RICHLAND — A federal judge has ruled that a lawsuit against Hanford Nuclear Reservation contractor Washington Closure Hanford and other companies that posed as small businesses to win environmental cleanup contracts can go forward.
The lawsuit contends the companies agreed among themselves to establish a facade of small businesses that were awarded millions of dollars for work reserved for small businesses.
Instead, that work was done by businesses that didn’t qualify for the bid award, according to the lawsuit. In one case, the winning subcontractor had no experience in handling nuclear waste, no equipment and no employees.
The Tri-City Herald reported that the lawsuit was brought by Savage Logistics, a small firm seeking work at Hanford. Savage Logistics was later joined by the federal government in much of the lawsuit.
Hanford for decades made plutonium for nuclear weapons and now is engaged in a decades-long effort to clean up the nation’s largest collection of radioactive waste. The work costs more than $2 billion per year.
The subcontracts were supposed to be awarded to small businesses, including those in certain categories, such as being owned by a woman. The lawsuit alleges the work was actually performed by Federal Engineers and Constructors, or FE&C, a Richland business that did not qualify for the subcontracts, according to the lawsuit.
“The old proverb ‘It’s not what you know but who you know’ is at the heart of the assertions,” U.S. District Court Judge Edward Shea said in his recent ruling on motions to dismiss the lawsuit. “Plaintiffs allege that defendants took their personal connections a step too far in order to gain a financial benefit.”
The lawsuit said that Washington Closure in 2010 awarded environmental cleanup work worth more than $4 million to Sage Tec, a company formed by Laura Shikashio, the wife of an FE&C vice president of construction services. The work called for digging up contaminated soil down to 85 feet deep near Hanford’s C Reactor.
Washington Closure Hanford knew that Sage Tec had no relevant experience in handling nuclear waste and no employees other than Shikashio, according to the lawsuit.
Several FE&C personnel were listed by Sage Tec in its proposal as those who would hold management and supervisory positions if Sage Tec were awarded the work.
In 2012 Washington Closure awarded another subcontract to Sage Tec, which said it would be responsible for performing about 27 percent of the work with its own organization. Washington Closure knew that was false because Sage Tec lacked equipment and employees other than Shikashio, the lawsuit said.
The subcontract to clean up contaminated structures, soil and pipelines in the 300 Area just north of Richland, was valued at $15 million.
In another case, Washington Closure awarded a subcontract to haul contaminated materials to a Hanford landfill to Phoenix Enterprises Northwest four months after it was formed by an FE&C employee as a small, woman-owned business. Shortly after that the Small Business Administration ruled that Phoenix was affiliated with FE&C, which was not eligible for the bid as advertised.
