Energy Dept. Overpays Contractor Executives

An Energy Department official signed off on cushy contractor salaries well above levels specified in department guidance, according to an inspector general report released Wednesday.

The Energy official in Oak Ridge, Tenn., approved higher than market rate salaries for 10 contractor executives at URS|CH2M Oak Ridge LLC, the report found.  The company has a $2.2 billion contract to manage environmental cleanup efforts at the East Tennessee Technology Park in Oak Ridge.

Two of the more extreme cases had executives netting $299,800 and $337,581, or 82 percent and 74 percent above the corresponding market rates for each position, respectively.

Energy Department officials were “under the impression” that a new process to set contractor pay had been adopted, so they “did not specifically evaluate the proposed executive salaries,” according to the inspector general.  The IG said the officials failed to “apply existing department guidance” on the salary setting process. The official who signed off on the salaries said his office “believed it had the authority to do so,” the report said.

“In light of current budgetary pressures, we concluded that the department needs to implement and execute measures to ensure that contractor executive salaries are: (i) reasonable; (ii) consistent with local market compensation rates; and (iii) developed using established departmental procedures,” the report concluded.

An Energy Department manager generally agreed with the report’s recommendations.