Watchdog: Federal contractor overpaid millions in living expenses on DOE project

The Energy Department paid the builder of its planned weapon-grade plutonium reprocessing plant millions of dollars in taxpayer money for unnecessary employee living expenses, government auditors concluded Monday.

The MOX Fuel Fabrication Facility is already projected to run over budget by an estimated $3 billion, dwarfing the $3.7 million in unnecessary expenses found by department Inspector General Gregory Friedman. Still, he criticized the department for not fully monitoring spending by its main contractor, Shaw AREVA MOX Services.

The department’s National Nuclear Security Administration “unnecessarily paid as much as $3.7 million to MOX Services for staff augmentation subcontractor temporary living expenses that could have been devoted to other critical mission areas or, returned to the taxpayers,” Friedman reported.

He was referring to subcontracts made to bring in professional, technical and administrative employees by Shaw AREVA because of the shortage of skilled workers near the federal Savannah River Site in South Carolina.

The company until 2007 limited temporary employee assignments to one year and capped payment for associated living and travel expenses. In 2008, as costs and assignments exceeded those limits, it canceled the cost ceiling and extended the allowable duration.

The company did so on the grounds that it was cheaper than training new permanent employees, Friedman said.

The expenses went on for nearly five years until Energy Department moved last year to limit extended contractor employee assignments. Friedman said that policy was still being clarified and had not been fully implemented.

The facility, already 60 percent completed, was to have cost $4.7 billion and open by 2016. It is now estimated by the Government Accountability Office that it will have cost as much as $7.7 billion when completed, and be delayed until 2019.

The Obama administration in its 2014 budget proposed slowing funding and re-examining the facility’s future. The plant is being built under an agreement with Russia for both nations to retire 34 metric tons of plutonium, enough to arm 1,700 nuclear warheads.

It has run into opposition by senators from South Carolina and Georgia, led by Sen. Lindsey Graham, R-S.C. He briefly held up the confirmation of incoming Energy Secretary Ernest Moniz until the White House agreed to revisit its plan, though it has made no commitments.

The NNSA agreed with recommendations made by Friedman and said it was taking actions to rein in the costs.

It was also reviewing past payments for possible reimbursement to the government, though NNSA Associate Administrator for Management and Budget Cynthia A. Lersten said that some of the disputed costs are being litigated.


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