Staff Reports
WC Monitor
10/16/2015
A federal judge has declined to dismiss a complaint filed by the Department of Justice (DOJ) against Washington Closure Hanford and other businesses over subcontracting practices at the Hanford Site. U.S. Judge Edward Shea ruled against defendants’ request for summary judgment on the complaint brought by the federal government, but gave a split ruling on requests for summary judgment on the complaint brought by Savage Logistics. Savage Logistics, a small company seeking Hanford work, filed the complaint in 2010. DOJ joined portions of the case in 2013.
“The old proverb, ‘It’s not what you know but who you know,’ is at the heart of the assertions brought by the United States’ and the relators Salina Savage and her business Savage Logistics,” wrote Shea in the case filed in U.S. District Court for the Eastern District of Washington. “The plaintiffs allege that defendants took their personal connections a step too far in order to gain a financial benefit, i.e., defendants reached agreement amongst themselves to establish a façade of small, disadvantaged businesses that applied for, and were awarded small-business government contracts by the prime contractor.” But the work was performed by Federal Engineers and Constructors (FE&C), which did not qualify to bid on the subcontract, rather than the small businesses that were awarded the bids, plaintiffs allege. FE&C has maintained that the allegations are without merit and that teaming arrangements among subcontractors are common and encouraged at Hanford.
Washington Closure issued a request for proposals in 2010 for removal of chromium contamination down to groundwater near Hanford’s C Reactor. Bidding was restricted to small, disadvantaged businesses. Washington Closure required potential subcontractors to have at least three years of experience performing earthwork and grading work and two years of experience handling waste. Sage Tec submitted a proposal without describing its qualifications, but advising that it would partner with FE&C, according to court documents. Plaintiffs said that Laura Shikashio, the wife of an FE&C vice president, was the owner and sole employee of the company. Washington Closure knew Sage Tec was merely lending its small, woman-owned business status to the work, plaintiffs allege. Sage Tec had no relevant experience in handling nuclear waste and no equipment, and as a new business did not have the years of experience outlined in the request for proposals, according to court documents.
In 2012, Washington Closure awarded another subcontract to Sage Tec, knowing FE&C would perform the work to move radiological and chemical waste sites, pipelines, and below-grade structures in the 300 Area using FE&C equipment, court documents allege. Shikashio submitted a document saying Sage Tec was the lead offerer and would perform about 27 percent of the work, although it still lacked equipment and employed only Shikashio, according to court documents. The 300 Area subcontract was valued at $15 million and the chromium excavation subcontract was worth about $4 million.
The Department of Justice also questions a Washington Closure subcontract awarded to Phoenix Enterprises, which was started by an employee of FE&C, which owned 49 percent of the company. Days after the subcontract award, the Small Business Administration determined that Phoenix Enterprises was not eligible for the subcontract because it was too closely tied to FE&C to be considered a small business. Washington Closure did not pull the subcontract award, but did not report the work as among projects helping meet its Department of Energy contract goal of awarding 65 percent of its work to small businesses. However, the subcontract was modified to add about $2.8 million in work and that was reported as a small business award to DOE, according to court documents. The work involved hauling waste from near the Columbia River to the Environmental Restoration Disposal Facility in central Hanford.
Among other rulings on the case, Shea dismissed individual plaintiffs working for Phoenix, FE&C, and Washington Closure from the claim filed by Savage. The federal government had not joined in that part of the lawsuit. The judge also dismissed Savage’s claims for the portion of the Phoenix Enterprises subcontract that Washington Closure did not claim toward its small business goal. In another ruling the judge bifurcated the trial in the case. The Department of Justice claims will proceed to trial first, followed by a second trial for the remaining Savage claims the Department of Justice did not join. The parties have until Oct. 27 to propose dates for discovery and trial.
