Hanford whistleblower to share in $5.5M fraud case settlement

The 300 Area north of Richland is shown in 2013 when Washington Closure Hanford had substantial work to complete. It subcontracted some of the work there to Sage Tec.
The 300 Area north of Richland is shown in 2013 when Washington Closure Hanford had substantial work to complete. It subcontracted some of the work there to Sage Tec. Courtesy Department of Energy

Washington Closure Hanford has agreed to pay $3.2 million to resolve fraud allegations in its award of small business subcontracts to clean up part of the Hanford nuclear reservation.

The Department of Justice released the settlement amount on Friday after it and Washington Closure announced the day before they had reached an agreement.

Two other businesses named in the lawsuit, Richland's Federal Engineers & Constructors (FE&C) and Sage Tec, reached separate settlements in 2017.

The FE&C settlement for $2 million and Sage Tec settlement for $235,000 bring the total recovered by the Department of Justice to more than $5.5 million in the case.

Of that, $1.16 million will go to Savage Logistics and its owner, Salina Savage.

The federal lawsuit started as a whistleblower complaint filed by Savage Logistics, a Hanford-area small business, and its owner. The Department of Justice joined the case in 2013.

Under the False Claims Act, a whistleblower who exposed fraud against the federal government can be eligible for some of the money from the settlement.

"Small business fraud not only harms the taxpayers and the vital cleanup mission at Hanford, but legitimate small disadvantaged businesses that do not have the opportunity to fairly compete for and perform subcontracts," said U.S. Attorney Joseph Harrington.

Washington Closure was accused of awarding two subcontracts worth about $20 million to Sage Tec in 2010 and 2012, although the Department of Justice alleged it was not a legitimate small business with resources to do the work.

It accused Sage Tec — a small, woman-owned company— of being a pass-through front company for FE&C, which did much of the work on the subcontracts.

Washington Closure, which held a Department of Energy contract worth $2.9 billion through September 2016 for cleanup along the Columbia River at Hanford, was required by DOE to subcontract some work at the site to small businesses and certain types of small businesses, such as women-owned small companies.

Washington Closure has previously said it relied in good faith on Sage Tec's self-certification as a small business and did not knowingly misrepresent its status to DOE.

"This settlement allows us to move on and close out a successful contract, which focused on protecting the Columbia River," said Peter Bengtson, Washington Closure spokesman. Washington Closure is owned by AECOM, Jacobs Engineering Group and Bechtel.

FE&C and Sage Tec have vigorously denied any wrongdoing, but said they settled to end the expensive lawsuit.

Savage Logistics and its owners will receive $643,000 of the Washington Closure Settlement, according to the Department of Justice.

Savage Logistics previously received $470,000 of the FE&C settlement and $47,000 of the Sage Tec settlement. In addition, it received $145,000 from Sage Tec and FE&C for attorney fees and related costs.

The Department of Justice and Hanford Challenge told U.S. Judge Sal Mendoza the settlement resolves all remaining claims except attorney fees, expenses and costs.

Annette Cary; 509-582-1533