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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Washington

FOR IMMEDIATE RELEASE
Tuesday, October 10, 2017

Owner of Hanford Subcontractor to Pay $235,000 to Settle Small Business Fraud Allegations

Spokane - Joseph H. Harrington, Acting United States Attorney for the Eastern District of

Washington, announced that the U.S. Department of Justice (DOJ) and Sage Tee LLC (Sage Tee), a

subcontractor at the Department of Energy's (DOE) Hanford Site, and its owner, Laura Shikashio,

have reached an agreement wherein Sage Tee and Ms. Shikashio have agreed to pay $235,000 to

resolve allegations that they violated the False Claims Act (FCA) in connection with bidding -

receiving two small business subcontracts at DOE's 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 eligible and

qualified small and disadvantaged businesses, including woman-owned small businesses. Pursuant

to the WCC, DOE fully reimbursed WCH for the amounts WCH paid to subcontractors so long as

they were reasonable and allowable under the contract.

 

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, Sage Tee LLC (an

entity that purported to be a small, disadvantaged business), Laura Shikashio, the owner of Sage Tee,

and another entity known as Federal Engineers and Constructors (FE&C), violated the False Claims

Act (FCA) with respect to two multi-million dollar subcontracts arranged between WCH and Sage

Tee. The Complaint alleges that WCH, Sage Tee, Ms. Shikashio, and FE&C knowingly

misrepresented Sage Tee to be a qualified disadvantaged small business in order to he eligible for

two multi-million dollar subcontracts that were designated for truly qualified small disadvantaged

businesses. The Complaint further alleges that Sage Tee 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. This settlement resolves Sage Tee and Ms.

Shikashio's liability. See attached Settlement Agreement.

 

Last month, FE&C agreed to pay $2.0 Million to resolve its own liability exposure. WCH continues

to deny liability and the United States' case against WCH continues.

 

Joseph H. Harrington said, "Small business fraud not only harms the taxpayers and the vital cleanup

mission at Hanford, but also legitimate small, disadvantaged businesses that are cheated from the

opportunity to fairly compete for and perform DOE subcontracts. I want to commend the

Department of Energy Office oflnspector 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. Harrington added, "The United States Attorney's Office

for the Eastern District of Washington, together with our federal law enforcement partners, will

continue to vigorously pursue 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 staffs 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 $47,000 of the $235,000 settlement DOJ

reached with Sage Tee and Shikashio due to their own private efforts in reporting and exposing 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. Salint;J Savage, Savage Logistics LLC, vs.

Washington Closure Hanford LLC, Federal Engineers and Constructors, Inc., Sage Tee LLC, and

Laura Shikashio, EDWA Cause No. CV-10-5051-SMJ.

Press Release Number: 
CV-10-5051-SMJ
Updated October 10, 2017