December 7, 2021

HPM Corporation Occupational Medical Service’s Billings

Since 2012, HPM Corporation’s (HPMC) contract supports the Department of Energy’s Richland Operations Office and Office of River Protection, Hanford contractors and their subcontractors, and others as designated from time-to-time in writing by the Contracting Officer or designee.  HPMC’s first contract was approximately valued at $108.9 million, which began in June 2012.  In December 2018, HPMC began work on a new 7-year contract for approximately $152.2 million.  Both occupational medical services contracts contain work that is performed under different types of contracts outlined in Federal Acquisition Regulation 16, Types of Contracts.  Specifically, both contracts contain scope that is firm-fixed-price, cost reimbursable, and indefinite delivery/indefinite quantity.  Due to the Department’s concerns, as well as the limited amount of management experience with indefinite delivery/indefinite quantity contracts, we initiated this audit to determine whether HPMC Occupational Medical Services submitted invoices compliant with contract, procedural, and regulatory requirements to the Department from calendar year (CY) 2013 through CY 2020.  We found that although Federal oversight and contract language had improved, HPMC invoiced the Department for costs that were not compliant with the contract and/or procedural and regulatory requirements.  As a result, we questioned $44,168 of costs that HPMC inappropriately billed to the Department from CY 2013 through CY 2020.  These costs were in addition to approximately $1.3 million in misallocated costs already resolved by the Department. 

The issues we identified occurred, in part, because of inadequate Department oversight and the contractor’s inconsistency to establish or adhere to controls.  Management concurred with all of our findings and recommendations and identified corrective actions to address the issues associated with our recommendations.