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Exposing Corruption and Preventing Abuse of Power

DOE Contracting Mismanagement Cost Taxpayers Over $450,000

A recent Department of Energy (DOE) Inspector General (IG) report found that four nuclear facility contractors paid Heather Wilson and Company, LLC (HWC) over $450,000 without requesting or recording a single deliverable.

While a U.S. Representative, Heather Wilson (R-N.M) promoted herself as a supporter of the two nuclear labs in New Mexico, Sandia National Laboratories (Sandia) and Los Alamos National Laboratory (LANL). Just a scant month after leaving office in 2009, Wilson created her company and entered into her first government contract with Sandia.

Wilson would go on to establish contracts with three other nuclear facilities: LANL, Oak Ridge National Laboratory (Oak Ridge), and Nevada National Security Site (Nevada). But an in-depth review by the DOE IG could find no documentation of the services she provided. All in all the contracts totaled $450,000 between 2009 and 2011. Although at the time these expenditures were reimbursed by the government, meaning they came from taxpayer dollars, the IG report has confirmed that $442,877 has been paid back to the DOE by the prime laboratory contractors.

The Federal Acquisition Regulation (FAR), a set of regulations governing contracting, requires evidence of the nature and scope of the services provided by contractors before they can claim their fees. But the DOE IG found that HWC’s contract with Sandia was far more informal, and the Sandia Field Office could not provide documentation showing exactly what Wilson did to earn her pay.

The IG report said, “the statement that a task order, standing alone without evidence of completion, is sufficient to demonstrate that a task had been successfully completed, in our opinion, turns logic on its head.” Sandia officials acknowledged to IG investigators that the arrangement was unusual, going so far as to say, “We don’t do business with anyone else like this and would prefer that this contract go away.”

The Inspector General found a similar situation at LANL where a senior management official was warned of the risks and issues with the HWC contract in March 2009. “The official was advised that the consulting agreement was risky because it contained a vague statement of work, that the retained agreement was not recognized in the LANL procurement system, there was inadequate data to justify that the price for the services was fair and reasonable, and there was a lack of specificity of level of effort required.” Despite these concerns, LANL made 19 payments to HWC totaling $195,718 between 2009 and 2011.

Because of the vague nature of the tasks assigned to HWC and the lack of concrete deliverables, the DOE IG was concerned about the duplication of work across the four labs. They were unable to determine if there was a redundancy in HWC’s work, however, because of that vague nature. The investigators were also unable to determine whether certain prohibitions were violated, again because of the vague nature of the agreements.

The DOE OIG confirmed in its report that it will continue to review these matters, but an IG staffer informed POGO that the OIG was not sure if the case has been referred to the Department of Justice for further investigation or if there has been a determination of illegal activity.

In February of this year, Wilson was appointed to an advisory panel tasked with assessing national nuclear laboratories by House Speaker John Boehner (R-Ohio). Because the goal of the panel is to “to examine options and make recommendations for revising the governance structure, mission, and management of the nuclear security enterprise,” some critics have raised conflict of interest concerns given Wilson’s contracts with the labs.

POGO has fought against conflicts of interest on federal advisory committees for years, most recently supporting The Federal Advisory Committee Act Amendments of 2013 (H.R. 1104), which would require agencies to reveal how committee members are chosen, as well as account for any outside priorities that may be considered conflicts of interest. Wilson remains on the advisory panel despite her relationship with these nuclear labs.

Meanwhile Wilson and the labs have defended her contracts, saying that her work was completely above board. An Oak Ridge director called her work “integral,” while a representative from LANL said, “We believe it was reasonable and appropriate to seek the services of Ms. Wilson. She is uniquely qualified to advise the lab on a variety of issues related to our national security missions.” Both LANL and Sandia representatives admitted that the documentation of her activities was substandard. Wilson told the Albuquerque Journal, “DOE’s criticism concerns what documentation the lab should require and maintain internally to satisfy regulators. My work was done in full compliance with the contracts we signed and under the direct supervision of lab sponsors.”

This most recent incident of DOE contracting mismanagement is just another in a long line of DOE contracting problems. For instance just last month the Government Accountability Office sustained a bid protest for a $23 billion National Nuclear Security Administration (NNSA) contract because the NNSA failed to make meaningful assessments of the cost savings in any of the bids. Just days later, the DOE IG found that the Department and the NNSA failed to correctly audit $906 million worth of subcontracts between 2010 and 2012. This is particularly troubling because subcontracts that were audited properly in this period were found to have over $2.5 million in “questioned costs.”

It’s time for DOE to step up the oversight and stop letting millions of taxpayer dollars walk out the door without any kind of meaningful assessment or review.