Audit Report: DOE-OIG-16-03

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November 17, 2015

Procurement of Parts and Materials for the Waste Treatment and Immobilization Plant at the Hanford Site

To support construction of the Waste Treatment and Immobilization Plant (WTP), Bechtel National Inc. (Bechtel) has procured approximately $4 billion in parts and materials through the end of fiscal year 2014 and instituted steps to ensure that procured parts and materials meet specifications and requirements.  To help ensure that parts were satisfactory, Bechtel developed several controls to include verification of vendor design submissions, review of the manufacturing or fabrication process, and receipt inspection and testing.  Bechtel also developed procedures to identify and resolve the nonconforming items and recover the costs from vendors.

The Department of Energy and its contractor had not always effectively executed procurements and material management activities at the Office of River Protection.  Specifically, Bechtel did not always identify nonconforming items resulting from vendor errors in a timely manner, resolve issues with nonconforming items in a timely manner after they were identified, or recover the costs for resolving nonconformances from vendors when the problems were the result of vendor errors.

These problems were caused by weaknesses in Bechtel’s quality assurance program.  In particular, although Bechtel had procedures in place to prevent or identify nonconforming items, they were not always performed effectively.  Contributing to these weaknesses were Bechtel’s failure to effectively implement corrective actions, a lack of timelines for resolving nonconformances, and inadequate Federal oversight over Bechtel’s cost recovery processes for nonconforming items.

Topic: Management & Administration