Energy unit paid contractor award fees despite poor performance

The Energy Department paid a contractor working on the Yucca Mountain nuclear waste project millions of dollars in incentive fees even though the company failed to meet performance requirements, the agency's inspector general reported Thursday.

Energy's Office of Civilian Radioactive Waste Management paid the award fees to Bechtel SAIC Co., a joint venture between the global construction company Bechtel Corp. and the information technology company Science Applications International Corp., even though the company had to take extra time to "correct poor quality work" and delivered unacceptable products, according to the report.

Bechtel SAIC won the five-year, $3.2 billion contract to manage and operate the Yucca Mountain Project in February 2001. Energy is preparing Yucca Mountain in Nevada as a site to store and safely dispose of nuclear waste.

The contract specified that if Bechtel SAIC helped Energy give a nuclear waste site recommendation to President Bush by Dec. 18, 2001, then it would receive an incentive award of $17.7 million. According to the IG report, the site recommendation documents provided by Bechtel SAIC were deemed unacceptable. The needed corrections delayed the recommendation by 22 days. Still, Energy paid Bechtel SAIC $17.5 million of the incentive fee.

The report blamed the lack of a plan clearly identifying the level of performance required for each incentive and how that performance would be measured, as well as a lack of documentation on the decision to award the fees. "It was unclear what rationale the fee determining official used when deciding the appropriate fee," the report stated.

The Office of Civilian Radioactive Waste Management agreed with the report's findings and said it would develop a corrective action plan.

Bechtel did not return a call seeking comment. An SAIC spokeswoman deferred calls to Bechtel SAIC Co., which did not return messages.