Sunday, March 2, 1997
Fernald company overbilled,
audit says

Energy Department was repaid $93,000

BY MIKE GALLAGHER
The Cincinnati Enquirer

The company managing Fernald violated U.S. Department of Energy financial rules and overcharged the government more than $93,000 in employee relocation and living costs in 1993, according to the department's inspector general.

The findings were made in a Jan. 27 inspector general audit report recently obtained by The Enquirer. The report covered millions of dollars in financial violations by several contractors holding Energy Department contracts at various sites, including Fluor Daniel Fernald.

After being cited by the inspector general, Fluor Daniel Fernald repaid the Energy Department $93,474, according to Energy Department records. The company challenged an additional $3,256 in other overcharges, which an Energy Department contracting officer later agreed were allowable costs.

According to the report, the inspector general found ''systemic problems of contractors charging the (Energy Department) for unreasonable and unallowable employee relocation and temporary living and associated travel costs.

''These unreasonable and unallowable costs were charged because the department did not use clearly defined contractual provisions that were consistent with (Energy Department financial rules) ... As a result, contractors claimed and were reimbursed about $13.6 million for costs to which they were not entitled.''

The latest repayment comes on top of more than $509,625 Fluor Daniel Fernald was forced to repay the government in 1995 and 1996 for other improper travel costs charged the Energy Department in 1993.

On Feb. 11, 1996, The Enquirer reported on Fluor Daniel Fernald's travel charges to the government, including the 1993 reimbursements cited by the inspector general.

The report was part of an ongoing series that has looked at financial mismanagement, safety and health problems and lack of oversight by the Energy Department officials at Fernald.

As a result of the series, congressional leaders ordered an investigation of Fernald by the U.S. General Accounting Office. That report is expected to be completed next month.

Last year, the inspector general determined that the company should repay an additional $400,000 for improper charges in 1994. That finding is being challenged by Fluor Daniel Fernald.

Also still unresolved, according to Energy Department officials in Washington, D.C., are the findings in a Defense Contract Auditing Agency audit report completed last year. That audit found Fluor Corp. - Fluor Daniel Fernald's parent company in Irvine, Calif. - must repay hundreds of thousands of dollars for improper charges in connection with several government contracts the corporation holds nationwide.

The inspector general's office is auditing similar problems by the company and Energy Department officials at Fernald for 1994 and 1995 and is expected to launch a 1996 audit upon completion of those.

Noting the financial abuses at Fernald that were initially discovered during an earlier interim audit, the inspector general found that Fluor Daniel Fernald:

  • Allowed family members' per diem payments to exceed the government-approved amount.

  • Violated Energy Department rules by allowing employees to ship such things as a boat, travel trailer and recreational vehicle and repaying the charges with government funds.

  • Improperly charged the government for reimbursement of title insurance costs to employees who claimed them as home-selling expenses.

  • Charged the government for reimbursement of shipping costs for household goods for which no receipts were maintained.

  • Discovered the company had inadvertently billed the Energy Department twice for the same service.

Officials at the Energy Department's Ohio Field Office declined to comment on their lack of oversight of Fluor Daniel Fernald's overcharges, and only noted that the company had repaid the improper costs.

A Fluor Daniel Fernald response, faxed to The Enquirer, said, in part:

''Fluor Daniel Fernald welcomes the IG reviews as a measure to help us comply with all applicable government regulations. As the January 1997 IG report points out, Fluor Daniel Fernald has implemented corrective actions. We have clarified written policies to all team members to gain tighter control over relocation and travel costs.''

DANGER & DECEIT: Enquirer investigation home page