August 8, 2013

Cost Transfers at the Department's Sodium Bearing Waste Treatment Facility Construction Project

In 2005, the Department of Energy (Department) awarded the Idaho Cleanup Project contract to CH2M ♦ WG Idaho, LLC (CWI) to remediate the Idaho National Laboratory, which included the Sodium Bearing Waste Treatment Facility construction project.  The primary mission of this facility was to treat approximately 900,000 gallons of radioactive sodium bearing liquid waste at a Federal baseline construction cost of $461 million, which was approved in December 2006.  Due to significant cost escalation, the Department approved a revised Federal project baseline in January 2009, to a cost of $571 million and a completion date of August 2011.

Between April and November 2010, CWI made seven funding determinations, transferring $13.1 million to other non-project operational accounts from the $571 million approved project cost.  In January 2011, the Department approved a revision to the project baseline that delayed project completion to December 2011, but did not change the project's estimated costs.  The Department requested that the Office of Inspector General determine whether the transferred costs were direct project costs that should have remained with the project.

We found that three of the seven cost transfers totaling $7.9 million represented direct costs of the project, specifically, $3.8 million for a waste transfer line and tie-in, $4 million for mineralization testing, and$107,000 for portable bathrooms.  As such, we found that these costs were not appropriately charged to the project because CWI did not consider all pertinent facts, and we concluded that the costs should not have been transferred.  Additionally, we found that four of the seven cost transfers, valued at $5.2 million, were for activities that were not direct project costs or had been appropriately shared pro rata with other projects in accordance with Department and CWI accounting and project management principles.  Management concurred with the report's recommendations and identified actions it had taken to address the issues we reported. 

Topic: Environmental Cleanup