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Energy Department approves lavish bonuses: $3.5 million to 10 workers alone

By Phillip Swarts

Thursday - 3/28/2013, 4:34pm  ET

Federal employees are facing unpaid days off and salary cuts due to the sequester, but several contract workers inside the Energy Department are raking in the cash.

Ten individuals at the department's Oak Ridge nuclear laboratory are set to make an extra $3.5 million above and beyond their normal pay, according to an Energy Department inspector general investigation that exposes a lavish bonus system.

The 10 people are executives at the company UCOR, which the department hired for environmental clean-up.  And despite watchdog warnings that the executives' salaries are as much as 82 percent above the market rate, Energy Department officials continue to pay out thebonuses.

"The Department could incur approximately $3.45 million over the market rate salaries for 10 UCOR contractor executive salaries over the life of the five-year contract," the inspector general's report said.  "The events leading up to the UCOR salary approvals involved Headquarters and [Oak Ridge] officials taking a number of actions that were inconsistent with existing policy and were not well coordinated."

The Energy Department hires more civilian contractors than any other government agency: at last count more than 100,000 in all.  Many are hired to do work at the agency's system of laboratories around the nation, like the Oak Ridge National Laboratory.

In April 2011, the department gave a $2.2 billion contract to "URS|CH2M Oak Ridge, LLC."  Shorthand, the company is known as UCOR.  The task was environmental clean up of the East Tennessee Technology Park.

But officials at the Oak Ridge Office (ORO), approved salaries that were far above market rates and much more than the UCOR contractors should have been getting, the inspector general said.  In the most extreme case, one person received $299,800, an 82 percent mark-up over the $164,900 they should have been paid, the inspector general said.

Despite the inspector general's warnings, the executives are continuing to receive excessive pay.  When inspectors notified ORO officials of the overpayments, the salary rates were rescinded.  Soon afterwards, however, they were reinstated and those same 10 contractors were approved for overpayments from $5,741 to $143,181 each.

For failing to clamp down on excessive payments and bonuses, the Energy Department's Oak Ridge Office wins this week's Golden Hammer, a weekly distinction awarded by the Washington Guardian to the worst examples of government waste, fiscal abuse and unnecessary spending.

Energy Department officials blamed the bonus bonanza on a miscommunication. ORO officials assumed that the salary levels would be evaluated by the department's Source Evaluation Board (SEB), which oversees proper pay rates.  But SEB officials didn't review the salaries, instead assuming that ORO officials would set them at market rates.

ORO officials that inspectors spoke with seemed convinced that the salary rates had been properly evaluated.

"After we questioned the process, a procurement official at ORO even went so far as to prepare a document certifying that an executive salary reasonableness determination had been made during the SEB process," the inspector general said, noting that no such evaluation had taken place.

Another official, however, told investigators it was believed that ORO "had the authority" to set the salaries itself, bypassing some of the department's approval processes.

Oak Ridge officials said they would improve the oversight process and ensure salaries are properly approved, but disagreed that the executives' pay was excessive.

"By comparison, the [UCOR] senior executive salary level parallel's executive salaries of Department of Energy cleanup contractors at two other sites doing environmental cleanup work comparable to Oak Ridge," said a letter from Larry Kelly, the manager of the Oak Ridge Office.

Investigators, however, said there were still serious flaws in the department's contractor salary approval process.

"In light of current budgetary pressures, we concluded that the Department needs to implement executive measures to ensure that contractor executive salaries are: 1) reasonable; 2) consistent with local market compensations rates; and 3) established using Departmental procedures," the inspector general concluded.