Washington Closure Hanford has reached a settlement agreement in principle with the U.S. Department of Justice in a civil lawsuit over subcontracting at the Energy Department’s Hanford Site in Washington state.
The Justice Department has accused the former Hanford cleanup prime contractor of awarding small business subcontracts to front companies. Washington Closure’s contract for environmental remediation of Hanford’s River Corridor, which included small business subcontracting requirements, expired in September 2016 with most of the work completed.
The parties were scheduled to be in U.S. District Court for Eastern Washington on Jan. 12 to argue summary judgment motions, but two days earlier Judge Sal Mendoza Jr. ordered a 45-day stay of the case schedule. When the stay expires, the parties must either request the lawsuit be dismissed or file a joint status report.
Washington Closure had asked that the case be dismissed because it did not knowingly claim false credit under its Department of Energy contract for subcontract awards to small, woman-owned businesses DOJ claims were actually fronts or pass-through organizations for Federal Engineers & Constructors (FE&C) of Richland, Wash. FE&C was ineligible to compete for the contracts.
The Justice Department had asked for summary judgment on certain Washington Closure defenses to prevent the contractor from introducing evidence at trial that could negate its liability. Washington Closure claims, among other defenses, that the United States suffered no actual injury; that the company undertook actions in good faith and in compliance with laws and regulations; and that the Department of Energy knew about its actions.
If the proposed settlement agreement is finalized and executed, it will resolve the litigation in its entirety, the parties said in a joint filing with Mendoza. “However, this proposed agreement in principle is subject to several specified contingencies and remaining issues that require further resolution between the parties,” they told the judge. They did not specify what issues remained.
Two other defendants in the case have settled since late summer. Both claimed no wrongdoing, but said they wanted out of the expensive and complicated litigation. Sage Tec, a small, woman-owned business, settled for $235,000. FE&C, which teamed with Sage Tec on two subcontracts, settled for $2 million.
The Justice Department said Sage Tec relied too much on FE&C, but a Washington Closure official said in court documents it was unreasonable for small businesses to meet the complex requirements of multimillion-dollar nuclear cleanup subcontracts on their own.
The Justice Department said Sage Tec had no relevant experience, no equipment, and no employees other than its owner when it received a $4.5 million subcontract in 2010 to remediate chromium contamination near Hanford’s C Reactor. FE&C employees performed most of the work, the Justice Department alleged. Two years later, Washington Closure awarded Sage Tec a $15 million subcontract for cleanup in the 300 Area. Sage Tec at the time still had only one employee and no equipment, according to the Justice Department.
