MOX Poster, SRS Watch Forum (copy)

A poster showing the canceled Mixed Oxide Fuel Fabrication Facility at the Savannah River Site.

A monthslong federal audit of contracting practices and expenses at the terminated Mixed Oxide Fuel Fabrication Facility found millions of dollars of questionable costs, a potential symptom of a much larger problem.

The investigation conducted by the U.S. Department of Energy inspector general's office found $8.5 million in suspect costs, a figure derived from a review of 58 reported transactions.

The findings were detailed in a report published Dec. 12.

The inspector general's office found that MOX Services – the lead contractor at the now-nixed multibillion-dollar project – did not consistently administer and handle subcontracts in accordance with federal rules. The contractor, the audit found, did not maintain proper records and documentation, and claimed costs inconsistent with the federal government's responsibilities, among other things.

The MOX contract was cost reimbursable, meaning the government paid MOX Services for costs incurred.

The National Nuclear Security Administration, the Energy Department's weapons-and-nonproliferation arm, engaged MOX Services years ago for the MOX project at the Savannah River Site.

The plant, once completed, would turn 34 metric tons of defense plutonium – enough for hundreds of nuclear weapons – into fuel for commercial nuclear reactors. MOX was initially expected to come online in 2016 at a cost of about $4.8 billion. That never happened.

The NNSA in October 2018, following an appeals court win, canceled the MOX project after more than a decade of stop-and-go work. The timeline had ballooned significantly, as had costs. One often-cited estimate placed project completion just short of 2050.

Before the project was axed, the audit explains, the National Nuclear Security Administration informed the inspector general's office that its MOX management office had "limited resources" for monitoring construction costs at the project – a red flag.

A significant amount of work at the MOX project was handled by subcontractors. The teams would work and bill MOX Services, and those costs would in turn be passed up for reimbursement. The audit looked at transactions tied to 20 subcontracts and 18 different subcontractors.

The Energy Department Office of Inspector General warned in its report that there was an "increased risk" that MOX Services saddled other incorrect costs that were later reimbursed by the government. The 58 transactions analyzed by the office between June 2018 and November 2019 represent less than 2% of costs claimed by MOX Services in fiscal year 2015 filings.

Earlier this year, the federal government sued MOX Services and a subcontractor, Wise Services, accusing both of fraudulent and otherwise illicit financial acts. 

The complaint alleged a total $6.4 million of dishonest claims, spurred by Wise Services, were submitted for repayment by MOX Services. The complaint also alleged Wise Services provided cash; gift cards; YETI coolers; Masters, NASCAR and football tickets; phones; car tires; and guns, among other things, to MOX Services officials to gain favorable treatment.

Also earlier this year, the National Nuclear Security Administration and MOX Services reached a $186 million settlement, smoothing over and resolving lingering contract and cost discrepancies. The audit report acknowledges that deal.

Information reviewed by the Aiken Standard described the settlement as "the best value to the American taxpayer."

A handful of MOX-related lawsuits have been filed with the U.S. Court of Federal Claims since 2015.

Colin Demarest covers the Savannah River Site, the U.S. Department of Energy, the National Nuclear Security Administration and government in general. Follow him on Twitter: @demarest_colin