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January 22, 2009

Department of Justice

United States Attorney William C. Killian Eastern District of Tennessee


TVA Contractor Stone & Webster Pays $6.2 Million To Resolve Contract Fraud Investigation

Knoxville, TN - United States Attorney James R. Dedrick announced today that the United States, on behalf of the Tennessee Valley Authority (TVA), has reached a settlement with Stone & Webster Construction, Inc., a subsidiary of The Shaw Group, as a result of a lengthy investigation conducted by the TVA Office of Inspector General into alleged false claims and contract fraud. As part of the settlement, Stone & Webster has paid $6.2 million to the United States.

Stone & Webster has a 10-year billion dollar plus contract to provide modification and maintenance services for TVA’s nuclear power plants in East Tennessee and Alabama. The contract provides for compensation for Stone & Webster as reimbursement for its costs as well as payment of periodic bonuses or performance fees based on meeting certain goals including those tied to personnel safety. Under the contract Stone & Webster is required to maintain accurate logs of injuries and to provide reports of all such injuries to TVA, consistent with Occupational Safety and Health Administration regulation. The United States alleged that during the period from 2003 through 2006, Stone & Webster failed to maintain the required logs and provided false reports to TVA that mis-classified and understated the number and severity of employee injuries in support of its claims for safety-related performance fees. TVA paid Stone & Webster based on those reports and statements.

In addition to payment of the $6.2 million, Stone & Webster has entered into a comprehensive two-year Corporate Integrity and Monitoring Agreement with the TVA Office of Inspector General to ensure that Stone & Webster implements a Compliance and Ethics Program applicable to all work or services provided by it to TVA and that it fully complies with TVA’s policies and directives related to its contracts. This is the first corporate integrity and monitoring agreement in TVA history between the Office of Inspector General and a TVA contractor.

“Today's settlement is an example of the Justice Department's determination to recover money lost due to contract fraud and other misconduct against the United States government,” United States Attorney Russ Dedrick said, “and is consistent with the mission of the National Procurement Fraud Task Force created in October 2006 to promote the prevention, early detection and prosecution of government contract fraud.” For more information about successful civil and criminal procurement fraud prosecutions, see the task force website at http://www.usdoj.gov/criminal/npftf/.

United States Attorney Dedrick further noted that this settlement resulted from a comprehensive, ongoing parallel criminal and civil investigation which was initiated by the TVA Office of Inspector General during 2004. A search warrant was executed on Stone & Webster’s premises on the Browns Ferry nuclear site in July 2006. The United States Attorney’s office joined the investigation at that time.

The $6.2 million settlement and the Corporate Integrity and Monitoring Agreement resolve all allegations against Stone & Webster. The United States Attorney and the TVA Inspector General continue to investigate individuals involved in the matter.

United States Attorney Dedrick commended the cooperative efforts of TVA Inspector General Richard Moore and his staff who participated in this complex investigation, and in particular lead TVA-OIG Agents Nancy Holloway, Beth Thomas and now-retired Doug Davis for their dedication and Assistant United States Attorneys Betsy Tonkin and Greg Weddle for their excellent and professional legal representation of the United States’ interests in this case.

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