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Lockheed Must Pay for Failed Dump Cleanup

Firm to Take $110 Million Charge

By Renae Merle
Washington Post Staff Writer
Tuesday, November 2, 2004; Page E02

Lockheed Martin Corp. said yesterday it will take a $110 million charge in the fourth quarter after losing a six-year court battle over a failed contract with the Energy Department for cleanup of a radioactive-waste dump in Idaho.

A U.S. District Court in Idaho ruled Bethesda-based Lockheed owes the government $110 million after its contract to clean up Pit 9, a one-acre site in Idaho Falls, fell years behind schedule and millions of dollars over budget. The field contained 55-gallon drums filled with radioactive waste, including rags, gloves and sludge used in making nuclear weapons.

In the 1960s, drums containing radioactive waste were dumped into Pit 9. Lockheed's contract to clean up the site was canceled after the firm's estimated costs tripled. (Department Of Energy)

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The ruling was a stinging defeat for Lockheed, which claimed it spent nearly $300 million on the cleanup, though it was paid only $54 million. Lockheed had planned to use the project as a catapult to capture billions of work in nuclear waste cleanup, according to the court decision.

Chief Judge B. Lynn Winmill said in a 100-page decision that Lockheed "had failed to progress with the work, failed to give adequate assurances that it would perform in the future, and failed to adequately explain its failure to progress, justifying the termination for default."

Lockheed said the $110 million charge includes 12 percent interest on the $54 million the company was paid and $11 million to dispose of a facility the company built to do the work. "We are extremely disappointed with the court's decision," company spokesman Thomas Jurkowsky said.

Asked if the company would appeal, spokesman Jeff Adams said, "We're still reviewing the documents."

The decision ends a nearly 10-year saga that began with a $179 million fixed-price contract in 1994 that the Energy Department expected to use as a model for hiring private companies to clean up nuclear waste dumps. The waste consisted primarily of plutonium and americium, which "posed a serious heath threat," according to the court decision. Some of it was dumped into the pit between 1967 and 1969 and came from the Rocky Flats Plant in Colorado.

Lockheed fell behind schedule, claiming the field included larger pieces of nuclear waste and waste of different compositions than originally expected. In 1997, Lockheed slowed down work on the project while it attempted to negotiate a higher price. The next year the department canceled the contract as the estimated cost of completing the work tripled to $600 million and the General Accounting Office, now the Government Accountability Office, called the program "clearly a failure."

"We are pleased with the ruling," said Thomas Welch, a spokesman for the Energy Department.

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