Feds Clean Up The Hanford Cleanup New Contractor To Take Over With Payment Based On Performance, Officials Say

A team of companies led by Fluor Daniel Hanford Co. - awarded a $4.88 billion contract Tuesday to manage operations at the Hanford Nuclear Reservation - pledged to create 3,000 unrelated jobs to help diversify the region’s economy as a condition of the contract.

Energy Secretary Hazel O’Leary, announcing the contract from Washington, D.C., emphasized the contract was performance-based, meaning the companies won’t earn any money if they don’t do a good job.

“If the contractor doesn’t deliver on their commitment, the Department of Energy and the taxpayers will not deliver the dollars,” O’Leary said.

The DOE sought bids in January to replace Westinghouse Hanford Co., which has served as its main contractor since 1987.

Both the DOE and Westinghouse Hanford have been criticized for spending billions of tax dollars while making little progress cleaning up the nation’s most polluted nuclear site. Hanford has produced plutonium for nuclear weapons since the Manhattan Project of World War II until 1988.

An investigative series by The Spokesman-Review in 1994 documented how large amounts of money were being wasted in the Hanford cleanup, which could cost $100 billion over the next 30 years. Among the losses:

A failed experiment to encase mildly radioactive waste was abandoned at a cost of $200 million.

One contractor got a $10 million bonus for having a good safety record, but the contractor failed to report some 47 injuries and a year’s worth of lost work days.

As an enticement to private contractors, the federal government has long agreed to absorb liability from financial, legal or environmental risks.

Hanford watchdogs said Tuesday’s announcement shows the government is as frustrated as the public with the performance at Hanford.

“It looks like the Department of Energy made a clean sweep of Hanford,” said Tom Carpenter, director of the Government Accountability Project. “Overall, it might be for the best.

“People are frustrated with the slow pace of cleanup,” Carpenter said.

Energy Undersecretary Thomas Grumbly, on hand in Pasco for the announcement, said things will be different under the new contract.

“The department has stopped paying people for showing up and will only pay for results now,” Grumbly said.

The Fluor team includes Babcock and Wilcox Hanford Co., Duke Engineering and Services Inc., Lockheed Martin Hanford Co., Numatec Hanford Corp., and Rust Federal Services.

The 4-1/2-inch-thick contract includes savings of $200 million per year over current plans for the site, O’Leary said. Other new goals include:

Deactivating weapons plants by 2005.

Stabilizing plutonium by 2000.

Reducing infrastructure budget by 25 percent in 1997.

Completely removing sludge and debris in K-basins, where spent nuclear fuel has been stored for decades, by June 2000.

Fluor Daniel also pledged to create 3,000 new jobs unrelated to Hanford and invest $10 million in a capital venture fund. The company will also invest up to 12 percent of its profits in the fund and in community organizations.

Les McGraw, chief executive officer of Fluor Corp. of Irvine, Calif., the parent company of Fluor Daniel, said his company will keep its pledges. “I’m here to underline that this is a commitment, a very serious commitment,” McGraw said. “To pull this off - which we fully intend to do - everything is at risk.”

Fluor Corp. is an engineering, construction and diversified services company operating in 80 countries.

Fluor Corp. plans to create a subsidiary called Fluor Daniel Northwest in the Tri-Cities which will create 1,300 jobs unrelated to Hanford to look for engineering-type projects throughout the Northwest. Each of its subcontractors also will open subsidiaries based in the Tri-Cities to create jobs unrelated to the Hanford reservation.

The new management team comes to Hanford with some blemishes on its record.

A subsidiary of Fluor Daniels was investigated by the Cincinnati Enquirer earlier this year for financial fraud against the government in its cleanup of Fernald, a former uranium-processing plant in Ohio.

The newspaper in February reported that the Fernald contractor billed the government millions of dollars in fees for incomplete work, in part to obtain performance bonuses. Another investigation in April uncovered haphazard safety-inspection records.

Martin-Marietta, a sister company to Lockheed Martin, has a long history of fighting against employees who raised concerns about safety at the Oak Ridge National Laboratory nuclear site in Tennessee, Carpenter said.

“Anybody you choose,” Carpenter said, “you are going to have a certain amount of baggage.”

Two other groups had bid for the contract. They were: Bechtel Northwest with Safestates (a Westinghouse and British Nuclear Fuels Ltd. partnership), Johnson Controls, Computer Sciences Corp., Jacobs Hanford Co., and Morrison Knudsen Hanford Co.

Raytheon Hanford Inc., with Boeing Information Services, CH2M Hill Federal Group, Newport News Shipbuilding, ICF Kaiser Hanford Co., Siemens Power Corp., and Wackenhut Services.

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The following fields overflowed: CREDIT = From staff and wire reports Staff writer Mike Prager contributed to this report.