Hanford DOE Subcontractor Agrees to Pay $2.0 Million to Settle Allegations of Small Business Fraud
Spokane – Joseph H. Harrington, Acting United States Attorney for the Eastern District of Washington, announced that Federal Engineers & Constructors (FE&C), a subcontractor at the Department of Energy’s (DOE) Hanford Site, has agreed to pay $2 Million ($2,000,000) to resolve allegations that it violated the False Claims Act (FCA) in connection with a number small business subcontracts with DOE at its Hanford nuclear site.
Between 2005 and 2016, Washington Closure Hanford, LLC (WCH), a jointly owned by AECOM, Bechtel National Inc., and CH2M Hill Companies Ltd., was a DOE prime contractor that was awarded a multi-billion dollar River Corridor Closure Contract (RCC) at DOE’s Hanford Site. WCH was responsible for environmental remediation on Hanford's River Corridor. WCH workers were responsible for cleaning up waste sites at Hanford, decontaminating and decommissioning former plutonium production nuclear reactors and surplus facilities, and disposing of contaminated waste. The RCC required WCH to award a certain percentage of subcontracts to small and disadvantaged businesses, including woman-owned small businesses. Pursuant to its contract, DOE fully reimbursed WCH for hundreds of millions of dollars in subcontracts WCH awarded to qualified small, disadvantaged businesses, including women-owned small businesses.
The case originally arose out of a whistleblower complaint filed in U.S. District Court by Savage Logistics LLC, a Hanford-area small business, and Salina Savage, its owner. In December 2013, the United States filed a Complaint intervening in the lawsuit, alleging that WCH, FE&C, Sage Tec LLC (purported to be a small, disadvantaged business) and Laura Shikashio, the owner of Sage Tec, violated the False Claims Act (FCA) with respect to two multi-million dollar subcontracts arranged between WCH and Sage Tec. The Complaint alleges that WCH, FE&C, Sage Tec and Ms. Sikashio knowingly misrepresented Sage Tec to be a qualified disadvantaged small business in order to be eligible for two multi-million dollar subcontracts that were designated for truly qualified small disadvantaged businesses. The Complaint further alleges that Sage Tec was not a legitimate small, disadvantaged business; rather it was a pass-through front company for FE&C, which performed substantially all of the work on WHC’s improperly awarded subcontracts.
FE&C’s settlement with the DOJ resolves its liability for the misconduct alleged and set forth in the United States’ Complaint. The United States’ case against WCH, Sage Tec, and Ms. Shikashio continues to be prosecuted and the remaining defendants still deny liability.
Joseph H. Harrington said, “Small business fraud not only harms the taxpayers and the vital cleanup mission at Hanford, but legitimate small, disadvantaged businesses that do not have the opportunity to fairly compete for and perform subcontracts. I want to commend the Department of Energy Office of Inspector General (DOE-OIG) and the Small Business Administration Office of Inspector General (SBA-OIG) for the outstanding efforts investigating and uncovering the scheme perpetrated here. The United States Attorney’s Office for the Eastern District of Washington, together with the Office’s law enforcement partners, will continue to pursue vigorously large and small business fraud at Hanford.”
“The false statements in this case were intended to deceive the government into believing that a woman-owned small, disadvantaged business was performing valuable work as a government subcontractor,” said Small Business Administration Acting Inspector General Hannibal “Mike” Ware. “OIG will aggressively pursue parties that, through fraud, gain access to SBA’s small business contracting programs. I want to thank the U.S. Attorney’s Office for their dedication to enforcing compliance in SBA’s contracting programs.”
Department of Energy Acting Inspector General April G. Stephenson said, “The Department of Energy Office of Inspector General is committed to ensuring the integrity of Departmental contracts and financial expenditures. We will continue to investigate allegations of fraudulent diversion of tax dollars throughout DOE programs. This settlement is a result of our staff’s dedicated work to ensure public funds are properly used for the mission-related purposes for which they are intended. We appreciate the support of Department of Justice’s and Department of Energy’s attorneys in these matters.”
The Savage whistleblowers will receive approximately $470,000 of the $2.0 Million settlement DOJ reached with FE&C due to their private efforts in exposing – reporting the described scheme to the DOE and DOJ.
DOE-OIG and SBA-OIG conducted the investigation on the Relators’ whistleblower complaint. The DOJ’s lawsuit is being prosecuted by Tyler H.L. Tornabene, Vanessa R.Waldref, and Daniel Fruchter, Assistant United States Attorneys for the Eastern District of Washington.
This case is captioned United States of America ex rel. Salina Savage, Savage Logistics LLC, vs. Washington Closure Hanford LLC, Federal Engineers and Constructors, Inc., Sage Tec LLC, and Laura Shikashio, CV-10-5051-SMJ.