March 22, 2013 

Approval of Contractor Executive Salaries by Department of Energy Personnel

In April 2011, the Department of Energy (Department) awarded a nearly $2.2 billion contract to URS|CH2M Oak Ridge, LLC, (UCOR) for the environmental cleanup at the East Tennessee Technology Park, Oak Ridge, Tennessee. As a support provider for the Office of Environmental Management, the Oak Ridge Office (ORO) is responsible for oversight of the UCOR contract, including analyzing and performing market analyses to assess the reasonableness of the proposed contractor executive salaries.  The Office of Inspector General received a complaint alleging that an ORO senior management official approved salaries for UCOR executives that were higher than the ORO Human Resources (ORO HR) calculated market rates without proper authority.  The inspection confirmed the essence of the complaint.  The review revealed that a former ORO senior management official deviated from requirements established in the awarded contract by approving UCOR contractor executive salaries that were higher than the market rates calculated by ORO HR officials.  For instance, we found that without proper authority, a former ORO senior management official approved 10 contractor executive salaries that exceeded market salary rates calculated by the ORO HR office.  The issues identified were the result of several contributing factors, including inconsistently applied guidance related to the process for setting salaries.  In response to the finding, management generally concurred with the recommendations and proposed corrective actions to address inconsistently applied guidance, improve the contractor executive salary setting process, and better control salary costs.

Topic: Human Resources