Senators question possible award of $3 billion Hanford contract to firm accused of fraud

Three senators are questioning the proposed award of a multi-billion dollar Hanford contract to a company that is being sued for false claims and submitting false bills to the Department of Energy.

The letter sent by Sen. Dianne Feinstein, D-Calif., with Sen. Patty Murray, D-Wash., and Sen. Jeff Merkley, D-Ore., to Energy Secretary Rick Perry on Sept. 27 did not name the company.

But they appear to be referring to a Department of Justice lawsuit filed against current contractor Mission Support Alliance and its previous owner, Lockheed Martin Services.

Mission Support Alliance contracts to provide site-wide support services at Hanford. Its contract expires Nov. 25 after a six-month extension to its 10-year contract.

Nearly 2,000 people work for the company in the Tri-Cities.

However, Leidos, now the primary owner of Mission Support Alliance, said the senators appear to have confused Mission Support Alliance with a new and legally separate company, Hanford Mission Integration Solutions.

Hanford Mission Integration Solutions was formed with Leidos as the primary owner, and bid on the new support services contract, according to Leidos.

DOE requested bids for a new site-support contract, which it advertised as being worth up to $10 billion over 10 years.

“Awarding new contracts to corporations with ongoing legal and ethical issues diminishes accountability and potentially undermines the integrity of the department and its procurement process,” the letter said.

Congress received notification in September that DOE intends to award a more than $3 billion, 10-year contract to “the very same contractor,” said the letter signed by the three senators.

All three serve on the Senate Appropriations Committee.

“While the department has withdrawn the notification explaining that it was made prematurely and in error, we are disturbed by the signal it sends,” the letter said.

The Department of Justice filed a civil lawsuit in February accusing Mission Support Alliance of defrauding the federal government out of tens of millions of taxpayer dollars.

It said Mission Support Alliance used half-truths, omissions, kickbacks and outright lies to get the Department of Energy to consent to a $232 million subcontract to a company with which it had ownership ties.

MSA Power Lines
As the services provider at Hanford, Mission Support Alliance provides sitewide assistance, including the removal of overhead power lines as a part of the demolition work at the Plutonium Finishing Plant. Mission Support Alliance

Lockheed Martin Corp. was a principal owner of Mission Support Alliance in 2010, when Mission Support Alliance awarded a subcontract for information technology services at Hanford to Lockheed Martin.

DOE said before the lawsuit was filed that Mission Support Alliance improperly awarded $63.5 million in taxpayer money as profit to Lockheed Martin Services Inc. as a subcontractor.

It said that Lockheed had profited twice for the same information technology work, once as the Mission Support Alliance owner and again as a subcontractor.

The lawsuit also alleged that estimates of costs for payment rates were inflated in some cases by basing them on far more employees to perform work than Lockheed Martin Services Inc. included in its internal budget.

Lawsuit response

Mission Support Alliance responded to the lawsuit with a court filing calling it “a textbook case of overreach.”

“This case is a classic example of what is, at most, a contract dispute transformed 10 years later into allegations of fraud by hindsight,” Mission Support Alliance said.

Mission Support Alliance is now owned by Leidos and Centerra Group, and the subcontract with Lockheed Martin Services ended in 2015.

All of the facts alleged in the lawsuit against Mission Support Alliance occurred before Leidos acquired an interest in Mission Support Alliance in August 2016, Leidos said in a statement Wednesday.

“Since then we have worked to implement a new management structure and leadership team,” Leidos said.

Lockheed Martin argued in court documents that DOE was well aware that Mission Support Alliance and Lockheed Martin Services shared Lockheed Martin as a common owner.

Mission Support Alliance provides Hanford site services, including fire protection. Courtesy DOE

Murray’s letter pointed out that DOE had pledged not to “tolerate fraudulent behavior by its contractors and will continue to strengthen its federal oversight at Hanford.”

The Senate Appropriations Committee plays a key role in approving spending for environmental cleanup at the nuclear reservation of as much as $2.5 billion annually.

Hanford, just north of Richland, produced about two-thirds of the plutonium for the nation’s nuclear weapons program from World War II through the Cold War. The work left the site massively contaminated with radioactive and hazardous chemical waste.

“We are committed to working with you to ensure that resources are available to complete the environmental cleanup at Hanford, but demand that the department meets its commitment to improve management and address allegations of waste, fraud and abuse,” said the letter from the senators.

“Awarding new contracts to corporations with ongoing legal and ethical issues diminishes accountability and potentially undermines the integrity of the department and its procurement process,” the letter said.

The senators advised DOE to redouble efforts to “find better partners who are committed to ethical, efficient and effective operations” and who support DOE.

The senators asked for an immediate response from DOE to several questions. It was not immediately clear Wednesday if DOE had responded.

The senators asked:

What criteria were used to evaluate proposals and make an award under the new request for proposals?

What is the status of the lawsuit?

How was the active lawsuit against the company taken into consideration in determining the award?

If the government prevails in its case against the contractor, what remedies does it have under the new contract?

What measures is DOE taking to prevent other contractors at Hanford or other sites from engaging in similar alleged behavior?

How can DOE safeguard the integrity of its procurement processes such that future bidders can be assured of a level playing field for contract competitions?

Senior staff writer Annette Cary covers Hanford, energy, the environment, science and health for the Tri-City Herald. She’s been a news reporter for more than 30 years in the Pacific Northwest.