A company hired to provide specialty steel bars for construction of the MOX facility at the Department of Energy’s Savannah River Site in South Carolina has agreed to pay $4.6 million in damages after being accused of supplying “defective steel reinforcing bar,” the Department of Justice said this week.
Energy & Process Corp., a Georgia-based supplier of parts for the nuclear industry, will pay the sum to resolve the lawsuit, which was filed under the federal False Claims Act, according to a DOJ statement. The suit, filed last September, alleges that E&P “knowingly failed to perform required quality assurance procedures” in connection with the Mixed Oxide Fuel Fabrication Facility (MFFF) being constructed to convert 34 metric tons of weapons-usable plutonium into commercial nuclear fuel.
CB&I AREVA MOX Services, the contractor building the facility, hired E&P as a subcontractor in July 2006 and signed another contract in March 2007. Together, the contracts were valued at $11.5 million.
According to the suit, the Energy Department paid E&P a premium to supply rebar for the MFFF that was supposed to meet stringent regulatory standards. “Standard ‘off-the-shelf’ or ‘commercial-grade’ rebar – a basic construction component that is routinely used in commercial construction projects – was unsuitable for use in the MOX Facility because it lacks the indicia of reliability and safety that is associated with rebar that has been manufactured and/or procured under the rigorous quality assurance standards required by the [Nuclear Regulatory Commission],” the Justice Department stated in the lawsuit. “To ensure its safe operation, the MOX Facility had to be constructed with rebar that met quality requirements.”
The Department of Justic alleged E&P knowingly supplied commercial rebar for the MOX plant, but billed the federal government for the cost of the specialty product. “E&P failed to perform most of the necessary quality assurance measures, while falsely certifying that those requirements had been met,” the Justice Department stated. All told, about a third of the rebar supplied by E&P was defective, according to the suit.
The suit alleges that, before the realization was made, E&P had delivered 3,000 tons of rebar to SRS, and that 1,084 tons of the material was defective. Of the defective material, 142 tons was used in construction of the facility. “The E&P rebar that had already been partially installed in concrete had to be modified and augmented with supporting rebar,” the lawsuit states. “The E&P rebar that had been delivered but not installed had to be set aside because it did not meet the nuclear quality requirements.”
Compliance with contract requirements is expected by all who contract with the U.S. government, but is especially critical in connection with the construction of a nuclear facility,” Chad Readler, acting assistant attorney general for the Justice Department’s Civil Division, said in the release.
E&P spokeswoman Denise Vaughn wrote in a prepared statement that the company settled the suit but “denies any wrong doing and stands behind the quality of the product it provided which complied with applicable standards, as well as the quality assurance processes employed.”
Vaughn added that even though the suit was filed last year, the company has faced allegations on the issue since 2007. She said early investigations determined the matter did not present a substantial safety hazard. “Since that time, she added, the investigation went through various periods of activity and inactivity until the lawsuit was filed in 2016. All the while, E&P continued to supply product for the project. “To avoid future distraction and the cost of lengthy litigation, E&P elected to settle the matter and return focus to its business and serving E&P’s valued customers,” she wrote.
