Washington Closure Hanford agreed to pay $3.2 million to settle a civil lawsuit alleging subcontracting fraud at the Hanford Site cleanup in Washington state, the Department of Justice announced on June 8.
The parties told U.S. District Judge Sal Mendoza Jr. the day before they had reached an agreement but did not release the amount at that time. The payment will bring settlements in the case brought by the DOJ to more than $5.5 million. Last year, Hanford subcontractors Federal Engineers and Constructors (FE&C) and Sage Tec settled, respectively, for $2 million and $235,000.
“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 Joseph Harrington, U.S. attorney for the Eastern District of Washington.
Washington Closure held the 11-year cleanup contract for Hanford’s river corridor that expired with most work completed in September 2016.
The case was brought in 2010 by Savage Logistics and its owner, Salina Savage, and joined in part by the Department of Justice in 2013 in U.S. District Court for Eastern Washington. The Department of Justice accused the three companies of violating the False Claims Act, which makes whistleblowers who expose fraud against the federal government eligible to receive a portion of any settlement.
Savage Logistics and its owner will receive $643,000 of the Washington Closure settlement, the DOJ said. That brings the total award to the original plaintiffs, including $517,000 from the settlements reached in 2017, to $1.16 million. Savage Logistics also received $145,000 from Sage Tec and FE&C for attorney fees and related costs. The amount of attorney fees and related costs Savage Logistics could be paid by Washington Closure had not been worked out last week, the parties told the judge.
“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’s contract required the award of subcontracts to small businesses and disadvantaged small businesses, such as those owned by women. It reported about $20 million in subcontracts to Sage Tec in 2010 and 2012 as awards to a woman-owned small business. The Department of Justice alleged Sage Tec was only a front company that served to pass through work to FE&C.
In court documents, Washington Closure said it relied in good faith on Sage Tec’s self-certification that it was a small business and did not knowingly misrepresent any information to the Department of Energy. FE&C and Sage Tec vigorously denied any wrongdoing and said that they settled only because of the prohibitive expense of a lengthy and complicated lawsuit.
The Sage Tec contracts covered digging up chromium contamination near C Reactor and cleanup of contaminated structures, soil and pipelines in the Hanford 300 Area.
A former procurement manager for Washington Closure said in court documents it would be unreasonable to require small business subcontractor to meet the complex requirements of multimillion-dollar nuclear remediation subcontracts on their own.
