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May 21, 2022

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Audit of Hanford site contract finds taxpayers possibly overcharged by Tri-City firm

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RICHLAND — The Hanford site’s occupational medicine contractor submitted inappropriate bills to the Department of Energy, according to an audit by the Department of Energy’s Office of Inspector General.

It found that DOE reimbursed contractor HPM Corp. for work without reasonable assurance that the costs met reimbursement requirements.

DOE has already resolved $1.3 million of what the Office of the Inspector General called “misallocated costs” after increasing oversight starting in 2016.

But in a sampling of records the audit found an additional $44,100 of inappropriately billed costs from 2013 to 2020 needed to be addressed. A review of the remaining billed costs should still be done, it said.

“The issues we identified occurred, in part, because of inadequate department oversight and the contractor’s inconsistency to establish or adhere to controls,” according to the Office of the Attorney General.

HPMC, based in Kennewick, has held contracts since 2012 to provide occupational medicine services at the nuclear reservation to ensure the health and safety of about 9,000 workers assigned to manage the site and clean up radioactive and hazardous chemical waste and contamination.

The Hanford site adjacent to the Tri-Cities in Eastern Washington was used from World War II through the Cold War to produce about two-thirds of the plutonium for the nation’s nuclear weapons program.

In some cases HPMC had agreed to accept a fixed price from DOE for some services it provided to workers but then also billed the federal government for expenses it incurred doing the work due to improperly coding costs, according to the audit report.

In other cases costs were billed to the federal government without approval by workers’ HPMC managers or documentation was missing.

The audit report also found that HPMC did not always follow federal requirements to determine the best value for taxpayers when it awarded subcontracts for services by seeking bids when possible.

The Office of Inspector General recommended that DOE take a look at any unreviewed invoices to check for similar errors.

It also recommended another look at existing policies and making sure oversight was sufficient.

DOE agreed with recommendations, saying it had already implemented some and will complete all actions recommended in the report by October 2022.

HPMC made no comment on the audit report. Its current seven-year contract is valued at up to $152 million.

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