Fluor Subsidiary Included in GAO Probe Into Ohio Nuclear Cleanup

IRVINE —  The federal government’s top financial watchdog agency said Monday that it will investigate allegations of financial irregularities and safety problems in a major nuclear cleanup program managed by a Fluor Corp. subsidiary.

A General Accounting Office official said his agency also will examine the quality of the U.S. Department of Energy’s oversight of the $2.2-billion contract at the government’s former nuclear processing plant in Fernald, Ohio.

The GAO investigation was requested by several Ohio lawmakers in the wake of reports of hundreds of safety violations and unauthorized and excessive spending that might have cheated the government of millions of dollars.

Fluor found no such misdeeds in its own audit and welcomes the GAO examination, company spokesman Rick Maslin said.

The allegations come as the Fluor-led consortium is trying to extend its Fernald cleanup contract. Government approval of Fluor’s performance also is significant because Fluor wants to bid on other major nuclear cleanup contracts.

The huge Fernald contract was awarded in 1992 to a consortium of companies headed by Fluor’s chief operating unit, Fluor Daniel. The consortium operates as Fermco--Fernald Environmental Recovery Management Organization.

The Energy Department, which oversees the contract, said in a statement late last month that its own examination has not uncovered any wrongdoing.

Vic Rezendes, director of the GAO’s energy resources and science issues unit, said his team will review the Energy Department report and talk with the investigators who prepared it. The review, he said, is aimed at determining if the Energy Department itself is properly overseeing the project.

The allegations against Fermco are “serious,” Rezendes said, “but at this point are just allegations.” He said he expects to begin reviewing the contract in about two weeks.

The charges of mismanagement and safety violations were leveled by workers and former workers for companies involved in the Fernald cleanup, according to a series of articles published by the Cincinnati Enquirer. It was in response to those stories that both of the state’s senators and two congressmen from the Fernald area asked the GAO to look into matters.

Maslin, speaking on the eve of Fluor’s annual shareholder meeting, denied the charges and called the newspaper’s series “incredibly poor journalism” that “misinterpreted the facts and chose to ignore [Fermco’s] explanations.”

In 1994, Fluor received $270 million as its share of the Fermco contract. That represented 38.6% of Fluor’s income from environmental projects and 3% of its total corporate revenue of $8.5 billion that year.

Fermco was hit by contract abuse charges once before.

A congressional hearing was called just after the cleanup contract was awarded in 1992 to examine expenditures for employee morale and entertainment, the GAO’s Rezendes said.

While Fluor was never accused of any wrongdoing, the company voluntarily reimbursed the government for about $100,000 that had been spent on picnics and other morale-building activities for Fermco workers, Maslin said.