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Audit Report: OAS-M-08-10

July 30, 2008

Management Controls over Changes to the Idaho Cleanup Project Contract Baseline

In Fiscal Year 2005, the Department of Energy (Department) awarded a Cost-Plus- Incentive-Fee coiltract to CH2M + WG Idaho, LLC (CWI) to lead environmental cleanup of its Idaho National Laboratory site. CWI's contract requires it to treat and dispose of radioactive waste at the site. The contract runs from May 1,2005 through September 30, 201 2, and has a target cost (cost baseline) of $2.4 billion with a target fee of $175 million. If work is conlpleted over or under target cost, the Department will share the savings or cost with CWI on a 30170 percent basis. For example, if CWI completes the work $1 million under target, its fee will increase by $300,000. If it exceeds the target cost by the same amount, its fee would be sinlilarly reduced. This fee structure provides strong incentive for CWI to control costs in perfomling its cleailup work.

Topic: Management and Administration