TOPICS
TOPICS
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.
COMMENTS
- Contracts do contain such a clause -- “Termination for Default.” This gives the government the right to terminate the contractor for non-performance and to reasonably charge that contractor for costs to re-procure the items/services. However, it’s not an overnight process. Poor performance has to be documented which requires strong government oversight. There is less oversight of government contracts these days which allows contractors to get away with things they shouldn't. And, when companies like Halliburton get a pass from the current administration for overcharging, by tens of millions of dollars, that only weakens our case in punishing poor performance. The acquisition workforce is also struggling. "Initiatives" like NSPS and BRAC have demoralized the workforce and people cannot wait to retire. Considering 50 percent of the acquisition workforce is eligible to retire in the next five years, it’s only going to get worse. DoD Contract Specialist GovExec.com reader Posted October 24, 2005 8:54 AM
- This is exactly why the government has such a huge deficit. We need better bankers and people held accountable for this abuse. The mentality that it's not their money is wrong. It's every taxpayer's money and the government should be held accountable for the lackadaisical attitude. When a contract is awarded a clause needs to be added to the contract on non-performance; reviewed every six months. Also have two back-up contractors in case the first one is dismissed (fired). This should give the first contractor incentive to do the job well and within the time and dollar constraints given. If, by chance, the second and third contractors are not available when the first contractor is dismissed, have an approved list of available contractors to step in when one withdraws or is no longer available. To prevent the contract being awarded to friends of the contracting officer have a committee of three to four people to do the selecting. It would be advisable to charge the contractor a penalty for each day past the end of the contract. Each contractor should have a scorecard with their work performance record to be considered when the contracting office is reviewing the contractor’s portfolio for the contract. If they had poor performance, failed to complete on time, or over charged on previous contracts, they should not be considered for the contract. No more rewards for bad performance, cost overruns, or overcharging. GovExec.com reader Posted October 17, 2005 10:41 AM
- Wait a minute. It's more than just friendship between federal employees and contractors. I have seen any number of deficient contracts allowed to slide by because the contracting people didn't want to take the time to rework them or they could get any bidders and wanted to get the contract out of their office. It's bean count. The government judges how well you do your job by how many beans you move out. Not how many contracts are done right. A lot of waivers are issued because the contracting officer signs off when the company can't comply 100%. Of course, there was that contracting officer where I worked who got busted after they found that a contractor gave him a log cabin. Unfortunately, there are a lot of Contracting Officers, Government Source Inspectors as well as a few Generals that get high paying "consulting" jobs after retirement and don't get busted. I think it depends a lot on who you know and how many politicians they control. The problem is not as rare as the government lets on especially in DoD. Robert M. Posted October 11, 2005 6:35 PM
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