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U.S. Uranium Sale Handled by Fluor Unit Is Criticized

Audit: Department of Energy investigators say contractor reaped millions, government netted $76,051.

March 10, 2001|From Associated Press

When the government put enriched uranium estimated to be worth $10 million up for sale, it expected a good return. Instead, the U.S. Treasury received a scant $76,051, raising the ire of Energy Department investigators.

A unit of Aliso Viejo-based Fluor Corp. that handled the sale reaped millions of dollars, according to auditors.

After a review of the sale, the department's inspector general concluded that the contractor who prepared and packaged the uranium and negotiated the deal was paid $3.4 million for "questionable costs" that should never have been allowed.

On top of that, Fluor Fernald Inc. received a $675,430 fee for handling the deal, nearly 10 times what the government made on the 1997 sale, said the inspector general's report, which was made public recently.

Still, the deal was vigorously defended Friday by the contractor and by the Energy Department office at the Fernald weapons plant near Cincinnati, where the uranium was located and is being disposed of as part of a general cleanup project.

"We don't think the sale was a bad deal," said Glenn Griffiths, deputy director of the Energy Department site office at the Fernald facility. He said the alternative to the sale was to declare the uranium a waste and face huge disposal costs.

Under the sale agreement, neither the name of the buyer nor the specific sale price can be made public for five years, Griffiths said. Other department sources said the company is a foreign uranium fuel provider.

According to the inspector general's investigation, Fluor Fernald, the managing contractor for environmental cleanup at Fernald, estimated the sale would get the government $5 million to $7 million. Instead, the government received $76,051 after all fees and other costs were calculated, the report said.

There were contradictory explanations Friday on how much money actually was paid for the 978 metric tons of uranium, which the buyer resells after it is diluted as commercial reactor fuel.

Ken Morgan, a spokesman for the Energy Department's Ohio field office, said the amount was "substantially less" than the $10.5 million "projected sales revenue" cited by the inspector general's report. Griffiths said the number was essentially correct but included all of the costs involved.

Griffiths said the $5 million to $7 million profit projections were made in 1990 before the market for uranium softened dramatically.

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