Waste of the Day: Energy Contractor Dodged Hiring Process, Promoted Its Employees

Topline: Instead of interviewing candidates to fill job openings, a government contractor has been hiring employees from its own parent companies, awarding them “unreasonable” salaries and billing the government for their moving expenses, according to a Jan. 3 audit from the Department of Energy’s inspector general.

Favoring one’s own employees

The practice resulted in $17.6 million of charges that “were not reasonable and were potentially unallowable,” the inspector general wrote.

Key facts: The Savannah River Site in South Carolina stores and disposes of excess nuclear materials, mostly left over from the Cold War. It is managed by Savannah River Nuclear Solutions through a contract with the Department of Energy.

Savannah River Nuclear Solutions is a joint venture between three larger companies: Fluor Corporation, Newport News Nuclear, Inc. and Huntington Ingalls Industries.

From 2017 to 2021, the company filled staff vacancies by transferring 62 employees already working at its three parent companies.

Its contract requires it to use a competitive bidding process to make sure all purchases have a “reasonable cost.” The 62 employees did not go through the bid process, since the company did not interview anyone else for their positions, the audit found.

There were 114 instances where Savannah River Nuclear Solutions billed the Department of Energy $35.8 million for the 62 employees’ work when comparable employees at the nuclear plant would have only earned $26.8 million for the same work — a difference of $9 million, the audit found.

There were also 51 instances from 2017 to 2021 where the company billed the Department of Energy for a full years’ work for several of the 62 employees, but there was “insufficient data” to prove the employees actually worked an entire year, according to the audit. The charges totaled $7.9 million. 

Moving expenses?

Savannah River Nuclear Solutions also billed the Department of Energy $743,356 to cover moving expenses for 16 of the employees who relocated to South Carolina, the audit found.

Background: The Savannah nuclear site is just one example of how no-bid hiring and purchasing can jeopardize taxpayer funds by reducing competition.

OpenTheBooks recently reported that 29% of federal contracts were awarded using no-bid procedures in fiscal year 2024.

Summary: Job recruitment must be incredibly easy when a company can offer high salaries using taxpayer funding.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

This article was originally published by RCI and made available via RealClearWire.