After a fraud case resulting in prison time for a subcontractor, the Energy Department’s Office of Inspector General recommended URS-CH2M Oak Ridge (UCOR) strengthen financial audits of firms employed to support cleanup of the Oak Ridge Site in Tennessee.
The manager of the DOE Oak Ridge Office of Environmental Management, Jay Mullis, agreed more in-depth reviews are needed following the scandal involving Transportation, Operations, and Professional Services (TOPS). Most of the recommendations outlined in an IG report publicly released this month should be implemented within the new few months, Mullis said in his formal response to the findings.
After UCOR was awarded the prime contract in 2011 for cleanup of the Oak Ridge Site, including the East Tennessee Technology Park (ETTP), the site of former uranium enrichment operations, TOPS landed a subcontract for waste transportation services in June of that year.
The former principal of TOPS, Joseph Anthony Armes, was sentenced in 2018 to just over a year in prison for using an elaborate system of phony invoices and cash payments to defraud the government of more than $2.3 million. He was convicted in 2016.
In its report, the DOE IG said it wants agency management at Oak Ridge to order a deeper look at TOPS’ entire $30.7 million subcontract work between fiscal 2014 and fiscal 2016. UCOR, which had already done an initial audit, should question any expenses lacking adequate supporting documents.
The UCOR follow-up audit on the TOPS costs should be finished by July 30, Mullis said in his letter. Any questioned expenses detected will immediately be sent to the DOE contracting officer for an allowability determination.
One less-pressing IG recommendation which should be carried out by Sept. 30 is development of a policy for subcontract close-out audits, Mullis said. The IG said the company’s current guidance is not clearly defined when it comes to doing close-out audits for dozens of subcontractors.
As the cleanup contractor for Oak Ridge, UCOR is required to either conduct its own audit or arrange for audits of its subcontractors when evaluating their expenses. Generally speaking, the IG said there were no red flags in UCOR’s initial audits of firms other than TOPS to indicate they were unreliable, and they met professional standards.
But given the criminal case brought successfully by the Justice Department, “there is an increased risk of fraud and an increased risk that unallowable costs were charged to the TOPS subcontract,” the IG said.
In August 2011, UCOR started work on its $2.7 billion decontamination and decommission contract which runs through July 2020.
