Tuesday, October 05, 2004
Copyright © Las Vegas Review-Journal

Agency lost money on equipment, audit says

WASHINGTON -- The Department of Energy in 2003 gave away 1,300 pieces of equipment no longer needed at Yucca Mountain, including a refurbished rock-boring machine and thousands of tons of iron and steel that could have raised more than $450,000 for the financially strapped nuclear waste project, federal auditors said.

A conveyer belt feeder that was never used and a generator listed as new were among the items turned over to a disposal contractor rather than sold at auction or offered to other federal agencies through normal procedures.

A refurbished rock-boring machine called a roadheader valued at $792,000 was put up for sale on the Internet by the contractor, who advertised it as being "in very good condition with only 165 hours of use."

Disposal of property estimated to carry a potential value of $1.75 million was detailed in a Sept. 27 report by the Energy Department inspector general that was made public Monday.

Auditors estimated the department lost $458,000 from "poor property management practices" when it rid itself of excess inventory after completing site studies for the proposed nuclear waste repository.

The department gave the contractor about 9,000 metric tons of property, "and the government received no monetary benefit from the sale of potentially reusable property," auditors said.

"With the uneconomic disposal of Yucca Mountain property, the department lost the potential to recover funds that could have been used to satisfy pressing mission needs," they said.

Auditors said two diagnostics trailers that belonged to the National Nuclear Security Administration for use at the Nevada Test Site were turned over mistakenly for disposal. And a drilling rig was sold after test site manager Bechtel Nevada requested it for transfer.

The report comes as the Energy Department is scrambling to avoid financial shortfalls that could cripple the Yucca Mountain Project.

Responding to the audit, DOE officials said they were revising their property management. But they defended their actions as the most cost-effective way to dispose of material they said had little value.

The property included 4,580 tons of scrap metal, plus fencing, piping, drill rigs and other heavy equipment, mining tools, water tanks and other industrial material that was stored in equipment yards and remote locations on the Yucca site, a DOE official said.

Critics said the report highlighted management problems in the Yucca Mountain Project.

"You've heard the phrase 'waste, fraud and abuse.' Now you can add mismanagement to that," said Sen. Harry Reid, D-Nev. "We're not talking about chump change; this is a half-million dollars."

Rep. Jim Gibbons, R-Nev., is researching ways that Congress could force DOE to repay $458,000 to taxpayers, spokeswoman Amy Spanbauer said.

"Such disregard for the American taxpayer is simply unacceptable and indefensible," Gibbons said in a statement.

Rep. Jon Porter, R-Nev., said the department "has wasted U.S. tax dollars."

Sen. John Ensign, R-Nev., said the report "highlights the ongoing mismanagement of the Yucca Mountain Project and is further evidence the project is misguided and unmanageable."

Rep. Shelley Berkley, D-Nev., said, "I can assure you that the half-million (dollars) is just the tip of the iceberg. The more auditors probe they will find millions and millions in waste."

Government rules require offering excess equipment to other federal agencies or selling it at auction. But auditors said DOE paid $73,000 to a contractor to dispose of the material.

A DOE spokesman identified the contractor as Toxco Inc., a metals recycling company in Oak Ridge, Tenn.

Responding to the audit, John Arthur, the Yucca project's deputy director, said the department chose the most cost-effective method to get rid of the material. He said some of it had been sitting around after being shipped to Nevada when DOE abandoned repository studies in Texas and Washington state in 1987.

The equipment had little value after "years of nonuse and harsh exposure to the desert environment," Arthur said.

The material that did have value was limited because of its age, remote location and lack of maintenance records, he said.

But inspectors said they found that 70 percent of the equipment was less than 10 years old and still had value. The department's financial estimates were unreliable because of failure to inventory the age and condition of the equipment, they said.

"The financial advantage of disposing of excess property was shifted, essentially in its entirety, from the government to the disposal contractor," auditors said.

Arthur said disposal rules would have required the equipment to have been surveyed for possible radiological contamination at a cost of more than $250 per metric ton.

"Since there was 9,000 metric tons of property, these radiological release surveys would have cost the program over a million dollars, which exceeded any estimated value of the property," he said.

Auditors said the disposal contractor identified five items that were contaminated out of 1,300 turned over for disposal.