Oct 30, 2007

Energy Dept. Audit Finds Overcharges On Contracts

I have every confidence that the internal lab audit will fix everything.



Washington Post Article

Alleged 'Padding' By KBR Affiliate

Washington Post Staff Writer
Tuesday, October 30, 2007; Page D01

The Los Alamos National Laboratory paid millions of dollars in questionable charges to a contractor affiliated with KBR, according to a recent audit by the Energy Department's inspector general.

In three-quarters of the "work order tasks" analyzed from the last two years, the inspector general found cost overruns of 20 percent or more. The inspector general examined 94,561 cases.

KBR was formerly known as Kellogg, Brown and Root.

In several cases, the contractor -- KSL Services Joint Venture, which was formed by KBR, Shaw Infrastructure and Los Alamos Technical Associates -- put estimates of 1 cent into a computerized payment system as a "place holder," according to a report by Gregory H. Friedman, the Energy Department's inspector general. For example, one work order actually totaled $101,978.08.

Eight of 10 managers at the Los Alamos lab whom auditors talked to said "estimates are overrun a fair amount of the time" or "estimates are overrun consistently," the report said.

KBR spokeswoman Heather Browne disagreed with the findings. She said that before the report came out, "KSL Services worked with LANL to implement new processes and procedures designed to address many of the issues raised in the report."

KSL was awarded a contract in February 2003 valued at nearly $800 million over five years, under which it provides mechanical and site-support services such as repairing doors, fixing plumbing and maintaining landscaping.

The University of California and Bechtel have a $2 billion contract with the Energy Department to run the laboratory. The facility recently has experienced several security lapses, lost computer drives and contracting problems. KSL operates under a subcontract to the lab.

The inspector general's report also found substantial problems with KSL overcharging for labor and materials.

In one case, $10,191 was paid for more than twice the amount of electrical wire that a job needed. In another instance, a nuclear safety engineer charged $4,900 on a job, triple the expected cost. In working on patching cracks on a loading dock, a foreman charged three hours to the work order -- more than four months before the job being done. And one KSL employee charged eight hours for re-gluing carpet tiles, a job that only took him 15 minutes to finish, according to the report.

Another $9,780 was paid for work to upgrade fire alarms that was never done. Lab officials told auditors that charges for labor and material were "questionable, inappropriate, excessive, or unsupported based on their knowledge of the work performed," the inspector general said.

Auditors were told of inappropriate timekeeping charges, work orders being submitted by people who did not work on them, unapproved overtime charges and other unexplained charges.

An official at the lab said that "when KSL workers have no work to do, they are being subsidized, and work order 'padding' is common," the report said.

The lab's computerized billing system, called PassPort, had a category called "Other Costs" that allowed KSL to recover up to $20,000 a year in unanticipated costs. But the costs reached $41 million last year and were already over $14 million by the end of May 2007, according to the inspector general's report, and it was unclear what the lab had paid for.

The lab is also conducting an internal audit of the KSL contract.


Anonymous said...

Gee, and I wonder why the Lab hates auditors so much? My internal auditors are looking into the alleged disappearance of chickens, said the fox! What a crock. Los Alamos National Lab continues to pretend it gives a damn about protecting taxpayer money, but the reality is Rich Marquez (aka Mikey’s personal attorney) and his revolving door cronies only care about covering up problems. Real auditors report problems, with hopes that the stakeholder community will demand real corrections. Now do you understand where the conflict arises? DOE and the U.S. Congress know, but through decades of in action they convey the reality that they really could care less. The objective is simply to keep the taxpayers bamboozled so that they’ll keep feeding the military-industrial monster that funds election campaigns and hires the friends and relatives of high ranking officials into high paying jobs for life. And so when the auditors reveal yet another scandal we'll just pretend, once again, that somebody actually gives a damn, and then quietly (behind the scenes) destroy those auditor SOBs that have a audacity to reporting reality. Soon enough the stakeholder community will fall back to sleep, as they always do. What then? Well it’s back to business as usual, that’s what then. That’s just the way it is. Old timers know that that’s the way it’s always been, and will likely continue to be. Because you can’t change the nature of this beast we call the Lab. Even if change is required for its own survival, the Lab just can’t change when the leadership lacks, well…leaders!

Anonymous said...

so what else is new. this crap has been going on at LLNL long before we got a new management contract and I'll bet at LANL too.

Anonymous said...

Why did the IG restrict the alleged padding to LANL's subs?

Working here is like seeing a horrific traffic accident, you know it's bad, but you just can't seem to turn away.

Anonymous said...

Easy people! I know how to solve this problem. The Lab will "fire" KSL to "prove" that they have solved the problem Then KSL will rename itself ... maybe something like KSL-R (KSL replacement). The Lab will perform an EHAUSTIVE NATIONAL SEARCH. And low and behold they will discover that the best company for the job is KSL-R, located right here in Northern New Mexico all the time. And then the raping and pillaging will continue and LANS management will get some sort of pay-off for giving their buddies a new contract with LANL.

Anonymous said...

This business with ZIA, Johnson Controls, Pan-Am, KSL, etc has been going on for 60 years. However, I note that every time that contract changes, it just gets worse.

This is a mess that LANS did not create, they just made it worse.

Anonymous said...

But, they made it worse safely and securely, at least as far as the published stats are concerned.

Anonymous said...

The problem with KSL and predecessors has more to do with the available workforce than anything else. That is why it has been going on for 60 years.

Anonymous said...

Look for the KSL contract to NOT be renewed next year and instead, LANS absorbing both the services inhouse as well as the (retained) craft/personnel. Bechtel has more than experience at providing these services and also has a "union" branch for the craft work. This would save big $$ in profit/overhead charges from the contractor and maybe inefficiency cost as well.

Anonymous said...

Ha, ha, ha, ha! Poster 11:14 AM is a really funny guy. Bechtel will save us money? Looks like a Bechtel mole is trolling the blog!

Anonymous said...

"This business with ZIA, Johnson Controls, Pan-Am, KSL, etc has been going on for 60 years. However, I note that every time that contract changes, it just gets worse."

"This is a mess that LANS did not create, they just made it worse."

Alas, but isn't LANS just a reincarnation that UC master-minded to keep itself entrenched in Los Alamos? Indeed, that's why nothing changes.

Anonymous said...

The problem with KSL padding their bills has not improved, regardless of what LANS may be telling the DOE.

If anything, these problems are bigger than ever, as KSL workers game the system in a desperate attempt to keep their jobs during the budgetary cutbacks.

Anonymous said...

Los Alamos is the last place any of those DOE DC beltway types wants to go. LANS tells DOE it's fixed, that's what they want to hear, then it's back to business as usual.