Claims Comes On Top of 2013 USEC Suit for $38 Million
Kenneth Fletcher
WC Monitor
1/30/2015
The United States Enrichment Corporation (now a subsidiary of Centrus Energy Corp.) late last week filed suit against the Department of Energy demanding $42.8 million for costs related to pension benefits the company paid to workers at the Portsmouth site. The move adds to a pending lawsuit the company filed in 2013 asking for nearly $38 million in what it claims were allowable costs for work performed at Portsmouth. In the latest move, the firm claims DOE broke its contract for not refunding allowable pension costs USEC asked for in late 2012. DOE rejected the invoice in January 2012 “without valid basis” and in breach of the contract, the company said in a Jan. 23 filing in the U.S. Court of Federal Claims.
Starting in 2001, USEC performed work at Portsmouth USEC as the “cold standby” contractor and also removed uranium deposits. The Portsmouth work fell under a contract that also included its work at the separate Paducah Gaseous Diffusion Plant, and DOE closed the Portsmouth segment of the contract in September 2011 while USEC work continued at Paducah until last year. Government contract cost accounting requirements and generally accepted accounting principles require “that when a segment closure or curtailment occurs, previously determined retirement plan costs be adjusted to actual costs as of the date of the closure,” according to USEC’s filing. “The government’s share of this adjustment is an allowable cost under any ‘suitable’ government contract.”
Because the closure of the Portsmouth segment “reduced significantly the expected years of future service for USEC employees, a curtailment of USEC [pension and postretirement benefit] plan occurred,” the filing states. But DOE did not pay its share of the costs, USEC claims. Since being rejected for the pension costs it billed DOE, the company has submitted a certified claim demanding payment for the pension costs, but DOE denied the claim. “DOE’s contract breach has resulted in damages to USEC totaling $42.8 million, plus interest,” the filing states. DOE did not respond to request for comment this week.
Related 2013 Case Asks For $38 Million
The latest claim filed by USEC comes after a May 2013 suit related to reimbursing allowable costs related to its work at Portsmouth. According to USEC, DOE failed to approve provisional billing rates for much of the work at Portsmouth, and also did not complete audits of the costs USEC incurred. “USEC successfully provided these services for 10 years, but DOE has refused, without valid basis, to pay USEC for nearly $38 million of allowable costs of performance. Now that these contracts are largely over, DOE is continuing to refuse to reimburse these costs without any valid basis,” states the May 2013 complaint. Oral arguments in that suit are set to occur Feb. 26, also in the U.S. Court of Federal Claims.
