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Justice News

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

Thursday, January 19, 2017

WRPS Agrees to Pay $5.275 Million to Settle False Time Card Allegations

Spokane, WA- The United States Attorney’s Office for the Eastern District of Washington (EDWA) and the Department of Justice (DOJ), Civil Frauds Section, announced a settlement agreement with government contractor Washington River Protection Solutions LLC (WRPS) for $5,275,000. The settlement resolves allegations that WRPS knowingly submitted false claims to the U.S. Department of Energy (DOE) between October 2008 and July 2013 concerning internal audit processes and the submission of false timecards by WRPS workers’ seeking payment of overtime and premium pay.

The alleged conduct involved three different schemes. First, upon being awarded Hanford’s Tank Farms Contract in October of 2008, WRPS was explicitly advised by federal law enforcement of systemic timecard fraud being committed by WRPS’s workforce at the Tank Farms under WRPS’s then utilized procedures. Notwithstanding this notification, it is alleged that WRPS failed to take any steps during the next five years (i.e., until after July 2013) to initiate any changes of the faulty procedures and failed to curtail the timecard fraud. As a result of this failure, the timecard fraud alleged at the Tank Farm was allowed to continue in a variety of forms under WRPS’s management and while WRPS’s management and executives allegedly looked the other way.

According to the DOJ, the most common form of the alleged timecard fraud involved WRPS workers, with management’s acceptance, not fully accounting for their claimed overtime work. The lack of a full accounting of worker overtime made it impossible for DOE to determine to what extent the claimed overtime was actually performed.

Given that the previous DOE contractor, CH2M Hill Hanford Group Inc. (CHG), admitted during its administration of the Tank Farms from 1999 to 2008 that it criminally conspired with its employees to submit false time cards to DOE, WRPS’ lack of accountability for that same work force and its continued use of the same loose overtime accounting procedures was, at a minimum, reckless and irresponsible conduct by WRPS’s managers and executives.

Second, WRPS also allegedly allowed its workers to falsely claim additional overtime pay at government expense by falsely classifying the workers’ overtime work as Emergency Call In (“ECI”) overtime. Under the Collective Bargaining Agreement (CBA) with WRPS’s Tank Farms’ workforce, ECI could only be used when, as the result of an actual emergency, a worker was provided less than 16 hours of advanced notice of the need to work an overtime shift. However, it is alleged that WRPS almost always allowed its workers to code timecards for higher ECI overtime pay when no emergency or urgency existed. This scheme allegedly resulted in the DOE paying hundreds of thousands of dollars of inflated labor rates for overtime that was falsely coded as ECI.

The third alleged scheme involved WRPS management and executives looking the other way when employees submitted false or fraudulent timecards for work allegedly performed at the Tank Farms. To oversee certain audit requirements, WRPS elected to install its own general counsel as the head of the contractually required Internal Audit Department during the first three years of WRPS’s Tank Farm contract. While DOE was generally aware of WRPS’s internal structural arrangement, DOE was not aware of the full extent of WRPS’s general counsel’s allegedly directing the audit department’s day-to-day auditing processes. WRPS’s arrangement was problematic for a number of alleged reasons, including that WRPS’s general counsel allegedly had no auditing experience and she consistently worked to avoid providing any meaningful oversight of the alleged ongoing timecard fraud scheme. When DOE became more aware of the true nature and extent of WRPS’s general counsel’s role in its internal audit process, DOE required WRPS to remove the general counsel as head of the Internal Audit Department and required WRPS to hire a new internal audit manager who could exercise independent judgment and true oversight of the program as contractually required by WRPS’s public contract with DOE.

“Robust and fully functioning internal audit processes are the first line of defense against fraud on prime contracts issued to private contractors at Hanford,” said Michael C. Ormsby, United States Attorney for the Eastern District of Washington. “WRPS’s acknowledgement and resolution of the Justice Department’s allegations goes to the heart of that essential defense and required oversight of tax payer dollars. This settlement shows that prime contractors should be wary of cutting corners on any

contractually required internal auditing obligation. To its credit, WRPS appears to have recently remedied the problem and we commend the career internal auditors at WRPS who despite these alleged systemic failings continue their good work under challenging and sometimes difficult circumstances,” stated Mr. Ormsby.

The settlement agreement between the government and WRPS requires WRPS to pay the full $5,275,000 settlement within 30 days. As authorized under the False Claims Act, the settlement recovers more than double the alleged loss caused to DOE by WRPS’s alleged false timecard schemes.

“It is deeply concerning that, in the wake of WRPS’s predecessor, CH2M Hill Hanford Group Inc.’s previous admission to criminal timecard fraud conspiracy with employees at the Tank Farms, conduct that occurred just shortly before WRPS took over the DOE’s contract, that WRPS continued to bury its head in the sand and allegedly allowed much of the same timecard fraudulent practices to continue,” stated USA Ormsby.

After being notified in July, 2013 of the lack of vigilant internal controls, WRPS did take significant steps to try to address its timecard fraud problem, principally by altering its procedures, instituting a proxy card system, negotiating changes in the relevant Collective Bargaining Agreement (CBA), and by working to ensure an environment of more meaningful and vigorous internal auditing processes and controls.

“We hope this settlement and the other false claims enforcement actions this Office and the Department of Justice in Washington D.C. have pursued these past years will assist WRPS and other Hanford contractors to perform their important clean-up work in a responsible and accountable manner, and in a way that does not place scarce tax payer dollars at irresponsible risk,” said USA Ormsby.

Since 2009, the United States Attorney’s Office (EDWA) and DOJ components have recovered more than $150,000,000 in false claims damages and penalties from Hanford – DOE nuclear reservation contractors and employees.

This case was investigated by the U.S. Department of Energy Office of Inspector General (OIG-DOE) and prosecuted by the United States Attorney’s Office (USAO) for the Eastern District of Washington and the Department of Justice (DOJ) Civil Frauds Section. A copy of the False Claims Act Settlement Agreement reached in this matter is attached.

This pre-lawsuit settlement resolves the fraud allegations that have been made. WRPS denies the allegations and there has been no formal determination of liability.

Attachment: Settlement Agreement

Updated January 30, 2017