A U.S. District Court judge will hear arguments next month on whether to dismiss the U.S. Department of Justice lawsuit alleging Fluor Federal Services and Savannah River Nuclear Solutions (SRNS) overcharged the government by more than $5 million for home office expenses and other “unallowable costs” in operation of the Savannah River Site.
The federal government sued SRNS, the management and operations contractor for the Department of Energy facility in South Carolina, and Fluor, one of the firm’s parent companies, on March 18 in the Aiken Division of the U.S. District Court of South Carolina. The lawsuit charges that the companies knowingly overcharged the U.S. to pay for home office expenses and bid and proposal costs – a direct violation of the M&O contract and of the cost transfer agreement that says the allocation of home office expenses is unallowable under the contract. SRNS on May 20 requested that the lawsuit be dismissed, stating that DOJ did not “explain how any particular costs would be unallowable in the context of both the language of the Contract and the regulations that govern its interpretation.”
Now, according to a Sept. 14 filing in the case, Judge Michelle Childs will oversee a motion hearing on Oct. 3 in Aiken, about 15 miles from SRS.
The federal government’s lawsuit includes several examples of alleged fraud by SRNS. In the first listed incidence, workers from SRNS and Fluor submitted an incurred cost report for nearly $338 million for their 2008 services. But, according to the complaint, the report included $1.19 million in home office costs and nearly $90,000 in bid and proposal expenses for a total of more than $1.2 million in unallowable costs.
Subsequent unallowable costs alleged by the federal government encompass $942,000 in 2009, $906,000 in 2010, $362,000 in 2011, $666,000 in 2012, $254,000 in 2013 and $481,000 in 2014.
Both sides have refused multiple times to comment on the case. In March, when the lawsuit was first filed, SRNS offered an initial response. Spokeswoman Barbara Smoak said both parties have been trying to resolve the issue for five years and are “disappointed” that the issue has surfaced as a false claims matter rather than remaining under the Contract Disputes Act. “However, now that this action has been filed, we will vigorously defend our position,” Smoak said by email.
SRNS is in the midst of a 10-year contract worth up to $8 billion, including a two-year option DOE exercised last month that keeps the firm on the job through July 2018. As the management and operations contractor, SRNS has a hand in multiple missions including waste cleanup, nuclear materials processing, and running the site’s tritium facilities. SRNS also manages the Savannah River National Laboratory (SRNL), one of 17 national labs in the DOE complex.
