notified of the pending sale, DOE said in a statement.

“DOE will review the plan and work closely with (Mission Support Alliance) in taking whatever actions may be appropriate to ensure that contractual requirements are adhered to,” DOE said in a statement.

Jacobs declined this week to say how it planned to proceed with the Hanford contracts as it acquires CH2M.

Mission Support Alliance provides sitewide services at Hanford, including security, emergency response, fleet and road maintenance, utilities and information technology.

It also provides portfolio management, which helps DOE make informed decisions on environmental cleanup work across all contracts to save money, evaluate alternatives and meet legally required cleanup deadlines and standards.

Mission Support Alliance’s contract, valued at about $3 billion, expires May 25, 2019. The contractor employs about 1,900 people.

CH2M Plateau Remediation Co.’s contract is set to expire in September 2018. With only a year for DOE to seek bids on a new contract and award it, DOE could offer CH2M a contract extension.

The CH2M contract was valued at $4.5 billion over 10 years when it was awarded, but that did not include $1.3 billion in economic stimulus money for work under the Obama administration.

CH2M employs about 1,700 people and is responsible for most Hanford environmental cleanup of waste sites, buildings and groundwater, with the exception of the 56 million gallons of waste held in underground tanks in central Hanford.

Key projects include operation of groundwater treatment plants, demolition of the highly contaminated Plutonium Finishing Plant and preparations to move radioactive sludge out of the K West Basin.

Jacobs announced in August that it had reached an agreement to purchase CH2M for $2.85 billion, to be paid 60 percent in cash and 40 percent in Jacobs common stock. CH2M stockholders would own 15 percent of Jacobs shares.

The transaction could close before the end of the year.

Jacobs said in a statement in August that the purchase better positions the company for government contracts. The purchase agreement was reached as DOE prepares to rebid not only the contracts held by CH2M and Mission Support Alliance at Hanford, but also the contract to manage Hanford tank farms.

Jacobs employs more than 54,000 people and operates in more than 25 countries.

This story was originally published September 26, 2017 at 6:23 PM with the headline "Conflict of interest? CH2M purchase would give Jacobs 2 Hanford contracts."