Originally created 05/30/97

Suit charges fraud at SRS



AIKEN - Westinghouse Savannah River Co. has defrauded the federal government of nearly $100 million since 1989 by subcontracting work that should have been done in-house and then inflating the costs, according to a lawsuit filed in U.S. District Court in 1994.

On Thursday, attorneys for Westinghouse argued that the lawsuit's claims are false and the lawsuit should be dismissed.

"We will deny the allegations that we did anything to increase the costs," said attorney Graeme Bell, who represents Westinghouse.

Judge Charles E. Simons Jr. is expected to issue his ruling within three to four weeks.

Edwin P. Harrison filed the lawsuit under the federal False Claims Act, which allows a citizen to prosecute fraud against the federal government on behalf of the government.

Last year he won a $1.2 million settlement from his former employer - General Physics Corp. - after he was fired for blowing the whistle on unethical bidding practices at the New Ellenton-based nuclear facility. General Physics filed an appeal with the state Supreme Court.

The same accusations are part of this lawsuit, as well as charges that Westinghouse lied about the true costs of a training project as a way to induce DOE to approve a contract with General Physics.

As subcontractor, General Physics agreed to provide training courses for about 35 trainees who would work on such projects as the Defense Waste Processing Facility, which turns nuclear waste into glass logs.

On Thursday, Mr. Harrison's attorney, Richard Miley, said Westinghouse told DOE that the training was a "one-time variety" and would last about 1« years at a cost of $2.75 million.

Within nine months the costs ballooned by 241 percent, and by the time the contract ended in 1994, DOE had a bill for $9.3 million, Mr. Miley said.

At the same time, Westinghouse hired other subcontractors to provide the same training General Physics provided, he said. And since 1994, the practice of duplicating contractual services has continued, amounting to a nearly $100 million loss to DOE, the North Augusta attorney said.

Westinghouse is paid fees based on the dollarvalue of projects it subcontracts, and the lawsuit alleges that is a built-in incentive for Westinghouse to hire subcontractors for extended time periods whenever the project's cost in-house is lower.

According to Mr. Harrison's lawsuit, Westinghouse could have done the project in-house for about $1.6 million.

However, Mr. Bell denied that Westinghouse has an incentive to balloon costs, saying that DOE officials pre-approve any costs incurred on the project, and the costs are documented by vouchers.

"Our award fee is completely separate from the amount of the costs we incur," Mr. Bell said. "The contract created the division so that we don't have an incentive to increase costs."

Mr. Miley also accused Westinghouse officials of knowingly allowing General Physics managers to help prepare the bid proposal for the training project.

"Obviously this gives General Physics a leg up on all the competitors," Mr. Miley said. "Despite all this, they're still not the low bidder. What Westinghouse did is throw out the bids and say we're going to negotiate only with General Physics."