Energy Department subcontractor Federal Engineers & Constructors (FE&C) has just reached a $2 million settlement with the Department of Justice, which resolves a whistleblower’s allegations that it created a shell company to secure a contract for work at the Hanford Nuclear Reservation that should have gone to a small or disadvantaged contractor.
FE&C worked under Washington Closure Hanford (WCH), which had received a multibillion-dollar nuclear waste cleanup contract at the Hanford Nuclear Reservation. As per the terms of the contract, WCH was required to secure the services of women-owned, small, or disadvantaged businesses to complete a portion of the tasks involved.
According to allegations, FE&C awarded a $2 million contract to Sage Tec, a company run by Laura Shikashio, the wife of the company’s former vice president.
Shikashio allegedly misrepresented Sage Tec to be a disadvantaged business that qualified for the contract. According to the prosecution, Sage Tec was merely “a pass-through front company for FE&C, which performed substantially all of the work on WCH’s improperly awarded subcontracts.”
The misconduct was brought to light by Salina Savage. Since 2007, the whistleblower has been the CEO of Savage Logistics, “a supply chain management company, provides radioactive material and hazardous waste transportation services in the United States and Canada,” according to Bloomberg’s description. Her previous position was as a Plant Engineer for Fluor Enterprises’ Hanford operation.
According to her version of the story, at some point, Savage became aware that WCH’s contracting officer, Dennis Houston, was looking for a shell company they could pass off as a disadvantaged business.
Savage’s company was allegedly qualified to provide the services required by another subcontract awarded to a separate “shell” company run by FE&C’s Jonetta Everano, which had no employees.
When she tried to threaten Houston with warning law enforcement about the contract rigging, Savage claims he told her that he would make sure she never got a contract again. Savage ended up filing a whistleblower complaint, which was later joined by the government.
For her efforts and assistance in holding fraudsters accountable, Savage will receive a $470,000 whistleblower award. The Federal False Claims Act allows whistleblowers to report fraud and receive between 15 and 30 percent of the resulting recoveries.
Upon the announcement of the settlement, Acting U.S. Attorney Joseph Harrington commented, “Small business fraud not only harms the taxpayers and the vital cleanup mission at Hanford, but also legitimate, small, disadvantaged businesses that do not have the opportunity to fairly compete for and perform subcontracts.”
Shell company schemes by large contractors intent on circumventing small or disadvantaged business laws are too common. If you have confidential information on this practice we want to hear from you for upcoming stories. Give us a call or send an email for a confidential conversation.