Jacobs Engineering will be required to mitigate an apparent conflict of interest at the Department of Energy’s Hanford Site in its planned acquisition of CH2M Hill.
Jacobs announced in June that it planned to purchase its fellow DOE contractor for $2.85 billion, with the deal set to close by the end of the year. Jacobs already has a financial interest in one Hanford prime contract, and the deal would give it a financial interest in a second prime contract.
Jacobs is one of three owners, with Leidos and Centerra, of Hanford site-wide services provider Mission Support Alliance (MSA). The 10-year MSA contract includes a clause addressing “organizational conflict of interest between Hanford Site contracts.” It says the contract is limited to performance by a contractor not currently performing work for three current Hanford contracts, including the Plateau Remediation deal held by CH2M Hill Plateau Remediation Co.
The Department of Energy said in a statement that MSA has informed it of a potential sale agreement between Jacobs and CH2M. The department responded by requesting MSA’s plan for compliance with its contract’s conflict of interest restriction. The contract clause does allow the conflict of interest requirement to be waived at the discretion of a DOE official at least at the level of the head of contracting activity.
“DOE will review the plan and work closely with MSA in taking whatever actions may be appropriate to ensure that contractual requirements are adhered to,” the department said in a statement.
Jacobs had no comment this week.
Mission Support Alliance calls itself the integrator of the multi-contract effort to clean up the former plutonium production complex in Washington state. It provides portfolio management services to help DOE and Hanford contractors make informed and realistic decisions on project alternatives and possible cost savings. It also provides emergency response and training, land management, fleet and road maintenance, utility, and information technology services. Its contract, originally valued at $3 billion, is set to expire in May 2019.
CH2M Hill Plateau Remediation’s contract is set to expire on September 2018. CH2M in 2008 was awarded a contract of up to 10 years for groundwater and central Hanford environmental cleanup, with the exception of tank waste. It was given some additional work a year ago upon the expiration of the River Corridor Contract it had partnered on with AECOM and Bechtel.
The value of the Plateau Remediation Contract was estimated at $4.5 billion when it was awarded, but more work has been added, including some remaining river corridor cleanup and $1.3 billion of work under the American Recovery and Reinvestment Act of 2009.
CH2M has a broad presence across the DOE complex. It has a major role on five legacy cleanup sites managed by DOE’s Office of Environmental Management (EM) and is the lead industry partner at three of those.
Jacobs’ position isn’t as widespread, but it has been picking up new business, including joining a team led by Honeywell for management and operations of DOE’s Nevada National Security Site.
