Doe Cuts Hanford Base Fees Contract Allows Westinghouse To Earn More For Good Work

Fri., Jan. 27, 1995

By Karen Dorn Steele karend@spokesman.com

Guaranteed fees for the company running Hanford’s nuclear cleanup will be slashed in half, the U.S. Department of Energy said Thursday.

Westinghouse Hanford Co.’s annual “base fee” will be reduced from $12.5 million to $6 million in its new Hanford operating contract, which runs through March 1987.

But Westinghouse also will be able to earn more - up to $41 million instead of the current $37.5 million - in incentive payments for good work.

The performance-based contract is the first at the government’s nuclear weapons sites.

“This represents a significant new approach to government contracting at Hanford,” said John Wagoner, DOE’s Richland operations manager.

The contract reforms are part of the Clinton administration’s reinventing government initiative, Wagoner said.

In an message to Westinghouse employees Thursday, company president Lamar Trego explained the contract.

“We have agreed to accept significantly more risk in return for potentially greater earnings based on results,” Trego said.

In the contract, the DOE also partially revised a decades-long agreement to shield its nuclear contractors from legal expenses.

The government will no longer reimburse Westinghouse for legal fees, fines or penalties if it is shown the company engaged in “willful misconduct” or “failure to exercise prudent business judgment.”

The new contract also includes:

Incentives for Westinghouse to farm out some Hanford work to private companies that can do the job more cheaply.

Opportunities for Westinghouse to earn up to 4 percent of a $170 million “productivity improvement” cost-savings goal this year.

Authority for Wagoner, DOE’s top Hanford manager, to withhold all or part of Westinghouse’s award fees if he determines the company’s performance is unacceptable.

DOE officials announced earlier this year that Hanford’s $1.7 billion budget will be trimmed $450 million to $600 million.

Between 2,000 and 5,000 of Hanford’s 18,700 jobs will be cut from Hanford’s work force.

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