DOJ Declines to Intervene in Subcontracting Fraud Lawsuit Against CHPRC
WC Monitor
11/21/2014
The U.S. Department of Justice has declined to intervene in a lawsuit accusing CH2M Hill Plateau Remediation Co. of committing fraud related to subcontract awards. CH2M Hill awarded subcontracts to a joint venture of Phoenix Enterprises Northwest and Acquisition Business Consultants (ABC), which the lawsuit accuses of not meeting small business requirements in the categories for which CH2M Hill claimed credit. Its Department of Energy contract set a goal of awarding about $88 million in subcontracts to woman-owned small businesses and $107 million in subcontracts to small disadvantaged businesses. U.S. Judge Edward Shea recently unsealed the lawsuit in Eastern Washington District U.S. Court after the federal government told the court it would not intervene.
Savage Logistics, a woman-owned company, filed the lawsuit against CH2M Hill and the two businesses in the joint venture in January. A month earlier the federal government had filed a civil lawsuit against another contractor, Washington Closure Hanford, accusing it of falsely claiming credit for awarding small-business subcontracts in certain categories. The claims of improper subcontracting in that lawsuit also were originally made by Savage Logistics. Although the Justice Department declined to intervene in the case against CH2M Hill, Shea agreed that no party could move to dismiss the case without first getting the written consent of the Justice Department and that Savage Logistics could continue to pursue the case.
Salina Savage of Savage Logistics informed CH2M Hill that the Small Business Administration had determined that Phoenix Enterprises was too closely linked with Federal Engineers and Constructors to be considered an independent business, but CH2M Hill awarded Phoenix Enterprises a contract worth $795,500, according to the lawsuit. Federal Engineers and Constructors has previously strongly denied that it was too closely aligned with Phoenix Enterprises or other subcontractors and said that teaming arrangements among businesses for Hanford work is common and even encouraged. CH2M Hill also awarded almost $1.5 million to the joint venture of Phoenix Enterprises and ABC under HUBZone subcontracts, according to the lawsuit. The lawsuit contends that both of the businesses in the joint venture would need to qualify as HUBZone businesses for the subcontracts to be valid, but Phoenix Enterprises was not considered a HUBZone business by the Small Business Administration. ABC had headquarters at the time in Wasilla, Alaska, and did not meet a requirement to have employees in Washington state, the lawsuit alleged.
The lawsuit accuses CH2M Hill of knowingly awarding subcontracts set aside for small and HUBZone businesses to companies that did not qualify for the work. Savage Logistics is asking for three times the damages that the federal government sustained and $11,000 for each violation under the False Claims Act, which allows whistleblowers to be awarded triple the money recovered by the federal government. CH2M Hill said it was unaware of the case late this week. Phoenix Enterprises could not be reached and ABC did not respond to a phone message.
