U.S. GOVERNMENT PRINTING OFFICE

64–767CC WASHINGTON : 2000

WHISTLEBLOWERS AT DEPARTMENT OF ENERGY

FACILITIES: IS THERE REALLY ‘‘ZERO TOLERANCE’’ FOR CONTRACTOR RETALIATION?

HEARING

BEFORE THE

SUBCOMMITTEE ON

OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

MAY 23, 2000

Serial No. 106–135

Printed for the use of the Committee on Commerce

(

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COMMITTEE ON COMMERCE

TOM BLILEY, Virginia, Chairman

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

MICHAEL G. OXLEY, Ohio

MICHAEL BILIRAKIS, Florida

JOE BARTON, Texas

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

Vice Chairman

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

BRIAN P. BILBRAY, California

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

CHARLIE NORWOOD, Georgia

TOM A. COBURN, Oklahoma

RICK LAZIO, New York

BARBARA CUBIN, Wyoming

JAMES E. ROGAN, California

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

ROY BLUNT, Missouri

ED BRYANT, Tennessee

ROBERT L. EHRLICH, Jr., Maryland

JOHN D. DINGELL, Michigan

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RALPH M. HALL, Texas

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

RON KLINK, Pennsylvania

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

TOM SAWYER, Ohio

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

THOMAS M. BARRETT, Wisconsin

BILL LUTHER, Minnesota

LOIS CAPPS, California

JAMES E. DERDERIAN, Chief of Staff

JAMES D. BARNETTE, General Counsel

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

FRED UPTON, Michigan, Chairman

JOE BARTON, Texas

CHRISTOPHER COX, California

RICHARD BURR, North Carolina

Vice Chairman

BRIAN P. BILBRAY, California

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

ROY BLUNT, Missouri

ED BRYANT, Tennessee

TOM BLILEY, Virginia,

(Ex Officio)

RON KLINK, Pennsylvania

HENRY A. WAXMAN, California

BART STUPAK, Michigan

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

JOHN D. DINGELL, Michigan,

(Ex Officio)

(II)

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C O N T E N T S

Page

Testimony of:

Carpenter, Thomas E., Director, Seattle Office, Government Accountability Project ................................................................................................ 11

Gutierrez, Joe, Assessor, Audits and Assessment Division, Los Alamos

National Laboratory ..................................................................................... 42

Hansen, Ronald D., President, Fluor Hanford, accompanied by: Jennifer

Tolson Curtis, Managing General Counsel, Legal Services, Fluor Daniel

Hanford, Inc.; and Richard W. Bliss, Attorney at Law .............................. 223

Sullivan, Mary Anne, General Counsel, accompanied by David Michaels,

Assistant Secretary for Environment, Safety, and Health, U.S. Department of Energy .............................................................................................. 215

Van Robert L., Ness, Assistant Vice President for Laboratory Administration, University of California ....................................................................... 219

Walli, Randall, West Richland ........................................................................ 38

Material submitted for the record by:

Sullivan, Mary Anne, General Counsel, Department of Energy:

Letter dated June 30, 2000, enclosing responses to questions 3, 4,

5, 7, and 8, for the record ...................................................................... 331

Letter dated July 14, 2000, enclosing responses to questions 1 and

6, for the record ...................................................................................... 334

Letter dated July 28, 2000, enclosing response to question 2 for

the record ............................................................................................... 339

Letter dated August 18, 2000, enclosing response for the record ......... 341

(III)

(1)

WHISTLEBLOWERS AT DEPARTMENT OF ENERGY FACILITIES: IS THERE REALLY ‘‘ZERO

TOLERANCE’’ FOR CONTRACTOR RETALIATION?

TUESDAY, MAY 23, 2000

HOUSE OF REPRESENTATIVES,

COMMITTEE ON COMMERCE,

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS,

Washington, DC.

The subcommittee met, pursuant to notice, at 9:30 a.m. in room

2322, Rayburn House Office Building, Hon. Richard Burr (vice

chairman) presiding.

Members present: Representatives Burr, Ganske, Bryant, Bliley

(ex officio), Strickland, and DeGette.

Staff present: Dwight Cates, majority investigator; Thomas

DiLenge, majority counsel; Amy Davidge, legislative clerk; and

Edith Holleman, minority counsel.

Mr. BURR. This hearing of the Oversight and Investigations Subcommittee will come to order.

The purpose of today’s hearing is whistleblowers at the Department of Energy facilities: is there really zero tolerance for contractor retaliation?

We have two panels. I know that more members will be in and

out because of the schedules today.

Let me take this opportunity to welcome all of our witnesses and

to announce to them that we expect a series of votes in approximately 30 minutes. That series will probably last for about 45 minutes. It is a series of four to five votes. When that happens, we will

take a recess for some period of time. It is my hope that Ms.

DeGette and myself will have time to make opening statements

and we will have an opportunity to hear the opening statements of

at least the first panel before we recess. I would ask all of you to

be patient with us as we work through those votes.

The Chair would recognize himself for the purposes of an opening statement.

Today the committee will review whistleblower retaliation at the

Department of Energy facilities operated by its contractors. We will

primarily focus on two issues: first, has the Department taken the

necessary steps to ensure that contractor employees are encouraged

to openly disclose violations of law, unsafe work conditions, and

other examples of waste, fraud, and abuse without fear of retaliation, or has the Department’s zero tolerance policy for reprisals

against whistleblowers simply been a false promise that has died

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due to the vacuum of leadership? Second, is the Department’s policy to reimburse its contractors’ legal defense costs to fight a whistleblower an appropriate use of taxpayer funds, or has the Department all too willingly funded contractor defense costs in an effort

to wear down whistleblowers, regardless of the merits of the whistleblower’s claim?

The committee has been studying these issues closely, and I am

concerned that the Department has once again fallen into a very

familiar cycle. This familiar cycle at DOE begins with a genuine

understanding of a problem, then a commitment to reform, and

then an announcement and lengthy press release from DOE headquarters describing how they will resolve the problem, but the Department always seems to forget to follow through on these reforms.

In 1995, former Secretary Hazel O’Leary presented a package of

whistleblower protection initiatives, including a zero tolerance policy for reprisals and a proposed limitation on the reimbursement

of contractors’ legal defense cost in certain cases, but the implementation of these reforms at DOE sites has been inconsistent due

to the lack of a clear guidance from headquarters—again, an alltoo-familiar problem at the Department of Energy.

Soon after announcing these reforms, Secretary O’Leary realized

that they were not being implemented. In March 1996, in a press

release she quoted, ‘‘These whistleblower initiatives have not been

implemented to my satisfaction, and I want to get this effort back

on track.’’

Secretary O’Leary asked former Under Secretary Tom Grumbly

to take the lead, but again implementation was derailed. In my

mind, the real test of zero tolerance policy is whether contractor

employees are now more willing to come forward with a legitimate

workplace concern without the fear of retaliation from management

and with confidence that DOE will protect them. Unfortunately, we

will hear about the cases today of several whistleblowers who not

only suffered acts of reprisal when they initially identified serious

safety concerns, but who also, in some cases, were subject to ongoing and unrelenting retaliation by both DOE and its contractors

throughout the complaint process.

In all these cases, the Department of Labor investigated the complaints and issued findings in favor of these whistleblowers. Remarkably, the Department has responded by providing virtually no

support to the whistleblowers, while providing generous taxpayer

support for the contractors fighting these meritorious claims.

First, the contractor and his lawyers have unlimited access to

any information they need from the employee’s files or from DOE

files to build their case. The whistleblower, on the other hand, has

to file a Freedom of Information Act request and wait months to

see if DOE and the contractors will comply.

In Mr. Lappa’s case, the Department has withheld access to documents and prevented Mr. Lappa’s attorney from interviewing

DOE personnel, forcing Mr. Lappa to file a separate lawsuit just

to gain access to this information.

Earlier this month, the Federal judge in that case determined

that the DOE ‘‘Acted arbitrary and capriciously in denying the tesVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 E:\HEARINGS\64767 pfrm06 PsN: 64767
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timony of DOE employees’’ sought by Mr. Lappa to prove his case

and ordered DOE to make these individuals available at once.

Second, the contractor has all the time and taxpayer-funded legal

help it needs to slow down, wear down a whistleblower and the

limited resources of a whistleblower.

In Mr. Walli’s case, Fluor Hanford knew it would lose its appeal

of OSHA’s initial ruling, but it appealed anyway and held out for

months of costly litigation until they settled the night before the

trial.

Fluor Hanford has spent more than $200,000 in taxpayer funds

over the past 3 years fighting Mr. Walli and his colleagues, and in

Mr. Lappa’s case the University of California has spent more than

$300,000 in taxpayer funds for outside legal help. In both cases,

the contractors likely will enjoy these free taxpayer-funded legal

expenses even if they continue to lose their ongoing fights against

these whistleblowers.

Third, the relationship between DOE and its contractors is a

close one. In many cases, the contractor receives full cooperation,

strategic coordination from DOE to fight the whistleblowers. All of

DOE’s resources are available to the contractor, but DOE will not

return the whistleblower’s call. In Mr. Lappa’s case, the Department has even entered into a joint defense privilege with the contractor to withhold information from Mr. Lappa.

The judge in Mr. Lappa’s suit found it incredulous that DOE

would claim a joint defense privilege and agreed. How can DOE be

both the independent enforcer of zero tolerance and also a willing

codefendant? This pattern of behavior does not represent zero tolerance, but, unfortunately, this is what we should expect when there

is poor leadership and follow-through by Secretary O’Leary, Secretary Pena, and most recently Secretary Richardson.

If DOE decides to stop hiding behind its contractors and their

contracts, perhaps the Department could establish a legitimate

whistleblower protection policy that it is willing to consistently implement and enforce. This will require DOE to gain control of the

contracts it writes and the contractors it hires, but it looks like we

may have to wait for the next Secretary of Energy to provide this

leadership.

I will now yield to the ranking member for the purposes of an

opening statement.

Ms. DEGETTE. Thank you, Mr. Chairman, for holding this important hearing. Frankly, my statement echoes a number of the concerns that you expressed in your statement, as well.

We in Congress and those in the executive branch have frequently praised the enormous courage and unmeasurable contributions of whistleblowers to building and maintaining policies and

practices in the Federal Government that guarantee that all are

treated fairly and that the public’s health and safety is protected.

We particularly note it—and I think it is particularly important—

at our nuclear weapons and other nuclear sites, where the price of

inadequate safety practices can be so costly. We do this even

though we know that, once outside of the public’s eye, whistleblowers are often punished for their actions with stagnant or destroyed careers, lost jobs, lost pay and benefits, unending legal proVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 E:\HEARINGS\64767 pfrm06 PsN: 64767
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ceedings, and uncompensated legal fees, continuing retaliation, and

tremendous emotional isolation and stress.

As someone who practiced employment law on behalf of workers

for a number of years before I came to Congress, I know firsthand

how this feels for people who are whistleblowers and who are suffering retaliation.

Even a Congressional hearing—and, frankly, we have had many

in this committee—can’t change the personal toll that whistleblowing takes on people.

Ernie Fitzgerald, a whistleblower from the Department of Defense, has labored in a closet for more than 15 years. Not very

many people can do that.

In 1988, when Congress authorized civil penalties under the

Price Anderson Act for DOE contractors who committed serious

safety violations, John Harrington, the Secretary of Energy, opposed all penalties. The contractors, according to Secretary Harrington, engage in special working relationships with the Department to operate Government-owned facilities that are vital to our

national security. The Secretary went on to say, ‘‘These relationships are founded on an understanding that the interests of the Department of its contractors are largely inseparable.’’ Mr. Chairman, I will submit that the DOE has had this attitude

under both republican and democratic administrations. Not too

much, unfortunately, has changed since 1988. The Department of

Energy continues to reimburse its contractors for the legal fees and

other expenses involved in beating down the whistleblowers. Its

lawyers strategizes, we have heard, with the contractors’ lawyers

and create these joint defense agreements. The DOE refuses to

allow its employees to be deposed in whistleblower actions, and it

authorizes punitive litigation against whistleblowers.

The truth is—and this is true in government and also in private

industry—no one in management wants a whistleblower around because they might tell the truth again and embarrass everybody.

Frankly, it doesn’t matter whether someone has worked successfully at a site for 1 or 20 years.

As we heard, following on the 1988 law Secretary O’Leary announced this zero tolerance policy and it was affirmed, in turn, by

both Secretary Pena and Secretary Richardson. Some changes were

made.

The Department set up the Office of Employee Concerns to attempt to informally resolve complaints. It announced a policy that

it would not pay legal fees for contractors who received an adverse

determination against a whistleblower action. But, as we will hear

in testimony today, the Office of Employee Concerns of headquarters has only one full-time staffer and no policy for some very

basic issues such as maintaining the confidentiality of hotline communications.

The 708 process is so slow, inefficient, and faulty that whistleblowers have been forced to go to the Labor Department to get a

full hearing. Labor, unlike DOE, allows discovery by the whistleblower, which gives them a real chance to prove their case. Labor,

unlike DOE, has orders that are enforceable against the contractor

and in court. And, as one whistleblower found out when he went

to court to enforce his DOE order, DOE proceedings don’t provide

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enforceable judgments. Moreover, the contractors have figured out

how to settle the Labor cases just before receiving an adverse determination, with DOE paying all of the bills, and then they take

new actions against the whistleblowers, either with retaliations or

through different legal proceedings. DOE’s counsel has overwhelmingly authorized these costs and cooperates with the contractors’

lawyers in these situations.

We heard a little bit about Hanford, where Fluor Daniel intervened in a dispute the pipefitters had with their union resulting

from their layoff. DOE paid all those bills. Now, after continued retaliation, the pipefitters had to resort to the State courts for relief,

and guess who is paying those bills—right again, the DOE, which

has a zero tolerance policy against reprisal. In fact, the DOE claims

a joint defense policy and is strategizing with Fluor. The whistleblowers must fight on against the resources not only of Fluor, but

the Federal Government.

We heard how much the whistleblowers have had to pay in legal

fees. The taxpayers have spent over $500,000 in legal fees to keep

the pipefitters off the jobs.

David Lappa, another whistleblower, is fighting against the University of California in State court. Lappa, a nuclear engineer with

20 years experience, was harassed out of his job after he alleged

safety violations. He, too, settled his case just before an adverse

finding. The university, however, continued to retaliate. Mr. Lappa

sued in State court. Who is paying the bills? Right again, the DOE.

The Department said it doesn’t need to investigate, it is just going

to wait for Mr. Lappa to bleed himself dry financially while doing

the public’s work.

Joe Gutierrez also ran up against the University of California

when he revealed there were no radioactive monitoring records in

a particular facility. Well, guess what? He got a negative performance rating, a reduced pay rate, and work taken away for that.

Even after an adverse determination, the University still fights

on. Mr. Gutierrez has amassed $50,000 in legal fees. Mr. Gutierrez

apparently violated a U.C. code of ethical conduct which required

him to ‘‘exhibit loyalty in all matters pertaining to the affairs of the

University of California and the Los Alamos National Laboratory,’’

and ‘‘refrain from entering into any activity which may be in conflict with the interests of the University of California and the Los

Alamos National Laboratory.’’

Now, $50,000 to an individual citizen is a lot of money to have

to spend in legal fees, and especially if they have to wait to have

any kind of recovery until an adverse determination. And what can

happen when you have a large institutional entity, like a corporation or the Department of Energy, if they can just bleed these poor

individuals dry?

As far as we are concerned and can see, DOE takes no steps to

protect these whistleblowers, and even most recently, in an April

28 letter for this committee, Mary Anne Sullivan said, ‘‘I believe

that the review of whether LLNL reprised against the individual

and therefore any response by the DOE under its contract with

U.S. has worked and should await the outcome of the proceeding.’’

It just goes on and on.

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Mr. Chairman, I really am glad, as I said, we are having this

hearing. I think it is an important hearing, and I am hoping it will

be the first step, no matter who is in the Administration after the

November elections, to making sure we protect these whistleblowers.

I yield back.

Mr. BURR. The gentlelady makes a good point. The gentlelady’s

time has expired.

The Chair would recognize the chairman of the full committee,

Chairman Bliley.

Chairman BLILEY. Thank you, Mr. Chairman, for holding this

important hearing today on whistleblower retaliation at DOE facilities.

Telling the truth about safety helps all Americans. When whistleblowers are afraid to come forward with safety concerns, the

health and safety of all those within these facilities and all those

who live nearby are jeopardized.

In 1995, then Secretary O’Leary announced new protections for

contractor employees who disclosed safety violations at DOE sites.

Unfortunately, over the past 5 years these whistleblower protections have failed to take hold. It seems that no one at DOE is really interested in strengthening the Department’s whistleblower protection policies.

While Secretary Richardson again pledged a zero tolerance policy

for reprisals against whistleblowers just last year, the reality is

that the Department continues to show its willingness to work

overtime to fight whistleblowers and to protect its contractors, even

after a whistleblower’s claim has been investigated and verified by

the Department of labor.

One of the most glaring failures has been limiting the taxpayer

funding of contractors’ legal costs in whistleblower cases. In 1995,

1998, and again in 1999 the Department proposed reforms so that

the taxpayers would not continue to pay a contractor’s legal bill

when a whistleblower’s claim has merit. However, the proposed reforms were never finalized. Why? According to a recent memo from

DOE’s Office of General Counsel, ‘‘There is no one championing

movement on this rule.’’

The failure of leadership has resulted in a state of confusion,

with inconsistent whistleblower protection policies and inconsistent

contract provisions at the Department’s different sites. Because

whistleblower retaliation is just as serious at one DOE site as at

another, there should be one policy on whistleblower protection

that applies to all contracts and to all contractors. Without tough

and clear contract provisions, contractors can continue to play

games with both DOE and whistleblowers and avoid having to pay

any real cost for retaliation.

The whistleblower cases we will review today are not cases we

have dug up from the past. These are active cases that demonstrate how far DOE and its contractors will go to fight whistleblowers who have identified significant safety issues.

When serious safety issues were raised by David Lappa, Randy

Walli, and Joe Gutierrez, the Department turned its back on them.

Instead of protecting these whistleblowers and investigating their

complaints, the Department sided with its contractors.

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When a contractor knows the Department is on its side, financially and otherwise, the contractor is encouraged to continue to retaliate against all whistleblowers. When employees find out that

the DOE will work overtime to fight whistleblowers and protect its

contractors, the message becomes clear: if you identify safety violations, you will be punished.

The Department claims to have zero tolerance for retaliation

against employees who blow the whistle on safety violations. Zero

tolerance is supposed to mean that not a single case will be tolerated, that every instance will be punished. Five years have passed,

and there have been numerous cases in which whistleblowers have

been retaliated against by DOE’s contractors, but where is the punishment, where is the accountability? After 5 years, the examples,

if any, are few and far between.

Secretary Richardson recently declared in another context that

he wants to put an end to the cozy relationship between DOE and

its contractors. Although we have heard that before, what better

place to start than here, where nuclear safety is at issue?

Thank you, Mr. Chairman.

Mr. BURR. I thank the chairman. The gentleman’s time has expired.

The Chair would recognize Mr. Ganske for the purposes of an

opening statement.

Mr. GANSKE. I thank you, Mr. Chairman.

I would just echo the words of Chairman Bliley. I think it is very

important that an oversight committee in Congress be able to get

the information related to nuclear safety. Whistleblower protections

are, I think, absolutely necessary.

Senator Grassley, the senior Senator from my State, has been a

strong proponent of whistleblower protection as it relates to the Department of Defense, and even strongly supports quit-type suits.

I think it should be noted also that the House of Representatives

passed a strong patient protection bill last October that had strong

whistleblower protections in it, too. There are a lot of analogies between the type of whistleblower protection that we ought to have

the people who are working in the nuclear industry in terms of

health and safety and those who are working in the health industry, in terms of making sure that there are not abuses or risks.

Those people need to be protected for stepping forward and drawing attention to potential problems.

And so, Mr. Chairman, I thank you for having this hearing, and

I look forward to the testimony.

Mr. BURR. I thank the gentleman.

We do have a series of votes, and for that reason I am going to

wait until we get back to bring up the first panel and to swear

them in.

I will take this opportunity, as the Chair, to suggest that the

problem is not cleared up even today. This subcommittee made requests of the Department of Energy for the last several weeks

about other cases that we are not here to hear about from individuals, and it was specifically requests as it related to whether, in

fact, the Department of Energy had reimbursed Kaiser Hill at

Rocky Flats for legal fees, and we were assured that they had not

and that the Department had not signed off on that issue, specifiVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 E:\HEARINGS\64767 pfrm06 PsN: 64767
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cally with the Graff whistleblower case at Rocky Flats, only to be

notified by the Department of Energy yesterday at 4:30 that they

had discovered in the billings last week that all along they had

been billed by Kaiser Hill for the legal costs of that fight.

This brings a number of questions to this committee that we will

explore today. One that is obvious is who is reading the invoices

submitted by the contractors to DOE that were paid and how closely are they checking them if, in fact, invoices were paid with legal

fees, yet those who are responsible to account for any legal fees

paid out to contractors didn’t know that the Department of Energy

was, in fact, reimbursing Kaiser Hill.

I am sure that we will get into this in greater depth on both

sides of the aisle.

At this time, I would ask unanimous consent to enter both the

original response from the Department of Energy, as well as yesterday’s response clarifying their participation into the record.

Without objection, so ordered.

[The information referred to follows:]

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10

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Mr. BURR. This hearing will be adjourned until 11:15.

[Brief recess.]

Mr. BURR. The subcommittee will come back to order.

At this time, the Chair would call up our first panel: Mr. Tom

Carpenter, director, Seattle office, Government Accountability

Project; Mr. Joe Gutierrez, assessor, audits and assessment division, Los Alamos National Laboratory; and Mr. Randy Walli from

West Richland, Washington.

Gentlemen, welcome.

Let me first turn to Mr. Strickland for the purposes of an opening statement, if he has one.

Mr. STRICKLAND. Mr. Chairman, I have an opening statement I

would like to submit for the record.

Mr. BURR. Without objection, all statements of all members will

be a part of the record.

Gentlemen, it is the history of this committee to take testimony

under oath. Do any of you have a problem with that?

[No response.]

Mr. BURR. It is also incumbent on the Chair to advise each of you

that, under the rules of the House and rules of the committee, you

are entitled to be advised by counsel. Do any of you choose to have

counsel sworn in to advise you during this hearing?

[No response.]

Mr. BURR. None. Okay.

I would ask all of you to stand up. Raise your right hand. Do you

swear to tell the truth, the whole truth, and nothing but the truth,

so help you God?

[All witnesses respond in the affirmative.]

Mr. BURR. Please be seated.

Mr. Carpenter, we would recognize you for the purposes of an

opening statement.

TESTIMONY OF THOMAS E. CARPENTER, DIRECTOR, SEATTLE

OFFICE, GOVERNMENT ACCOUNTABILITY PROJECT; RANDALL WALLI, WEST RICHLAND; AND JOE GUTIERREZ, ASSESSOR, AUDITS AND ASSESSMENT DIVISION, LOS ALAMOS NATIONAL LABORATORY

Mr. CARPENTER. Thank you, Congressman, and thank you for inviting my testimony here today about whether there really is a zero

tolerance for reprisal policy against whistleblowers at Department

of Energy nuclear facilities.

I am an attorney and the director of the Seattle office of the Government Accountability Project, and I am primarily responsible for

overseeing the activities of the Department of Energy nuclear

weapons production facilities, a position I have held since 1985.

Our organization provides nonprofit legal counseling and support

for whistleblowers who suffer reprisal for exposing health, safety,

and environmental abuses. With over 20 years of experience in successfully representing literally thousands of government and corporate employees who have challenged unsafe, fraudulent, and environmentally unsound practices, our organization has developed a

unique and effective strategy for helping whistleblowers.

Based in Washington, DC, GAP opened an office in Seattle in the

summer of 1992 to effectively respond to the growing number of

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cases and issues at the Hanford nuclear site. We also represent or

have represented employees at various Department of Energy sites

nationally, including at Los Alamos in New Mexico, Knolls Atomic

Power Lab in New York, Hanford in Washington, Oak Ridge National Laboratory in Tennessee, Savannah River site in North

Carolina, Rocky Flats plant in Colorado, the Fernald site in Ohio,

Idaho National Engineering Labs, Lawrence Livermore National

Laboratories in California, and Pantex in Texas.

The ability of employees to raise concerns is fundamental to safe

and efficient operations, especially at nuclear facilities. The Department of Energy has for a decade recognized the important concept

of protecting whistleblowers, but has not taken the necessary steps

to change the culture to make a policy shift more than window

dressing. In fact, in total contradiction of its oft-cited zero tolerance

for reprisal policy, the Department has assisted its contractors in

every possible way to fight whistleblowers, even when they prevail

in court.

After years of a zero tolerance policy, can the Department point

to a single instance where the policy has actually been enforced?

The Department has effectively dismantled safety oversight and

regulation of its contractors in many ways, but has removed qualified safety professionals from the management chain for its most

dangerous operations.

The problems surfaced by whistleblowers are troubling symptoms

of the lack of safety enforcement and in absence of safety professionals who are empowered in the management chain to heed the

concern of whistleblowers.

Since 1993, the Department of Energy has enacted a policy of

zero tolerance for reprisal against whistleblowers. This started with

Secretary Hazel O’Leary, who announced a set of whistleblower initiatives in 1994 and 1995 to address what she called a ‘‘miserable,

miserable history’’ of reprisal within her agency. Her reforms were

echoed and embraced by Secretaries Federico Pena and the current

Secretary, Bill Richardson.

Among the reforms pledged to by the Department was a commitment to curtail the practice of reimbursing contractor litigation expenses associated with whistleblower cases. Many contracts within

the Energy Department were subsequently modified to explicitly

disallow the payment of contractor costs associated with litigation

in cases where an adverse determination was found against the

contractor. Where costs were advanced by the Department of Energy and the contractor lost, the DOE required the repayment of

any advanced fees.

The Department has consistently ignored its own policies on zero

tolerance. The agency continues to reimburse contractor costs, even

when the whistleblower prevails.

Earlier we talked about the case of David Lappa. Mr. Lappa is

a nuclear engineer. He was formerly employed at the Lawrence

Livermore National Lab. His case is a prime example of how the

DOE has failed in its policies.

Mr. Lappa refused to engage in a coverup of nuclear criticality

safety violations as part of an Investigation Committee. The University of California removed his name from a final report, of which

he was a part. Mr. Lappa was then removed from his position and

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subjected to harassment and intimidation. He filed a complaint

with the U.S. Department of Labor, which investigates claims of

whistleblower reprisals, and after an extensive investigation the

Labor Department found that management had illegally retaliated

against Mr. Lappa an ordered the lab to pay damages and to cease

its harassment campaign.

U.C. did not appeal this finding. It became the final agency order

of the Labor Department. Yet, the Department of Energy refused

to recognize this finding and reimbursed all of the University’s expenses associated with Mr. Lappa’s complaints.

When the University continued to harass Mr. Lappa and denied

him meaningful work, Mr. Lappa filed a lawsuit in State court. The

Department continues to side with the University and has actively

sought to block access to information and witnesses to Mr. Lappa,

while at the same time paying the University’s legal bills.

It took a Federal judge to order the DOE to produce documents

and to make DOE officials available for deposition. Meanwhile, Mr.

Lappa, who has appealed for help repeatedly from the Department

of Energy in his case, has been insulted and rebuffed by U.C. management and DOE. DOE managers have told him that they didn’t

put credence in the Department of Labor’s findings and have attempted to create a joint defense relationship with the contractor

in order to hide documents and witnesses from Mr. Lappa.

After suffering repeated harassment and mental anguish, Mr.

Lappa finally resigned due to the emotional toll and refusal of the

university to provide him meaningful work.

It is cases like this that have led to many employees within the

Department to characterize the DOE’s true whistleblower policy as

‘‘zero tolerance for whistleblowers.’’

For an agency with such critical safety and health responsibilities, effective financial management controls are also essential.

The U.S. GAO describes DOE’s contractor oversight as an undocumented policy of blind faith in contractors’ performance, which it

calls its ‘‘least interference policy.’’ This is no more apparent than

at the DOE’s Hanford site in Washington State.

Over the past several years, David Carba, a former accountant

for the Westinghouse Hanford Company, reported that Westinghouse was deliberately inflating cost, adding up to over $100 million, in violation of the Federal accounting system. These findings

were subsequently verified in September, 1997, by the Defense

Contracting Audit Agency. The agency also found that Fluor Daniel

Hanford Company, which succeeded Westinghouse, not only continued these fraudulent practices, but refused to correct them.

Shortly after the Hanford audit was completed, an internal request called a ‘‘form 2000’’ was filed to initiate a fraud investigation, but, for reasons that have not been provided, it was not acted

upon.

Despite these actions, the DOE has done little, if anything, to

correct these and has closed ranks against Mr. Carba, who filed a

False Claims Act case against the contractors.

Given DOE’s consistent blind faith in its contractors, we are concerned that DOE may be paying contractor legal fees to defense a

False Claims Act case for the same contractors that were found to

14

have violated the Federal acquisition cost accounting standards

now subject to litigation.

The Department of Energy could act differently. It need look no

further than the Nuclear Regulatory Commission for help. The

NRC, which is responsible for the commercial nuclear industry, has

enacted policies that promote a safety-conscious work environment

at commercial nuclear operations. Under NRC rules, licensees and

contractors are routinely subjected to civil penalties and even license suspension and revocation for chilled reporting atmospheres.

The DOE would be well advised to follow the NRC example if it

is serious about changing its 50-year culture of reprisal.

Protecting employees who speak about illegality, threats to public health and safety, mismanagement, and fraud deserve protection and encouragement. Congress can do its part by beefing up

protection for these workers, which remain inadequate, and by

passing legislation that resolves a conflict of interest situation at

DOE by affording external regulation of these facilities to OSHA

and the NRC.

Thank you for inviting my testimony today.

[The prepared statement of Thomas E. Carpenter follows:]

PREPARED STATEMENT OF TOM CARPENTER, DIRECTOR, SEATTLE OFFICE,

GOVERNMENT ACCOUNTABILITY PROJECT

INTRODUCTION AND BACKGROUND

Thank you for inviting my testimony today about whether there is really ‘‘zero

tolerance for reprisal’’ against whistleblowers at Department of Energy nuclear facilities. My name is Tom Carpenter, and I am an attorney and the Director of the

Seattle Office of the Government Accountability Project. I am primarily responsible

for overseeing the activities of Department of Energy nuclear weapons production

facilities, a position I have held since 1985.

Our organization provides non-profit legal counseling and support for whistleblowers who suffer reprisal for exposing health, safety, and environmental abuses.

We also work to ensure that whistleblower concerns are addressed through by appropriate federal agencies, public exposure in the media, Congress, and the courts.

With over twenty years of experience in successfully representing over thousands

of government and corporate employees who have challenged unsafe, fraudulent,

and environmentally unsound practices, GAP has developed a unique and effective

strategy combining first-hand investigation of whistleblower concerns with broad

public education, grassroots coalition-building, congressional action, media pressure,

and selective litigation. Moreover, our efforts have brought together diverse groups

to press for reforms, such as industry, workers, local unions, grassroots organizations and citizens who face toxic exposures from nearby facilities.

Based in Washington, D.C., GAP opened an office in Seattle in the summer of

1992 to effectively respond to the growing number of cases and issues at the Hanford Nuclear Site. GAP also represents or has represented employees at various Department of Energy sites nationally, including: Los Alamos National Laboratory in

New Mexico; Knolls Atomic Power Laboratory in New York; Hanford Nuclear Reservation in Washington; Oak Ridge National Laboratory in Tennessee; Savannah

River Site in South Carolina; Rocky Flats Plant in Colorado; Fernald Site in Ohio;

Mound Laboratories in Ohio; Idaho National Engineering Laboratories in Idaho;

Lawrence Livermore National Laboratories in California; and Pantex Nuclear Weapons Assembly and Disassembly Plant in Texas.

In addition to providing legal representation to whistleblower employees, the Government Accountability Project also advances policy reform within the Department

of Energy. For instance, in 1990, we filed the Rulemaking Petition that led to the

establishment of the DOE’s whistleblower protection program under 10 C.F.R. Part

708, and we have commented extensively on similar reforms. We have also affected

policy reforms through Congress, where we helped draft and advocate for changes

to the Nuclear Whistleblower Protection Act, to provide whistleblower protection to

DOE contractor employees in 1992.

15

At Hanford, the Department’s most contaminated and dangerous site, I have represented dozens of employees who have blown the whistle on illegalities, threats to

public health and safety, mismanagement and environmental abuses since 1987.

I serve on the Hanford Advisory Board, which advises the Department of Energy,

the Washington State Department of Ecology, and the Environmental Protection

Agency on matters related to environmental cleanup and remediation and health

and safety issues at Hanford.

I was also instrumental in the formation and continued operation of the Hanford

Joint Council for Resolving Employee Concerns, a highly successful and unique mediation board that resolves cases of whistleblower allegations and personnel actions

at a low level, in a manner that protects the employee and the interests of the company and the government and in a full, final and fair resolution.

GAP’s Work with DOE Employees and Contractor Employees

It has been repeatedly demonstrated that employees who have raised environmental, safety and health concerns (whistleblowers) at DOE nuclear weapons production facilities have subsequently experienced significant workplace reprisal that

has impacted their careers, financial stability, and personal and familial relationships. Frequently, they are courageous people of integrity who have observed and

documented health-threatening safety and environmental hazards, and refused to

remain silent despite adverse consequences. Society should protect and applaud

whistleblowers, who, in looking beyond narrow self-interest uphold a professional

code of ethics, save lives and preserve not only public health and safety but also

vital fiscal resources.

The historical policy of retaliation against whistleblowers throughout the DOE

complex has been well-documented. Reprisals have come in the form of poor performance appraisals, terminations, psychiatric evaluations, physical threats, harassment, creation of hostile working environments, transfers, layoffs, security clearance

abuses and salary cuts.

On November 6, 1993, Energy Secretary Hazel O’Leary, at my invitation, attended a national conference entitled ‘‘Protecting Integrity and Ethics.’’ The conference, held in Washington, D.C., was co-sponsored by the Government Accountability Project and Public Employees for Environmental Responsibility. Secretary

O’Leary met privately with a number of DOE whistleblowers, and then gave the

keynote address of the conference. She stated,

And finally, not just to make whistleblowing acceptable, but to celebrate it. To

have, not just me and you, but every manager and every employer in the DOE

to understand that whistleblowing is simply being proactive. That’s what it is.

It’s being proactive. It’s saying, ‘for God’s sake this is a problem let’s handle it.’

********

Here’s my commitment. I’ve talked a lot in my life about zero tolerance for discrimination. How about zero tolerance for reprisals, doesn’t that get everybody

under the same tent? Now that’s my piece and I own that... What we are going

to do here is agree that that’s the goal and we’re going to stick on it . . . I commit

today, zero tolerance, zero tolerance for reprisal.

—SECRETARY HAZEL O’LEARY, November 6, 1993, Holiday Inn,

Bethesda, Maryland, at the Protecting Integrity and Ethics Conference.

Secretary O’Leary’s commitments were an invitation to the public and the workforce to encourage the Department to examine and improve its own policies and

practices in regards to whistleblower protection.

Secretary O’Leary’s commitments translated into a series of reforms which she

adopted as ‘‘Whistleblower Initiatives.’’ On August 9, 1995, the DOE issued a press

release announcing the adoption of a series of reforms to protect whistleblowers. The

reforms were meant to carry out Secretary O’Leary’s policy of ‘‘zero tolerance for reprisal.’’ The DOE announcement stated:

The reforms adopted by O’Leary include measures to ensure that whistleblowers are not retaliated against by misuse of security clearance procedures;

a limit on payment of contractor litigation costs in whistleblower cases, and establishment of an enhanced ‘‘employee concerns’’ program which would have the

effect of strengthening DOE policies and programs to ensure that employee concerns are given full attention by DOE and DOE contractor managers and supervisors.

The whistleblower reforms, and particularly the ‘‘zero tolerance for reprisal’’ policy

was recognized by Secretary Federico Pena, and subsequently Secretary Bill Richardson, who issued a ‘‘Safety and Accountability Policy Memorandum’’ to all employees on March 10, 1999. The policy stated,

16

There must be open communication between management and employees and

a zero tolerance policy for reprisals against those who raise safety concerns.

Free and open expression of employee concerns is essential to safe and efficient

accomplishment of the Department’s missions.

However, the DOE’s commitment to these reforms has flagged. Secretary O’Leary,

in sworn testimony in a whistleblower case involving a DOE Resident Inspector in

1998, observed,

‘‘. . . [W]hat I was after was what I then knew and know even more deeply after

having spent four years in the Department of Energy, as the longest Secretary

of Energy in this history of the government, has been a practice of repeated and

long-term reprisal that visits the employee in the place that he or she is most

vulnerable and that is, first of all, in the questioning of the employee’s competence to do his or her work, and once that happens to any employee, that individual is almost dead in terms of promotion or having people even attend

what is being said.’’

DOE’S POLICY ON REIMBURSING CONTRACTOR LITIGATION FEES IN WHISTLEBLOWER

CASES

As part of the new era of employee protection ushered in by Secretary O’Leary,

the Department took action by requiring the insertion of language in new contracts

made by the Department specifically limiting the payment of contractor litigation

fees in whistleblower cases.

Subsequently, the Department issued a new regulation under its procurement

rules, called DEAR (Department of Energy Acquisition Regulations) regulations,

mandating the insertion of clauses relating to whistleblower cases against contractors in site contracts throughout the complex.

Pursuant to 48 C.F.R. Part 970.2274-1(d) of the DEAR regulations, a contractor

may not submit for payment by the Department costs incurred in connection with

a final decision in Departmental whistleblower findings under 10 C.F.R. Part 708.

Additionally, 48 C.F.R. Part 970 (h) states that contractors ‘‘shall not be reimbursed

if such liabilities were caused by contractor managerial personnel’s (1) Willful misconduct, (2) Lack of good faith, or (3) Failure to exercise prudent business judgment,’’ including in actions brought by employees.

The DEAR regulations, however, only mention proceedings under 10 C.F.R. Part

708 proceedings, and are silent on other actions brought in other fora, such as a

Labor Department or state court proceeding.

Additionally, the Whistleblower Initiatives signed by Secretary O’Leary after an

opportunity for public comment, clearly stated the Department’s policy, and many

site contracts were modified throughout the complex reflecting these new policies.

However, a review of the various site contracts reveals little consistency in this

area.

For instance, the Hanford Site and the Savannah River Site contracts state that

DOE may reimburse contractor litigation costs in connection with whistleblower

cases before an adverse determination, which is defined as an initial determination

under 10 C.F.R. Part 708, a finding by an Administrative Law Judge in the Labor

Department, or a state or federal court ruling. If an adverse determination against

a contractor is filed, the DOE will not reimburse costs or expenses associated with

the case, and in fact requires the repayment of any such costs that were ‘‘fronted’’

by the Department for the litigation. The Hanford Contract states:

C. Litigation costs and settlement costs incurred in connection with the defense of,

or a settlement of, an employee action are allowable if incurred by the Contractor before any adverse determination of the employee’s claim, if approved

as just and reasonable by the Contracting Officer and otherwise allowable

under the contract. Costs incurred in pursuit of mediation or other forms of alternative dispute resolution are allowable, if approved as just and reasonable

by the Contracting Officer, and no adverse determination of the employee’s

claim has occurred. Additionally, the Contracting Officer may, in appropriate

circumstances, reimburse the Contractor for litigation costs and costs of judgements [sic] and settlements which, in aggregate, do not exceed any prior settlement offer approved by the Contracting Officer and rejected by the employee.

D. Except as provided in Paragraphs C, E and F of this clause, any other cost associated with an employee action (including litigation costs connected with, a

judgement [sic] resulting from, or settlement subsequent to the employee action)

are not allowable unless the Contractor receives a judgement or final determination favorable to the Contractor. In such event, reasonable litigation costs

incurred by the Contractor are allowable, and the Contractor may submit a reVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00020 Fmt 6633 Sfmt 6621 E:\HEARINGS\64767 pfrm06 PsN: 64767
17

1 In one case, involving a whistleblower named Larry Cornett, the DOE took over four years

to issue a final decision in his favor, at which time the contractor, who was no longer employed

by DOE, refused to pay. A district court likewise declined to order the agency to honor its commitment under 10 C.F.R. Part 708 to enforce the judgment on the contractor. Negative publicity

against the agency and imminent Congressional action eventually forced the agency to itself pay

Mr. Cornett’s damages on behalf of the contractor. In the opinion of the author, the actions of

DOE did not serve as much of a deterrent against contractor malfeasance.

quest for reimbursement for all such costs incurred subsequent to the adverse

determination.

Project Hanford Management Contract, Contract No. DE-AC06-96RL13200, Section

H-40.

The contract at the Rocky Flats site in Colorado is more open to interpretation.

There, the contract provides, in whistleblower or labor actions, that ‘‘if the dispute

was occasioned by contractor actions which are unreasonable or were found by the

agency or board ruling on the dispute to be caused by unlawful, negligent or other

malicious conduct, the costs would be unallowable.’’ The DOE has apparently ignored the policy enumerated in the Whistleblower Initiatives at Rocky Flats and in

the DEAR regulations, which prescribe the insertion of a clause in all DOE contracts that prohibit reimbursement of claims reimbursed ‘‘if such liabilities were

caused by contractor managerial personnel’s (1) Willful misconduct, (2) Lack of good

faith, or (3) Failure to exercise prudent business judgment.’’

The contract covering Lawrence Livermore National Laboratory and the Los Alamos National Laboratory is the most convoluted. While disallowing costs associated

with whistleblower claims when there is an adverse determination, there are a few

loopholes that still allow reimbursement. For instance, where the DOE ‘‘approved

the Contractor’s request to proceed with defense of the action rather than entering

into a settlement with the employee or accepting an adverse determination or other

interim decision prior to a final decision,’’ the costs are allowable.

The Livermore contract provides for the ability of the contractor, subsequent to

an adverse determination, to obtain ‘‘conditional payment from contract funds upon

provision of adequate security, or other adequate assurance, and agreement by the

Contractor to repay all litigation costs if they are subsequently determined to be unallowable.’’

In our experience, the current DOE policy on reimbursement of contractor litigation fees, however well-intentioned, serves to actually frustrate the Department’s

stated policy of ‘‘zero tolerance for reprisal’’ against whistleblowers.

As an initial matter, taxpayers should not be subsidizing illegal retaliatory activities by contractors. Subsidizing a contractor’s legal costs in these circumstances

sends the wrong message to the work force as well as the contractor that DOE will

support the contractor, until proven guilty. This policy actually promotes lengthy

and expensive legal battles since the contractor can always count on a well-funded

defense campaign that will financially and personally wear down the worker, who

typically does not have access to large law firms or a big war chest.

Typically, legal fights in administrative fora, such as that provided by the Department of Energy’s 10 C.F.R. Part 708, can take years to ever reach a Hearing Officer.

A final decision in Part 708 cases can literally take as long as ten years, accounting

for the contractor’s right to file an appeal of an agency action pursuant to the Administrative Procedures Act—a six year statute of limitations.1

Even if the contractor realizes that it is culpable, it may decide to wait to settle

the claim until the last possible minute before an adverse decision is rendered that

might prevent the contractor from recovering its legal fees from the DOE. The advantage to the contractor using this strategy is multi-faceted:

• the complainant is not at work during the period of the pendency of the legal action, and the contractor may reason that it has successfully removed a ‘‘troublemaker’’ who was raising inconvenient safety or health issues;

• the absence of the complainant during the years of litigation sends a powerful

message to the rest of the work force that those who raise concerns will face

termination and a lengthy period of costly and stressful litigation—it is a deterrent to other employees to not raise health and safety issues;

• in many instances, the contractor may actually profit from the expenditure of litigation funds by adding on a ‘‘cost-plus’’ adder on expenditures (the more you

spend, the more you make);

In short, for the DOE to indemnify the contractor’s legal fees in some cases actually facilitates and encourages reprisals and lengthy legal battles by subsidizing

contractor malfeasance. This alone flies in the face of the Departmental policy on

‘‘zero tolerance for reprisal’’ against whistleblowers.

18

There is another troubling aspect to the Department’s current policy in that there

are several cases where the policy has been ignored or subverted. In several recent

high-profile cases, the contractor was adjudged guilty of reprisals, but still had its

fees reimbursed by the DOE.

This includes the case of David Lappa versus the University of California, where

the Secretary of Labor issued a Final Agency Decision that found that the Lawrence

Livermore National Laboratory contractor (UC) had violated the law by engaging in

retaliation and discrimination against Mr. Lappa. Mr. Lappa, a twenty-year veteran

of the Lab and an accredited nuclear engineer raised concerns about nuclear criticality violations. Ironically, DOE investigated Mr. Lappa’s substantive concerns and

issued a civil finding under the Price Anderson Act against the University of California for deliberate violations of nuclear safety protocols. Yet inexplicably, DOE has

paid, and continues to pay, all expenses related to Mr. Lappa’s claims against the

University of California. The best that can be said about the DOE’s attitude towards

Mr. Lappa’s case is that it is ‘‘gaming’’ the system to come up with the result that

it wants—to reimburse the contractor no matter what.

The Government Accountability Project therefore recommends that the DOE enact

clear, comprehensive and effective rules that prohibit the payment of litigation fees

in whistleblower cases in any circumstance other than when a contractor can clearly

show a written directive from a DOE official ordering the behavior complained of

by the whistleblower.

NEED FOR A SAFETY CONSCIOUS WORK ENVIRONMENT AT DOE

It is fundamental to the mission of the Department of Energy that it protect the

public safety and health in the regulation and control of its nuclear weapons production facilities. It is also fundamental to DOE’s safety programs that DOE and DOE

contractor employees be encouraged to voice environmental, safety and health

(ES&H) concerns without experiencing reprisal. Past and recent revelations of longstanding ES&H deficiencies in DOE operations, along with a continuing stream of

DOE and DOE contractor employees who allege reprisal for voicing concerns, indicate that DOE has not achieved what the commercial nuclear industry calls a ‘‘safety-conscious work environment’’ which is fundamental to DOE reliably accomplishing its mission.

A safetyconscious work environment is defined as a work environment in which

employees are encouraged to raise concerns and where such concerns are promptly

reviewed, given the proper priority based on their potential safety significance, and

appropriately resolved with timely feedback to employees. Attributes of a

safetyconscious work environment include (1) a management attitude that promotes

employee involvement and confidence in raising and resolving concerns; (2) a clearly

communicated management policy that safety has the utmost priority, overriding,

if necessary, the demands of production and project schedules; (3) a strong, independent quality assurance organization and program; (4) a training program that

encourages a positive attitude toward safety; and (5) a safety ethic at all levels that

is characterized by an inherently questioning attitude, attention to detail, prevention of complacency, a commitment to excellence, and personal accountability in

safety matters.

Indicators of lack of a ‘‘safety-conscious work environment’’ at DOE include:

• The deficient safety programs and situations described in the current annual Defense Nuclear Facilities Safety Board (DNFSB) report to Congress (as well as

previous annual DNFSB reports).

• Wide-spread environmental, safety and health (ES&H) deficiencies at sites such

as Hanford and Pantex, which represent a direct threat to the safety of the

work force and the public.

• The numerous well documented cases of whistleblower reprisal for voicing ES&H

concerns in DOE, as documented in independent studies such as by the National Academy of Public Administration (NAPA).

• Deficient implementation of employee concern programs by the responsible managers, as detailed in the audit by the NIC Corporation performed for headquarters DOE, which analyzed employee concerns programs at the Hanford

Site. (See, Employee Concerns Program, Hanford Site Assessment Performed for

the U.S. Department of Energy, Richland Operations Office, National Inspection

& Consultants, Inc. (NIC), November 1996.)

• The many deficient safety and management conditions that led to the tank explosion at Hanford in May 1997, which unnecessarily exposed over a dozen Hanford workers to toxic and hazardous vapors and conditions, and led to the imposition of a $110,000 fine from the State of Washington.

19

• The DOE Environment and Health (EH) review of the radiation protection program in Transportation Safeguards Division (TSD) identified a complete breakdown in the employee concern program, noting that management threatened to

fire employees who persisted in raising concerns about the lack of radiation protection provided in their jobs as nuclear materials couriers. • The recent highly publicized allegations about deficiencies in DOE’s safeguards

and security program at Rocky Flats, and the recent Labor Department ruling

that a high-ranking officer in the guard force was illegally retaliated against by

management for voicing concerns. • Tens of tons of plutonium 239 and highly enriched uranium remain in unsafe or

questionable storage containers around the country. Unresolved problems

abound—unstable nuclear solutions, residues, metals, and powders in deteriorating containers and tanks; nuclear weapon parts in ill-suited containers; a

wide variety of fire and explosion risks; degraded equipment and safety systems; and deteriorating storage facilities—some dating back to World War II.

Skilled personnel who can safely fix these problems are disappearing. • The July 28, 1998 death of a worker severe injuries suffered by others when a

high-pressure carbon dioxide fire suppression system unexpectedly went off in

a facility at the department’s Idaho National Engineering and Environmental

Laboratory. Within seconds 13 workers found themselves struggling to escape

a lethal atmosphere under zero visibility. The rescue team was put at great risk

as they entered the building without breathing equipment. An investigation

found that the accident could have been avoided. Several similar accidents at

the laboratory, including two very serious ones, had been ignored. The investigators concluded that management ‘‘had not been aggressive or effective in

monitoring contractor performance . . . or in ensuring that corrective actions and

improvements in hazard and work controls are completed or consistently applied.’’ • The recently publicized dissenting safety report by Frank Rowsome, a senior Energy Department safety expert, who wrote, ‘‘The case of DOE’s nuclear weapons

program has been made particularly acute by some vicious circles...Those of

us who help to cover up deficiencies are rewarded, and those that bring them

to the fore... are at best ignored, resented, or dismissed as troublemakers.’’ In

his February dissent, Rowsome said that Energy Department officials heavily

censored safety reports while engaging in wholesale removal of safety experts

from the nuclear weapons management chain. ‘‘No one in our management hierarchy is a safety professional today,’’ he said. Many safety professionals ‘‘are disaffected and are seeking to leave.’’ In calling for the shutdown of Pantex,

Rowsome also wrote, ‘‘We have seen nuclear weapons accidentally destroyed but

not exploded at Pantex in recent years. We might see an accident in which the

chemical high explosive is detonated or burned while still in a nuclear weapon.

That would destroy one bay or cell at Pantex, and kill the technicians . . . and

possibly a few outside.’’ Rowsome believes that an accidental nuclear detonation, even if it is a fizzle, would have much more serious consequences:

It ‘‘would destroy Zone 12 at Pantex, and kill the several hundred workers

there, and induce the chemical explosive to go off in a few dozen other nuclear

weapons, but probably not detonate them. It would produce radioactive fallout

not unlike those resulting from one of our above ground nuclear weapon tests

in the 1940s and 1950s.’’ Higher-yield nuclear explosions are substantially

less likely, he says, but they could create more radioactive fallout because

they might ‘‘vaporize the many plutonium pits’’ stored at the site.

Employees like Frank Rowsome are far and few between in attempting to warn

the bureaucracy about the potentially fatal consequences of ignoring safety. Such actions suppress, or ‘‘chill’’ the reporting of concerns because employees understandably become fearful of suffering reprisal when they report a concern. The systematic

dismantlement of safety systems within the DOE, and the suppression of the safety

professionals like Mr. Rowsome will likely only lead to future preventable nuclear

catastrophes.

Even the DOE facilities with the most sophisticated programs and the most experience with employee concerns issues have been found to be in failure mode. The

Hanford Site, which boasts a DOE employee concerns office with four staff members, the support of upper management, and a large array of contractor employee

concerns mechanisms, was audited by the National Inspections and Consultants,

Inc. at the request of DOE Headquarters in late 1996. NIC’s report, entitled, ‘‘Employee Concerns Program Hanford Site Assessment,’’ concluded that senior management did not support the program and that ‘‘the lack of support by management

has not promoted a work environment in which workers were comfortable in identifying concerns to their supervision.’’ Additionally, NIC reported—

20

• there was a lack of training for program investigators; • employee concerns staffing was inadequate; • the program did not address concerns in a timely manner; • employees who used the program were not informed of their case status; • concerns filed by employees were turned over to the organization or manager that

the employee had accused for investigation in a third of all cases reviewed; • evidence was not available or maintained in the case file supporting disposition

of the concern; • all of the program users interviewed stated that their confidentiality was not

maintained.

A recent review by my office indicated that many of these problems persist. In

over a third of the cases that come to the Hanford employee concerns program, the

employee was simply referred back to the contractor, a practice that was harshly

criticized by the NIC team. In many other cases, the Concerns Program simply decided that it did not have jurisdiction over the concern, and closed the concern without further action. More disturbingly, the Employee Concerns office at Hanford has

divulged the identity of employees against their wishes, subjecting them to reprisals, and in one case even sent a warning letter to a contractor that an employee

was seeking outside legal help and was likely to file a lawsuit against the contractor.

This dismal assessment of the DOE’s flagship site for handling employee concerns

underscores the urgency of the need for immediate and deliberate reform. But appeals to the DOE bureaucracy have gone unheeded.

ZERO TOLERANCE FOR WHISTLEBLOWERS

For nearly seven years, the Department of Energy, through the commitment of

three Energy Secretaries, has pledged to institute a policy of ‘‘zero tolerance for reprisal’’ against those who raise employee concerns. Although the Department has

made some efforts towards reform, the de facto policy of the Department, as embodied by the behavior of its personnel and its actions, remains a zero tolerance policy for whistleblowers. Several recent cases illustrate this point.

I. DAVID LAPPA

David A. Lappa v. Regents of the University of California, et. al.

Alameda County (CA) Superior Court No. V-015785-4

Background

A square-mile complex of buildings southeast of suburban Livermore, California,

Lawrence Livermore National Laboratory (LLNL) is one of three Department of Energy labs that conducts nuclear weapons research. It is run by the University of

California on a long-term contract with DOE. But unlike nuclear power plants and

other private, commercial users of radioactive material, which are monitored by the

Nuclear Regulatory Commission, the lab’s compliance with environmental and safety regulations is monitored by the Department of Energy itself. And while it doesn’t

take whistleblower David Lappa to realize that self-monitoring is a dangerous prescription in work involving deadly materials, both his disclosures and his subsequent treatment reveal exactly how wrong the continuing experiment can go.

In the summer of 1997, manufacturing workers at LLNL’s plutonium facility were

preparing wafers of plutonium to be shipped to Nevada for underground nuclear

weapons testing. Officials ordered an emergency work stoppage, however, when they

discovered that some employees were placing excessive amounts of plutonium in enclosed handling platforms called glove boxes. Such actions placed the metal in danger of criticality, or uncontrolled nuclear reaction, in which the silvery substance explodes and/or releases lethal amounts of radiation into the surrounding environment.

Following the incident, DOE officials appointed an Incident Analysis Committee

to investigate what happened, and in July 1997, David Lappa, a nuclear engineer

with 20 years service to the Lab, was appointed to the committee.

To his shock, Lappa found that the statements of workers involved in the incident

suggested that some of the safety violations were intentional. Lappa was convinced

that the committee’s report should explore the veracity of the allegations and publish its findings.

The final report, however, contained no mention of possible deliberate violations.

Lappa refused to sign it.

Alan Copeland, the head of the IA-Committee, deleted the ‘‘willful violations’’ thesis from the report while Lappa was on vacation. When Lappa refused to sign the

redacted report, Copeland threatened, ‘‘I’ll be damned if there’s going to be a blank

21

signature line on the cover of this thing.’’ Copeland then whited out Lappa’s name from the report and U.C. In pretrial discovery in whistleblower litigation filed by.

Lappa against U.C. in state court, U.C. has now taken the position that Lappa was

not really on the IA-Committee and did not have to sign the report, rather than admitting that Lappa was removed for dissenting.

Later, during pretrial discovery in the state case, Lappa discovered that Ron

Hoard, Lappa’s immediate supervisor, who had him transferred after this dissent,

sent two performance evaluations on Lappa—one positive version for Lappa and for

general consumption, the other a negative secret evaluation that was critical of

Lappa his activities on the IA-Committee. The secret evaluation contained the following direction: ‘‘FYI—kindly destroy this after reading it.’’ The secret evaluation

explained that Lappa’s reports of safety violations has made U.C. customers ‘‘some- what reluctant to continue offering [Lappa] assignments.’’ The negative evaluation

was circulated to managers.

Lappa filed a Department of Labor administrative complaint, on which he prevailed. It is worth noting that throughout that investigation U.C. withheld production of the secret evaluation. Lappa found that job assignments were withdrawn

from him and anticipated pay raises were withheld. Supervisors moved him into his

new ‘‘office’’—an isolated, windowless storage closet. After he contacted national

DOE officials and the DOE Office of Inspector General’s office about the situation

at LLNL, supervisors told him that he should not have done so and that he was

‘‘unemployable.’’

Seeing no action taken on his concerns and the work environment around him becoming ‘‘unbearably hostile,’’ Lappa filed a discrimination complaint with the Department of Labor in the spring of 1998. OSHA investigators found that the ‘‘weight

of evidence’’ indicated that the lab was retaliating against Lappa, and ordered the

lab to protect Lappa from further reprisal, eliminate negative references in his personnel file during the time in question, and provide him $32,500 for counseling and

legal fees.

While LLNL did not appeal the ruling, it also refused to address the hostile working environment against Lappa, and harassment continued. Continuing retaliation

forced Lappa to sue LLNL in state court to protect himself and obtain remedy for

the damage LLNL did to his career.

During the pending suit, Lappa was forced by stress and exhaustion to quit his

job at the lab on February 4, 2000. Quoted in the San Francisco Chronicle, Lappa

said: ‘‘It’s pretty clear I have no future at the laboratory.’’

Current Status

Lappa’s suit against the University of California, which manages LLNL, is currently in discovery. GAP attorneys are to uncover evidence demonstrating the scope

of the unlawful retaliation against him after he raised safety concerns at the lab.

The case is slated for trial in September 2000.

DOE’s Involvement in the Case

Despite its avowed policy of ‘‘zero tolerance for retaliation’’ against whistleblowers,

and despite DOE spokeswoman Susan Houghton’s statement that ‘‘perceptions may

not be realities,’’ DOE has conspired with the University of California in David

Lappa’s case to punish him for seeking a full investigation (per the Incident Analysis Committee’s mandate) into evidence suggesting that dangerous safety breaches

at LLNL involving plutonium—one of the deadliest substances known to humankind—were willful.

The evidence is both plentiful and damning. DOE officials—

• Have continually resisted Lappa’s requests for permission to interview DOE’s investigators and public documents necessary to his civil action against the University of California without offering justification. Lappa was forced to sue the

agency under the Freedom of Information Act (FOIA) in U.S. District Court. His

recent victory in that case, after several months of litigation, vindicated his assertions. Judge Maria-Elena James found the DOE’s refusal to allow its investigators to be interviewed ‘‘arbitrary and capricious,’’ and, citing Department of

Energy Secretary Bill Richardson’s own memorandum calling for ‘‘open communication between management and employees’’ and ‘‘zero tolerance for reprisals,’’ criticized DOE for its demonstrated failure to live up to its word. As of this

document’s preparation, DOE is continuing despite the District Court decision to

prevent GAP’s attorneys from conducting depositions with its officials that were

slated to occur on Wednesday, May 24, 2000, in D.C.

• Waived $153,000 in fines that the University would otherwise have had to pay

the government for safety violations discovered by the DOE during its own investigation of the plutonium handling incident.

22

• Pledged to reimburse the University’s legal fees in the lawsuit unless Lappa wins

(in which case the university would have to pay its own legal fees and any judgment Lappa is awarded). • Neglected to investigate Lappa’s original disclosures to DOE officials and the DOE

Office of the Inspector General.

Should this Committee, or the public, care about the fate of David Lappa? The

Government Accountability Project argues that employees like David Lappa are the

public’s first line of defense on nuclear safety. Without conscientious employees who

are willing to challenge and expose safety and health threats, the public would often

only discover these violations after it is too late—as happened in Tokaimura, Japan.

On September 30, 1999, the worst nuclear accident in Japanese history occurred

just 87 miles northeast of Tokyo after workers loaded 35 pounds of uranium into

a mixing tank, nearly eight times the proper amount. The material reached criticality, and a self-sustaining nuclear reaction continued for more than 18 hours.

Forty-nine workers were exposed to high levels of radiation; 160 people were evacuated, and 313,000 people were warned to stay indoors. Twelve hours after the accident began, radiation levels at one mile away from the plant measured 15,000 times

greater than normal. Two workers have died as a result of the accident.

In the aftermath of the nuclear criticality accident at the Tokaimura uranium

plant in Japan, can a similar tragedy take place in the United States? After the accident, eyes are now turned to comparable commercial uranium processing plants

in the United States, licensed by the Nuclear Regulatory Commission (NRC). Certainly, these facilities need to be carefully reviewed to ensure that a similar problem

isn’t lurking. However, what is not fully appreciated is that if such an accident were

to take place, it would most likely be at a government-owned facility operated by

the U.S. Department of Energy (DOE).

Nearly all U.S. criticality accidents have occurred at federal facilities. DOE is responsible for one of the world’s largest inventories of concentrated fissile materials.

Hundreds of tons of these materials—principally plutonium and highly-enriched

uranium produced for nuclear weapons and nuclear energy research—are stored at

DOE sites across the nation.

Nuclear criticalities are among the most serious accidents in the nuclear industry.

A criticality event occurs when a relatively small amount of fissile material (as little

as pound of plutonium or highly-enriched uranium) is concentrated and starts a nuclear chain reaction. This small nuclear explosion has a characteristic blue flash,

produces levels of radiation in the form of neutrons and gamma rays lethal to nearby workers, and may release significant amounts of radioactive fission products to

the environment. Controls to avoid a nuclear criticality accident in storage and processing facilities are of paramount importance.

Unfortunately, these essential safety controls are diminishing at DOE sites, as

tens of tons of fissile materials remain in unsafe or questionable storage modes.

Since 1994, several official reviews have identified significant complex-wide environmental, safety and health vulnerabilities associated with DOE’s storage of fissile

materials—many of which remain to be corrected. Dozens of problems were identified at sites such as the Hanford nuclear reservation in Washington, the Rocky

Flats facility in Colorado, the Oak Ridge nuclear complex in Tennessee, the Los Alamos National Laboratory in New Mexico, the Idaho National Environmental and

Engineering Laboratory, the Pantex weapons facility in Texas, the Savannah River

Site in South Carolina, and Lawrence Livermore National Laboratory in California.

They include unstable nuclear solutions, residues, metals and powders in deteriorating containers and tanks, nuclear weapons parts in ill-suited containers, fire and

explosion risks, degraded equipment and safety systems, deteriorating storage facilities (some that date back to World War II), and a growing number of inadequately

trained workers.

Last year, the General Accounting Office found that: ‘‘Leakage from corroded containers or inadvertent accumulations... pose health and safety hazards, especially in

aging, poorly maintained, or obsolete facilities.’’ The Y-12 nuclear weapons plant at

the DOE’s Oak Ridge, Tennessee site is a case in point. It holds the largest quantity

of highly enriched uranium (HEU) of any DOE site, over 189 metric tons, or the

rough equivalent of 9,450 Hiroshima-size atomic bombs. Sixty percent of the drums

containing HEU at the Y-12 plant have never been opened. In fact, some HEU materials at Y-12 have been in their present storage form for almost 40 years. A very

large amount is stored in decades-old wooden buildings that are vulnerable to fires

and provide little protection if an accident occurs.

According to a December 1996 DOE safety review, ‘‘At some of the Y-12 buildings,

the available information is insufficient to determine if HEU is stored within nuclear

criticality safety limits.’’ The review concluded, ‘‘The lack of controls necessary to ensure that systems are being kept fully operable jeopardizes barriers relied on to sepaVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00026 Fmt 6633 Sfmt 6621 E:\HEARINGS\64767 pfrm06 PsN: 64767
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rate HEU from workers, the public and the environment.’’ A subsequent follow-up

in September 1998 by DOE’s Office of Environment, Safety and Health found that ‘‘. . . criticality risks remain unchanged’’ for one of Y-12’s most hazardous buildings.

Of additional concern, skilled and qualified personnel needed to ensure safe storage and processing of fissile materials in the DOE are rapidly disappearing. ‘‘Some

sites are in danger of losing this expertise through retirement and have not implemented provisions to maintain the necessary knowledge base,’’ says a September,

1998 DOE oversight report. This problem is made worse by contractor and DOE

management blunders. At DOE’s Hanford site, some 3.5 metric tons of unstable plutonium are stored at the Plutonium Finishing Plant (PFP), which was closed in 1996

because of criticality safety problems. The following year, in order to grab a financial incentive for cutting costs, the site-wide contractor, Fluor-Daniel Hanford Inc.

(FDH), greatly weakened the site’s nuclear safety function by moving key criticality

experts off their payroll. As a result, DOE found in 1998 that ‘‘the FDH Nuclear

Safety organization does not have sufficient resources to staff an effective NCS [nuclear criticality safety] program.’’ To date, this problem has yet to be fixed.

Despite the fact that almost all of these problems were identified years ago,

lengthy delays in fixing a large backlog of serious nuclear material safety

vulnerabilities plague the system. As a result, the GAO finds that ‘‘DOE is unlikely

to meet its commitment date for stabilizing and storing plutonium...’’ and concludes

that ‘‘These delays result in continued risk to workers’ health and safety and have

increased costs to DOE and taxpayers and likely will continue to do so.’’ A major

reason why these delays persist is that DOE has yet to establish an adequate tracking and safety enforcement system to ensure that these problems identified years

ago are being corrected.

In response to the Tokaimura accident, DOE recently launched a ‘‘Nuclear Criticality Safety Self-Improvement Initiative.’’ True to form, the DOE is, once again, investigating itself using an ‘‘honor system’’ without any enforcement follow up. What

is needed is a truly independent assessment of the DOE’s nuclear material risks.

Finally DOE and the Congress must take immediate steps to hold people accountable for failing to address these long-standing and unacceptable safety problems.

Otherwise, the growing risk of yet another ‘‘blue flash’’ awaits.

The public’s first line of defense against nuclear accidents is the workforce in our

nuclear facilities. Employees must be free to speak out when there are violations;

they should not be forced to choose between preserving safety and preserving their

jobs. Tokaimura happened, in part, because workers willfully violated safety rules

at the direction of their managers. A similar situation may have happened at Lawrence Livermore National Laboratory, and the American public has the right to

know the truth about such events.

The public owes employees like David Lappa its full support, and the laws protecting their careers should be enforced. Secretary Bill Richardson would do well to

honor his commitment to a safety-conscious work environment that protects whistleblowers from reprisal, and encourage disclosures of wrongdoing, instead of assisting

the University of California in its legal case with Mr. Lappa.

II. HANFORD PIPEFITTERS

Brundridge et. al. v. Flour Daniel, Inc. et. al.

Benton County (WA) Superior Court No. 99-2-01250-7

Background

The Hanford Site has a long history of controversy regarding the issue of employee freedom to raise concerns either internally or externally without fear of reprisal. An open, non-retaliatory employment climate is critical to safety and environmental protection at Hanford. Recent developments have contributed to the perception that the Hanford employment climate chills safety disclosures by employees.

As the U.S. government’s first largescale plutonium production site, Hanford occupies 560 square miles of steppe, sand and sagebrush in southeastern Washington.

Over the decades, about 50 tons of plutonium were produced there and as a result,

some 440 billion gallons of contaminated liquids were poured into the ground—

enough to create a lake the size of Manhattan, 80 feet deep. There are 177 large

underground high-level radioactive waste tanks—the many which are 40 to 50 years

old and are in significant states of deterioration and have leaked over 1 million gallons. Also, Hanford has some 1500 soil dumping sites containing very large amounts

of radioactive and hazardous wastes, including as much at least a half ton of plutonium. Since the last free running 51-mile stretch of the Columbia River runs

through the site, contamination from Hanford of this largest fresh water artery of

the Pacific Northwest is not a trivial matter.

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In 1989, the Department entered into a tri-party environmental compliance agreement with the State of Washington and the U.S. EPA. The agreement sets forth several milestones that focus on waste stabilization, storage and removal actions. The

two highest risk-based priorities in the agreement are:

• Stabilization and removal of some 3,000 metric tons of deteriorating spent nuclear

fuel from leaking the K-reactor basins in near the Columbia River; and • The conversion of wastes in Hanford’s high-level radioactive waste tanks into

glass for disposal—known as the Tank Waste Remediation System (TWRS).

Other compliance milestones of importance include:

• Removal of as much liquid as possible from single-shell high-level waste tanks to

reduce environmental contamination risks from aging and leaking tanks. • Removal of soil that pose contamination risks to the Columbia River. • Deactivation and interim entombment of 8 closed reactors near the Columbia

River. • Characterization and stabilization/removal of contaminants in soil disposal sites,

mostly in the center of the site.

In addition to environmental compliance requirements Hanford has a large

amount of unstable nuclear materials, which pose significant safety risks. Some

4,000 metric tons of plutonium are stored in unstable forms, in questionable storage

modes at a deteriorating facility, known as the Plutonium Finishing Plant.

In the 200-West area of the Department of Energy’s Hanford Nuclear Site, located

along the Columbia River in eastern Washington, pipefitters and other workers

labor amidst fields of massive storage tanks holding millions of gallons of the most

radioactive waste in the custody of the U.S. government. Several years after whistleblower disclosures forced DOE to concede that dozens of the tanks were leaching

contaminants in the porous soil beneath, DOE is undertaking emergency measures

to transfer waste from the oldest, most decayed tanks into newer ones. And, while

inherently dangerous, such transfers become even more hazardous when safety

rules are dismissed.

In May 1997, seven pipefitters—Terry Holbrook, Clyde Killen, Pete Nicacio, Shane

O’Leary, Dan Phillips, James Stull, and Randy Walli—discovered management’s disregard for basic safety firsthand. Employed by Fluor Daniel Northwest (FDNW), the

principal contractor at Hanford, the seven were instructed to work under conditions

both dangerous and illegal. Their concerns included:

• Supervisor’s instructions, despite the pipefitters’ protests, to install underrated

valves in pipes which were destined to carry high-level nuclear waste liquids

from old tanks into new storage facilities

• Working in an area where another subcontractor’s crew was performing high-intensity x-ray testing of pipe welds, despite regulations requiring that areas undergoing such testing be evacuated and guarded to prevent unnecessary radiation exposure

• Working in ‘‘confined space’’ areas, which are enclosed areas where air supply is

limited, and workers are susceptible to gases that can displace oxygen and

cause rapid suffocation, without proper adherence to federal safety regulations

• Workers were especially concerned about the installation of the underrated

valves, because the failure of the pipes could result not only in death for workers in the immediate vicinity, but also jeopardize the structural integrity of the

massive storage tanks themselves.

Two days after the seven refused to install underrated valves, management notified them that they would be laid off. A week later, on June 5, 1997, they were unemployed.

The Government Accountability Project (GAP) took on the representation of the

Hanford pipefitters and filed a complaint in July 1997 pursuant to the Energy Reorganization Act with the Department of Labor (OSHA).

Each of the original seven pipefitters sought to use the DOE-subsidized Hanford

Joint Council, a mediation board that is supposed to resolve Hanford whistleblower

cases at an early stage. Even though the contractor was a member of this Council,

it refused to utilize the services of the Council, and chose to litigate instead—using

free taxpayer money supplied by the Department of Energy.

In October 1997, OSHA found that five of the seven had been retaliated against.

Rather than undergo the administrative hearing set for February 1998, after extensive pre-trial discovery, Fluor Daniel settled with the pipefitters the day before the

hearing, granting each reinstatement, full back pay, compensatory damages, and attorneys’ fees.

In order to ‘‘make room’’ for the returning pipefitters, however, Fluor Daniel laid

off seven employed pipefitters. Evidence indicates that this layoff was not only unnecessary but also deliberately designed to create hostility toward them. Notably,

25

four of the seven who were laid off—Don Hodgin, Ray Richardson, Jessie Jaymes,

and Scott Brundridge—were vocal supporters and witnesses in the pipefitters’ original claim. These four filed complaints with OSHA alleging that they were retaliated

against for supporting their co-workers.

Finally, having returned to work as part of the original settlement, the seven

pipefitters found a hostile work environment. Not only were the pipefitters given

discriminatory job assignments, denied overtime, and given strict surveillance, but

they were told by fellow employees that they had to ‘‘watch their backs’’ around one

particularly irate foreman and were laid off less than a year later.

The Department of Labor is charged by Congress with investigating nuclear whistleblower complaints through the Energy Reorganization Act, 42 U.S.C. § 5851. The

Labor Department has tasked OSHA with the initial investigations of such complaints.

The regional OSHA office, after an extensive investigation into the pipefitter allegations, found that Fluor Daniel NW had established and maintained a hostile

working environment to retaliate against the pipefitters after raising safety and

health concerns. The decision cited a handwritten statement signed by the pipefitters’ foremen which reflected the resentment of the foremen about the reinstatement of the pipefitters to their jobs pursuant to a settlement agreement in March

1998. The same foremen chose the whistleblower-pipefitters for layoff within six

months, and then immediately replaced them with other pipefitters.

The decision also cited disparaging remarks made by foremen who directed the

work of the pipefitters. In one case a foreman was quoted as saying ‘‘. . . the complainants should have stayed laid off. I’ll do anything in my power to get rid of

them.’’ The decision stated, ‘‘Another foreman was so vocal in his hostility towards

the complainants, they were warned by other employees to ‘watch their backs’

around him.’’ Fluor Daniel refused to make available key foremen for OSHA to

interview, stated the report.

The Labor Department ordered Fluor Daniel Northwest to immediately reinstate

the pipefitters and pay them back pay, compensatory damages and attorney fees

and costs. It also ordered—

‘‘Immediate and continuing cessation of harassment and intimidation and all

acts of reprisal against complainants, or anyone of them, or anyone who acknowledges their support of the complainants for instituting or causing to be

instituted any proceeding under the [Nuclear Whistleblower Protection Act].’’

Fluor Daniel was also ordered to implement ‘‘training and/or formal discipline for

respondent’s agents and representatives’’ to ensure that they are aware of employee

rights to raise concerns. Fluor Daniel refused to implement the findings, and filed

an appeal.

In March 2000, ten pipefitters who either raised safety concerns or supported

their co-workers in doing so filed a state civil lawsuit against Fluor Daniel, Inc., and

its local subsidiaries, alleging wrongful discharge and civil conspiracy against them

for their terminations after having raised serious safety concerns.

Current Status

Due to strategic considerations involving the disclosure of key evidence, GAP attorneys and their clients decided that the administrative hearings that had been set

for April 2000 to consider both the complaint of the second group of pipefitters and

the second complaint of the original group of pipefitter whistleblowers should be

dropped in order to focus attention on the larger, more significant civil case now

pending in Benton County Superior County in Washington. The case is currently

in the discovery phase, with GAP attorneys working to bolster an already-solid set

of evidence documenting Fluor Daniel’s violation of state employment law. The

case’s trial date is set for September 2000.

Meanwhile, as the discovery process continues, more employees step forward with

ever more incriminating information against the company. During the first deposition, taken on June 11, 1999, Fluor manager Ivan Sampson produced a page from

his journal dated March 9, 1998. This was the same time period in which the original seven pipefitters had been reinstated, and the second set laid off. Sampson testified that Jim Holladay, the Constructions Operation Manager for FDNW (at the

time), called Jerry Nichols, a foreman, while Sampson was in the room. Sampson

could overhear the conversation. According to the Sampson, Nichols told Holladay

that he had a place for a couple of the pipefitters who were being laid off. Holladay

responded, ‘‘no, you don’t.’’ Nichols persisted in trying to explain that he could find

work for some of the pipefitters, and Holladay responded, ‘‘you are going to lay off

seven.’’ Holladay then stopped and asked Nichols who else was in the room. Nichols

responded that Sampson was in the room. Holladay told Nichols to tell Sampson

that he ‘‘would tear off [Sampson’s] balls’’ if Sampson were to tell anyone about the

26

call. Sampson stated that he felt intimidated and feared that he would be retaliated

against.

On July 2, 1999, the deposition was reconvened. At that deposition, Mr. Sampson

produced even more journal entries. He stated that on September 10, 1998 that he

had been called into a meeting by Jim Holladay, along with two others, and told

that the meeting was to be considered confidential. Holladay stated that they were

to be members of a new audit team. Holladay stated that the FDNW auditor, a man

named Arslanian, was ‘‘a fucking idiot,’’ and that he did not want ‘‘that stupid

motherfucker looking over his shoulder,’’ and making him fill out 900 pages of paperwork.

Holladay stated that he would call with an incident to investigate, and they were

‘‘to drop everything and come running.’’ Holladay stated he did not want them to

take more than two or three hours looking at anything, but to make a quick overview and report it. Sampson stated, ‘‘We would have no findings.’’

Sampson testified that there had been three ‘‘events’’—a rigging event in the 100

Area, an asbestos event in the 100 Area and ‘‘some event at S Plant.’’ ‘‘We were

told that specifically, there would be no findings,’’ by Jim Holladay. Sampson stated

that the goal was audit the event before it ‘‘got too big’’ and Arslanian got involved.

When asked—

Q. Was it your understanding that the purpose of your doing the audit was to somehow coverup what may have been improper conduct?

A. Cover up anything. That we were to have no findings.

Q. So did you understand at the time that Mr. Holladay was asking you to do something that was against company policy?

A. Yes, I did.

Later, Sampson testified that he attended a meeting on September 29, 1998, at

the Jadwin Building (FDNW HQ) with ‘‘a bunch of big managers’’ including Holladay. Sampson testified that the managers were all worried that the three events on

site could be perceived as ‘‘setting a trend and had any possible liability for the

Price Anderson Act.’’ Immediately following the meeting, Holladay, in the presence

of two other managers, stated, ‘‘that we would go out and come back with a conclusion that they were just dumb mistakes, which was a quote.’’

When asked why he had failed to report this obvious wrongdoing, Sampson stated

that he had considered making the report but decided against it. He then related

an event in 1995 (or 1994, which was when Kaiser was in charge, not Fluor Daniel)

where he had walked into a meeting where top-level managers, including Dave

Foucault, the Construction Manager for FDNW, were gathered around a conference

table listening to a tape recording of a man’s voice. A manager came over and informed Sampson that ‘‘We’re listening to the recording from DOE trying to figure

out who made the call.’’

Sampson stated, ‘‘And that pretty much floored me, and I left. From that point

forward, I never figured you could call any of these hot lines with any privacy.’’

The testimony offered by Sampson, which is documented by his daily journal, evidences a high-level corporate conspiracy to not only deliberately establish a hostile

working environment against employees who report safety concerns, but to deliberately engineer a cover-up of potentially significant safety events in order to evade

the Price Anderson Act.

DOE’s Involvement in the Case

Despite its avowed policy of ‘‘zero tolerance for retaliation’’ against whistleblowers,

DOE has shown its willingness in the case of the Hanford pipefitters to facilitate

Fluor Daniel’s efforts to retaliate against them, undoubtedly silencing in the process

other employees at Hanford with crucial safety and health disclosures.

More specifically, the DOE:

• Not only failed to investigate the concerns of the pipefitters, otherwise intervene

in Fluor Daniel’s retaliation, or hold them accountable following adverse Department of Labor investigative findings, but actually reimbursed Fluor Daniel

nearly $500,000 for expenses the company incurred in settling the original pipefitter case and in a frivolous suit against the pipefitters for filing union grievances, which was dismissed with costs assessed against Fluor Daniel by a Federal District Court.

• Has ignored the extraordinary findings of fact by a sister federal agency, and the

finding of a hostile working environment that impacts safety at Hanford.

• Pledged to reimburse Fluor Daniel for legal costs associated with the current civil

case.

• Participated, and continues to participate, in litigation strategy meetings with attorneys representing Fluor Daniel, and has entered into a ‘‘joint defense’’ relaVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00030 Fmt 6633 Sfmt 6621 E:\HEARINGS\64767 pfrm06 PsN: 64767
27

tionship with the contractor despite the fact that DOE has not been named as

a party.

• According to the testimony of a Fluor Daniel manager, allowed answering machine tapes from its own ‘‘anonymous’’ hotline for reporting safety disclosures

at Hanford to fall into the hands of Fluor Daniel managers. FD manager Ivan

Sampson testified in a July 1999 deposition that he accidentally interrupted a

meeting where senior managers were listening to a tape of one such call, trying—as one of the senior managers informed him—to determine the identity of

the worker who made the call.

• Mishandled and corrupted an investigation into the allegation of the alleged hotline interception testified to by Sampson, and claimed that there was ‘‘no evidence’’ to support the allegation. However, a review of the DOE’s investigation

file turned up an e-mail message from a witness who had been interviewed by

the DOE team who complained to DOE that the legal counsel Fluor Daniel had

been allowed to attend his interview. The employee complained that he felt intimidated, and stated that he is sure that DOE will obtain ‘‘the results you are

looking for’’ in its investigation.

In summary, what started as a crew of seven pipefitters with a simple safety concern has tragically blossomed into major litigation involving over fifteen pipefitters,

most of whom no longer work at Hanford, with a clear message to all Hanford employees that the price of making a safety disclosure is your job and years of expensive litigation—all paid for by the Department of Energy. Far from evidencing a

‘‘zero tolerance for reprisal’’ policy, the Department’s behavior is more akin to a coconspirator in that it has counseled the contractor, paid the contractor’s attorney

fees in violation of the Hanford Site contract, and stood by mute as the career death

toll has mounted as more and more employees were laid off by the contractor because of their support for the original crew of seven.

III. DAVID CARBAUGH AND THE $240 MILLION FRAUD CASE

The U.S. Department of Energy is responsible for the government’s largest and

most dangerous enterprise. With more than 2.4 million acres of land, some 100,000

employees and about 25,000 fixed assets, Energy would rank in the top 30 of America’s ‘‘Fortune 500’’ corporations. If it were privately held, DOE would be filing for

bankruptcy. Major elements of the DOE’s complex are closing down leaving a huge

unfunded and dangerous mess. As a result of a half century of making nuclear

weapons, DOE possesses one of the world’s largest inventories of dangerous nuclear

materials and has created several of the most contaminated areas in the Western

Hemisphere.

Currently, two thirds of DOE’s annual $17.4 billion budget goes for nuclear weapons activities and to address the daunting environmental, safety and health legacy

of the nuclear arms race. Inadequate investments were made to upgrade facilities,

infrastructure, waste management and environmental protection. These failures in

recent years created a very large environmental liability for the DOE estimated in

the range of $230 billion to a trillion dollars over the next 50 years.

The single largest and most expensive environmental challenge in the United

States is at DOE’s Hanford site in Eastern Washington. Hanford site is one of the

most contaminated areas in the Western Hemisphere and is responsible for roughly

half it the DOE’s volumetric environmental contamination. Estimated to cost of

some $50 billion dollars over several decades , the Hanford environmental cleanup

effort rivals the Apollo Moon program in complexity and scope. Currently, the site

spends about $1billion a year which is about 5 percent of the DOE’s total annual

budget.

For an agency with such critical safety and health responsibilities, effective financial management controls are essential. There are at least 20 different contractor

cost accounting systems, which make it virtually impossible for DOE to match them

up and estimate basic expenses, like overhead costs, or compare the performance of

contractors against each other. In essence, DOE is an early Cold War throwback

that isn’t even remotely comparable to the Defense Department (not exactly a paragon of financial management itself.) In the Defense Department it is possible to

discover that a hammer costs 600 dollars and why it costs this much. In DOE, not

only is it impossible to know how much a hammer costs, it is equally impossible

to know if the hammer even exists. The U.S. General Accounting Office (GAO) describes this as ‘‘an undocumented policy of blind faith in its contractors performance, which is called its ‘least interference policy’.’’

For ten years, the U.S. General Accounting Office has identified the DOE as one

of the government ‘‘highRisk’’ agencies susceptible to waste fraud and abuse. According to the GAO.

28

• ‘‘DOE has had difficulty Completing Large Projects. From 1980 through 1996,

DOE terminated 31 of 80 mission critical projects costing over $100 million,

after expenditures of $10 billion. Only 15 percent of these projects were completed, most of which were behind schedule and over budget.’’

• ‘‘DOE’s organizational structure allows challenges to go uncorrected. DOE’s ineffective organizational structure blurs accountability allowing problems to go undetected and remain uncorrected.’’

• ‘‘Contract management remains vulnerable to Risk. DOE relies on contractors to

perform about 90 percent of its work. In addition, although DOE originally

planned to shift risk from the federal government to private contractors, as a

means of enhancing its performance, it now considers risksharing more appropriate.’’

• ‘‘DOE staff lacks technical and management skills. At an Idaho facility, DOE

turned to a private contractor, in part because it lacked the inhouse expertise

needed to evaluate technical cleanup proposals. At the Hanford site, where DOE

entered into a multibilliondollar fixed price contract for the next 20 years [with

BNFL], DOE has no experts in fixedprice contracting.’’

In October 1998 the DOE Inspector General’s Office underscored the GAO’s concern about the Department’s high risk to waste fraud and abuse because of the

growing number of False Claim Act complaints filed against DOE. That year there

were 25 open claims, ‘‘the highest number ever’’, ranging from $400,000 to $100 million. The number of complaints increased by 85 percent in that year alone and doubled over the past five years.

Lack of Contractor Accountability

From the 1940’s to the 1980, DOE contractors were provided with blanket indemnification, even for acts of willful negligence. This changed over the past decade as

DOE Secretaries attempted to impose greater contractor accountability with limited

success. In April 1999 the DOE’s Office of Inspector general reported that, ‘‘The Department has not been successful in protecting the Government against contractor

created liabilities in 16 of its 20 major forprofit operating contracts. Also the Department has not recognized the implications of adding contract reform liability provisions without obtaining a performance guarantee with indemnification provisions

from parent companies of the Department’s major operating contractors. As a result,

the Department may be liable for monetary awards resulting from liabilities such

as fines penalties, third part claims and damages to or loss of Government Property.’’

Financial and Project Management Problems at Hanford

Hanford has been plagued with delays and cost overruns on several critical

projects. In 1994, the DOE’s Contract Reform Team acknowledged that DOE’s staff

were not prepared to oversee contractors. The sites two most expensive and highest

priorities the KBasins and the TWRS Projects have experienced the greatest problems. The KBasins project costs have ballooned from $274 million to more than $1

billion in three years and the completion date has slipped by 19 months.

Because of cost and management problems, Congress enacted legislation creating

a separate Office of River Protection to manage the TWRS project which involved

several billions of dollars. Contractor cleanup work, with some exceptions, is behind

schedule in the range of $100 million annually. There are several reasons for DOE’s

failures that stem to a large extent from inadequate financial management.

For several decades the DOE has been exempted from the contracting and financial management statutes and regulations required of other major federal agencies.

DOE has used its own Department of Energy Acquisition Regulation (DEAR) which

was originally formulated to provide maximum flexibility to produce nuclear weapons and develop nuclear energy technologies. Because of the high importance given

to nuclear weapons, combined with the need for experimental latitude involving

ultra hazardous technologies, the DEAR, in effect required little contractor oversight

and has vague enforcement policies and authorities subject to individual interpretation by DOE field offices. In September 1998, the DOE Office of Inspector General

‘‘found varying interpretations of existing DEAR provisions’’ The IG also noted that,

‘‘the DEAR did not define or explain,’’ policies and procedures to analyze the propriety of contractor fees. Thus, the DEAR is a product of the early cold war and

has institutionalized cost maximization practices that remain deeply embedded in

the agency.

Only recently has DOE agreed to adopt the Federal Acquisition Regulation (FAR),

a. more consistent and enforceable financial management requirement. The FAR

was established to codify uniform policies for the purchase of products and services

by federal agencies. Additionally, the DOE is now required to comply with Cost AcVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00032 Fmt 6633 Sfmt 6621 E:\HEARINGS\64767 pfrm06 PsN: 64767
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counting Standards (CAS), codified by the Congress. These standards require formal

written and transparent a cost accounting that is consistent with proscribed regulations. It is the primary tool for the U.S. government to exercise budgeting, procurement and financial management.

By the late 1980’s the DOE began to adopt the FAR in its contracts, and now has

policy that requires the FAR to apply to its contracts. However, in practice the

DEAR, ‘‘ implements and supplements the FAR for the Department’s unique needs.’’ In effect the DEAR remains an integral element of DOE’s financial and contract

management, while compliance with the Federal Acquisition Regulation and the

Cost Accounting System is not enforced by DOE field sites or Headquarters.

At Hanford there appear to be several shortcomings in DOE’s efforts to adopt the

Federal Acquisition Regulation.

• DOE financial management staff lacks technical competency to apply Federal Acquisition Regulation and Cost Accounting System principals. • The inability to provide effective oversight of public funds. • Failure to hold contractors financially responsible for deliberate CAS noncompliance. • Inability to effectively control unallowed indirect costs bill to the DOE by contractors. • Limited presence by the Defense Contracting Auditing Agency (DCAA) DOE sites

to ensure compliance with the FAR and CAS.

• Refusal of DOE staff at field sites to follow FAR and CAS Principals.

David Carbaugh Uncovers Hanford Contractor’s Systematic Cost Inflation

David R. Carbaugh was first employed as an accountant at the Hanford site in

1979, and he served as an accountant there until his termination in April 1997 for

reporting false claims against the government by his employers. During his tenure,

Mr. Carbaugh served in the accounting departments of both Westinghouse Hanford

Company and Fluor Daniel Hanford.

He received a Masters degree in Business Administration from Washington State

University. In 1992, he was licensed by the State of Washington as a Certified Public Accountant. Prior to his termination for attempting to blow the whistle, Mr.

Carbaugh’s served as a budget rate analyst for employee fringe benefit costs.

Mr. Carbaugh discovered the fraud as part of his responsibilities to help ensure

that the contractors’ annual congressional budget requests fairly represented their

expected costs and complied with federal Cost Accounting Standards. What he came

to realize is that Westinghouse, and later Fluor Daniel, were actually bilking the

government for millions of dollars each year by inflating their annual budget requests with phantom costs. Mr. Carbaugh learned that the contractors’ financial accounting system, the Financial Data System or FDS—double charged fringe benefit

‘‘absence’’ costs—paid vacation holiday and sick leave, charging these ‘‘absence

costs’’ once against regular time hours and then once again against the overtime.

As a result, the FDS was creating fictitious statements of costs and building these

into the contractors’ statements of indirect costs in their annual budget requests.

Once Mr. Carbaugh learned that the paid absence rates were being double

charged against both regular time and overtime, he attempted to have Westinghouse reprogram the FDS to apply the absence costs rate solely to regular time

hours. After Westinghouse refused to correct the double billing, he attempted to

alert persons in DOE’s Richland Office (DOE-RL) about the budget inflation caused

by the FDS. Westinghouse used retaliation and harassment to prevent Mr.

Carbaugh from communicating with DOE. As a result, Mr. Carbaugh was forced to

file a qui tam False Claims Act suit in April of 1996.

The September 1997 Defense Contracting Auditing Agency Report

Mr. Carbaugh’s suit is not mere supposition. The double charging of absence costs

in the budgeting system has been documented in a Defense Contracting Auditing

Agency (DCAA) audit and Fluor Daniel has actually acknowledged that it is wrong.

In fact, a federal district court has recently ruled that there is sufficient evidence

of budget inflation to allow Mr. Carbaugh to prosecute the quarter of a billion dollar

case. However, DOE’s oversight of its management contractors is so lax that it completely ignored the audit, and the contractors, coming to rely on DOE’s ‘‘least interference policy,’’ have brazenly requested that the agency reimburse their legal expenses for attempting to quell Mr. Carbaugh’s False Claims Act suit.

The DCAA audit which confirms the double charging that Mr. Carbaugh alleged

was submitted to DOE in September 1997. The DCAA was asked to perform a baseline assessment of contractor accounting at the time when DOE was in transition

from a Management and Operating Contract it held with the Westinghouse Hanford

Company (WHC) and a new Management and Integrating contract with the Fluor

30

Daniel Hanford Company (FDH). The DCAA audit was done to evaluate ‘‘ whether

FDH has complied with the CAS Board’s rules, regulations and standards, and FAR

Part 31.’’ Specifically the purpose of the DCAA Audit ‘‘ was to determine if FDH

has complied with the requirements of CAS 407, the Use of Standard Costs for Direct Material and Direct Labor.’’ The DCAA audit disclosed four major areas of non compliance with respect to

CAS 407. According to the Audit:

1. FDH does not have written practices as required by CAS 407 which describe the

setting and revising of its labor rate standards, the use of such standards, or

the disposition of variances from standard labor costs. The absence of such written practices has resulted in or may result in a material misstatement or

missallocation of costs to final cost objectives... Because of its failure to meet

basic documentation criterion, DH cannot use a standard costing system to estimate, accumulate, and record the cost of direct labor.

2. FDH does not set labor rate standards in accordance with labor grouping requirements of CAS 407. The failure to properly set such standards has resulted in

or may result in a material misstatement or missallocation of costs to final cost

objectives . . . in setting its standard rates for each [subcontractor]...FHD includes all employees in the groupings...The presence of highly paid indirect

employees in the groupings will skew cost estimates, accumulation of labor upward. Consequently, there is no assurance that FDH cost estimates, accumulations of labor costs, and reported costs... are accurate or reasonable... 3. FDH does not record variances on the basis of production units as required by

CAS 407. FDH does not accumulate variances in separate labor cost variance

accounts for each production unit. The failure to properly record variances has

resulted in or may result in a material misstatement or missallocation of costs

to final cost objectives an entire company consisting of management, employees,

engineers, accountants, and other professionals, scientists, skilled technicians,

journeymen union employees, unskilled workers, and clerical employees cannot

be considered a ‘‘production unit’’ in the sense defined in CAS 407...there is

no assurance that labor costs reported, accumulated and estimated at standard

are either accurate or reasonable, and there is no assurance that labor accounting and estimating practices are being followed in a consistent manner from one

accounting period to another.’’ 4. FDH does not dispose of variances at the level of the production unit as required

by CAS 407. FDH does not allocate variances related to direct labor on the basis

of labor costs at standard...Finally, a pension liability from the predecessor

contractor, Westinghouse Hanford Corporation, was transferred to FDH at the

beginning of the contract. FDH proposes to ‘passback’ this liability in FY 1997

or FY 1998. This disposition would be in noncompliance with the requirement

that variances be disposed of annually...The Hanford pension plan is fully

funded and at the end of FY 1995 and FY 1996 there was no funding obligation

on the part of WHC [Westinghouse Hanford Company] to satisfy its fiduciary

responsibilities with regard to the pension plan. Nevertheless, during FY 1995

and Fy 1996, WHC made entries in its books representing an $8.0 million over

accrual of its pension liability...FHD plans to use the FY 1995 and FY 1996

pension variance to offset FY 1997 and FY 1998 program costs . . . on August 25

and August 29 [1997], in spite of our conversations with all interested parties.

FDH ‘‘distributed’’ the $8 M million overaccrued pension cost...the $8.0 million . . . indirect expense was ‘‘passed back’’ as direct labors to offset program

costs . . . to the targeted programs as follows: Tank Waste Remediation Program $2.975M

Waste Management 1.415.5M

Spent Nuclear Fuel .742M

Facility Stabilization 2.559M

Other Programs .316M

Total $8,007M

Furthermore according to the DCAA report: ‘‘ The distribution of overaccrued FY

1995 and FY 1996 pension cost violates CAS 406, CAS 407, CAS 412, GAAP, and

ERISA. In the distribution process, FDH simply changed the costs from pension

costs to direct labor and in so doing changed indirect to direct.’’

DOE approved this transfer of funds in direct violation of law and regulations,

on the basis of a ‘‘White Paper’’ submitted by FDH. The DCAA found that , ‘‘the

FDH ‘‘White Paper’’ sent to DOERL [ Richland Operations Office]... contains

misstatement of fact, including its reference to the appropriateness of the use of

cash basis accounting... CAS, FAR, ERISA and FSAB 87 all specifically state that

cash basis accounting for pension cost is not acceptable.’’

The Audit concluded that:

31

‘‘The labor accounting practices followed by FDH and the major PHMC [Project

Hanford Management Contract] subcontractors under its responsibility are not

in compliance with the requirements of CAS 407. ‘‘ The contractor accounting

system is not adequate for estimating, accumulating and reporting costs based

on standards on government contracts . . . In our opinion, FDH does not meet

any of basic CAS 407 criteria and consequently, FDH cannot use a standard

costing system to estimate, accumulate, and report its costs of direct

labor...FDH did not contest the fact that its practices... are not documented.

FDH’s response does not indicate any intention to correct this current CAS 407

noncompliance’’ DCAA recommended that DOE: ‘‘ (i) . . . make a determination that FDH is on non

compliance with CAS 407; (ii) require FDH to provide cost impact of the non compliance and (iii) disapprove of those portions of FDH’s accounting system related to the

use of standard labor costs in estimating, accumulating and reporting labor costs.’’ The DCAA Report was not circulated and stamped ‘‘Official Use Only’’ to ensure

that it could not be obtained under the Freedom of Information Act. The audit remained effectively secret until 1999.

A DCAA Request for a Fraud Investigation at Hanford

Shortly after the Hanford audit was completed, a ‘‘form 2000’’ or ‘‘Suspected Irregularity Referral Form’’ was filed by the DCAA employee who performed the audit.

The form is meant to initiate an investigation based on ‘‘information which suggests

a reasonable basis for suspicion of fraud, corruption, or unlawful activity affecting

Government contracts...’’ Several irregularities were identified to justify further investigation including mischarging through the ‘‘use of Standard Costs in Estimating,

Accumulating, and Reporting Direct Labor’’, accounting mischarging involving improper transfers through disposition of labor variances, Unallowable costs though

the improper use of indirect funds in violation of CAS 407 and possible fraudulent

performance fees.

According to the investigation request:

• Mischarging the government ‘‘FDH [Fluor Daniel Hanford] uses standard costs to

estimate, accumulate, and report all labor costs. The FDH standard labor rates

are composed of a base average rate, an ‘‘absence adder’’ factor to overtime and a ‘Continuity of Service’ adder . . . It is not appropriate to apply [sic] the ‘absence

adder’ factor to overtime labor. Application of the ‘absence adder’ to overtime

labor results in overstated labor cost and cost estimates for fee proposals, baseline budget estimates, control point budget estimates, indirect expense forecasts, indirect cost budgets, estimates to complete, and final certified contract

cost proposals . . . FDH’s application of the ‘absence adder’ to overtime labor results in a significant overstatement of both estimated and recorded labor

costs...FDH management knows that it is improper to apply the ‘absence

adder’ to overtime labor...FDH management knows that the ‘absence adder’

applied to overtime labor will generate a standard labor cost for which there

can be no of setting payroll cost. FDH management staff members told the auditor they knew application of the ‘absence adder’ factor to overtime was wrong.

• Improper Transfer of funds ‘‘We are most concerned that the capability to manipulate the targets receiving ‘passbacks’ of variances is built into the [Project

Hanford Management Contract] ‘passback’ program. FDH management can use

the ‘pass back’ of ‘pure’ variances to offset ‘troubled programs’ ie., overrun program costs. It appears the adjusting troubled program costs using ‘pure’

variances will help earn contract performance fee’’

The effective lack of control by the Department of Energy of its contractors’ manipulation of the contracting system at the expense of the U.S. taxpayer is in and

of itself an outrageous breach of the public trust. Compounding the outrage, however, is DOE’s apparent willingness to reimburse the litigation costs of the contractors accused of defrauding the government.

The Major Fraud Act, 41 U.S.C. section 256 disallows costs associated with fraud

cases brought against contractors by either the government or a relator on behalf

of the government in False Claims Act cases. ‘‘Costs incurred in defense of any civil

or criminal fraud proceeding or similar proceeding (including filing of any false certification) brought by the United States where the contractor is found liable or had

pleaded nolo contendere to a charge of fraud or similar proceeding (including filing

of a false certification).’’

DOE’s regulations contain a provision which was not a part of the 1988 Act and

is not in s 41 U.S.C. section 256(k). Specifically, DOE’s regulations allow advancement of costs so long as the contractor repays them if it loses:

‘‘During the pendency of any proceeding covered by paragraphs (b) and (f) of

this section, the Contracting Officer shall generally withhold payment and not

32

authorize the use of funds advanced under the contract for the payment of such

costs. However, the Contracting Officer may, in appropriate circumstances, provide for conditional payment upon provision of adequate security, or other adequate assurance, and agreements by the contractor to repay all unallowable

costs, plus interest, if the costs are subsequently determined to be unallowable.’’ 48 C.F.R. 970.520461(g). This provision does not appear to be expressly in conflict

with federal law but there is no evidence that the lawmakers intended that agencies

should be free to adopt such a provision by regulation. Indeed, it appears that NO

other agency has enacted any such regulation, and the general FAR provisions are

silent about advancement of litigation costs under these circumstances.

It would be ironic indeed if the DOE were to reimburse the contractor litigation

costs in claims where the contractor is accused of defrauding the agency. This is

tantamount to a business paying the attorney fees, expert witness costs and associated trial costs of an accountant accused of embezzlement.

IV. JIM BAILEY AND THE NUCLEAR COURIERS

In their daily travels along the nation’s highways, few Americans realize that they

may be sharing the road with a live nuclear warhead secured in an unmarked government vehicle. Until recently, the public had little reason to know-or worry about

the activities of the U.S. Department of Energy’s Transportation Safeguards Division, which ferries nuclear materials between military bases and nuclear weapons

facilities. GAP whistleblower Jim Bailey has changed all that.

Bailey was one of 238 special agents within the Transportation Safeguards Division (TSD) charged with transporting nuclear materials between sites. Through the

bomb-building years of the Cold War and its aftermath, TSD couriers have traveled

millions of miles along America’s highways, logging over 3 million in 1996 alone.

The work is grueling and dangerous; the couriers call themselves ‘‘road warriors.’’ The risks-of terrorist attacks or accidents-are detailed in government documents.

‘‘The Department of Energy,’’ reads one document, ‘‘has taken the position that it

is not a question of if a nuclear weapons shipment will be attacked, but when.’’ The government has worked hard to prevent such a catastrophe. Couriers are

trained to protect their cargo from the inherent dangers of transporting nuclear devices, including accidents and terrorist sabotage. Their schedules and activities are

shrouded in secrecy. They carry badges and are permitted to use deadly force. They

travel in convoys that include well-armed tactical teams of up to 23 agents.

The tractor-trailers that carry the nuclear materials are technologically designed

to protect their cargo. The armored 18-wheel ‘‘Safe Secure Trailers’ are built to withstand devastating collisions. They can endure raging fires without endangering the

nuclear materials they carry. The trailers are accompanied by special vans carrying

additional couriers and equipment ranging from night-vision goggles to pistols, M16 rifles and 12-gauge shotguns.

SST, or Safe Secure Transport Truck Carrying Nukes

These safeguards arguably have served the government and the public well. The

agency reports no terrorist attacks or deadly accidents involving a nuclear weapons

shipment to date. The drivers, however, may not be so lucky. Evidence gathered in

the case of whistleblowing courier James Bailey indicates that couriers suffer not

only from punishing working conditions, but from potential exposure to dangerous

levels of radiation. The bombs are protected. The public is protected. But who protects the protectors?

For eight years, Jim Bailey ferried nuclear cargo around the country for the TSD’s Southeast Courier Section, based out of Oak Ridge, Tennessee. Then, in March

1995, Bailey’s wife gave birth to their first child, a daughter they named Kelly. The

baby was born with a rare form of brain cancer. Afflicted with three aggressively

malignant tumors at birth, Kelly survived for four painful months. By the time she

died, her head had swelled to adult size.

The shock of Kelly’s illness and premature death led Bailey to question his potential exposure to radiation on the job. He was concerned about the hazards posed by

some of the nuclear materials he had transported and the time his job required him

to spend in contaminated areas. ‘‘I wasn’t hauling watermelons at the time,’’ he said

later. ‘‘That ought to make the alarm bells go off.’’

Bailey sought the advice of several medical experts, including Dr. Jay Hunt, a

cancer specialist with expertise in genetic mutations. Dr. Hunt had Bailey tested

and discovered chromosomal damage consistent with radiation exposure. After consulting with other medical experts in the field of pediatric genetics, Dr. Hunt advised Bailey that if he intended to father another child, he should take appropriate

measures to protect himself. ‘‘You’ve already had one child with a brain tumor,’’ the

doctor told Bailey, according to his later court testimony. ‘‘There’s absolutely no reaVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00036 Fmt 6633 Sfmt 6621 E:\HEARINGS\64767 pfrm06 PsN: 64767
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son to take a chance. There’s no reason to be driving these trucks without adequate

monitoring.’’ Bailey took his doctor’s advice and refused to continue his courier travel. He used

several months of leave time and performed light-duty desk work. After a few

months, however, Bailey’s supervisor told him to get ready for trip duty in the near

future.

Bailey was not about to give in, however. He wrote his congressional representative, Rep. John Duncan, in December 1995, describing his many concerns about radiation exposure and working conditions on the job. And he studiously gathered evidence from other couriers about the hazards they faced on the job.

His coworkers described a range of health and safety concerns. Some involved the

harsh working conditions, the stress and exhaustion experienced on 36-hour road

trips. More troubling to Bailey were the tales of possible radiation exposure. Couriers are in routine contact with nuclear materials; they are required, for example,

to enter the trailers to check that their cargo is securely tied down en route. Yet

they travel in street clothes in order to deflect attention, protected only by dosimeter

badges designed to register radiation exposure. The badges virtually always register

‘‘zero,’’ according to the couriers.

Bailey learned of cases of contamination requiring officials to confiscate couriers’ clothing and shoes. Some couriers were warned by management to ‘‘get in and get

out’’ when they check tie-downs inside the trailers, raising fears of radioactive exposure. On occasion, tractor-trailers had set off radiation monitors located at the entrance and exit of DOE bases and ports of inspection at state borders. Couriers had

observed workers at nuclear plants wearing full-body protection with respirators

while loading, unloading, or positioning materials inside their trailers.

Bailey’s concerns mounted, along with his frustration at the DOE for failing to

act on the health and safety hazards he reported. One DOE Health and Safety Manager told him bluntly that if the agency were to take inexpensive steps to protect

couriers’s safety-such as increasing radiation training, providing laundry facilities at

work, and offering routine bioassay tests-the result would be to threaten couriers’ morale by leading them to believe that there was reason for concern.

Bailey’s superiors, meanwhile, were not taking his resistance quietly. One of his

supervisors publicly described Bailey’s actions in raising health and safety concerns

as tantamount to ‘‘committing jobicide.’’ In late June 1996, Bailey was told to report for travel duty. He refused the travel

assignment, citing DOE’s failure to correct unsafe practices. Bailey was fired on

September 13, 1996. Soon afterward, he filed a complaint under the federal Whistleblower Protection Act challenging his removal, and asked the Government Accountability Project to represent him.

Bailey’s hearing began in late March 1997. The judge heard damning testimony

about agency practices. Under cross-examination, the DOE’s own expert witness,

Gene Runkle, could not explain why a dosimeter badge did not register exposure

even after suspicious couriers had positioned a badge on a known radiological

source. He said only that the badges had to be placed ‘‘just right’’ to receive a reading.

The judge was not persuaded by the agency’s arguments. In an April 6 decision,

he concluded, ‘‘I find that a reasonable, prudent person would heed [Dr. Hunt’s] advice and conclude that courier duties, without better health and safety measures,

posed a specific and objective danger to health. I can imagine that anyone, having

just lost an infant daughter to three types of rare brain cancers, and with chromosomal damage consistent with radiation exposure, would not come to the same conclusion the appellant did: that it was not safe for him to return to work.’’

Showing little regard for the health and safety implications raised by the judge’s

decision, the Department of Energy refused to reinstate Bailey to his job, and appealed the ruling. The fallout from the Bailey case, however, forced the DOE to conduct a review to investigate the radiological safety practices of the courier program.

The DOE’s investigative panel issued its final report on the courier program in

November 1997. Its findings are extremely damaging to DOE. The report confirms

that couriers were subjected to radiological conditions that could result in

unmonitored exposures to contamination. It points to the removal of monitoring

equipment from TSD tractor-trailers in September 1996, for example, and identifies

several potential contamination hazards in the ‘‘bone yard,’’ where vehicles are

parked and the break rooms located.

DOE management responded to the findings not by correcting the problems, but

by retaliating against couriers who had taken part in the investigation. The retaliation was sweeping and systematic. Three managers formed a ‘‘Blue Ribbon Panel,’’

which met with every courier in the Oak Ridge Division. All courier assignments

out of Oak Ridge were suspended until the panel had interviewed everyone. CouriVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00037 Fmt 6633 Sfmt 6621 E:\HEARINGS\64767 pfrm06 PsN: 64767
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ers were told to answer three questions and informed that their answers would be

reviewed and their futures in the program would be adjusted accordingly.

Not surprisingly, the investigation had a chilling effect among the couriers at Oak

Ridge. One courier described the experience to GAP investigators, ‘‘I answered ‘don’t

know’ to all three questions on the survey, and would soon regret it during my hearing before [the supervisors]. I spent approximately 35 degrading minutes before

these individuals, who told me that my answering ‘don’t know’ would result in my

[security clearance] being rescinded. I was provided a new questionnaire, which I

hurriedly filled out the way they wanted (yes responses) and said, put me in the

good guy club. I want to keep my job. Coercion. There was no question in my mind

that this entire humiliating and debasing experience was done to seek out persons

not considered loyal to the management of TSD. . .’’

At stake is the health and safety of a large group of DOE employees. The couriers

should have a right to question DOE’s inexplicable failure to perform radiation testing on employees who have consistent and routine contact with radioactive materials-and who risk extreme exposures in case of an accident of attack.

Jim Bailey does not regret his decision. After he stopped working as a courier,

the damage to his chromosomes disappeared. The Baileys gave birth to a healthy

child in 1996.

Bailey’s fellow couriers, meanwhile, are still working continuous shifts of up to

36 hours and are expected to check tie-downs in trucks carrying radioactive cargo

without protection. Their confidence in DOE’s concern for their safety is lower than

ever.

In February 1998, ABC National News aired a story critical of the Department’s

handling of Mr. Bailey’s concerns and raising questions about the TSD program

itself. The Departmental response was swift and overwhelming. Every single courier

was ordered to report for a polygraph test, and to submit to a line of questioning

that included such questions as to whether or not they agreed with Jim Bailey,

whether they had been in contact with the news media, and other questions of an

unconstitutional nature. Eighteen of the couriers refused to answer the questions,

calling the investigation a witch-hunt for whistleblowers. They obtained counsel,

and, two years later, remain on paid, suspended leave from their jobs.

Meanwhile, I appealed to Secretary of Energy Frederico Pen ̃ a to conduct an independent assessment of the situation and take immediate corrective actions. On February 4, 1998, Pen ̃ a agreed and appointed a Management Review Panel to undertake a ‘‘comprehensive review’’ of operations of the TSD program. The six-member

panel, led by Gordon Moe, issued its report in July 1998, vindicating the couriers’

concerns. The Panel not only found serious management problems, but prescribed

sweeping organizational changes and management fixes to address the problems. In

November 1998, Gordon Moe and I met with Assistant Secretary Victor Reis to give

him an update on the progress—or rather lack of progress—in implementing the

changes. Secretary Reis promised action. However, as of this update, no action has

been taken of any magnitude. Specifically—

• Settlement has not been reached with Jim Bailey on outstanding legal issues, despite the Moe Panel recommendation;

• The 18 suspended couriers remain on leave, even though the FBI review is reportedly at an end;

• TSD management continues to rule through intimidation, hostility, and threats.

• Couriers are constantly warned to not complain to outside parties, and specifically

told not to contact Gordon Moe.

• No settlement has been reached or even attempted in the Southern Cross training/exposure incident where numerous couriers allege that they were exposed

to toxins, resulting in health effects.

In conclusion, the Department’s intolerance of employee’s raising of safety and

health concerns is by no means restricted to contractor employees—the Department

has shown that its own employees will suffer egregious reprisals whenever they

challenge the system. Even a DOE-sponsored investigation which found a prevalent

culture of hostility and mismanagement was ignored, and the recommendations forgotten. Meanwhile, eighteen couriers who once had productive careers twist in the

wind—at taxpayers’ expense.

SOLUTIONS: THE MODEL OFFERED BY THE NRC

The commercial nuclear industry has a long history of dealing with the issue of

employee concerns, and during the past 15 years has evolved principles and procedures that establish work environments encouraging safety reports and prohibiting

retaliatory conduct that could chill such reports. The primary regulator of the nuclear industry is the Nuclear Regulatory Commission (NRC), which defines its misVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00038 Fmt 6633 Sfmt 6621 E:\HEARINGS\64767 pfrm06 PsN: 64767
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2 The language that is in bold typeface is different than that already appearing in the NRC’s

Statement of Policy at 10 C.F.R. Part 50.7.

sion as the protection of the public safety and health in its regulation of commercial

nuclear facilities. Last year, DOE announced that it intended to put its nuclear safety program under NRC regulation, and pilot programs toward this end have been

announced recently.

One example of the NRC’s approach to its regulation of licensees in the area of

employee concerns involves a Connecticut nuclear station called Millstone, which

has three reactors. Since the late 1980’s, Millstone Nuclear Power Station has been

the source of a high volume of employee concerns and allegations related to safety

of plant operations and harassment and intimidation of employees. Following a

TIME magazine cover story in March 1995 about the situation, in which the NRC

IG faulted the NRC for not recognizing that the reactors had been operating outside

their license requirement for many years, the Nuclear Regulatory Commission

(NRC) concluded that the large number of deficiencies identified at all three Millstone sites implied that some employees were reluctant to identify safety issues.

In an Order issued on August 14, 1996, the NRC mandated independent, third

party oversight to address licensee noncompliance with regulatory requirements

concerning, among other things, employee safety concerns. In this Order, the NRC

directs that, prior to resumption of power operations, the Licensee shall develop,

submit to the NRC, and implement a comprehensive plan for reviewing and

dispositioning safety issues raised by the Licensee’s employees and ensuring that

employees who raise safety concerns are not subject to discrimination. Additionally,

the Licensee was ordered to retain an independent third party, subject to the approval of the NRC, to oversee its implementation of a comprehensive plan. The plan

for independent third party oversight will continue to be implemented until the Licensee demonstrates by its performance, that the conditions which led to the requirement of that oversight have been corrected to the satisfaction of the NRC.

At commercial nuclear facilities, the NRC has made a clear and cogent determination that the ability of employees to raise concerns is integral to the protection of

public health and safety. The hazards at DOE nuclear facilities are no less dangerous, and yet throughout the DOE complex, reprisals against employees continue

unabated, and hostile working environments are instituted without challenge from

the DOE. The DOE should take notice of the NRC’s actions and promptly incorporate the NRC methodology for protecting employee concerns at its facilities. If

DOE is serious about improving its operations consistent with its mission and in

accomplishing a work environment that has a ‘‘zero tolerance for reprisal’’ in fact

and not just in rhetoric, it will study and implement the NRC model. For instance,

the DOE could—

1. Establish Departmental policy in the Code of Federal Regulations that mandates

the establishment of a ‘‘safety-conscious work environment’’ which actively encourages employees to report health, safety or environmental and other employee concerns at DOE-owned sites;

This procedural step is necessary to clarify and formalize DOE’s policy on prohibition of reprisals against employees who raise concerns. The Nuclear Regulatory

Commission codifies its policy in 10 C.F.R. Part 50.7. The NRC’s statement of policy

could easily be modified to suit the purposes of the Department of Energy. A DOE

version of this policy could read like this: 2

Employee protection.

(a) Discrimination by an agency official, or a contractor or subcontractor of the Department against an employee for engaging in certain protected activities is prohibited. Discrimination includes discharge and other actions that relate to compensation, terms, conditions, or privileges of employment. The protected activities are established in section 211 of the Energy Reorganization Act of 1974, as amended, and in Departmental regulations codified at 10 C.F.R. Part 708 and in general are related to the administration

or enforcement of a requirement imposed under the Atomic Energy Act or the

Energy Reorganization Act.

(1) The protected activities include but are not limited to:

(i) Providing the Department or his or her employer information about alleged violations of either of the statutes named in paragraph (a) introductory

text of this section or possible violations of requirements imposed under either

of those statutes;

(ii) Refusing to engage in any practice made unlawful under either of the statutes named in paragraph (a) introductory text or under these requirements if

the employee has identified the alleged illegality to the employer;

36

(iii) Requesting the Department to institute action against his or her employer for the administration or enforcement of these requirements;

Testifying in any Department proceeding, or before Congress, or at any Federal or State proceeding regarding any provision (or proposed provision) of either of the statutes named in paragraph (a) introductory text.

(v) Assisting or participating in, or is about to assist or participate in, these

activities.

(2) These activities are protected even if no formal proceeding is actually initiated as a result of the employee assistance or participation.

(3) This section has no application to any employee alleging discrimination

prohibited by this section who, acting without direction from his or her employer (or the employer’s agent), deliberately causes a violation of any requirement of the Energy Reorganization Act of 1974, as amended, or the Atomic Energy Act of 1954, as amended.

(b) Any employee who believes that he or she has been discharged or otherwise discriminated against by any person for engaging in protected activities

specified in paragraph (a)(1) of this section may seek a remedy for the discharge

or discrimination through an administrative proceeding as provided in Departmental regulations codified at 10 C.F.R. 708 or in the Department of

Labor. The administrative proceeding must be initiated within 60 days after an

alleged violation occurs with the DOE, and within 180 days with the Labor

Department. The employee may do this by filing a complaint alleging the violation with the Department of Labor, Occupational Safety and Health Administration. In either proceeding, the agency may order reinstatement, back pay,

and compensatory damages.

(c) A violation of paragraph (a), (e), or (f) of this section by a contractor or

subcontractor of the Department may be grounds for— (1) Denial, revocation, or suspension of the contract.

(2) Imposition of a civil penalty on the contractor or subcontrator.

(3) Other enforcement action.

(d) Actions taken by an employer, or others, which adversely affect an employee may be predicated upon nondiscriminatory grounds. The prohibition applies when the adverse action occurs because the employee has engaged in protected activities. An employee’s engagement in protected activities does not

automatically render him or her immune from discharge or discipline for legitimate reasons or from adverse action dictated by nonprohibited considerations.

(e)(1) Each contractor or subcontractor shall prominently post the provisions of this policy at DOE-owned facilities. This form must be posted at

locations sufficient to permit employees protected by this section to observe a

copy on the way to or from their place of work.

(f) No agreement affecting the compensation, terms, conditions, or privileges

of employment, including an agreement to settle a complaint filed by an employee with either the Department of Labor pursuant to section 211 of the Energy Reorganization Act of 1974, as amended, or pursuant to a proceeding

initiated under the provisions of 10 C.F.R. Part 708 may contain any provision which would prohibit, restrict, or otherwise discourage an employee from

participating in protected activity as defined in paragraph (a)(1) of this section

including, but not limited to, providing information to the DOE or to his or her

employer on potential violations or other matters within DOE’s regulatory responsibilities.

2. Empower the existing Office of Employee Concerns with the authority and the

resources to set DOE policy on the issue of all agency and contractor employee

concerns. Specifically, the Office of Employee Concerns—

• should report directly to the Secretary of Energy, and must standardize DOE policy across the complex. • should be given adequate funding and staffing and the authority to implement

policy, conduct investigations, levy sanctions, and order corrective actions to

abate violations. • should institute rules, procedures and regulations requiring DOE managers and

supervisory personnel as well as contractor and subcontractor employers to

maintain a safety conscious work environment where employees are free to

raise employee concerns without fear of reprisal.

• should require facilities to conduct independent and reliable employee surveys to

measure whether employees feel free to raise concerns free of reprisal on a company-by-company basis (including at DOE) to use as a basis for determining

whether corrective actions should be undertaken.

Currently, the DOE’s HQ Office of Employee Concerns is a shell of an office, with

one full-time employee (the Director, Bill Lewis) and one and half Full-Time EquivaVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00040 Fmt 6633 Sfmt 6621 E:\HEARINGS\64767 pfrm06 PsN: 64767
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lent (FTE) employees who are mostly contracted from the outside. The very existence of this Office is in constant doubt. The Office of Employee Concerns is windowdressing. In its current incarnation, it cannot effect change.

The Office of Employee Concerns should have, at a minimum, a Director, one administrative support person, two policy staffers and two full-time investigators. The

Office should be responsible primarily for setting and enforcing Departmental policy.

Other duties should include—

• developing language to insert into the Department of Energy Acquisition Regulations requiring contractors to maintain a safety conscious work environment;

• developing posters and employee communication vehicles to distribute for posting

around the complex;

• inspecting and evaluating each facility in the complex to ascertain that the standards set by the DOE in the area of employee concerns are being reached;

• investigating and correcting extraordinary cases of hostile and chilled work environments, high-profile cases, or facilities experiencing a large number of discrimination complaints alleging reprisals for raising concerns.

A revitalized and effective Office of Employee Concerns is of paramount importance for achieving employee protection and safer work environments.

3. Require DOE and DOE contractor ES&H and quality organizations to implement

‘‘Differing Professional Opinion (DPO)’’ processes, using NRC’s DPO process as

a model, to increase the autonomy of safety professionals employed by DOE and

DOE contractor organizations.

4. Amend existing contract(s) at its nuclear weapons production and former nuclear

materials production sites to ‘‘incentivize’’ the establishment and maintenance

of a safety-conscious work environment, and to put contractors on notice that

the contract can be conditioned, suspended and/or revoked upon a finding by the

DOE that a company has engaged in a pattern and practice of whistleblower

reprisals or has failed to maintain a safety-conscious work environment;

This proposal follows the lead of the NRC, which has put licensees on notice that

the license to operate the facility hinges upon maintaining a retaliation-free work

environment. As the Department moves away from the Management and Operating

(M&O) contracting model, and towards the performance-based contracts, there is a

greater need to spell out DOE’s policies in relation to prohibition against reprisals

in the contract and to tie specific awards to this performance.

The recent history of reprisals at Hanford, Oak Ridge, Rocky Flats and Pantex,

illustrate that contractual financial incentives and penalties are necessary to encourage a climate free of reprisals. A substantial portion of every DOE contract in

the nuclear complex should depend upon employee freedom to report and resolve

employee concerns.

5. Address ‘‘hot spots’’ where the chilling effect now exists, based upon the investigative reports of the Labor Department, Office of Special Counsel, MSPB, OCEP,

or OHA and where there may be a strong perception among employees that

there will be reprisal. Corrective actions could include:

• training of supervisory employees and workers by employee concerns experts;

• developing guidelines for use of the ‘‘holding period’’ concept recommended by the

Nuclear Regulatory Commission for contested proposed job actions;

• instituting a ‘‘personal accountability’’ rule to hold individual managers accountable for reprisals.

These recommendations come from the ‘‘Independent Panel Review’’ of the Millstone Plant licensee action levied by the Nuclear Regulatory Commission. They represent ‘‘state of the art’’ thinking of some of the most experienced employee concern

professionals in the nation.

6. Require the Department of Energy’s Office of Enforcement and Investigation, Environment, Safety and Health, to ascertain, through its normal inspection duties

or upon request from the Office of Employee Concerns, whether departures from

a ‘‘safety-conscious work environment’’ or a chilling effect on employee concerns

exists at a specific facility or within any DOE division, and to order corrective

actions to remedy such environment.

Periodically, the Office of Oversight conducts inspections, evaluations and assessments at sites around the complex. A key part of their mission should be to assess

the existence of a ‘‘safety-conscious work environment’’ and where departures from

it exist, to require corrective actions. Failure to maintain such an environment, especially in a nuclear safety context, could lead to findings of violations under the

Price-Anderson Act.

In summary, the Department can only salvage its credibility on the whistleblower

issue by—

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• establishing Departmental policy that calls for the positive presence of a ‘‘safety

conscious work environment in its facilities;

• instituting rules, procedures and regulations requiring DOE managers and supervisory personnel as well as contractor and subcontractor employers to achieve

and maintain a ‘‘safety-conscious work environment;’’

• requiring the Department of Energy’s Office of Oversight, Environment, Safety

and Health, to ascertain, through its normal inspection duties or upon request

from the Office of Employee Concerns, whether a demonstrative ‘‘safety-conscious work environment’’ exists at a specific facility or within any DOE division, and to order corrective actions to remedy departures from such an environment;

• requiring DOE and DOE contractor ES&H and quality organizations to implement ‘‘Differing Professional Opinion (DPO)’’ processes, using NRC’s DPO process as a model, to increase the autonomy of safety professionals employed by

DOE and DOE contractor organizations;

CONCLUSION

The ability of employees to raise concerns is the key to safe and efficient operations, especially in nuclear facilities. The Department of Energy has, for seven

years, recognized this important concept but has not taken the necessary steps to

change the culture to make the policy shift more than a rhetorical chimera. In fact,

in total contradiction of its oft-cited ‘‘zero tolerance for reprisal’’ policy, the Department has assisted its contractors in every possible way to fight whistleblowers, even

when they prevail in court. After seven years of a ‘‘zero tolerance’’ can the Department point to a single instance where the policy has actually been enforced? The

Department has yet to take a single action against a single contractor or individual

who has been found guilty of reprisal. The cases of David Lappa, the fourteen pipefitters at Hanford, Mr. Jim Bailey and many others testify to the ongoing state of

affairs at the DOE—where the true message seems to be ‘‘zero tolerance for whistleblowers.’’

Congress needs to get serious about reforming, or getting rid of, this agency. The

General Accounting Office has pointed out for nearly twenty years in numerous reports that the Department is seemingly incapable of managing itself, much less its

contractors or the massive cleanup job that lies ahead. Protecting employees who

speak about illegality, threats to public health and safety, mismanagement and

fraud deserve protection and encouragement. Congress can do its part by beefing up

protections for these workers, which remain inadequate, and by passing legislation

that resolves the conflict of interest situation at DOE by affording external regulation of these facilities to OSHA and the Nuclear Regulatory Commission.

Thank you for inviting my testimony today.

Mr. BURR. I thank you, Mr. Carpenter.

The Chair would recognize Mr. Walli for purposes of an opening

statement.

TESTIMONY OF RANDALL WALLI

Mr. WALLI. Thank you. Thank you for inviting my testimony

today. My name is Randy Walli. I am a pipefitter by trade. I’ve

worked 24 years in the construction industry. Some of my jobs have

been at the Hanford Nuclear Reservation in southeast Washington

State.

I have come here today on my own accord and at great expense

to my family and myself. Unlike some that will testify here today,

I am not being paid to be here. But I am hopeful that, by being

here today, that somebody is finally taking these matters seriously.

I grew up in the Hanford area and my family is from the Hanford area. I have lived there and watched the Tri-Cities revolve

around the ups and downs of the Hanford site.

The last 3 years have been a real bad experience for me and my

fellow pipefitters. This is because we believed in safety and we

thought we had the right and the duty to talk and practice safety

in our workplace. But because of the stand that we took on some

39

safety issues in the tank farms, we have been labeled as ‘‘whistleblowers.’’ ‘‘Whistleblower’’ is a very tough name to live with once

it has been pinned on you. People misjudge you. They don’t want

to be seen with you. They leave the room when they see you. They

feel that they have to choose sides when they are around you.

We’ve lost friends over this, and we’ve put great burdens on our

families. We are still right in what we did and what we are doing.

The Department of Labor has twice seen that we were wronged

by this company, yet no one else beside the Government Accountability Project people have stepped in to help us fix these problems.

This whole process has driven concerned people into the shadows

because they have seen what happens to people who raise concerns.

I have seen people demoted, transferred, laid off, harassed for

bringing up concerns. This makes for a very bad work environment.

In my case as a pipefitter foreman in the 200 west area of Hanford, we had a few issues come up. The last one was a safety issue

related to under-rated valves in a radiation contamination zone.

This issue was of great importance, because the use of the wrong

valves—these were test valves—on a high-level waste transfer line

could cause personal injuries and/or environmental contamination.

If the valves failed, they could flood the nearby underground highlevel waste tanks, which is both a safety and environmental concern.

Two working days after, as a crew, we refused to use the wrong

valves and stopped work over this issue on this project, we were

told the entire crew was being laid off. At the end of that week,

my crew and I were terminated. But the job was not over, because

there was a DOE milestone to be reached in October of that year,

and this was the first of June, so we were replaced by other workers.

We ended up going through numerous avenues, where we found

the Government Accountability Project people and ended up at the

Department of Labor. The Department of Labor, after several

months of investigations, found in our favor. The company appealed it, and, after months of discovery and depositions, settled it

out of court the day before trial.

They agreed to take us back under the Whistleblower Act, so we

were supposed to be treated fairly. We were not.

I’ve also learned that the Department of Energy has paid the

cost of that settlement and the legal fees associated with it. The

company paid us a total of $334,000 and hired us back to our

former jobs. The company then sued myself and the other pipefitters because of union complaints that we filed. The Union complaints had nothing to do with this company, but the company held

up our settlement checks and dragged us into Federal district

court, saying we had breached the settlement. We hired lawyers to

fight back. The Federal court ruled against the company and made

the company pay the settlement amount with interest, as well as

our attorney fees. Again, DOE paid for that, as well.

It seems we are fighting a company and DOE and/or the company with DOE’s money. A little over 6 months after being rehired, we were laid off again. That’s not unusual for construction

people. That’s part of our lives. The first day we go to work, we’re

working ourselves out of a job. But Hanford is our home and some

40

of the people that we worked with there in construction have

worked there continuously for 20-plus years. It is nice to be able

to work at home and be able to come home to our families. Most

of us have young families. But we have been labeled ‘‘whistleblowers’’ and we might not ever be able to work there again. Most

of the people at the Hanford site, if they support us, it’s from the

back door. It is done quietly, because they don’t want to be seen

talking to us. Yet, they’ll call us at home and want us to hear their

concerns.

We stood up for numerous safety issues and concerns and tried

to keep people from getting hurt, but these companies and DOE

don’t seem to want to listen. They put window dressing on safety

first, and that there is no price tag on safety—and there really is

no price tag on safety if you’re doing it the wrong way if DOE is

going to keep paying for the contractor’s mistake.

After we were terminated a second time, we ended up going a

different avenue, the Hanford Joint Council. This is a mediation

board set up to resolve issues at the Hanford site.

Fluor Daniel, the company that we work for, is a member of this

DOE-supported council. Some of the gentlemen and I that worked

together went to the Joint Council, told our story, and tried to resolve it out of court. Fluor Daniel Northwest, the company we were

working for, refused in writing to meet with this agency to try to

resolve these issues, so we pursued things through the legal system

again, the Department of Labor ruled in our favor again, and the

company appealed it again.

The Department of Labor handed down an amazing finding, one

of the stiffest findings ever handed a company, and yet here we

are, we’re going through it again. We are on our way to court in

September, and we have got a lot more evidence this time than we

ever had the first time. We’ve got documents that show malice,

cover-ups, and how they have treated people that worked with us.

We had people that were in carpools with us and just associated

with us that were laid off.

This is the new atmosphere at Hanford. This is the atmosphere

that DOE is helping or allowing to create.

When I grew up in this community, there was a great deal of

pride. There was pride that Hanford was part of the war effort.

This was the town that gave a day’s pay for a bomber. There was

a great deal of pride in this community. I don’t believe you’ll find

this there again.

You know, it is a sad thing that some people have to stand up

alone and put so much on the line to try to make safety work.

There are some sincere, honest people working out there, but they

are not up front.

We’ve got proof that DOE’s counsel is helping the company fight

us again, and this means that the people sitting in this room today

are paying to fight us, the public.

There was a DOE manager that once said in an interview, ‘‘I

don’t expect we’ll get zero concerns being raised.’’ The zero is not

for concerns raised. It’s supposed to be zero tolerance for reprisals

against those who bring them.

41

Mr. Richardson also stated that there must be zero tolerance policy for reprisals linked to the contractor safety records of their performance reviews. I thought that would be a fine, not a payment.

DOE should be out there guiding these companies and not paying for their mistakes. This is not the way to do business.

There are a lot of good, skilled people out there. Let’s back the

workers. Let’s clean up the mess and make it in a safe manner so

that we can watch our children grow up.

Thank you.

[The prepared statement of Randall Walli follows:]

PREPARED STATEMENT OF RANDALL WALLI

I have worked numerous jobs at the Hanford Site in southeastern Washington for

different contractors over a number of years. I grew up near Hanford. My family

is from the Hanford area. You know, we have lived there and watched the Tri-Cities

grow, and revolve around Hanford. We have seen a lot of people testify to the pride

of this community. It’s been a bad experience for me and some of my fellow pipefitters over the last three years, because we took a stance at the Hanford Site over

some safety issues. We’ve since been labeled as whistleblowers. Which is a bad term

for people that were concerned over safety issues or their fellow workers.

In my case I was a pipefitter foreman, 200 West Area. We had some issues that

came up over some testing of some new pipe systems that were being put in. And

subsequently we were terminated. The whole crew that worked for me was terminated.

We ended up going through numerous avenues, including lawyers, over a period

of time. We tried to go through what we call the Hanford Joint Council, which is

an agency that is set up to try to resolve issues here at the Hanford Site.

Some of the gentlemen that I worked with, we all met with the Joint Council, told

our stories, tried to get it resolved by keeping it out of court, kind of an in-house

deal.

The company we worked for refused in writing to meet with this agency that DOE

has set up to handle these issues.

We then pursued things through legal systems. The Department of Labor ruled

in our favor. The company appealed it. The company, the day before we went to

trial, settled this out of court. They agreed to take us back under the whistleblower

acts. We are supposed to be treated fairly. I have learned that the Department of

Energy paid the costs of that settlement and the company’s legal fees associated

with it.

Then, the company sued myself and the other pipefitters because we filed a union

complaint. The complaint had nothing to do with the company. But the company

held up our settlement checks and dragged us into federal district court, saying that

we breached the settlement. We had to hire lawyers to fight back. The federal court

ruled against the company and made the company pay the settlement amounts,

with interest, as well as our attorney fees. Again, the Department of Energy paid

for that, as well.

Six months and four days after we were rehired, most of us were laid off again.

It’s not a big deal to construction people to be laid off. I mean, it’s part of our

life. We know the first day we go to work, we are working ourselves out of a job.

But to work near home was an honor. Most of us have families, young families.

It would be nice to stay home once in a while and work with them, play with them,

watch your kids grow up.

But because we have been labeled as whistleblowers, we can’t work out there anymore.

Most of the people out there at the Hanford area, if they do support us, it’s

around the back door, it’s quietly, they don’t want to be seen talking to us, but yet

they want us to listen to their concerns.

We stood up for some safety concerns, numerous different safety issues, to try to

help keep people from getting hurt.

And these companies don’t want to really listen to this. They put on a window

dressing all the time about safety first, there’s no price tag on safety. But it seems

like it’s window dressing.

There are some very concerned people working out there, but they are getting

harder and harder to talk to, and most of them are going into hiding, because if

they bring up a safety issue, they are either demoted or they are replaced.

42

After we were released the second time we ended up calling the Department of

Labor again. They came in, looked at it. They handed down an amazing finding on

our behalf again. One of the stiffest findings they have ever handed the company.

Six months after they hired us back. And yet here we are, we are out of work, we

are going through it again. The company has now appealed it again. And it will be

a matter of time, we will be back in court. And we have got a hundred times more

evidence this time than we had the first time. We have got truckloads of paperwork,

documents that shows malice, cover-ups, how they’ve treated people that have

worked with us.

We have had people that were in car pools with us and just because they associated with us, they got laid off.

This is the new atmosphere at Hanford. And I tell you, from people that have

grown up here, thought Hanford did a good thing for this country, I mean, this was

the town that gave a day’s pay to buy a bomber for the war effort.

I don’t believe that would happen again, you know, and it’s a sad thing that you

have to have people that have a little bit of backbone and can stand up to a company and take it through the court system to try to make safety work.

I know there’s some sincere, honest people out there, but they’re not up-front. And

I just wish that maybe DOE could step in and help the workers instead of the company.

We’ve got proof that DOE counsel is helping the company counsel fight us on our

own lawsuits.

That means that you people sitting there, your tax dollars are going to the government to help fight ourselves. My own tax dollars, I’m fighting myself. You know,

this shouldn’t be.

DOE is supposed to be out there guiding these companies. I think they should

step in and make them either toe the line or kick them out. This is not the way

we do business. There’s a lot of skilled people out there that know their jobs and

they’re willing to do their jobs. Let’s get a company in here that will back the workers, let’s do the work to clean up this mess that we’ve got sitting in our back yards

so that our kids can grow up in a safe environment.

Mr. BURR. Thank you, Mr. Walli.

The Chair would recognize Mr. Gutierrez for the purposes of an

opening statement.

TESTIMONY OF JOE GUTIERREZ

Mr. GUTIERREZ. Good morning, and thank you, Mr. Chairman.

Thank you for inviting me to give this testimony.

My name is Joe Gutierrez. I reside at Los Alamos, New Mexico,

specifically White Rock. I have completed 11 years of employment

with the University of California at Los Alamos National Laboratory.

Since October 1992 through the present time, I have collected information about the management practices of officials and managers at Los Alamos National Laboratory, the University of California, the Department of Energy, some supporting government

agencies, and, as I’ve heard today, I must add one more party. And

let me preface my statement by stating that there is no I am castigating or criticizing Congress. We need your help. We are the ultimate body that we can defer to for help. However, I must include

and ask you to investigate the relationship between those representatives and Senators who have a DOE facility located in their

Districts, because that relationship is one that I feel, at least in my

experiences, has a big bearing in this issue, because that is an underlying reason why the Department of Energy and the University

of California, in particular, is remiss in not enforcing and implementing these zero tolerance safety policy. I will address that in

more detail here in a minute.

Let me state that in 1996, October 1996, I found it necessary,

after having disclosed some information that the University of CaliVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00046 Fmt 6633 Sfmt 6602 E:\HEARINGS\64767 pfrm06 PsN: 64767
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fornia and the Los Alamos National Laboratory was perpetrating

a deception to the surrounding Los Alamos community and the Nation, as a whole. There was a claim that Los Alamos National Laboratory was in compliance with the Clean Air Act. I had personal

knowledge and documentation to clearly show that that was not

the case, so I found it necessary to blow the whistle. That was in

1996.

In the spring of 1997, I met with Senator Pete Domenici, at his

request, to address some very important and very critical employee

concerns at Los Alamos. In that meeting, Senator Pete Domenici

pointed at me in anger because I had blown the whistle. In his

view, he felt that I had given the laboratory a black eye. But he

completed his statement by stating that, ‘‘I tell the University of

California and Los Alamos to fight you guys to the hilt, and I’ll

give them all the support and all the money they need.’’ And taking

a pause and realizing what he said, he then added, ‘‘Only if they’re

right.’’ Well, who is making sure that they are right? Certainly he’s

not and certainly the DOE is not.

That was in the spring of 1997. By the end of that year, during

the August timeframe, when I received a performance appraisal, I

detected some subtle retaliation. I pursued to investigate, and, in

fact, I felt that there was retaliation being perpetrated against me

and I filed a claim in November of that year.

By the spring of 1998, the Department of Labor had made a determination and gave a favorable determination in my behalf. The

University of California appealed that determination.

In the spring—January 1999, after a 5-day hearing, again the

administrative law judge for the Department of Labor issued a 72-

page ruling on my behalf, again a favorable ruling in my behalf

and determination on my behalf.

The University of California has appealed that ruling, and I am

now going through that appeal. If—the Administrative Review

Board has that appeal in front of them. If that ruling should again

be in my favor and the University of California chooses to again

appeal, I am facing, as I understand it, in the 10th District, a potential 10-year wait before my case gets in front of that court.

Again, not only do I have to wait and incur additional expenses,

but at the end of that I am still probably expecting a large expense,

and who knows how much longer for a final outcome in my favor.

I’m hoping it will be in my favor.

In closing, I would like to make two comments, one relating to

recommendations and the other perhaps—it has been fashionable

for officials at DOE to refer to these laboratories as the ‘‘crown jewels of this country.’’ I think we need to take a pause, in light of

this issue, in light of the issues that surround this concern. We

need to really stand back and take a look at it.

What benefits are derived from the technical innovations at those

laboratories I believe are greatly undermined and perhaps even

there’s a detraction from that benefit due to the waste, fraud, and

abuse that surrounds the management of those technical endeavors.

With that, I think I would like to close. I’d like to just add that

I was quite impressed about the statements that were made this

morning by you, Mr. Chairman, and the rest of the panel. They are

44

quite strong, and I’m hoping that, in fact, there will be follow-up

and corrective action.

Mr. BURR. I thank you, Mr. Gutierrez.

Let me make two comments.

One, the purpose of this subcommittee and specifically this hearing is to try to get at the truth and to make sure that a zero tolerance policy, if has not been adopted, is adopted, because that’s the

stated objective of the Department of Energy.

I’m sure that Mr. Carpenter will be very informative to this committee, because I think that he helped to set the draft policy with

Secretary O’Leary, who I believe was well intended with her drafting.

The second statement would be I thought I was very controlled

in my comments this morning, much more controlled than last

night at 11 when I was not only walking through today’s testimony

but looking at the hearing that we had a year ago and the answers

that I got from the Department of Energy then that are inconsistent with the actions that have taken place since then, and with

the testimony that I had in my lap in my bed last night reading.

I can assure you that I think we will be much more specific and

hopefully as controlled as this hearing goes on.

The Chair would recognize himself for the purpose of questions.

Mr. Carpenter, you did participate with Secretary O’Leary in the

draft proposals, didn’t you?

Mr. CARPENTER. Yes, sir.

Mr. BURR. And share with everybody here what she intended to

accomplish with those proposals, in your estimating.

Mr. CARPENTER. Secretary O’Leary attended a conference sponsored by our organization to look at the issue of whistleblower protection in 1993 and she became the keynote speaker at this conference and met privately with a number of DOE employees and

DOE contractor employees following or right before that speech,

and she was personally affected by what she heard and committed

at that point in time with the zero tolerance for reprisal.

So she recognized that this was bad business for the Department

to countenance reprisal against whistleblowers. She committed to

addressing that and tried to come up with a set of initiatives and

policies that would change the course of the Department.

Mr. BURR. Did you feel that her initiative was genuine?

Mr. CARPENTER. Absolutely.

Mr. BURR. And did you ever read the points that she attempted

to set?

Mr. CARPENTER. Sure. I read and commented on those points repeatedly and had numerous meetings with her and tried to tell her

where they were falling down.

Mr. BURR. How many of those points that you remember were in

her initiative have been implemented at the Department of Energy?

Mr. CARPENTER. Well, to a degree, some of the points have been

implemented, but, in my view, none of them have been implemented fully or effectively.

Mr. BURR. How many of them have been enforced?

Mr. CARPENTER. Same answer, which is that, even when it comes

to what was a no-brainer at the time to Secretary O’Leary and her

45

staff, which was the contractor reimbursement policy, everyone

agreed that this sent the wrong message. And this was the strongest thing she heard from whistleblower after whistleblower at her

meetings, was: why is it that the Department is funding this litigation? And our position is that they ought not fund the litigation,

even in advance, because most agencies don’t fund their contractors’ litigation for whistleblower discrimination cases and in advance of a ruling.

So this was one that we thought—where we felt comfortable

where there were going to be some changes made, and, in fact, the

changes that were made occurred on a haphazard basis. I recently

reviewed the contracts at the various sites—Los Alamos, Rocky

Flats, Hanford, Savannah River—and took a look at the language

in those contracts, and they are all different and they say different

things, but generally they allow reimbursement of these cases for

the contractors’ costs until an adverse ruling, and then, at the

point of an adverse ruling, it’s supposed to cutoff and even cost

paid back, but that hasn’t happened.

Mr. BURR. Clearly, an adverse ruling and the willingness to participate in an appeal of an admitted violation or an adverse ruling

are two different things. Correct?

Mr. CARPENTER. Yes.

Mr. BURR. Let me ask you specifically, on the contract with U.C.

as it relates to Mr. Lappa and his case at Lawrence Livermore, do

you feel that the Department of Energy has the ability under Price

Anderson to do a notice of violation?

Mr. CARPENTER. Clearly. In fact, the Department, in—I believe

it was December 1988, through its Environment and Health and

Safety Office, put out a notice to all contractors saying—recognizing a Department of Labor ruling in favor of a whistleblower in

the case of a man named Casey Rudee at the Hanford site, and

said, ‘‘Here is an example of the case where the Price Anderson Act

allows the Department of Energy to take enforcement actions and

civil penalties against contractors who engage in reprisal, and in

the future you are on notice, contractors, that this might happen.’’

So notice was given to the contractor community, but there was no

follow-up.

In Mr. Lappa’s case, it was even more egregious, in our opinion,

that it wasn’t done, because Mr. Lappa was a witness to the very

Price Anderson Act enforcement investigators that ended up

issuing a notice of violation for the underlying safety problems and

the nuclear criticality violations at the laboratory, and so he was

a helpful witness to the DOE.

Mr. BURR. Let me ask you, the 1st of January 1999 the Department of Energy was prepared to send a notice of violation, or at

least a proposed notice of violation, to U.C., and I’ve got an email—1/6/2000, excuse me—where—from Keith Christopher to

Sharon Hurley. Let me just read you a portion of it. And this is

referring to a decision that Ms. Sullivan has made.

‘‘I advised her that, during the enforcement and conference and

in responding to any subsequent PNOV, if one were issued, the lab

would have an opportunity to make their case. Sullivan stated that

she felt this process was inadequate due process without DOE conVerDate 11-MAY-2000 11:32 Mar 23, 2001 Jkt 067005 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 E:\HEARINGS\64767 pfrm06 PsN: 64767
46

ducting another separate investigation of the case, regardless of

DOL findings.’’ I would only ask you, in your opinion, do you believe that the Department of Labor’s findings are substantial enough for them to

pursue a notice of violation, even a proposed notice of violation, or

is Ms. Sullivan’s counsel right that they have not allowed due process?

Mr. CARPENTER. They were certainly allowed due process. The

University of California, if it disagreed with the findings of the

Labor Department, had an opportunity to appeal. They chose not

to exercise that option. What resulted was a final agency order of

the Department of Labor, which was, again, not appealed. So the

due process was there. The University simply chose not to pursue

it, and, in my view, admitted to the violations, which was an even

stronger result than having an ALJ come out and make a finding.

This was a great case for the Department to be able to vindicate

zero tolerance for reprisal policy, but, instead, chose to, I think,

getting the system to support the contractor.

Mr. BURR. Let me read one additional sentence and just get your

comment on it. This is the next paragraph. ‘‘Sullivan stated that the laboratory was pressured by DOE to accept the DOL findings and did not appeal the findings, and had

that not been the case the laboratory would have appealed DOL’s

findings.’’ The Department of Energy pressured U.C. to accept DOL’s findings, yet turn around and participate in continued litigation, unlimited, possibly, based upon the wording of a contract.

Mr. CARPENTER. I actually didn’t know that the DOE had pressured the laboratory to—— Mr. BURR. I’m only going based upon somebody at DOE’s e-mail

referencing the meeting they had.

Mr. CARPENTER. That would be amazing to me in that the DOE

has taken the position that the Labor Department finding has no

credence to them. If they’re going to tell the contractor to do one

thing and accept this as a finding and let’s all move on, and then

turn around and fund their litigation, what kind of message is that

sending to the rest of the workforce and to the contractor community? I think the message is, ‘‘litigate these cases.’’ Mr. BURR. And if I remember some of the comments of Secretary

O’Leary, the intent was to make sure that we sent a loud message

to employees that if you work in unsafe areas, if there is retaliation

we want you to feel comfortable to come to the Department of Energy. We want you to feel comfortable to use whatever means you

need to voice that opposition, with the confidence that no contractor will retaliate against you.

Does that pretty much sum up some of the—— Mr. CARPENTER. That was the intent of Secretary O’Leary, and

the reality is that there is a great deal of fear out there, and we

advise clients not to go to the Department of Energy with safety

and health concerns. It is not the right place to go. The Department has a very bad track record of supporting whistleblowers.

Mr. BURR. The Chair would ask unanimous consent to enter a

significant amount of records into the record. My understanding is

that minority and majority have——

47

Ms. DEGETTE. Reserving an objection, let me just review that.

Thank you.

Mr. BURR. The Chair has one additional question and then he

will turn to the ranking member for questions.

Mr. Walli, you remember those valves that you refused to put in?

Mr. WALLI. Yes.

Mr. BURR. Are they in today?

Mr. WALLI. No, they are not. Those valves—— Mr. BURR. Did they ever go in?

Mr. WALLI. Yes, they did.

Mr. BURR. For how long?

Mr. WALLI. A matter of hours.

Mr. BURR. And they took those valves out why?

Mr. WALLI. The valves that we were objecting over were given

to us as test valves. They were just to test the new systems that

we were putting in. We were going to run a hydro test on them.

When they were first given to us, we noticed right away that

they were not rated for the pressures that we were going to be putting against them. We objected. We raised the concerns. We went

through our company and through our management and our safety

department and they tried to force us to use them. They backed

myself and my colleagues, my crew into a corner, stating that,

‘‘Yes, that was a—they weren’t rated, but they were still okay to

use.’’

We agreed. I agreed that we could go ahead and use them if none

of my personnel or the people I was responsible for were going to

be anywhere near those valves when they were under pressure,

and that they, as the company, took sole responsibility for anything

that might happen to the system and/or the environment where

they were going to be used.

It came to a head to the fact that we either had to quit or use

them. When they assured me that none of my personnel were going

to be close to them and the safety of the personnel which I was responsible for would not be injured, we agreed to use them, but

these were solely for test purposes.

It came time to use these valves. The scope of work changed, and

any time you change the scope of work from what the plan of the

day was, you’re supposed to stop work, reassess what is going to

happen, and either make a new plan and have a new meeting and

then move on.

We went down there. We had what we call the ‘‘pre-job.’’ The

scope of work changed. They wanted my personnel and the personnel of another company that had charge of this tank farm to go

in and operate these valves under these high pressures that they

were not rated for, which had changed from the agreement that we

had said that we would install these valves.

Now they wanted us in the confined space in the contaminated

radiation zone operating these valves under the pressures that they

weren’t rated for, and that’s not what we had agreed we would do.

Now my personnel and these other people that were assisting us

would be at danger if those valves come apart, blew up, or just let

go.

This was also at the end of two lines that had about three-quarters of a mile of water against them, that if those valves let go all

48

that water would end up in the pit where they were at, which was

just feet from the drain that went into the 101SY tank, which was

one of the Hanford’s watch list hydrogen tanks at the time.

At that time, we stopped the work. We found out that the subcontractor that was working with us had the right valves all along,

like we had been telling the company—my people in the company

were out there some place.

The company managers came down there, after yelling, cursing,

throwing what we call an ‘‘animal act’’ on me and my personnel,

got us the right valves. We installed those valves. We went ahead

and did the test, like should have been done the first place, and

we pulled the test off like was required.

At the end of that test, we drained the system in the normal

manner that we would have.

Mr. BURR. I just want to make sure all the members understand.

You objected to the installation of the valve originally because the

valve was not rated at the pressure that you knew the system

would be tested. Given an assurance of this safety of your personnel during testing, you agreed to go ahead and install the

valves, and it wasn’t until your people were put back in what

might have been a dangerous position that you stopped work.

Mr. WALLI. Yes, that statement is true.

Mr. BURR. And I would only ask one last question before I recognize Ms. DeGette.

Mr. Carpenter, given that that was nuclear safety related solutions, or whatever was going through there, would this also be a

Price Anderson violation?

Mr. CARPENTER. You bet, sir. This is a nuclear safety issue and

it impacts the safety of a nuclear system at the Hanford site.

There’s probably no more sensitive nuclear area than the high-level

nuclear waste tanks at Hanford, which, if you fool with those

tanks, if you add materials to these tanks, they can become unstable. Millions of curies reside in these tanks. It could be an environmental disaster of the first magnitude.

Mr. BURR. Are you aware of any investigation by the Department

of Energy relative to Price Anderson authorities?

Mr. CARPENTER. No. And, in fact, we have been asking the Department of Energy to investigate and take action on these issues,

and the Department of Energy has consistently refused to do so.

Mr. BURR. Ms. DeGette has been very patient, so let me at this

time recognize her.

Ms. DEGETTE. First of all, Mr. Chairman, we have no objection

to your entering——

Mr. BURR. Without objection, so ordered.

Ms. DEGETTE. Thank you.

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