WASHINGTON -- Federal inspectors on Thursday faulted the Department of Energy for picking a law firm with conflicts of interest to work on the Yucca Mountain Project without fully documenting why the firm was selected.
A contract potentially worth more than $100 million to Morgan, Lewis & Bockius LLP was opened to scrutiny because the firm also represents more than a dozen utilities suing the government for missing deadlines on the Nevada nuclear waste project.
The Energy Department inspector general said DOE's hiring of the firm was inconsistent with its past practice of excluding bidders with conflicts.
DOE officials said Morgan Lewis was the only firm with adequate experience for the job, and that safeguards were put in place against the conflicts. But at the end of a four-month probe, auditors concluded that DOE's decision-making was not fully documented and could not be fully reviewed.
"Given the controversial nature of the Yucca Mountain Project, the history of allegations concerning conflicts of interest and the likely public scrutiny... of the contract, we found the absence of such documentation disturbing," inspector general Gregory Friedman said at the outset of a 15-page report.
"In our view, the public interest would have been better served had the department done more to document the key decision points related to this procurement," the inspector general said.
While criticizing aspects of DOE's selection process, the inspector general stopped short of recommending the contract be voided.
Opponents of the Yucca project were not as restrained in critiquing DOE's handling of the matter.
Attorneys for Nevada filed documents at the Nuclear Regulatory Commission seeking to have Morgan Lewis disqualified from participating in Yucca license hearings, based on the audit findings.
Further, the five Nevada lawmakers in Congress called on the Energy Department to recuse the firm.
"This report makes clear that DOE blatantly violated its own policies in order to award a $100 million sweetheart deal to a firm drowning in special interest conflicts," said Rep. Shelley Berkley, D-Nev.
"When DOE learned that its own policies prevented the awarding of this no bid contract to Morgan Lewis, they just torched the rulebook," Berkley said.
The Energy Department through a spokeswoman rejected the state's demand and said the firm is staying on the project.
"Nothing here warrants the recusal of Morgan, Lewis & Bockius from representing DOE in the Yucca Mountain licensing proceeding," spokeswoman Megan Barnett said in a statement.
"While the IG observed that DOE did not develop documentation in such a manner as the IG would have preferred, that sort of documentation is neither required nor consistent with the type of procurement conducted here," Barnett said.
"We are confident that our retention of (Morgan Lewis & Bockius) serves the department and the public interest," Barnett said.
Morgan, Lewis & Bockius, a major international firm with a thriving nuclear practice, was hired on Sept. 26 to handle licensing for the proposed nuclear waste repository 100 miles northwest of Las Vegas that is being designed to store 77,000 tons of high level waste.
The firm signed a five-year contract, with five additional one year options, carrying a potential maximum payout of $109 million that legal experts said would be a record for a nuclear proceeding.
DOE properly followed requirements to obtain conflict of interest waivers and to demand the firm erect firewalls between its work for the government and for the utilities, the inspectors report said.
A separate team of lawyers in a separate location was assigned to the DOE contract. Documents were kept in a secured room and computer network security restricted access to Yucca Mountain material, auditors confirmed.
Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@ stephensmedia.com or (202) 783-1760.