Energy Dept. Audit Finds Overcharges On Contracts

By Dana Hedgpeth
Washington Post Staff Writer
Tuesday, October 30, 2007

The Los Alamos National Laboratory paid millions of dollars in questionable charges to a contractor affiliated with KBR, according to a recent audit by the Energy Department's inspector general.

In three-quarters of the "work order tasks" analyzed from the last two years, the inspector general found cost overruns of 20 percent or more. The inspector general examined 94,561 cases.

KBR was formerly known as Kellogg, Brown and Root.

In several cases, the contractor -- KSL Services Joint Venture, which was formed by KBR, Shaw Infrastructure and Los Alamos Technical Associates -- put estimates of 1 cent into a computerized payment system as a "place holder," according to a report by Gregory H. Friedman, the Energy Department's inspector general. For example, one work order actually totaled $101,978.08.

Eight of 10 managers at the Los Alamos lab whom auditors talked to said "estimates are overrun a fair amount of the time" or "estimates are overrun consistently," the report said.

KBR spokeswoman Heather Browne disagreed with the findings. She said that before the report came out, "KSL Services worked with LANL to implement new processes and procedures designed to address many of the issues raised in the report."

KSL was awarded a contract in February 2003 valued at nearly $800 million over five years, under which it provides mechanical and site-support services such as repairing doors, fixing plumbing and maintaining landscaping.

The University of California and Bechtel have a $2 billion contract with the Energy Department to run the laboratory. The facility recently has experienced several security lapses, lost computer drives and contracting problems. KSL operates under a subcontract to the lab.

The inspector general's report also found substantial problems with KSL overcharging for labor and materials.

In one case, $10,191 was paid for more than twice the amount of electrical wire that a job needed. In another instance, a nuclear safety engineer charged $4,900 on a job, triple the expected cost. In working on patching cracks on a loading dock, a foreman charged three hours to the work order -- more than four months before the job being done. And one KSL employee charged eight hours for re-gluing carpet tiles, a job that only took him 15 minutes to finish, according to the report.

Another $9,780 was paid for work to upgrade fire alarms that was never done. Lab officials told auditors that charges for labor and material were "questionable, inappropriate, excessive, or unsupported based on their knowledge of the work performed," the inspector general said.

Auditors were told of inappropriate timekeeping charges, work orders being submitted by people who did not work on them, unapproved overtime charges and other unexplained charges.

An official at the lab said that "when KSL workers have no work to do, they are being subsidized, and work order 'padding' is common," the report said.

The lab's computerized billing system, called PassPort, had a category called "Other Costs" that allowed KSL to recover up to $20,000 a year in unanticipated costs. But the costs reached $41 million last year and were already over $14 million by the end of May 2007, according to the inspector general's report, and it was unclear what the lab had paid for.

The lab is also conducting an internal audit of the KSL contract.

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