Cost Incentives for the Department's Cleanup Contract in Idaho   [open pdf - 243KB]

"In Fiscal Year 2005, the Department of Energy (Department) awarded a Cost-Plus-Incentive-Fee contract to CH2M WG Idaho, LLC (CWI) to lead environmental cleanup of its Idaho National Laboratory site. The contract originally ran from May 1, 2005 through September 30, 2012, and has been extended for 3 years to September 30, 2015. The contract had a target cost of $2.7 billion and a target fee of $196 million (7.36 percent of target cost). The contract includes an additional incentive if work is completed under target cost, in which the fee will be increased by 30 cents for every dollar that the total allowable cost is less than the target cost. In addition to the target work to be completed within the contract, additional non-target work was allowed under Section B.5 of the contract. When the contract was originally approved, the contractor anticipated that the amount of additional non-target work would be approximately $89 million. However, the amount of non-target work completed ultimately increased to about $510 million, with the largest increase attributable to work funded under the American Recovery and Reinvestment Act of 2009 (Recovery Act). The Department and CWI are now negotiating to close out the agreed upon scope of work covered by the contract performance period that ended September 30, 2012, and to calculate fee based upon the cost to complete this work. In that connection, the Department requested that we perform this review. Our objective was to examine the appropriateness of the contractor's allocation of General and Administrative (G&A) costs to the entire scope of non-target work."

Report Number:
Department of Energy, Office of Inspector General, Office of Audits and Inspections, Report No. OAS-RA-13-20
Public Domain
Retrieved From:
U.S. Dept. of Energy, Office of Inspector General: http://www.energy.gov/ig/office-inspector-general/
Media Type:
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