The Cost of Cronyism

Politically powerful company provides inaccurate cost data, report says

January 23, 2013

A politically connected company with a history of legal and workplace safety violations provided inaccurate cost data to support a multi-billion-dollar federal nuclear waste cleanup contract, according to a recent report by federal watchdogs.

The report faulted the CH2M Hill Plateau Remediation Company (CHPRC), the recipient of a $5.6 billion contract in 2008 to clean up a contaminated former nuclear weapon manufacturing site in Washington state, and the Department of Energy, which had been unable to monitor CHPRC’s cost performance due to the lack of data provided by the company.

An independent audit "found significant deficiencies during reviews of CHPRC's contract change proposals," according to the report released in December by the Energy Department’s Inspector General.

The IG found the amount CHPRC spent on the project did not align with DOE’s balance sheets for three years after work on the contract began. Those numbers should have been reconciled within 180 days of the start of the project.

"CHPRC's inability to provide timely and supported contract change proposals made it difficult for the Department to measure cost performance," the report states.

CH2M Hill, the Plateau Remediation Company’s corporate parent, referred questions about the IG’s findings to the response from DOE included in the report. DOE "disagreed with the report's assertion that the department could not accurately assess contractor performance" and noted it had already implemented corrective actions suggested by the IG.

CH2M Hill has worked on the remediation effort for the Hanford nuclear site since 1999. It has racked up numerous safety violations  and been named in a civil lawsuit alleging the company condoned efforts by its employees to fraudulently overbill the federal government. DOE expanded the company’s role in the Hanford cleanup with the 2008 contract and the subsequent stimulus award despite the fraud allegation and past environmental violations.

The department did not respond to questions about the company’s prior legal problems and the role it played in the department’s contract award decisions.

CH2M Hill has thrown its weight around Capitol Hill, contributing heavily to friendly politicians, employing officials who have worked in the Energy Department previously, and spending hundreds of thousands on lobbying efforts.

CH2M Hill executives began meeting with Energy Department officials in December 2008 to help them craft the energy portions of the stimulus package, according to the Washington Post. The Plateau Remediation Company eventually would receive $1.3 billion in stimulus funds.

Sen. Patty Murray (D., Wash.), who was also present at those meetings, lobbied for greater funding for the Hanford remediation project. She won $6.4 billion in funding for remediation in the final stimulus bill, nearly 13 times the funding level included in the House’s legislative package.

CH2M Hill’s political action committee quadrupled its contributions to Murray’s campaign in the following election cycle. The $12,500 in contributions to the senator were the most the PAC has given to a congressional candidate during a single cycle.

Murray’s office did not respond to a request for comment.

An undated presentation authored by three CH2M Hill staffers identified Murray as one of the company’s "crucial congressional allies" and noted the stimulus as a potential source of federal funding.

CH2M Hill employed Robert Card, the president of its energy, water, and facilities division when it received the 2008 grant and subsequent stimulus award.

Card oversaw the Office of Environmental Management as an undersecretary of energy from 2001 to 2004. That office was in charge of the Hanford cleanup and a similar effort at the Rocky Flats nuclear site in Colorado, for which a CH2M Hill joint venture received a federal cleanup contract.

Neither CH2M Hill nor the Energy Department answered inquiries about Card’s role in securing stimulus funds for the Hanford cleanup. Card left the company last year.

CH2M Hill also beefed up its lobbying presence in 2009, employing the services of ten different lobbyists at the Podesta Group, a firm with extensive ties to the Obama administration.

The Podesta Group reported lobbying Congress on the stimulus on CH2M Hill’s behalf during all four quarters of 2009. It billed the company $220,000 for its services that year. A Podesta Group spokesperson referred questions about the specifics of their lobbying operations to online disclosure forms.

CH2M Hill announced it would lay off more than 1,300 workers in early 2011 when funding for the cleanup dried up and announced nearly 200 additional layoffs in August 2012.

CH2M Hill did not respond to requests for comment by press time beyond referring questions to the IG report.