Justice Department Sues Energy Contractors for Fraud Over Hanford Site Cleanup

An array of contractors working to decontaminate the Hanford nuclear weapons site near Richland, Washington, on Friday became the target of a Justice Department suit alleging false claims and kickbacks in their billings to the Energy Department.

In a suit filed in the Eastern District of Washington, the department’s Commercial Litigation Division said the Mission Support Alliance LLC, a contract integrator working along with Lockheed Martin Corp, Lockheed Martin Services Inc., and Lockheed executive Jorge Francisco Armijo, “knowingly made or caused false statements to the DOE regarding the amount of profit included in the billing rates for LMSI under the subcontract it was awarded by its affiliate, MSA.”

The suit also alleges that the defendants’ claims for what the government calls inflated rates violated the False Claims Act. The companies deny the charges.

MSA’s multi-billion dollar contract with the Energy Department, signed in 2010, required the alliance to provide numerous site-wide services to the department and to other contractors involved in management and technology services needed for the massive clean-up ongoing at the site, which dates to World War II. MSA awarded, without competition, according to Justice, a $232 million subcontract for work from Jan.1, 2010, through June 2016.

According to its website, MSA, which was previously owned in part by Lockheed, provides emergency response and training—including the Hanford Fire Department and Hanford Patrol operations—as well as environmental integration and land management; fleet and road maintenance; water and electric utilities; cyber security and information management. The alliance is now made up of Leidos and Centerra Group.

The complaint also alleges that Lockheed Martin Corp., in violation of the Anti-Kickback Act, made payments of more than $1 million to Armijo, a vice president at the company who “also served as a president of MSA during the time period in question,” as well as to other MSA executives “in order to obtain improper favorable treatment from MSA with respect to the award of the [Lockheed Martin Services Inc.] subcontract at the inflated rates,” Justice said. Armijo left the alliance in 2015 to move to suburban Maryland and “do more corporate work for Lockheed,” the alliance said in a release at the time.

“Where Congress has allocated money for specific purposes, we will not tolerate unlawful conduct by contractors who seek to enhance their profits at the expense of taxpayers,” said Assistant Attorney General Jody Hunt of the Civil Division.

“Fraud, corruption, and self-dealing at Hanford will simply not be tolerated,” added U.S. Attorney Joseph Harrington for the Eastern District of Washington. “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.”

Harrington added that said the department is determined to hold “fraudsters accountable, whether they are individuals, businesses, or the nation’s largest corporations.”

Joe Franco, Energy’s deputy manager for the Richland Operations Office at Hanford, said his department had alerted Energy’s inspector general and the department to the problems.

A Lockheed Martin spokeswoman said in a statement to Government Executive that the corporation “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.”

MSA said in a statement that it disagrees “with the allegations made by the Department of Justice that MSA or its employees engaged in any wrongdoing. We look forward to presenting a strong defense in this matter, and as always, we stand behind our team of incredible employees to perform extraordinary work supporting the Hanford mission,” it added. “Ethical business conduct is a hallmark of MSA and we are committed to integrity and compliance throughout all levels of the company.”