Washington Closure Hanford and the Department of Justice received a final extension Friday to seal a settlement agreement in a civil lawsuit alleging the former Hanford Site contractor knowingly awarded small business subcontracts to front companies.
Judge Sal Mendoza Jr. stayed the case in U.S. District Court in Eastern Washington until a June 8 hearing, but said both parties must either file a settlement agreement by then or be prepared to proceed to a trial that will be set on that date.
The parties reached a tentative settlement agreement in January. Mendoza has stayed the case three times since then and said Friday this will be the last delay. Ahead of the hearing, Washington Closure had asked for another 21 days to reach a settlement agreement, with the Department of Justice threatening to oppose any more delays.
Mendoza told attorneys he did not want to keep granting two- and three-week stays before he set the June 8 deadline, saying six months of settlement talks should be enough. Assistant U.S. Attorney Daniel Fruchter asked that any delay be final, saying the Justice Department is concerned that talks postponing resolution of the settlement agreement are not directly related to the litigation and the federal agency has no control over them.
Attorneys representing Washington Closure said finalizing the settlement depended on resolving an outstanding contract issue between the company and DOE and on reaching an agreement over attorney fees with one of the parties in the lawsuit. Washington Closure is relatively close to resolving the issue with DOE, the contractor’s attorneys said. However, Fruchter said the Department of Justice had heard from DOE that Washington Closure walked out of a recent meeting called to resolve the contract dispute.
Washington Closure’s 11-year, $2.6 billion contract for environmental remediation of Hanford’s River Corridor, which included small business subcontracting requirements, expired in September 2016 with most work completed.
If the proposed settlement agreement is finalized and executed, it will resolve the litigation in its entirety, the parties have told Mendoza. Two other defendants in the case have settled since late summer. Both claimed no wrongdoing, but said they wanted out of the expensive and complicated litigation. Sage Tec, a small, woman-owned business, settled for $235,000; and Federal Engineers and Constructors (FE&C), which teamed with Sage Tec on two subcontracts, settled for $2 million.
Washington Closure was required as part of its contract to subcontract work to small businesses and to certain categories of small businesses such as those owned by women. Among the Justice Department’s allegations was that Washington Closure took small business credit for two Sage Tec subcontracts worth nearly $20 million in total, but that Sage Tec relied too heavily on FE&C to perform cleanup of chromium contamination and other operations. Sage Tec and FE&C have vigorously denied the allegations. Washington Closure has said it did not knowingly make any false representations related to small business subcontracts.
The lawsuit was initially filed under the False Claims Act in 2010 by Savage Logistics, a woman-owned small-business subcontractor. The Department of Justice joined the case took over litigation
