Stimulus recipients have past problems

WASHINGTON – A private company was being paid $300 million by the federal government to clean up radioactive waste at two abandoned Cold War plants in Tennessee when an ironworker crashed through a rotted floor. That prompted a major safety review, which ended up forcing work to an abrupt halt, and the project was shut down for months. The delay and a host of other problems caused cost estimates to rise, eventually hitting $781 million.

Now, President Obama’s stimulus package is opening a bountiful stream of new funding, and the same contractor, Bechtel Jacobs, is slated to get $118 million to help complete the job.

The Energy Department has begun releasing more than $6 billion in stimulus money to clean up 18 nuclear sites from New York to California, more than doubling the typical yearly funding for the program. Contractors helped shape the stimulus package and are lined up to get the work, including many that have been cited for serious safety violations and costly mistakes.

The contracts – along with much broader problems in the department’s nuclear cleanup program – have prompted rare, sharply worded warnings from some government officials and lawmakers who say the stimulus funding is ripe for abuse.

The cleanup program has long been plagued by cost overruns and delays and is designated by the Government Accountability Office as “at high risk for fraud, waste, abuse and mismanagement.” Over the past two years, estimated cleanup costs at all 22 sites have escalated from $180 billion to $240 billion, according to the Energy Department.

“The very contractors that have been responsible for cost overruns and serious delays have proposed how to pump stimulus money back into the project,” said Gerry Pollet, executive director of Heart of America Northwest, an environmental watchdog group. The companies “are set to get hundreds of millions of dollars on top of the money they’ve already received, for the same projects they’ve seriously mismanaged.”

Energy Department officials, as well as the contractors, point out that nuclear cleanup work is exceedingly complex and that some problems have been unavoidable. Still, the boost in funds to a troubled federal program highlights the potential pitfalls as $787 billion in stimulus funding flows out to federal, state and local programs across the country.

In the case of the Energy Department program, private contractors do all cleanup work, and they have been involved from the beginning in shaping their piece of the stimulus. As far back as December, when it became clear that Obama would introduce a huge spending bill to create jobs, Energy Department staff members began meeting with the contractors, including representatives from Bechtel National, CH2M Hill and other large firms.

A $6.4 billion plan was devised at the sessions and carried forward by Sen. Patty Murray, D-Wash., who incorporated the funding into the Senate bill. The House version of the bill provided for $500 million.

But Murray pushed for the larger figure, saying in an interview that the projects were a perfect fit for stimulus spending because they would create jobs – the Energy Department has estimated 13,000. Most work will begin in the coming months and is supposed to be completed by the end of 2011.

It is already clear that many of the same contractors whose problems have been noted in dozens of GAO and inspector-general reports are once more in line for federal money.

Washington Closure Hanford, for example, will receive $254 million for additional cleanup work at the Hanford nuclear site along the Columbia River in central Washington. Two years ago, some workers the company had hired were caught falsifying documents about their handling of nuclear waste, according to an investigation by the Environmental Protection Agency. Todd Nelson, a spokesman, said his company thinks the misconduct by subcontractors is now “history.”

In New Mexico, Washington TRU Solutions will get at least $100 million to manage and operate a disposal site in the Chihuahuan Desert despite safety violations that forced repeated closures and put the work behind schedule. Company officials did not return calls requesting comment.

Senators have demanded that the department name contractors with past cost overruns and delays, and have questioned why it would give current contractors new work without firm penalties in place.

“These contractors know they are going to get the business. What has been the penalty when they exceeded costs?” Sen. Mark Begich, D-Alaska, asked at a hearing last month. “Over the past four years, how many contracts have been terminated?”

No contractors lost jobs for poor performance during that period, said Ines Triay, acting assistant secretary for environmental management. But she said that if contractors do not perform well in the stimulus programs, the funds will be shifted to other projects. “We believe we will be very demanding customers,” she said.

Environmental groups, as well as government watchdogs, have warned that private contractors have become too powerful, wielding more influence at the sites than the Energy Department. The department staff members, said Gene Aloise, the GAO’s director of natural resources and environment, “need to be reminded that they are there to oversee the contractors, to protect the taxpayers’ dollars.”

A central concern for watchdog groups and government auditors is that, to secure the huge funding increase, department officials promised to accelerate the work, and that some of the most notable mishaps took place during accelerated plans under two prior administrations.

One project was at the Oak Ridge, Tenn., site, where costs more than doubled and the estimated completion date went from 2008 to 2015. Two plants there were abandoned in the 1960s, and hundreds of compressors and generators laced with uranium were left behind.

Bechtel Jacobs, hired to dismantle and demolish the two buildings, fell behind schedule in 2005 and asked the Energy Department to authorize an accelerated plan for the work. But, according to government records, the company did not follow proper safety plans or accurately evaluate the first building’s condition before sending in workers. That’s when the worker fell through the floor and was seriously injured.

“This accident did not have to happen,” an investigation by the Energy Department found.

“Did we have problems? Yes. But I believe that anyone would have,” said Paul Divjak, president and general manager at Bechtel Jacobs, noting that the worker has recuperated and has returned to the job. “Are there other companies that are better qualified” to do the new work? “We don’t think so.”

At the Hanford site, critics worry that accelerated efforts will lead to a repeat of past mistakes. In 2006, for example, a treatment plant had to be redesigned largely because site managers did not account for the region’s seismic activity, causing costs to rise from $4.2 billion to a projected $12.2 billion.

Now, $44 million in stimulus funding will go to design a facility that will process leftover waste from the treatment plant. But because that plant is still under construction, nuclear engineers say it is premature to design the new facility.

“It doesn’t make sense,” said Arjun Makhijani, president of the Institute for Energy and Environmental Research and an expert on the Hanford site.