Department of Energy: Unethical Conduct at DOE's Yucca Mountain Project
(Letter Report, 09/30/96, GAO/OSI-96-2).
Pursuant to a congressional request, GAO investigated allegations of
conflicts of interest at the Department of Energy's (DOE) Yucca Mountain
Project, focusing on whether: (1) the DOE Office of Civilian Radioactive
Waste Management (OCRWM) properly implemented and adequately enforced
federal standards of ethical conduct and DOE ethics regulations; and (2)
failure to implement DOE ethics standards may have contributed to
contract award and management abuses.
GAO found that: (1) the two most senior DOE officials on the project, as
well as 14 other DOE employees, had personal relationships with
employees of Science Applications International Corporation (SAIC), the
project's largest single contractor; (2) the relationships of the two
senior officials were in violation of an executive order and DOE
regulations because they created at least the appearance of a loss of
impartiality; (3) although in some cases OCRWM and other project
officials knew for years that potential ethical problems existed at the
project, they did not take formal action until 1993, when OCRWM issued a
memorandum about federal-contractor employee relationships, provided
ethics training, and determined whether DOE employees in such
relationships required a recusal or waiver to ensure impartiality; and
(4) one of the senior officials also acted questionably in terms of
presenting his own positions about the project to Congress without
management approval, influencing the hiring of a subcontractor, opposing
a contract that would have reduced SAIC work, and inappropriately
lobbying Congress and attending congressional meetings with the
contractor.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: OSI-96-2
TITLE: Department of Energy: Unethical Conduct at DOE's Yucca
Mountain Project
DATE: 09/30/96
SUBJECT: Ethical conduct
Public officials
Conflict of interest
Nuclear waste disposal
Contractor personnel
Lobbying activities
Subcontracts
Contracting procedures
IDENTIFIER: DOE Yucca Mountain Project (NV)
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Cover
================================================================ COVER
Report to the Ranking Minority Member, Committee on Science, House of
Representatives
September 1996
DEPARTMENT OF ENERGY - UNETHICAL
CONDUCT AT DOE'S YUCCA MOUNTAIN
PROJECT
GAO/OSI-96-2
Unethical Conduct at DOE's Yucca Mountain Project
(600357)
Abbreviations
=============================================================== ABBREV
DOE - Department of Energy
GAO - General Accounting Office
IRG - Integrated Resources Group
OCRWM - Office of Civilian Radioactive Waste Management
OIG - Office of Inspector General
OSI - Office of Special Investigations
RCED - Resources, Community, and Economic Development Division
SAIC - Science Applications International Corporation
TRW - TRW Environmental Safety Systems, Inc.
Letter
=============================================================== LETTER
B-261324
September 30, 1996
The Honorable George E. Brown, Jr.
Ranking Minority Member
Committee on Science
House of Representatives
Dear Mr. Brown:
In the Nuclear Waste Policy Act of 1982, the Congress established
federal responsibility for the permanent disposal of highly
radioactive waste generated at civilian nuclear power plants and
created the Office of Civilian Radioactive Waste Management (OCRWM)
within the Department of Energy (DOE) to manage the disposal program.
The centerpiece of the disposal program is the Yucca Mountain Site
Characterization Project, whose purpose is to investigate Yucca
Mountain, Nevada, to determine if that site is suitable for permanent
disposal of highly radioactive waste.
You asked us to investigate allegations of conflicts of interest at
the Yucca Mountain Project. A similar issue had surfaced in 1987,
involving OCRWM's top management and the award of the project's
management contract. (See app. I and II.) You were concerned that
DOE may not have properly implemented or adequately enforced federal
Standards of Ethical Conduct or DOE ethics regulations at the project
and that failure to do so may have contributed to contract award and
management abuses.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
The Principles of Ethical Conduct for federal employees contained in
Executive Order 12674 and DOE's regulations for ethical conduct by
its employees prohibit, among other things, any action that might
result in or create the appearance of the loss of impartiality or
independence. However, our investigation and DOE's own reviews
revealed the appearance of the loss of impartiality by DOE officials
at the Yucca Mountain Project. For example, both the Manager of
DOE's Yucca Mountain Project from 1987 to October 1993 and the Deputy
Manager from October 1990 to January 1994 had long-term personal
relationships with personnel of major project contractors, including
the Science Applications International Corporation (SAIC).\1
Moreover, by 1994, DOE had learned that 14 additional, or almost 18
percent of, DOE employees at the project were engaged in
relationships that might have created problems concerning the lack of
impartiality and independence. DOE determined that four of these
relationships represented potential ethical problems, requiring
recusal or waiver.
Although senior OCRWM officials in Washington, D.C., knew by 1991
that potential ethical problems existed at the Yucca Mountain
Project, they did not act to resolve the situation until late 1993.
Further, our investigation disclosed that this Yucca Mountain Project
Manager had engaged in other questionable actions. Evidence shows
that he encouraged SAIC to hire a certain subcontractor largely
because of the subcontractor's stated political connections that
could be used to promote the Project Manager's, as well as SAIC's,
priorities for the project rather than DOE's priorities. SAIC
awarded a small subcontract to the firm after soliciting bids from it
and a second firm in which SAIC held a major interest. Within a few
months, and after soliciting bids from the same two firms, SAIC
received DOE's consent to award a second contract, much larger in
cost and different in scope, to the same subcontractor. The Project
Manager also violated DOE policy by improperly participating in a
meeting with congressional and contractor officials, where he lobbied
for his own positions concerning the project without, as required,
first notifying his superiors.
--------------------
\1 Prior to the award of the project's management contract to another
company in February 1991, SAIC was the technical and management
support services contractor for the Yucca Mountain Project and the
largest single project contractor, with project revenues of about $40
million annually.
BACKGROUND
------------------------------------------------------------ Letter :2
The Nuclear Waste Policy Act of 1982 directed DOE to identify and
recommend to the President three sites for detailed investigation as
a potential permanent repository for nuclear waste. In May 1986, the
President selected three candidate sites, including Yucca Mountain,
Nevada. However, faced with escalating costs and public resistance
to the disposal program, in December 1987 the Congress amended the
act by, among other actions, directing DOE to investigate only the
Yucca Mountain site.
Before the Congress enacted the 1987 amendments, DOE/OCRWM had
decided that a successful disposal program could best be ensured if
DOE had a long-term partnership with a management contractor. DOE
expected that the proposed management contractor would develop waste
storage and transportation capabilities and manage the investigation
of candidate repository sites. DOE also expected the number of
contractors on the program to decline by transferring the work of
some existing contractors to the management contractor.\2
In December 1988, DOE selected a team of contractors-- headed by
Bechtel Systems Management, Inc. and including SAIC--as the disposal
program's management contractor. However, TRW Environmental Safety
Systems, Inc. (TRW) asserted, in a bid protest, the existence of a
serious conflict of interest by DOE's chairman of the contract's
Source Evaluation Board, a previous SAIC employee.\3 In an August 24,
1989, decision on the bid protest, the court agreed, stating that DOE
could award the contract to TRW or cancel the procurement action.
(See app. I and II.) In February 1991, DOE awarded TRW a 10-year
management contract for an estimated $1 billion to perform systems
engineering, development, and management of a system to transport and
permanently dispose of highly radioactive waste.
--------------------
\2 See Nuclear Waste: DOE's Management and Organization of the
Nevada Repository Project (GAO/RCED-95-27, Dec. 23, 1994).
\3 He was also OCRWM's Acting Director from Nov. 1988 through Mar.
1990.
DOE OFFICIALS NEGLECTED TO
ENSURE ETHICAL CONDUCT IN THE
YUCCA MOUNTAIN PROJECT
------------------------------------------------------------ Letter :3
Even though there were strong indications that relationships between
DOE employees and contractor employees might result in ethical
problems, OCRWM officials failed to diligently monitor such
relationships. The two most senior DOE officials in OCRWM's Yucca
Mountain Project at the time--the Project Manager (1987-Oct. 1993)
and the Deputy Project Manager (Oct. 1990-Jan. 1994)--had personal
relationships with contractor employees that violated Executive Order
12674 and DOE regulations by creating at least the appearance of a
loss of impartiality. For example, this Project Manager opposed the
transition of work from SAIC to the management contractor, TRW,
including the work performed by the SAIC official with whom he had a
personal relationship. Additional relationships between DOE and
contractor employees involved almost 18 percent of DOE's employees at
the project.
EXECUTIVE ORDER AND DOE
REGULATIONS TO PROTECT
AGAINST THE UNETHICAL
CONDUCT OF EMPLOYEES
---------------------------------------------------------- Letter :3.1
Executive Order 12674, containing the Principles of Ethical Conduct
for federal employees, was promulgated to help ensure public
confidence and the integrity of the government by establishing fair
standards of ethical conduct for federal employees. It requires
federal employees to avoid any actions that create the appearance of
a loss of impartiality. DOE regulations\4 require DOE employees to
recuse themselves from any job responsibilities that may compromise
their objectivity and independence. Adherence to these regulations,
particularly as to their application to relationships with contractor
employees, is especially important in DOE because of its heavy
reliance on contractors. To ensure that DOE's business is conducted
effectively, objectively, and without improper influence or
appearance thereof, DOE expects its employees to
". . . avoid any action, whether or not specifically
prohibited by the regulations, which might result in, or create
the appearance of: (1) using public office for private gain;
(2) giving preferential treatment to any person; (3) impeding
government efficiency or economy; (4) losing complete
independence or impartiality; (5) making a government decision
outside official channels; or (6) affecting adversely the
confidence of the public in the integrity of the government."\5
--------------------
\4 10 C.F.R. 1010.101(a).
\5 10 C.F.R. 1010.101(a).
APPEARANCE OF LOSS OF
IMPARTIALITY AND DOE'S
UNTIMELY RESPONSE
---------------------------------------------------------- Letter :3.2
THEN PROJECT MANAGER'S
ACTIONS VIOLATED DOE
ETHICS REGULATIONS
-------------------------------------------------------- Letter :3.2.1
DOE's Manager for the Yucca Mountain Project from 1987 to 1993 had a
personal relationship with a female official of a major project
contractor, SAIC. Our investigation and an April 1995 report by the
DOE Office of Inspector General (OIG) concluded that because of this
relationship, the Project Manager, as the Fee-Determining Official
and the Contracting Officer's Technical Representative for the SAIC
contract, had lost the appearance of impartiality in the performance
of his official duties, contrary to regulations regarding the ethical
conduct of employees.
Our investigation and the OIG report disclosed that the Project
Manager and the SAIC official had traveled together frequently on
official business (over 60 trips in fiscal years 1992 and 1993).
Some of these trips involved little apparent business-related
justification for the SAIC official, according to one of the Project
Manager's supervisors. Despite denials of anything other than a
professional relationship, the officials' public behavior repeatedly
caused DOE, SAIC, and industry officials to raise concerns.
According to the DOE Yucca Mountain Project Special Assistant for
Institutional Affairs, the SAIC official functioned primarily as an
administrative assistant to the Project Manager, rather than
reporting to the Special Assistant as called for within the Yucca
Mountain Project organizational structure. One of the Project
Manager's supervisors told us she was astonished to find that an SAIC
official, while on official trips with the Yucca Mountain Project
Manager, would do trivial tasks while her staff went unsupervised.
The Project Manager opposed having several SAIC functions-- among
them the institutional and external affairs functions headed by the
SAIC official--transitioned to TRW, the management contractor. He
communicated that opposition to individuals who either were in a
position to influence or participated in the decision not to
transition certain functions, including that for which the SAIC
official was responsible. According to SAIC lawyers, if the work had
transitioned to TRW as planned, any SAIC employees forced to leave
the company would have lost substantial pension and stock/stock
option benefits and may have incurred tax liabilities arising from
the forced sale of their SAIC stock.
The Yucca Mountain Project Manager's opposition to the transition of
SAIC work to TRW put him in direct conflict with OCRWM's then
Director (Apr. 1990-Jan. 1993) and then Deputy Director (Nov.
1988-Oct. 1993). According to this former OCRWM Director, the
Project Manager took SAIC's side in its dispute with OCRWM management
over transitioning SAIC work to TRW. The OCRWM Director also told us
that he wanted the Project Manager to implement the management
contract with TRW; and although the Project Manager never said no, he
delayed repeatedly. The OCRWM Director stated that he did not
recognize some of these problems until the end of his tenure as
Director.
DOE MANAGEMENT'S UNTIMELY
RESPONSE
-------------------------------------------------------- Letter :3.2.2
Although OCRWM and Yucca Mountain Project officials had reason to be
concerned about the relationship between the Yucca Mountain Project
Manager and the SAIC official by 1991 or earlier, they took no formal
action regarding the relationship until late 1993.
In 1990 or 1991, an industry official expressed concern to the then
OCRWM Deputy Director about the relationship between the Project
Manager and the SAIC official. The Deputy Director took no action
other than warning the Project Manager that he was traveling too much
with the SAIC official. In 1990 or 1991, the DOE Director of Public
Affairs for the Yucca Mountain Project Office cautioned the Project
Manager about an appearance problem. Although the Director of Public
Affairs stated that he had discussed this with OCRWM's then Deputy
Director, no action was taken, such as reporting this to the DOE OIG.
In April 1993, OCRWM's Deputy Director, based on his observations,
cautioned the Project Manager. Further, although the then DOE
Associate Director for Geologic Disposal, based in Las Vegas, Nevada,
became aware of rumors about the relationship in June 1993, no
investigation of the relationship was undertaken. During this time,
the Project Manager disregarded the warnings he had received.
In mid-September 1993, the Project Manager and the SAIC official
engaged in a public altercation at the Phoenix, Arizona, airport.
Shortly after that incident, the then Acting Director of OCRWM (Jan.
1993-Oct. 1993) requested that the DOE OIG evaluate the relationship
between the Project Manager and the SAIC official. On September 27,
1993, the Project Manager was removed from professional contact with
the SAIC official and directed to meet with DOE counsel to discuss
the relationship. Because the Project Manager told the counsel that
he and the SAIC official were "only good friends," the counsel
concluded a recusal was not necessary. The counsel did, however,
suggest to the Project Manager that he contact a DOE ethics counselor
at headquarters for advice and counsel, which he never did.
In October 1993, DOE took further action, removing the Project
Manager from his position and detailing him to another DOE site. He
was subsequently reassigned to the DOE Nevada Operations Office at a
reduced grade.
THEN DEPUTY PROJECT
MANAGER'S RELATIONSHIP
CREATED APPEARANCE PROBLEMS
---------------------------------------------------------- Letter :3.3
The Deputy Project Manager from 1990 to 1994 had a personal
relationship with a female SAIC employee, beginning in 1984 when the
deputy was a Yucca Mountain Branch Chief. Even though this open
relationship was public knowledge as early as 1986, no action was
taken to ensure that the relationship did not violate federal
standards of conduct until 1991. DOE acted again in 1993 and January
1994, shortly after a report of the relationship was aired nationally
on the McNeil/Lehrer News Hour.
During the Deputy Project Manager's relationship, the previously
discussed Project Manager did not act on his deputy's potential
ethical problem. However, the deputy did execute a recusal in 1991
to meet a condition of his associate's employment by a prospective
employer. His associate was seeking a job with the project's
management contractor, TRW; and TRW had requested assurances of the
Deputy Project Manager's impartiality. Despite a DOE general
counsel's statement to him that there was no need for the recusal
that the then Acting OCRWM Director had suggested, the deputy recused
himself. His recusal removed him from decisions regarding the
transition of work from SAIC to TRW; TRW's contract award fee
evaluation; and any decisions regarding his associate's salary,
bonuses, and benefits. A subsequent August 1993 recusal somewhat
broadened these areas with regard to his associate's position with
TRW.
However, in early 1994, the newly appointed Project Manager raised
concerns about the adequacy of the 1993 recusal with regard to the
expanded duties that he envisioned for the deputy position. The
project's newly appointed Chief Counsel/ethics officer determined
that the recusal was not sufficient to ensure the deputy's
impartiality in the new duties. Thus, in late January 1994, the new
Yucca Mountain Project Manager placed the Deputy Project Manager in a
senior advisory position for which DOE deemed the recusal was
sufficient. The former deputy retired in late 1994.
OTHER POTENTIAL ETHICAL
PROBLEMS AT THE PROJECT
---------------------------------------------------------- Letter :3.4
Days before the September 1993 public incident involving the Project
Manager and the SAIC official, OCRWM began to enforce DOE's ethics
regulations more actively. In doing so, it exposed a number of other
relationships between DOE and contractor employees that posed
potential ethical problems. In September 1993, the then Acting
Director of OCRWM issued a memorandum entitled, "Ethics Requirements,
Federal-Contractor Employee Relationships." All OCRWM employees were
required to sign and date the memorandum, indicating that they were
aware of their responsibilities.\6
By mid-1994, an internal memorandum by the Yucca Mountain Project
Chief Counsel listed 14 relationships between DOE employees and
employees of several contractors that might have posed the appearance
of the lack of impartiality and independence. These were in addition
to the previously discussed relationships of the Project Manager and
Deputy Manager and represented almost 18 percent of the 80 DOE Yucca
Mountain Project employees. Upon examination, the Chief Counsel
determined that four of these relationships required a recusal or
waiver. The others were told that if they had any changes in
positions or responsibilities, their cases would require a
reexamination.
--------------------
\6 Annual ethics training is now mandatory for all Yucca Mountain
employees who are required to file annual Financial Disclosure
Statements. According to DOE officials, the training consists of a
1-hour presentation by the project's Chief Counsel and covers a
variety of ethics issues, including personal relationships and the
need to alert a supervisor concerning these for appropriate action.
OTHER QUESTIONABLE ACTIONS BY
THEN YUCCA MOUNTAIN PROJECT
MANAGER
------------------------------------------------------------ Letter :4
The former Yucca Mountain Project Manager took other questionable
actions while in that position. Specifically, he precipitated SAIC's
hiring of a project subcontractor, Integrated Resources Group (IRG),
primarily because of IRG's political connections that could provide
him an opportunity to promote his positions, which were contrary to
those of DOE. With those connections, the Project Manager went
outside official channels to lobby the Congress for his concept of
how the project should be run and funded. Further, the Project
Manager's lobbying activities included his improper attendance at a
meeting with congressional and contractor officials to discuss the
project's future.
PROJECT MANAGER DISAGREED
WITH OCRWM DIRECTORATE
---------------------------------------------------------- Letter :4.1
The Project Manager disagreed with the information that OCRWM's
Directors were conveying to the Congress and the Secretary of Energy
about the Yucca Mountain Project. He was concerned that the
Secretary of Energy did not consider the waste program a major
priority and that OCRWM's then Acting Director (Nov. 1988-Mar.
1990) was not effective in communicating the progress being made on
the project. The Project Manager also believed that opponents of the
project were very effective in implying that the project was making
little advancement. He encouraged project contractors to convey to
the Congress and the Secretary of Energy the improvements that were
being made on the project. Further, the Project Manager opposed the
project's management contract with TRW. Under the contract, SAIC,
with whose official the Project Manager had a personal relationship,
would have relinquished much of its work.
According to OCRWM's subsequent Director (Apr. 1990-Jan. 1993), the
Yucca Mountain Project Manager did not think that the OCRWM
directorate knew what was best for the project. The Project Manager,
according to this OCRWM Director, wanted to run the program,
independent of Washington.
The Project Manager's desire to be the OCRWM director became a point
of contention between the Project Manager and his then immediate
supervisor, the OCRWM Deputy Director (Nov. 1988-Oct. 1993).
According to this Deputy Director, he told the Project Manager
several times to stop "seeking the OCRWM directorship." The then
OCRWM Director (Apr. 1990-Jan. 1993) said that the Project Manager
would come to Washington just to lobby the Congress for himself and
other things of interest to him.
PROJECT MANAGER INFLUENCED
HIRING OF A SUBCONTRACTOR
---------------------------------------------------------- Letter :4.2
In early 1990, the Yucca Mountain Project Manager saw an opportunity
to provide the Congress his perspective on the Yucca Mountain Project
when he was approached by the president of IRG, a management
consulting company, about doing technical work in the project. IRG's
president promoted his political connections, and the Project Manager
said that the IRG's involvement would be in the best interest of the
project. After the Project Manager determined that the IRG president
did have political connections, he referred the individual to SAIC
officials and encouraged them to hire IRG as a subcontractor.
SAIC's initial contract award to IRG--to evaluate project training
requirements relative to the Nuclear Regulatory Commission's
licensing process--was made in March 1990 for $15,000. The SAIC
Assistant Vice President responsible for licensing support
activities, including work that was to be subcontracted to IRG, told
us he doubted that SAIC would have contracted with IRG had it not
been for the political contacts of IRG's president and the Project
Manager's desire to have IRG in the project. He said that when SAIC
considered IRG for a subcontract, it looked at IRG's corporate
capabilities, i.e., IRG had considerable expertise in nuclear
facility licensing support and regulatory commitment tracking
systems. He added, however, that the Project Manager's expressed
desire was the motivation behind SAIC's consideration of IRG and
except for that expressed desire, SAIC probably would not have
subcontracted the work. Another SAIC official recalled clear
direction from the Project Manager to SAIC that, if it was
procedurally and legally possible, he wanted IRG in the project.
Further, once IRG was under contract to SAIC, as IRG's president told
us, he became a direct congressional contact for the Project Manager.
IRG's president also told us that he believed his efforts, and those
of SAIC's hired lobbyists, were instrumental in bringing about a
high-level DOE review of the management contract's transition plan.
As we reported in December 1994,\7 DOE deferred transferring some
SAIC work addressed in the plan until after a June 1993 performance
assessment of SAIC. Once the assessment was performed, none of the
assessed work was transferred from SAIC to TRW.
--------------------
\7 (GAO/RCED-95-27, Dec. 23, 1994).
SAIC'S SECOND SUBCONTRACT
AWARD
---------------------------------------------------------- Letter :4.3
SAIC awarded a second subcontract in July 1990 to IRG for over
$224,000 after receiving consent from a DOE Contracting Officer
pursuant to F.A.R. part 44. That part prescribes policies and
procedures for consent to subcontract. "Consent to subcontract" is
defined at 44.101 as the Contracting Officer's written consent for
the prime contractor to enter into a particular subcontract.
In a May 30, 1990, letter, SAIC originally requested DOE's consent to
add a $185,000 amendment to IRG's March 1990 subcontract for $15,000.
According to a Yucca Mountain Project Contracting Officer in 1994,
such a request was "irregular," stating that any modification over 20
percent of a contract's value is of "concern" according to the
Competition in Contracting Act. DOE apparently never acted on SAIC's
request.
In early July 1990, SAIC requested bids from the two predetermined
firms that had bid on the March 1990 contract-- IRG and a larger
business in which SAIC held a 49-percent interest and whose
unsalaried Chief Financial Officer at the time was an SAIC official
in contracting. On July 12, 1990, SAIC requested by letter that DOE
approve its decision to award the second time and materials
subcontract to IRG as the low bidder for $224,450. In that letter,
SAIC advised the Contracting Officer that only two firms had been
solicited, largely to perform regulatory compliance strategy reviews
and to develop/present related training at the project but also to
recommend methods for successful interaction with various entities,
including the Congress.
On July 13, 1990, the DOE Contracting Officer approved the
subcontract award. In determining whether to consent to a
subcontract award on a time-and-materials basis, the Contracting
Officer must exercise particularly careful and thorough consideration
of several factors, including whether the contractor has a sound
basis for selecting and determining the responsibility of the
proposed subcontractor. (F.A.R. 44.202(a)(7)) Further, the
"Competition in Subcontracting" clause at F.A.R. 52.244-5, which
provides that contractors must select subcontractors on a competitive
basis to the maximum extent practical and consider the objectives and
requirements of each contract, was in SAIC's contract.
Although the second subcontract called for different services and the
resulting amount of the award was significantly higher than that of
the first subcontract, the Contracting Officer apparently did not
object to SAIC's method of competition. However, according to the
project's Chief Counsel, it was highly unusual for SAIC to have only
two companies bid for the work that was subcontracted to IRG. The
work was not very specialized, and a large pool of companies could
have been considered. To have solicited only two bids, she said,
defeats the purpose of competition to get the best price for the
government.
PROJECT MANAGER
INAPPROPRIATELY LOBBIED
CONGRESS, ATTENDING
CONGRESSIONAL/CONTRACTOR
MEETING
---------------------------------------------------------- Letter :4.4
In April 1992, the DOE Yucca Mountain Project Manager engaged in
lobbying activities outside proper official channels by attending a
meeting that included congressional officials and representatives
from SAIC and IRG to discuss the project's future. The meeting--for
which IRG's president told us he was the catalyst--breached DOE
policy on congressional contacts by senior DOE officials because the
Project Manager did not obtain prior Secretarial approval to attend
the meeting and because the meeting was not carried out in accordance
with the existing policy.
Participants stated that discussions at the meeting included (1)
future funding for the Yucca Mountain Project and (2) how the
Congress could alter the way the project was funded. The evidence
shows that the Project Manager argued that the project was
substantially underfunded, needing additional funding to meet its
scheduled completion date, and discussed how best to use that and
other funding. According to the IRG president, he believed that he
too was helpful in explaining how additional funding would be used at
the project. The Project Manager also discussed removing the project
from the annual budget appropriations process and going to an
off-budget funding that would give DOE direct access to the Nuclear
Waste Fund, financed by the owners and generators of nuclear waste.\8
This latter proposal would have required legislation to accomplish.
The then Secretary of Energy told us that this meeting was a breach
of DOE policy for interacting with Members of Congress and was
unethical on the Project Manager's part. The meeting was neither
coordinated with DOE officials beforehand nor carried out according
to the existing policy. When the Secretary learned after the fact
that SAIC representatives had been present at the meeting, he was
concerned because of the previously discussed corporate struggle over
project work that was taking place between SAIC and the OCRWM
management contractor, TRW. According to the former Secretary, the
Project Manager acknowledged that he should have left the meeting
when he saw who was there.
--------------------
\8 Although the Project Manager proposed, as early as April 1992,
that funding for the Yucca Mountain Project be taken off-budget, the
then Acting Director of OCRWM stated in April 1993 that DOE had not
yet decided on the preferred method of funding for the project (see
GAO/RCED-93-124, May 21, 1993).
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :5
The current Director, OCRWM; Deputy Director, OCRWM; and other DOE
officials provided us their comments on a draft of this report. They
were in general agreement with the contents of the draft but
expressed concern that, with the draft's identification of DOE
officials by title alone, readers may incorrectly attribute the
actions discussed to previous or subsequent officeholders. To
address that overall concern, we have included in the report's text
the dates during which the respective individuals held office. (See
also app. II.) In addition, where appropriate, we have clarified
sections for which the officials provided additional details.
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :6
We conducted this inquiry between May 1994 and April 1996 at several
locations including the DOE/Office of Civilian Radioactive Waste
Management, Washington, D.C.; DOE/Yucca Mountain Project Office and
Nevada Operations Office, Las Vegas, Nevada; SAIC Corporate
Headquarters, LaJolla, California, and SAIC, Las Vegas, Nevada; and
IRG, Metairie, Louisiana, and Las Vegas, Nevada. We interviewed
current and former DOE officials and staff and current SAIC and IRG
officials. We reviewed DOE, SAIC, and IRG contract files, including
solicitations for bids, evaluations of proposals, contractual scopes
of work, and contract awards; IRG time and expense reports, and SAIC
management and support services charges to DOE; documentary materials
regarding the award and implementation of the OCRWM management and
operating contract; and federal law and regulation regarding
conflicts of interest and lobbying activities.
In the course of our investigation, we coordinated with the DOE OIG.
We will provide the OIG a copy of this report.
---------------------------------------------------------- Letter :6.1
As arranged with your office, unless you announce its contents
earlier, we plan no further distribution of this report until 30 days
after the date of the letter. At that time, we will send copies of
the report to interested congressional committees and the Secretary
of Energy. We will also make copies available to others on request.
If you have further questions or concerns, please contact me at (202)
512-6722. Major contributors are listed in appendix III.
Sincerely yours,
Donald J. Wheeler
Acting Director
AN EARLIER OCRWM ETHICAL ISSUE
=========================================================== Appendix I
An ethical problem surfaced in 1987 at the highest levels of OCRWM
management: A conflict of interest by OCRWM's chairman of the Source
Evaluation Board for a Yucca Mountain management contract severely
undermined OCRWM's effort to award the contract in a timely manner.
The board chairman, after returning to DOE from private industry, did
not, as initially instructed by DOE, recuse himself from
participation as a supervisory employee in certain DOE actions
involving SAIC. This resulted in a bid protest and subsequent
set-aside of the contract award. The board chairman also served as
OCRWM's Acting Director from November 1988 to March 1990.
BOARD CHAIRMAN/ACTING OCRWM
DIRECTOR DID NOT HEED DOE'S
INITIAL POSTEMPLOYMENT
RESTRICTIONS
--------------------------------------------------------- Appendix I:1
The chairman of the Source Evaluation Board for the Yucca Mountain
contract, a longtime DOE employee, left the agency in about 1983 to
work in private industry and returned to DOE on June 2, 1986. One
employer while he was in the private sector was SAIC. Immediately
prior to his return to DOE and while still in SAIC's employ, DOE's
Office of General Counsel advised him by letter that for 1 year after
returning to DOE he could not participate as a supervisory employee
in any DOE action in which SAIC was substantially, directly, or
materially involved. However, DOE's Office of General Counsel
subsequently prepared an interoffice memorandum which concluded that
its earlier advice was in error. The individual had become chairman
of the Source Evaluation Board for the OCRWM management contract on
May 1, 1987, which was about 1 month before the restriction was to
expire.
In December 1988, DOE selected Bechtel Systems Management, Inc.,
which had teamed with SAIC and other companies, as the management
contractor. Shortly thereafter, TRW, an unsuccessful bidder, filed a
bid protest and motion to enjoin DOE from awarding the contract to
Bechtel. These were based, in part, on allegations that the chairman
of the Source Evaluation Board had violated the DOE Reorganization
Act's conflict-of-interest provision at 42 U.S.C. 7216 by
participating in a procurement that involved a previous employer
within 1 year of joining DOE. That provision prohibits a supervisory
employee for 1 year from participating in any DOE proceeding in which
his former employer is substantially, directly, or materially
involved.
In August 1989, the Claims Court held that the board chairman/ Acting
Director had violated 42 U.S.C. 7216 by participating in the
procurement involving SAIC. In its decision, the court rejected
DOE's pre-hearing attempt to reverse its first instruction. It said,
"[O]ne might reasonably have expected that [the board chairman], out
of an abundance of caution, would have recused himself in any matter
in which SAIC was involved during the restricted period.
Unfortunately, such did not occur. . . ." (TRW Envtl. Safety
Sys., Inc. v. United States, 18 Cl. Ct. 33, 63 (1989)). TRW,
therefore, was granted its motion for a permanent injunction.\9 The
court ruled that DOE could not award the contract to any original
bidder other than TRW. DOE awarded the management contract to TRW in
February 1991.
--------------------
\9 It is still the position of DOE's Office of General Counsel that
there was no prohibition against the individual's serving on the
Source Evaluation Board. According to DOE officials, DOE chose not
to appeal the court's decision for policy reasons.
DATES OF POSITIONS HELD BY CERTAIN
DOE OFFICIALS DISCUSSED IN THIS
REPORT
========================================================== Appendix II
Position Dates
---------------------------------------- ----------------------------
Manager, Yucca Mountain Project 1987 to October 1993
Deputy Manager, Yucca Mountain Project October 1990 to January 1994
Chairman, Source Evaluation Board for
Yucca Mountain Management Contract Appointed May 1987
and
Acting Director, Office of Civilian
Radioactive Waste Management November 1988 to March 1990
Director, Office of Civilian Radioactive
Waste Management April 1990 to January 1993
----------------------------------------------------------------------
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III
OFFICE OF SPECIAL INVESTIGATIONS,
WASHINGTON, D.C.
Donald J. Wheeler, Deputy Director for Investigations
M. Jane Hunt, Senior Communications Analyst
SAN FRANCISCO/SEATTLE FIELD OFFICE
Stephen R. Myerson, Assistant Director for Investigations
Margie K. Shields, Core Group Manager, Energy & Science Issues
Eugene P. Buchert, Evaluator-in-Charge
M. Kathy Colgrove-Stone, Staff Evaluator
OFFICE OF THE GENERAL COUNSEL,
WASHINGTON, D.C.
Barbara C. Coles, Senior Attorney
*** End of document. ***