Trusting agency pays $15m without receipts
BY MIKE GALLAGHER
The Cincinnati Enquirer
During the past three years the U.S. Department of Energy has paid more than $15 million in unsubstantiated travel expenses to the companies cleaning up Fernald, The Enquirer has learned.
The payments are based on typewritten statements from the companies with no receipts or other documentation. This payment procedure continues despite the fact that the government has determined the companies improperly charged it $1.6 million for travel expenses in violation of the Fernald contract between September 1992 and September 1994.
The government found that between September 1992 and 1993, the companies overcharged the Energy Department by more than $1.2 million. From 1993 through 1994 the amount was $400,000.
An audit of the 1995 travel expenses of Fernald Environmental Restoration Management Co. (FERMCO) and its parent company, Fluor Daniel, has not been done yet.
The companies are billing - and receiving - an average of more than $417,000 per month for travel costs, according to financial records of the Energy Department, FERMCO and Fluor Daniel of Irvine, Calif.
Energy Department records show it usually makes payment on those unsubstantiated bills within 15 days.
Asked why the government pays the in-voices without checking their validity, Jack Craig, the Energy Department's chief at Fernald, said it is a matter of trust.
''Maybe they should be (verified), but there has to be a little trust when you hire a company to perform work for you,'' Mr. Craig said. ''If we're doing something wrong, then we should change it.''
Mr. Craig said Energy Department auditors at the department's Ohio field office also do not demand the actual receipts when they re-view the companies' charges, ''Because we don't have the manpower available to handle all that (receipts).''
Because of the overcharge findings and budget constraints, the government has ordered Fluor Daniel - FERMCO to cut its 1996 travel charges by 25% of what it billed the government in 1995.
Fluor Daniel - FERMCO repaid $509,625 of the $1.2 million in disputed 1993 travel costs. The company still is negotiating the remaining $691,000. Negotiations have not begun on an additional $400,000 in improper charges for 1994, which were revealed in a recently completed Energy Department audit report.
The Energy Department agreed to reimburse the company for travel expenses when it signed a five-year contract with Fluor Daniel - FERMCO in 1992. The government agreed to pay Fluor Daniel - FERMCO for all Fernald-related travel costs, including: airfare, car rentals, lodging, per diems, relocation, travel and registration for work-related training.
Mr. Craig said most of Fluor Daniel - FERMCO's multi-million dollar overcharges dealt with improper relocation costs billed to the government, including paying per diems to employees who were sent to Fernald and remained there after 30 days. The contract called for per diem payments (often $56 to $96 per day) to be halted after they were employed 30 days at the site.
''We didn't learn of the 1993 problem until last year when the audit for that time period was finally completed,'' Mr. Craig said. ''The audit for 1994 shows us still being improperly charged for more than $400,000, but hopefully we have identified the problem and it will be fixed.''
Despite the overcharges, Mr. Craig said the Energy Department does not intend to demand the receipts for costs Fluor Daniel - FERMCO will claim in the future, and will still rely on the companies' typewritten reports.
Mr. Craig also acknowledged that neither Fluor Daniel nor FERMCO kept all their own travel receipts for auditing purposes be-tween 1993 and early 1995.
''We found out they weren't keeping the receipts, but we've now hopefully fixed that and told them to maintain them. But they still don't have to send them to us when they submit their invoices,'' Mr. Craig said.
The company doesn't provide receipts for its travel expenses when it bills the government because it doesn't have to, said FERMCO President Don Ofte.
''The government sets the rules and does not require us to submit actual receipts with our (travel) invoices. . . . As far as the disputed costs, we have taken care of part of that problem and are discussing the remaining balance with them.''
Mr. Ofte did not comment about why his company charged the government for the unallowable travel expenses.
J. Phil Hamric, manager of the Energy Department's Ohio field office, however, said the Energy Department considers the companies' typewritten invoices proper documentation.
The department also doesn't routinely require Fluor Daniel - FERMCO to submit receipts for an audit, said Mr. Hamric. ''They do the audits through random checks, meaning they will ask for receipts for only certain items. It's not a perfect system, but it's what we have to work with.''
The department doesn't ask for receipts ''because we just don't have the manpower to handle all that,'' Mr. Hamric said. ''The way we're doing this, paying off those invoices, is the best we can do. We also hope our auditors can catch any problem later down the line.''
The Energy Department also does not require Fluor Daniel - FERMCO to repay the government the interest it has earned on the ''disallowed costs'' ($1.6 million so far). ''I don't think we've ever done that,'' Mr. Hamric said.
Published Feb. 11, 1996.