The United States is suing Bethesda-based defense giant Lockheed Martin in connection with an alleged fraudulent kickback scheme related to a $232 million support contract for nuclear waste disposal, the Justice Department announced Friday.
It is the latest accusation of contractor malfeasance to emerge from the Hanford site, a decommissioned plutonium production plant in rural southeastern Washington, where companies handling the decades-long, multibillion-dollar decontamination work have been routinely accused of misusing taxpayer money.
Federal attorneys accused Lockheed of paying more than $1 million to executives from Mission Support Alliance, a joint venture that it partially owned, in exchange for “improper favorable treatment” when it awarded a $232 million contract to another Lockheed Martin subsidiary. The contract was awarded without open competition, allegedly at inflated rates.
The defendants are accused of lying to the Energy Department to cover up how much profit Lockheed would receive from the work that took place from 2010 to 2016. One of those executives, Jorge Francisco Armijo, later left MSA and became a vice president at Lockheed.
Representatives from Mission Support Alliance and Lockheed Martin said their employees had not engaged in any wrongdoing, and both vowed to fight the charges.
“Lockheed Martin categorically denies the allegations made by the Department of Justice and rejects the suggestion that the Corporation or Frank Armijo engaged in any wrongdoing. Lockheed Martin will defend this matter vigorously,” a company spokeswoman said in an email.
An MSA spokeswoman said the company would stand by its employees.
“We look forward to presenting a strong defense in this matter, and as always, we stand behind our team of employees who perform extraordinary work supporting the Hanford mission,” an MSA spokeswoman said in an email.
The site was set up in 1943 to produce plutonium for U.S. nuclear bombs, including one that was dropped on Japan at the end of World War II, according to a government website describing its history.
For more than 40 years and through the height of the Cold War, the 586-square-mile site was a critical piece of the U.S. nuclear arsenal. Its workforce at one point swelled to well over 50,000 people.
But the last reactor at Hanford was decommissioned in 1987, and the site was left with massive underground tanks containing radio-active sludge. About a third of those 177 tanks have leaked an estimated 1 million gallons of waste, according to a fact-sheet published by a company tasked with clean-up services, raising environmental concerns.
A 1989 agreement between the Energy Department, Environmental Protection Agency and the state of Washington began the clean-up process and established a set of milestones to return the area to toxic waste levels that are acceptable under federal regulations.
Starting in 2000 the Energy Department started paying the construction and energy contractor Bechtel to build an advanced nuclear treatment plant that would “vitrify," or convert the waste into a less dangerous form, allowing for its safe disposal.
A host of challenges have thrown the clean-up off-schedule, however, raising the question of whether the disposal work will ever be completed.
According to a 2015 report from the Government Accountability Office, the Department of Energy spent more than $19 billion over 25 years on “treatment and disposition of 56 million gallons of hazardous waste" at the Hanford site, without actually treating hazardous waste.
“Over the last 25 years, [the Department of Energy] has considered and abandoned several different approaches to treating and disposing of this waste but, to date, no waste has been treated,” the GAO wrote in 2015.
The Energy Department has pushed back the deadline for that work at least twice: In 2000 the project was expected to cost $4.3 billion and be completed in 2011. By 2016 the department increased its estimated total project cost to $16.8 billion, and Bechtel’s contract for that work was extended through 2023.
Bechtel, along with another contractor called AECOM, in 2016 paid $125 million to settle allegations that they had fallen short on quality standards and lied to the government about it.
In Friday’s release, Department of Energy Deputy Manager for Richland Operations Office Joe Franco said the Department of Energy had initially identified the possibility of fraud before referring the issue to the Justice Department.
The Energy and Justice Departments both promised to clean up the nuclear cleanup effort.
"Fraud, corruption, and self-dealing at Hanford will simply not be tolerated,” U.S. Attorney Joseph H. Harrington said in the release. “The critical mission of cleaning up the Hanford Site in a safe, timely, environmentally responsible, and cost-effective manner is too important to the public and the residents of this region.”