Inspection Report 

Severance Repayments at the 

Savannah River Site 

 

INS-O-10-02 July 2010 

U.S. Department of Energy 

Office of Inspector General 

Office of Inspections and Special Inquiries 
Department of Energy

Washington, DC 20585

July 29, 2010

MEMORANDUM FOR THE ASSISTANT SECRETARY FOR

 ENVIRONMENTAL MANAGEMENT

FROM: Sandra D. Bruce

 Assistant Inspector General for Inspections and Special Inquiries

SUBJECT: INFORMATION: Inspection Report on "Severance Repayment at the

 Savannah River Site”

BACKGROUND

The Department of Energy’s (Department) mission has evolved in recent years, which 

necessitated changes in the contractor workforce requirements. In 1993, Congress 

approved Section 3161 of the National Defense Authorization Act (Act), which mandates 

that if a change in the workforce is necessary, the Department must develop a plan for 

workforce restructuring that will minimize the impact on the affected employees and the 

surrounding communities. Since the passage of the Act, the Department has managed 

numerous contractor workforce restructurings that resulted in a reduction in the 

Department’s contractor workforce. For example, workforce restructuring efforts in 

Fiscal Years 2005, 2007 and 2009 at the Savannah River Site (Site) reduced the 

contractor workforce by 1,184 employees. 

The Office of Inspector General (OIG) received a hotline allegation that employees of the 

Washington Savannah River Company (WSRC), a former management and operating 

contractor, had inappropriately received severance payments under the 2007 Savannah 

River workforce restructuring. It was alleged that these employees were subsequently 

rehired to perform in the same or similar functional job areas but were not required to 

repay severance money. The contractual agreement between the Department and WSRC 

prohibited employees from receiving severance pay if they were offered employment at 

the Site, performing the same or substantially the same type of work with comparable pay 

and benefits, by any WSRC contractor or subcontractor. At the same time, the OIG’s 

Office of Investigations was in the process of reviewing a similar allegation received 

from Savannah River Operations Office (SRO) officials. The OIG’s Office of 

Inspections initiated an inspection to consolidate the information and review the facts and 

circumstances regarding both allegations. Our efforts focused on the Fiscal Year 2007 

workforce restructuring which cost $9.7 million and resulted in the reduction of 312 

contractor employees.
RESULTS OF INSPECTION 

We found that 37 former WSRC employees who participated in the 2007 workforce 

restructuring inappropriately received about $1.1 million in severance payments. We 

believe that these costs, which were reimbursed by the Department, were unallowable 

and that they should be recovered by the Department. Specifically, we found that 

contrary to the WSRC contract with the Department, 21 former WSRC employees who 

participated in the 2007 workforce restructuring were subsequently rehired and not 

required to repay approximately $300,000 in severance payments. These employees 

were rehired to perform the same or substantially the same job functions in various 

positions including WSRC consultants, WSRC staff augmentation positions, or as WSRC 

subcontractors. They were also rehired within a timeframe that would have required 

them to repay $300,000 of the severance money. However, none of the former 

employees were required to return any portion of the $300,000 in severance payments. 

We further determined that an additional 16 WSRC employees who participated in the 

2007 workforce restructuring received $780,000 in severance payments. The employees 

were allowed to participate in the program despite the Site’s established need for 

retaining employees in critical positions -- science, engineering and information 

technology fields. 

To address these matters, we made two recommendations to the Acting Manager, 

Savannah River Operations Office. 

MANAGEMENT REACTION

In comments on a draft of this report, SRO officials concurred with the report 

recommendations and identified corrective actions that will be taken to address our 

recommendations. Management’s comments are included in their entirety at 

Appendix C.

Attachment

cc: Deputy Secretary

Under Secretary of Energy

Chief of Staff

Acting Manager, Savannah River Operations Office

Director, Office of Risk Management, CF-80

Team Leader, Office of Risk Management, CF-80

Audit Resolution Specialist, Office of Risk Management, CF-80
REPORT ON SEVERANCE REPAYMENTS AT THE SAVANNAH RIVER 

SITE

TABLE OF

CONTENTS

OVERVIEW

Introduction and Objective 1

Summary 2

DETAILS OF FINDINGS

Former Employees Did Not Repay Severance 

Payments 3

Restricted Employees Paid Severance 5

RECOMMENDATIONS 6

MANAGEMENT AND INSPECTOR COMMENTS 7

APPENDICES

A. Scope and Methodology 8

B. Prior Reports 9

C. Management Comments 10
Overview

____________________________________________________

Page 1 Introduction and Objective

INTRODUCTION The Department of Energy’s (Department) Savannah River Site 

AND OBJECTIVE (Site), located in Aiken, South Carolina, is dedicated to

environmental management and cleanup; nuclear weapons 

stockpile stewardship; and, nuclear materials disposition in support 

of the U.S. nuclear non-proliferation efforts. The current 

management and operating contractor for the Site is Savannah 

River Nuclear Solutions, LLC. One of the former management 

and operating contractors was Washington Savannah River 

Company, LLC (WSRC).

With the end of the Cold War, the Department shifted its efforts 

from weapons programs to other areas, which necessitated a 

change in the contractor workforce requirements. In 1993, 

Congress approved Section 3161 of the National Defense 

Authorization Act (Act), which mandates that if a change in the 

workforce is necessary, the Department must develop a plan for 

workforce restructuring that will minimize the impact on the 

affected employees and the surrounding communities. Since the 

passage of the Act, the Department has managed numerous 

contractor workforce restructurings throughout its nuclear weapons 

production facilities. For example, three recent workforce 

restructurings occurred at the Site in Fiscal Years 2005, 2007 and 

2009. The workforce restructurings at the Site cost the Department 

$35 million in severance pay and reduced the contractor workforce 

by 1,184 employees. Specifically, the 2007 workforce 

restructuring at the Site cost $9.7 million and resulted in the 

reduction of 312 contractor employees. WSRC was the Site’s 

management and operating contractor at the time.

The contractual agreement between the Department and WSRC 

prohibited WSRC employees who were offered employment at 

comparable pay and benefits by any contractor or subcontractor 

performing the same or substantially the same type of work from 

receiving severance pay. The contract further stipulates that 

former WSRC employees, who had received severance pay and 

were subsequently rehired within a specified interval, were 

required to repay an appropriate portion of the severance payment. 

 

The Office of Inspector General (OIG) received a hotline 

allegation that former WSRC employees had inappropriately 

received severance payments under the 2007 Savannah River 

workforce restructuring. It was alleged that these employees were 

subsequently rehired to perform in the same or similar functional 

job areas but were not required to repay appropriate severance 

money. At the time the hotline allegation was received, the OIG’s

Office of Investigations was in the process of reviewing a similar 
Overview

____________________________________________________

Page 2 Introduction and Objective

allegation received from Savannah River Operations Office (SRO)

officials. The OIG’s Office of Inspections initiated an inspection 

to consolidate the information and review the facts and 

circumstances regarding both allegations.

The OIG has previously conducted several reviews that identified 

concerns with contractor workforce restructuring programs and 

severance payments at the Idaho National Laboratory and 

Department-wide. The related prior reports are identified in 

Appendix B.

SUMMARY We found that 37 former WSRC employees who participated in the 

2007 workforce restructuring inappropriately received 

approximately $1.1 million in severance payments. We believe 

that these costs, which were reimbursed by the Department, may

be unallowable and should be recovered by the Department. 

Specifically, we found that: 

Contrary to the WSRC contract with the Department,

21 former WSRC employees who participated in the 2007 

workforce restructuring were subsequently rehired and not 

required to repay approximately $300,000 in severance 

payments. These employees were rehired to perform the 

same or substantially the same job functions including 

WSRC consultants, staff augmentation under WSRC 

contracts, or WSRC subcontractors. The employees were 

also rehired within a timeframe that required them to repay 

$300,000 of the severance money. However, none of the 

former employees were required to return any portion of 

the severance money. The $300,000 estimate was based on 

a formula which relied upon the relationship between the 

duration of severance pay and the actual separation time. 

For example, if an employee received 26 weeks of 

severance pay and was rehired after being separated for 20 

weeks, the contract required that the employee return the 

equivalent of 6 weeks in severance pay. 

An additional 16 employees who participated in the 2007 

workforce restructuring received $780,000 in severance 

payments. These employees were allowed to participate in 

the program despite the Site’s established need for retaining 

employees in critical positions. 

In response to these findings, SRO officials indicated that they 

anticipate conducting a full review of this matter to include making 

a determination on the $1.1 million in questioned costs.
Details of Findings

____________________________________________________

Page 3 Details of Findings

FORMER We found that 21 former WSRC employees who participated in the

EMPLOYEES 2007 workforce restructuring were subsequently rehired, but they

DID NOT REPAY were not required to repay approximately $300,000 in severance

SEVERANCE payments. These employees were rehired to perform the same or 

PAYMENTS substantially the same job functions, including WSRC consultants, 

staff augmentation under WSRC contracts, or WSRC

subcontractors. As such, these employees were rehired within a 

timeframe that would have required them to repay $300,000 in 

severance payments. 

We identified the 21 individuals by accessing the badge office 

database to determine the number of 2007 workforce restructuring

participants who were re-issued Site access badges. Since we 

limited our review to those rehires who were issued Site access 

badges, our review does not include those individuals, if any, who 

returned as consultants, in staff augmentation positions or as 

subcontractors in off-site locations. 

The Department’s management and operating contract with WSRC 

prohibited employees who transferred to another facility, 

subsidiary or affiliate of the contractor from receiving severance 

payment. The contract further prohibited employees from 

receiving severance payment who were offered employment at 

comparable pay and benefits by any contractor or subcontractor 

performing the same or substantially the same statement of work 

contained in the contract. Moreover, the contract required former 

Site contractor employees who had received federally-funded 

severance pay and were subsequently rehired within a specified 

interval to repay an appropriate portion of the severance. Contrary 

to the contract, our review revealed that the 21 former employees 

performing the same or similar type work as they previously 

performed for WSRC prior to the workforce restructuring returned 

to the Site. 

Our review of the “Savannah River Site Workforce Management 

Strategy FY 2007 Plan” (2007 Plan) determined that the Plan was 

inconsistent with the contract. Specifically, the Plan did not 

include any provisions on the repayment of severance pay if a 

former employee returned in a consultant, augmentation or 

subcontractor position other than under a parent company or an 

affiliate nor did it address comparable pay and benefits. Further, 

the 2007 Plan’s section on “Questions & Answers (Q&A)”

indicated that the severance pay would only be impacted if the 

employee were to accept a job with WSRC’s parent company or an 

affiliate. The Q&A listed the following five parent companies --

Washington Group International, Bechtel, BNG America, BWXT,
____________________________________________________

Page 4 Details of Findings

or CH2MHILL -- but did not identify the affiliates. In addition, 

the 2007 Plan did not address the repayment of severance pay for 

employees rehired under other Department contractors or 

subcontractors.

When interviewed regarding recouping the severance funds, senior 

WSRC officials indicated that under the 2007 Plan, former 

employees would only be required to repay severance money if 

they were a “direct-hire” to WSRC or an affiliate. The officials 

also stated that the 2007 Plan did not prohibit employees from 

returning in other positions including consultants or staff 

augmentation. Therefore, WSRC officials made no effort to 

recoup severance money when the 21 employees were rehired in 

the various consultant, staff augmentation and subcontractor 

positions. We noted that the 2007 Plan and WSRC officials’ 

position was inconsistent with the contract. 

Senior SRO officials indicated they were not aware of the extent to 

which former WSRC employees who participated in the 2007 

workforce restructuring were returning to the site to work for 

WSRC or its contractors. These officials further stated that WSRC 

may not have been in compliance with the terms of the 

management and operating contract with the Department by 

rehiring former WSRC employees who received severance 

payments to conduct the same type or similar type of work as they 

previously conducted. Specifically, senior SRO officials stated 

that the contract addressed the contractor’s responsibility regarding 

reduction or recoupment of severance payments if the employee 

was hired to perform the same type of work. 

Senior SRO officials further stated that the 2007 Plan was intended 

to assist in reducing the “footprint” at the Site. The officials also 

stated that they considered the individuals hired in consultant, staff 

augmentation and subcontractor positions as working for the 

contractor and subsequently not reducing the footprint. The 

officials also indicated that it was not the intent of the workforce 

restructuring to reduce the number and costs of direct hire 

employees while increasing the numbers and costs associated with

hiring personnel to fill consulting and staff augmentation positions. 

These officials stated that they were not involved in the execution 

of the 2007 workforce restructuring. 

Senior SRO officials indicated that, upon receipt of our report, they 

would assess whether the $300,000 would be considered a 

disallowed cost. Additionally, senior officials indicated that the 

2009 Plan eliminated the ambiguity in the 2007 Plan as it relates to 
____________________________________________________

Page 5 Details of Findings

reemployment. Specifically, the 2009 Plan included a one-year 

restriction on employees returning to work for the Department, 

Savannah River Nuclear Solutions, Washington Savannah River 

Company, Bechtel Savannah River, Incorporated, or any other 

contractor or subcontractor that performed work under a contract 

with the Department. The 2009 Plan further states that if 

employees were hired in any of the aforementioned capacities, they 

would be required to repay a pro rata portion of all the severance 

money they received.

RESTRICTED In addition to the 21 rehired employees, we identified 

EMPLOYEES 16 restricted position employees who were allowed to participate 

PAID SEVERANCE in the workforce restructuring and received approximately 

$780,000 in severance payments. These employees were allowed 

to participate in the program despite the Site’s established need for 

retaining critical employees in engineering positions. 

Specifically, the “M&O [Management and Operating] Engineering 

Assessment and Improvements Report,” (March 28, 2007) 

highlighted serious organizational concerns surrounding the 

contractor’s engineering program. The Assessment Report 

indicated that the engineering attrition had reduced the relative 

capability to support mission needs, and that hiring, training and 

development programs had not kept up with the engineering 

attrition. In responding to the Assessment Report, WSRC 

acknowledged these concerns and asserted recruitment, retention 

and training programs were being implemented to address the 

problems and build engineering capability. Yet, within 4 months 

of issuing this Assessment Report, WSRC allowed 10 engineers to 

participate in the 2007 workforce restructuring. These 10 

engineers were a part of the 16 restricted employee positions. The 

remaining six restricted employees were in the science fields. 

Our review of the 2007 Plan revealed that elements of the Plan 

were inconsistent regarding exempting critical skills, functions 

and/or individuals from the workforce restructuring. In general, 

the 2007 Plan indicated that there was a need to retain the highly 

skilled workers (specifically engineers and scientists) because their 

skills were critical to nuclear material stabilization. It further 

indicated that the restrictions, in part, were based on WSRC’s 

continuing demand for technical and scientific talent and their 

ability to retain these individuals in a competitive market. In 

addition, the 2007 Plan stated that it was crucial to retain 

experienced personnel and it would be “counter-productive to 

make these segments of the employee population eligible” for the 

workforce restructuring. Yet, the 2007 Plan included provisions 
Page 6 Details of Findings and Recommendations

that ultimately allowed the highest grade level employees in these 

critical mission fields to participate in the 2007 workforce 

restructuring, but restricted mid-level employees from 

participating. When interviewed by the OIG about the 16 

restricted employees, a senior WSRC official stated that the 

prohibitions applied to certain grade levels within critical 

positions. Therefore, only persons occupying the specified grade 

levels were restricted from participating in the workforce 

restructuring. The official maintained that the 16 employees 

identified during our inspection were allowed to participate 

because these employees were not in the restricted grade levels and 

were, therefore, entitled to severance payments. Although the 

engineers were not in the restricted grade levels, they were, 

however, in the highest grade levels and therefore the most 

experienced. Paying these senior engineers severance appeared to 

be counterproductive to WSRC’s efforts to recruit and train 

employees in this critical category. In addition, WSRC would 

have been required to subsequently recruit, train or pay retention 

bonuses to the same category of employees (engineers) to ensure 

mission accomplishment. 

In our discussions with senior Department officials, they stated that 

they were unaware that any employees in restricted positions 

participated in the 2007 workforce restructuring. They agreed that 

this issue warranted further review, and if determined that 

employees in critical positions received $780,000 in severance pay, 

this payment could possibly be viewed as disallowed cost.

RECOMMENDATIONS We recommend the Acting Manager at the Savannah River 

Operations Office: 

1. Conduct a review to determine the full extent of consulting, 

subcontract and staff augmentation positions occupied by 

WSRC employees who left during the FY 2007 workforce 

restructuring and determine if severance money of 

$300,000 paid to these employees should be deemed a 

disallowed cost.

2. Conduct a review of the circumstances under which the 

employees in critical positions were approved to participate 

in the FY 2007 workforce restructuring and determine if 

severance money of $780,000 paid to these employees 

should be deemed a disallowed cost. 
____________________________________________________

Page 7 Comments

MANAGEMENT AND In comments on a draft of this report, Savannah River Operations 

INSPECTOR Office officials concurred with the report recommendations. SRO

COMMENTS management identified corrective actions that will be taken to 

address our recommendations. These officials also suggested that

the OIG delay issuance of the report in order to include the 

completed corrective actions with the exact determination of

unallowable costs and any subsequent off set costs against the 

contractor. 

Management’s comments are included in their entirety at 

Appendix C.

We consider SRO’s comments responsive to our report 

recommendations. The OIG advised SRO management that we 

will not delay issuance of the final report but we will monitor the 

corrective actions in the Departmental Audit Tracking System until 

they are deemed complete.
Appendix A

____________________________________________________

Page 8 Scope and Methodology

SCOPE AND As part of this inspection, we interviewed Federal and contractor

METHODOLOGY officials and reviewed Federal laws governing workforce 

restructuring and employee benefits. The inspection fieldwork was 

conducted from April 2009 through March 2010.

To accomplish the inspection objective, we reviewed:

Applicable Federal and Departmental policies and 

regulations related to workforce restructuring and 

severance payments;

Contract procedures pertaining to workforce restructuring 

and severance payments;

Prior OIG and Government Accountability Office reports 

on workforce restructuring and severance payments; and,

The FY 2007 WSRC workforce restructuring participants 

list. 

This inspection was conducted in accordance with the Council of 

the Inspectors General on Integrity and Efficiency’s “Quality 

Standards for Inspections” issued by the President’s Council on 

Integrity and Efficiency.
Appendix B

____________________________________________________

Page 9 Prior Reports

PRIOR REPORTS The following are prior Department of Energy Office of Inspector

General reports:

Letter Report on “Contractor Severance Plans at the 

Department of Energy,” (OAS-L-09-04, February 2009). 

The audit was conducted to determine whether the 

Department had a consistent approach to reimbursing 

contractor employee involuntary separation severance 

benefit costs. The audit concluded that based on an 

evaluation of 23 contractor plans, that the Department did 

not have a consistent approach to workforce restructuring to 

ensure reasonable and equitable treatment of separated 

employees. 

Audit Report on “Voluntary Separation Program at the 

Idaho Cleanup Project,” (DOE/IG-0765, May 2007). The 

audit was conducted to determine whether the cost and 

benefits associated with Idaho National Laboratory’s 

voluntary separation program were consistent with similar 

efforts conducted at other Department facilities and whether 

the project retained the necessary skill mix to accomplish 

the mission objectives. The audit concluded that the 

program was exceptionally costly and, in certain respects, 

inefficient. Specifically, the Idaho program had:

1) significantly higher incentives than comparable 

Department programs; 2) costly incentives did not have 

analytical support to justify the additional benefits paid; and, 

3) critical skills were not retained to accomplish the mission.

We did not identify any reports issued by the Government 

Accountability Office within the past five years that had similar 

findings.
Appendix C

Page 10 Management Comments
Appendix C (continued)

Page 11 Management Comments
Appendix C (continued)

Page 12 Management Comments
 IG Report No. INS-O-10-02

CUSTOMER RESPONSE FORM

The Office of Inspector General has a continuing interest in improving the usefulness of 

its products. We wish to make our reports as responsive as possible to our customers’ 

requirements, and, therefore, ask that you consider sharing your thoughts with us. On the 

back of this form, you may suggest improvements to enhance the effectiveness of future 

reports. Please include answers to the following questions if they are applicable to you:

1. What additional background information about the selection, scheduling, scope, or 

procedures of the inspection would have been helpful to the reader in understanding 

this report?

2. What additional information related to findings and recommendations could have 

been included in the report to assist management in implementing corrective actions?

3. What format, stylistic, or organizational changes might have made this report’s 

overall message clearer to the reader?

4. What additional actions could the Office of Inspector General have taken on the 

issues discussed in this report which would have been helpful?

5. Please include your name and telephone number so that we may contact you should 

we have any questions about your comments.

Name Date 

Telephone Organization 

When you have completed this form, you may telefax it to the Office of Inspector 

General at (202) 586-0948, or you may mail it to:

Office of Inspector General (IG-1)

Department of Energy

Washington, DC 20585

ATTN: Customer Relations

If you wish to discuss this report or your comments with a staff member of the Office of 

Inspector General, please contact Felicia Jones at (202) 586-7828.
This page intentionally left blank.
The Office of Inspector General wants to make the distribution of its reports as customer friendly 

and cost effective as possible. Therefore, this report will be available electronically through the 

Internet at the following address:

U.S. Department of Energy Office of Inspector General Home Page

http://www.ig.energy.gov

Your comments would be appreciated and can be provided on the Customer Response Form

attached to the report.