Defense contractor to take $110 million loss
Court upholds Energy's move to cancel a $179 million contract after finding Lockheed Martin failed to clean up nuclear waste site.
The Lockheed Martin Corp. announced last week that it will take a $110 million charge against fourth-quarter earnings after losing a lawsuit filed to recoup money it lost with the cancellation of a nuclear waste cleanup contract.
The decision by Federal District Judge B. Lynn Winmill ended a protracted legal case involving the nuclear waste clean up of one acre of the 900-square-mile Idaho National Environmental and Engineering Laboratory site.
The court ruled that the Bethesda, Md.-based corporation must repay the Energy Department $54 million in progress payments, plus interest and about $12 million in decontamination and decommissioning costs. Winmill found that Lockheed did not clean up the Pit 9 site - comprised of about 75 trenches containing buried 55-gallon drums of radioactive waste -- and that the contractor could not guarantee completion of project.
A spokesman said Lockheed is in the process of reviewing the 100-page ruling and a decision has not yet been made on whether or not to appeal. In a press release, Tom Jurkowsky, Lockheed vice president of media relations, said the company is "disappointed with the court's decision."
"Because of the importance of the Pit 9 project to the U.S. Department of Energy and the state of Idaho, we offered a plan that would have led to the successful completion of the project with a portion of the cost being recognized as a legitimate claim," Jurkowsky said.
Hoping to get an edge on Energy Department contracts for cleaning up buried radioactive waste at laboratory sites, in the early 1990s Lockheed bought a soil remediation company to clean up Pit 9.
Lockheed officials, according to court documents, vigorously pursued Energy remediation projects and used political pressure to get the department to issue a contract to remediate Pit 9.
Buried in the 1950s, many of the 55-gallon drums, which were filled with radioactive waste, had deteriorated by the 1980s, posing a health hazard. The Environmental Protection Agency, Energy and the state of Idaho entered an agreement to clean up the site and proposed staggered deadlines. Pit 9 was specifically chosen for immediate clean up because it posed a serious health threat.
Lockheed officials signed a fixed-price contract for the work in 1994, but Energy terminated the $179 million contract in 1998 because Lockheed failed to meet its cleanup deadline. The site was supposed to be decontaminated by February 1999.
The Energy Department also filed a lawsuit seeking damages and interest totaling about $100 million. Lockheed protested the termination of its contract in the four-month 2003 trial and claimed $270 million in damages.