March 17, 2014

IG: SRNS DID NOT MEET OBLIGATIONS IN AWARDS TO PARENT COMPANIES

By ExchangeMonitor

Savannah River Nuclear Solutions did not meet contractual obligations for two contracts it awarded to parent companies Fluor and Newport News Nuclear in 2009, according to a Department of Energy Inspector General report released Friday. “SRNS had not obtained required Department approval for the two noncompetitive contracts it awarded to Fluor and Newport News during 2009. Also, SRNS had not demonstrated, in most cases, that the affiliates were the only sources capable of providing the expertise necessary to perform the needed services, a pre-requisite for noncompetitive awards to affiliate companies. Further it had not performed cost analyses to ensure the reasonableness of the cost of affiliate personnel services, as required,” the report states. SRNS released 126 purchase orders in 2009 and 2010 related to the contracts, totaling $26 million.

The IG also found that DOE failed to give proper oversight over the contracts. “In the absence of effective Department oversight of SRNS’ acquisition of affiliate personnel services, the Department lacked assurance that due consideration was given to acquiring these services via competitive means, that the services were obtained at fair and reasonable prices, and, as a consequence, the best interests of the U.S. taxpayers were protected,” the report states. However, DOE took issue with some aspects of the report. The Department believes that the transactions were human resource related and not procurement, therefore they were not subject to the same requirements for acquisition of affiliate services, called corporate reachback. SRNS also said it had met its obligations. “We adhered to what we committed to do in our proposal and were in compliance with what our contract provided regarding corporate reachback,” SRNS spokeswoman Barbara Smoak said in a written response.

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