Major Government Contractors Admit to Overcharging between 2009 and 2019 by Billing Time Not Worked, and also Agree to Three-Year Independent Corporate Monitor
U.S ATTORNEY’S OFFICE, EASTERN DISTRICT OF WASHINGTON |
Richland and Spokane, WA – Today, the United States Attorney’s Office for the Eastern District of Washington announced that major federal contractors Bechtel National Inc., Bechtel Corporation (Bechtel), AECOM Energy & Construction, Inc. (AECOM), and their subsidiary Waste Treatment Completion Company, LLC (WTCC), agreed to pay $57,750,000 to the U.S. Department of Justice (DOJ) to resolve claims that Bechtel and AECOM fraudulently overcharged the U.S. Department of Energy (DOE) in connection with its operation of the Hanford Waste Treatment Plant (WTP) project. The False Claims Act (FCA) claims arose from allegations that Bechtel and AECOM management were aware of and failed to prevent inflated labor hours being charged to DOE, and for falsely billing DOE for work not actually performed.
The WTP is located at DOE’s Hanford Site near Richland, Washington. Between 2001 and the present, DOE has paid billions of dollars to Bechtel and AECOM to have them design and construct the WTP, the purpose of which is to treat hundreds of millions of gallons of dangerous radioactive waste currently stored at the Hanford Site. To construct, operate, and maintain the WTP, Bechtel and AECOM employed hundreds of electricians, millwrights, pipefitters, and other skilled tradesmen known as “craft” workers.
As part of the settlement secured by the U.S. Attorney’s Office (USAO) for the Eastern District of Washington, Bechtel and AECOM admitted to a detailed Statement of Facts setting forth their actionable conduct. Between 2009 and 2019, Bechtel and AECOM admitted to overcharging DOE for unreasonable and unallowable idle time experienced by craft personnel. Bechtel and AECOM further admitted to failing to schedule and carry out adequate work to keep craft personnel sufficiently occupied and productive, resulting in excessive idle time. Bechtel and AECOM also admitted that Bechtel and AECOM management knew that craft personnel were experiencing idle time due to management’s failure to assign sufficient work, and that this idle time could, at times, last “several hours.” Finally, Bechtel and AECOM admitted that they improperly billed DOE labor costs for the unreasonable idle time and continued doing so for years, even after Bechtel and AECOM knew they were under investigation for the improper billing practices.
“Completing the WTP is not only critical to public safety and the environmental health of the Pacific Northwest, but is an urgent and critically important ongoing public health concern, which the DOE and the State of Washington have appropriately made a top priority,” said Joseph H. Harrington, First Assistant United States Attorney (FAUSA) for the Eastern District of Washington. “It is stunning that, for nearly a decade, Bechtel and AECOM chose to line their corporate pockets by diverting important taxpayer funds from this critically essential effort.”
Teri L. Donaldson, the Inspector General for the Office of Inspector General – Department of Energy (OIG – DOE) noted, “Bechtel National Inc., AECOM Energy & Construction Inc. and Waste Treatment Completion Company LLC, engaged in a massive scheme to submit tens of millions of dollars of false claims to the U.S. Government for unallowable and unjustified costs over a period of years – a pattern of conduct that continued even after U.S. authorities notified the defendants that these costs were unallowable.” Inspector General Donaldson added, “I would like to extend my deep gratitude to our dedicated colleagues at the U.S. Attorney’s Office for their excellent work in holding the defendants responsible for their continuing pattern of unacceptable and irresponsible conduct. Our colleagues at the U.S. Attorney’s Office worked tirelessly with Special Agents of the Office of Inspector General in putting the evidence together and building the strong case that led to this significant settlement.”
This is the second time that Bechtel and AECOM have been the subject of the DOJ’s fraud enforcement actions and have agreed to pay a large sum to resolve allegations of fraud and overcharging on the WTP project. In November 2016, the USAO announced that Bechtel and AECOM then agreed to pay $125 million to resolve claims that they knowingly violated quality standards at Hanford and used substandard materials in constructing portions of the WTP, and also improperly used federal funds to lobby Congress to, among other things, try to cut the DOE’s budget for independent oversight of work on the WTP.
As part of the settlement, Bechtel and AECOM also entered into a 3-year independent corporate monitor agreement, which requires Bechtel and AECOM to pay for a full-time independent monitor and assistant monitor selected by the USAO. These monitors will enjoy broad access to Bechtel’s and AECOM’s systems, meetings, personnel, and other information pertaining to labor charging. The monitors will also report directly to the United States. Bechtel and AECOM face additional liquidated damages of up to $10 million if they violate the terms of the monitoring agreement, provide false information, or fail to immediately correct any identified DOE contract issues.
Importantly, Bechtel and AECOM also agreed to fully cooperate and assist the United States in its ongoing investigation and enforcement efforts against individual officers and managers that facilitated or participated in the false labor billing practices. FAUSA Harrington added,
“Requiring Bechtel and AECOM to admit to their conduct and to subject themselves to independent monitoring reflects not only the seriousness of this matter, but the USAO’s commitment to holding repeat offenders accountable, whether they are multinational corporations or individuals.
I commend the agents of the DOE’s Office of Inspector General for their dedicated and tireless investigative work. The agents reviewed hundreds of thousands of documents, interviewed dozens of witnesses and copiously reviewed and catalogued hundreds of hours of video and audio recordings, to build a solid case for these extensive and false labor charge transactions. Their hard work, persistence, and professional skill made this complex and challenging case possible.
This Office will continue to work with its law enforcement partners to investigate and prosecute fraud, waste and abuse committed by contractors and individual wrongdoers at Hanford, to hold them accountable, and to safeguard public funds, and protect the critical work being done at Hanford.”
According to court documents, the false craft labor billing case began in late 2016 when four (4) whistleblowers, who were employed at the WTP, came forward with allegations of labor mischarging. In May 2017, these individuals, known as “Relators”, filed a qui tam complaint under seal in the U.S. District Court (EDWA). When a relator files a qui tam complaint, the False Claims Act requires the United States to investigate the allegations and elect whether to intervene and take over the action or to decline to intervene and allow the relator to go forward with the litigation on behalf of the United States. The relator is generally able to then share in any recovery. In this case, according to court documents, the United States intervened in the action in February 2020, and that the United States, Bechtel, and AECOM reached this settlement following the United States’ intervention. Pursuant to the settlement agreement, the relators will receive $13,750,000 of the settlement amount. Another $25,789,039 of the settlement amount has been designated as restitution, meaning that it will be returned to DOE so that it is available for use in the ongoing Hanford efforts.
The settlement was the result of an investigation jointly conducted by the USAO and DOE OIG’s Western Field Office – Region 6, which is based in Richland. The USAO’s investigation and prosecution was handled by Special Assistant United States Attorney Frieda K. Zimmerman, and Assistant United States Attorneys Dan Fruchter and Tyler H.L. Tornabene, in the USAO’s Spokane Office.
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For those members of the press interested in obtaining more information about this settlement, the USAO will host a virtual press conference at 11 a.m. on Wednesday, September 23, 2020, via WebEx, where the USAO will provide additional information and respond to questions regarding this resolution. If you are interested in virtually attending or participating, and have not received an invitation, please contact Debra Doll at (509) 835-6317 or [email protected] for further information.