Audit Report: IG-0559

In January 1997, Westinghouse Savannah River Company, the management and operating
contractor at the Savannah River Site, submitted a privatization proposal requesting approval to
form a "spin-off" company to perform safety management services. The new company,
Westinghouse Safety Management Solutions, Incorporated (WSMS), would be a wholly owned
subsidiary of Westinghouse and would be largely comprised of Westinghouse personnel already
performing safety management services at the site. To justify the spin-off, the management and
operating contractor prepared a make-or-buy analysis indicating that by using WSMS the
Department would save at least $11.5 million over 5 years. The Department approved the
proposal and allowed Westinghouse to enter into a sole-source, cost-reimbursable agreement
with WSMS beginning in Fiscal Year 1998.
The objective of this audit was to determine whether the privatization of safety management
services at the Savannah River Site has reduced the Department's cost.