MOX Services, prime contractor for the canceled Mixed Oxide Fuel Fabrication Facility (MFFF), played fast and loose with federal contracting rules, the U.S. Department of Energy’s inspector general wrote in a scathing report published days before the winter holiday.
The audit, which focused on MOX Services’ administration of project subcontractors, identified some $8.5 million in questionable costs claimed in 2015: the year before DOE first asked for Congress’ permission to stop construction of the plant at the Savannah River Site in South Carolina.
The audit landed only a month after MOX Services and DOE’s National Nuclear Security Administration (NNSA) settled a long and bitter lawsuit the contractor filed in 2016. MOX Services alleged its customer caused the cost overruns and mismanagement the government later cited as reasons for terminating its contract.
The reported $186 million settlement the government paid to cover MOX Services’ closeout costs “includes the questioned costs cited in this report,” according to the inspector general’s report. That disclosure, an afterthought to one paragraph, makes the audit one of the few publicly available documents that includes any detailed terms of the settlement.
However, the inspector general said, MOX Services might have billed even more questionable costs over the nearly 20-year life of the MFFF contract — and the settlement announced Nov. 19 leaves the door open for the government to recoup its costs in pending and possible future lawsuits. That includes a $6.4 million false-claims suit the government filed against MOX Services in February in U.S. District Court for South Carolina.
“[B]ased on our findings, there is an increased risk that other unallowable subcontract costs may have been incurred by MOX Services and reimbursed by NNSA,” the IG report says.
According to the inspector general, MOX Services, among other things: modified a firm-fixed-price subcontract with one unidentified supplier to include claims based on the supplier’s cost, rather than the scope of work performed; paid out overtime rates for labor that should have been billed at regular rates, then billed the government for the difference; and claimed costs for profits it paid out to subcontractors that had to redo some work — something explicitly not allowed by the prime contract.
The MFFF was intended to convert 34 metric tons of surplus weapon-usable plutonium into fuel for commercial nuclear power plants. The NNSA now expects to spend roughly $17 billion on the replacement Surplus Plutonium Disposition project, diluting the material for burial deep underground at DOE’s Waste Isolation Pilot Plant near Carlsbad, N.M.
