WASHINGTON -- The Department of Energy paid incentive fees to Yucca Mountain management contractor Bechtel SAIC for work that was found to be late or unacceptable, government auditors said in a report Thursday.

The company was awarded payments by the Office of Civilian Radioactive Waste Management "even though Bechtel delivered poor quality work and missed deadlines," the Energy Department inspector general said.

The inspector general challenged $3.99 million out of $43.4 million in incentives for work performed on the proposed Nevada nuclear waste repository between February 2001 and September 2004.

"The total costs of inappropriate incentive fees cannot be determined," the audit report said.

The payments questioned by auditors included $2 million with work Bechtel performed on a license application for the Yucca repository.

The findings are the latest blow to the nuclear waste project, which is years behind schedule and faces continued legal, political and technical challenges.

Nevada critics of the Yucca Mountain project seized on the audit.

Rep. Shelley Berkley, D-Nev., called on Bechtel SAIC to give back the challenged money and for the Department of Energy to cease awarding bonuses.

"I can't understand how DOE could not ask for the money back," Berkley said. "If a bank accidentally gave you money that is not in your account, you must return it. Same thing here, except Bechtel knew about it. This is a rip-off pure and simple."

The audit illustrates shoddy DOE management, Sens. Harry Reid, D-Nev., and John Ensign, R-Nev., said in a statement.

And Rep. Jim Gibbons, D-Nev., said: "To pay out millions upon millions of dollars in bonuses for incomplete work, poor performance, and unacceptable products is the height of government waste and mismanagement."

Rep. Jon Porter, R-Nev., said similar activity in the private sector would be a firing offense, "no questions asked."

Paul Golan, the principal deputy director of the Yucca project, said he accepted the audit findings.

"I will use this report to develop a comprehensive corrective action plan that will provide clearer and more objective performance standards," he said in a letter responding to the audit.

A DOE spokesman declined to comment further.

Jason Bohne, a spokesman for Bechtel SAIC in Las Vegas, said the audit was being reviewed.

"We stand by the work we have performed under the contract," Bohne said. "We take the report seriously and will review it carefully."

The incentives were written into the Bechtel SAIC contract, which was valued at about $3.2 billion for five years.

Bechtel SAIC and the Office of Civilian Radioactive Waste Management, which operates the Yucca program, signed a "cost plus incentive fee" contract, an arrangement designed to reward companies for meeting goals and performing work to required quality levels.

The contractor was offered an additional "super stretch incentive fee" if it would complete pre-license application technical documents ahead of schedule.

The contract contained opportunities for Bechtel to earn $50.9 million in "performance based incentives" in the deal's early years.

But auditors concluded that DOE managers failed to identify acceptable quality levels or specify how the contractors performance would be measured.

Also, no procedures existed to adjust the fees when deadlines were missed, the report said.

The investigators challenged incentives that the department paid in cases in which Bechtel needed more time to correct poor quality work and in which work scope was reduced because of poor performance.

As an example, auditors said DOE paid most of a $17.7 million incentive fee for work on documents supporting the Yucca Mountain site recommendation in December 2001 though Bechtel needed more time to correct inconsistencies.

The extra work caused a 22-day delay, auditors said.

DOE paid all but $125,786 of the incentive fee, they said, and reported that the delay "was due to events beyond the contractor's control."