[House Hearing, 106 Congress]
[From the U.S. Government Printing Office]




                               before the

                            SUBCOMMITTEE ON

                                 of the

                         COMMITTEE ON COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION


                              MAY 23, 2000


                           Serial No. 106-135


            Printed for the use of the Committee on Commerce

                     U.S. GOVERNMENT PRINTING OFFICE
64-767 CC                    WASHINGTON : 2000

                         COMMITTEE ON COMMERCE

                     TOM BLILEY, Virginia, Chairman

W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio               HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas                    RALPH M. HALL, Texas
FRED UPTON, Michigan                 RICK BOUCHER, Virginia
CLIFF STEARNS, Florida               EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio                FRANK PALLONE, Jr., New Jersey
  Vice Chairman                      SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania     BART GORDON, Tennessee
CHRISTOPHER COX, California          PETER DEUTSCH, Florida
NATHAN DEAL, Georgia                 BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma              ANNA G. ESHOO, California
RICHARD BURR, North Carolina         RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California         BART STUPAK, Michigan
ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
GREG GANSKE, Iowa                    TOM SAWYER, Ohio
CHARLIE NORWOOD, Georgia             ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma              GENE GREEN, Texas
RICK LAZIO, New York                 KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming               TED STRICKLAND, Ohio
JAMES E. ROGAN, California           DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois               THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico           BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona             LOIS CAPPS, California
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland

                   James E. Derderian, Chief of Staff

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel


              Subcommittee on Oversight and Investigations

                     FRED UPTON, Michigan, Chairman

JOE BARTON, Texas                    RON KLINK, Pennsylvania
CHRISTOPHER COX, California          HENRY A. WAXMAN, California
RICHARD BURR, North Carolina         BART STUPAK, Michigan
  Vice Chairman                      GENE GREEN, Texas
BRIAN P. BILBRAY, California         KAREN McCARTHY, Missouri
ED WHITFIELD, Kentucky               TED STRICKLAND, Ohio
GREG GANSKE, Iowa                    DIANA DeGETTE, Colorado
ROY BLUNT, Missouri                  JOHN D. DINGELL, Michigan,
ED BRYANT, Tennessee                   (Ex Officio)
TOM BLILEY, Virginia,
  (Ex Officio)


                            C O N T E N T S


Testimony of:
    Carpenter, Thomas E., Director, Seattle Office, Government 
      Accountability Project.....................................    11
    Gutierrez, Joe, Assessor, Audits and Assessment Division, Los 
      Alamos National Laboratory.................................    42
    Hansen, Ronald D., President, Fluor Hanford, accompanied by: 
      Jennifer Tolson Curtis, Managing General Counsel, Legal 
      Services, Fluor Daniel Hanford, Inc.; and Richard W. Bliss, 
      Attorney at Law............................................   223
    Sullivan, Mary Anne, General Counsel, accompanied by David 
      Michaels, Assistant Secretary for Environment, Safety, and 
      Health, U.S. Department of Energy..........................   215
    Van Robert L., Ness, Assistant Vice President for Laboratory 
      Administration, University of California...................   219
    Walli, Randall, West Richland................................    38
Material submitted for the record by:
    Sullivan, Mary Anne, General Counsel, Department of Energy:
        Letter dated June 30, 2000, enclosing responses to 
          questions 3, 4, 5, 7, and 8, for the record............   331
        Letter dated July 14, 2000, enclosing responses to 
          questions 1 and 6, for the record......................   334
        Letter dated July 28, 2000, enclosing response to 
          question 2 for the record..............................   339
        Letter dated August 18, 2000, enclosing response for the 
          record.................................................   341





                         TUESDAY, MAY 23, 2000

                  House of Representatives,
                             Committee on Commerce,
              Subcommittee on Oversight and Investigations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:30 a.m. in 
room 2322, Rayburn House Office Building, Hon. Richard Burr 
(vice chairman) presiding.
    Members present: Representatives Burr, Ganske, Bryant, 
Bliley (ex officio), Strickland, and DeGette.
    Staff present: Dwight Cates, majority investigator; Thomas 
DiLenge, majority counsel; Amy Davidge, legislative clerk; and 
Edith Holleman, minority counsel.
    Mr. Burr. This hearing of the Oversight and Investigations 
Subcommittee will come to order.
    The purpose of today's hearing is whistleblowers at the 
Department of Energy facilities: is there really zero tolerance 
for contractor retaliation?
    We have two panels. I know that more members will be in and 
out because of the schedules today.
    Let me take this opportunity to welcome all of our 
witnesses and to announce to them that we expect a series of 
votes in approximately 30 minutes. That series will probably 
last for about 45 minutes. It is a series of four to five 
votes. When that happens, we will take a recess for some period 
of time. It is my hope that Ms. DeGette and myself will have 
time to make opening statements and we will have an opportunity 
to hear the opening statements of at least the first panel 
before we recess. I would ask all of you to be patient with us 
as we work through those votes.
    The Chair would recognize himself for the purposes of an 
opening statement.
    Today the committee will review whistleblower retaliation 
at the Department of Energy facilities operated by its 
contractors. We will primarily focus on two issues: first, has 
the Department taken the necessary steps to ensure that 
contractor employees are encouraged to openly disclose 
violations of law, unsafe work conditions, and other examples 
of waste, fraud, and abuse without fear of retaliation, or has 
the Department's zero tolerance policy for reprisals against 
whistleblowers simply been a false promise that has died due to 
the vacuum of leadership? Second, is the Department's policy to 
reimburse its contractors' legal defense costs to fight a 
whistleblower an appropriate use of taxpayer funds, or has the 
Department all too willingly funded contractor defense costs in 
an effort to wear down whistleblowers, regardless of the merits 
of the whistleblower's claim?
    The committee has been studying these issues closely, and I 
am concerned that the Department has once again fallen into a 
very familiar cycle. This familiar cycle at DOE begins with a 
genuine understanding of a problem, then a commitment to 
reform, and then an announcement and lengthy press release from 
DOE headquarters describing how they will resolve the problem, 
but the Department always seems to forget to follow through on 
these reforms.
    In 1995, former Secretary Hazel O'Leary presented a package 
of whistleblower protection initiatives, including a zero 
tolerance policy for reprisals and a proposed limitation on the 
reimbursement of contractors' legal defense cost in certain 
cases, but the implementation of these reforms at DOE sites has 
been inconsistent due to the lack of a clear guidance from 
headquarters--again, an all-too-familiar problem at the 
Department of Energy.
    Soon after announcing these reforms, Secretary O'Leary 
realized that they were not being implemented. In March 1996, 
in a press release she quoted, ``These whistleblower 
initiatives have not been implemented to my satisfaction, and I 
want to get this effort back on track.''
    Secretary O'Leary asked former Under Secretary Tom Grumbly 
to take the lead, but again implementation was derailed. In my 
mind, the real test of zero tolerance policy is whether 
contractor employees are now more willing to come forward with 
a legitimate workplace concern without the fear of retaliation 
from management and with confidence that DOE will protect them. 
Unfortunately, we will hear about the cases today of several 
whistleblowers who not only suffered acts of reprisal when they 
initially identified serious safety concerns, but who also, in 
some cases, were subject to ongoing and unrelenting retaliation 
by both DOE and its contractors throughout the complaint 
    In all these cases, the Department of Labor investigated 
the complaints and issued findings in favor of these 
whistleblowers. Remarkably, the Department has responded by 
providing virtually no support to the whistleblowers, while 
providing generous taxpayer support for the contractors 
fighting these meritorious claims.
    First, the contractor and his lawyers have unlimited access 
to any information they need from the employee's files or from 
DOE files to build their case. The whistleblower, on the other 
hand, has to file a Freedom of Information Act request and wait 
months to see if DOE and the contractors will comply.
    In Mr. Lappa's case, the Department has withheld access to 
documents and prevented Mr. Lappa's attorney from interviewing 
DOE personnel, forcing Mr. Lappa to file a separate lawsuit 
just to gain access to this information.
    Earlier this month, the Federal judge in that case 
determined that the DOE ``Acted arbitrary and capriciously in 
denying the testimony of DOE employees'' sought by Mr. Lappa to 
prove his case and ordered DOE to make these individuals 
available at once.
    Second, the contractor has all the time and taxpayer-funded 
legal help it needs to slow down, wear down a whistleblower and 
the limited resources of a whistleblower.
    In Mr. Walli's case, Fluor Hanford knew it would lose its 
appeal of OSHA's initial ruling, but it appealed anyway and 
held out for months of costly litigation until they settled the 
night before the trial.
    Fluor Hanford has spent more than $200,000 in taxpayer 
funds over the past 3 years fighting Mr. Walli and his 
colleagues, and in Mr. Lappa's case the University of 
California has spent more than $300,000 in taxpayer funds for 
outside legal help. In both cases, the contractors likely will 
enjoy these free taxpayer-funded legal expenses even if they 
continue to lose their ongoing fights against these 
    Third, the relationship between DOE and its contractors is 
a close one. In many cases, the contractor receives full 
cooperation, strategic coordination from DOE to fight the 
whistleblowers. All of DOE's resources are available to the 
contractor, but DOE will not return the whistleblower's call. 
In Mr. Lappa's case, the Department has even entered into a 
joint defense privilege with the contractor to withhold 
information from Mr. Lappa.
    The judge in Mr. Lappa's suit found it incredulous that DOE 
would claim a joint defense privilege and agreed. How can DOE 
be both the independent enforcer of zero tolerance and also a 
willing codefendant? This pattern of behavior does not 
represent zero tolerance, but, unfortunately, this is what we 
should expect when there is poor leadership and follow-through 
by Secretary O'Leary, Secretary Pena, and most recently 
Secretary Richardson.
    If DOE decides to stop hiding behind its contractors and 
their contracts, perhaps the Department could establish a 
legitimate whistleblower protection policy that it is willing 
to consistently implement and enforce. This will require DOE to 
gain control of the contracts it writes and the contractors it 
hires, but it looks like we may have to wait for the next 
Secretary of Energy to provide this leadership.
    I will now yield to the ranking member for the purposes of 
an opening statement.
    Ms. DeGette. Thank you, Mr. Chairman, for holding this 
important hearing. Frankly, my statement echoes a number of the 
concerns that you expressed in your statement, as well.
    We in Congress and those in the executive branch have 
frequently praised the enormous courage and unmeasurable 
contributions of whistleblowers to building and maintaining 
policies and practices in the Federal Government that guarantee 
that all are treated fairly and that the public's health and 
safety is protected. We particularly note it--and I think it is 
particularly important--at our nuclear weapons and other 
nuclear sites, where the price of inadequate safety practices 
can be so costly. We do this even though we know that, once 
outside of the public's eye, whistleblowers are often punished 
for their actions with stagnant or destroyed careers, lost 
jobs, lost pay and benefits, unending legal proceedings, and 
uncompensated legal fees, continuing retaliation, and 
tremendous emotional isolation and stress.
    As someone who practiced employment law on behalf of 
workers for a number of years before I came to Congress, I know 
firsthand how this feels for people who are whistleblowers and 
who are suffering retaliation.
    Even a Congressional hearing--and, frankly, we have had 
many in this committee--can't change the personal toll that 
whistleblowing takes on people.
    Ernie Fitzgerald, a whistleblower from the Department of 
Defense, has labored in a closet for more than 15 years. Not 
very many people can do that.
    In 1988, when Congress authorized civil penalties under the 
Price Anderson Act for DOE contractors who committed serious 
safety violations, John Harrington, the Secretary of Energy, 
opposed all penalties. The contractors, according to Secretary 
Harrington, engage in special working relationships with the 
Department to operate Government-owned facilities that are 
vital to our national security. The Secretary went on to say, 
``These relationships are founded on an understanding that the 
interests of the Department of its contractors are largely 
    Mr. Chairman, I will submit that the DOE has had this 
attitude under both republican and democratic administrations. 
Not too much, unfortunately, has changed since 1988. The 
Department of Energy continues to reimburse its contractors for 
the legal fees and other expenses involved in beating down the 
whistleblowers. Its lawyers strategizes, we have heard, with 
the contractors' lawyers and create these joint defense 
agreements. The DOE refuses to allow its employees to be 
deposed in whistleblower actions, and it authorizes punitive 
litigation against whistleblowers.
    The truth is--and this is true in government and also in 
private industry--no one in management wants a whistleblower 
around because they might tell the truth again and embarrass 
everybody. Frankly, it doesn't matter whether someone has 
worked successfully at a site for 1 or 20 years.
    As we heard, following on the 1988 law Secretary O'Leary 
announced this zero tolerance policy and it was affirmed, in 
turn, by both Secretary Pena and Secretary Richardson. Some 
changes were made.
    The Department set up the Office of Employee Concerns to 
attempt to informally resolve complaints. It announced a policy 
that it would not pay legal fees for contractors who received 
an adverse determination against a whistleblower action. But, 
as we will hear in testimony today, the Office of Employee 
Concerns of headquarters has only one full-time staffer and no 
policy for some very basic issues such as maintaining the 
confidentiality of hotline communications.
    The 708 process is so slow, inefficient, and faulty that 
whistleblowers have been forced to go to the Labor Department 
to get a full hearing. Labor, unlike DOE, allows discovery by 
the whistleblower, which gives them a real chance to prove 
their case. Labor, unlike DOE, has orders that are enforceable 
against the contractor and in court. And, as one whistleblower 
found out when he went to court to enforce his DOE order, DOE 
proceedings don't provide enforceable judgments. Moreover, the 
contractors have figured out how to settle the Labor cases just 
before receiving an adverse determination, with DOE paying all 
of the bills, and then they take new actions against the 
whistleblowers, either with retaliations or through different 
legal proceedings. DOE's counsel has overwhelmingly authorized 
these costs and cooperates with the contractors' lawyers in 
these situations.
    We heard a little bit about Hanford, where Fluor Daniel 
intervened in a dispute the pipefitters had with their union 
resulting from their layoff. DOE paid all those bills. Now, 
after continued retaliation, the pipefitters had to resort to 
the State courts for relief, and guess who is paying those 
bills--right again, the DOE, which has a zero tolerance policy 
against reprisal. In fact, the DOE claims a joint defense 
policy and is strategizing with Fluor. The whistleblowers must 
fight on against the resources not only of Fluor, but the 
Federal Government.
    We heard how much the whistleblowers have had to pay in 
legal fees. The taxpayers have spent over $500,000 in legal 
fees to keep the pipefitters off the jobs.
    David Lappa, another whistleblower, is fighting against the 
University of California in State court. Lappa, a nuclear 
engineer with 20 years experience, was harassed out of his job 
after he alleged safety violations. He, too, settled his case 
just before an adverse finding. The university, however, 
continued to retaliate. Mr. Lappa sued in State court. Who is 
paying the bills? Right again, the DOE. The Department said it 
doesn't need to investigate, it is just going to wait for Mr. 
Lappa to bleed himself dry financially while doing the public's 
    Joe Gutierrez also ran up against the University of 
California when he revealed there were no radioactive 
monitoring records in a particular facility. Well, guess what? 
He got a negative performance rating, a reduced pay rate, and 
work taken away for that.
    Even after an adverse determination, the University still 
fights on. Mr. Gutierrez has amassed $50,000 in legal fees. Mr. 
Gutierrez apparently violated a U.C. code of ethical conduct 
which required him to ``exhibit loyalty in all matters 
pertaining to the affairs of the University of California and 
the Los Alamos National Laboratory,'' and ``refrain from 
entering into any activity which may be in conflict with the 
interests of the University of California and the Los Alamos 
National Laboratory.''
    Now, $50,000 to an individual citizen is a lot of money to 
have to spend in legal fees, and especially if they have to 
wait to have any kind of recovery until an adverse 
determination. And what can happen when you have a large 
institutional entity, like a corporation or the Department of 
Energy, if they can just bleed these poor individuals dry?
    As far as we are concerned and can see, DOE takes no steps 
to protect these whistleblowers, and even most recently, in an 
April 28 letter for this committee, Mary Anne Sullivan said, 
``I believe that the review of whether LLNL reprised against 
the individual and therefore any response by the DOE under its 
contract with U.S. has worked and should await the outcome of 
the proceeding.'' It just goes on and on.
    Mr. Chairman, I really am glad, as I said, we are having 
this hearing. I think it is an important hearing, and I am 
hoping it will be the first step, no matter who is in the 
Administration after the November elections, to making sure we 
protect these whistleblowers.
    I yield back.
    Mr. Burr. The gentlelady makes a good point. The 
gentlelady's time has expired.
    The Chair would recognize the chairman of the full 
committee, Chairman Bliley.
    Chairman Bliley. Thank you, Mr. Chairman, for holding this 
important hearing today on whistleblower retaliation at DOE 
    Telling the truth about safety helps all Americans. When 
whistleblowers are afraid to come forward with safety concerns, 
the health and safety of all those within these facilities and 
all those who live nearby are jeopardized.
    In 1995, then Secretary O'Leary announced new protections 
for contractor employees who disclosed safety violations at DOE 
sites. Unfortunately, over the past 5 years these whistleblower 
protections have failed to take hold. It seems that no one at 
DOE is really interested in strengthening the Department's 
whistleblower protection policies.
    While Secretary Richardson again pledged a zero tolerance 
policy for reprisals against whistleblowers just last year, the 
reality is that the Department continues to show its 
willingness to work overtime to fight whistleblowers and to 
protect its contractors, even after a whistleblower's claim has 
been investigated and verified by the Department of labor.
    One of the most glaring failures has been limiting the 
taxpayer funding of contractors' legal costs in whistleblower 
cases. In 1995, 1998, and again in 1999 the Department proposed 
reforms so that the taxpayers would not continue to pay a 
contractor's legal bill when a whistleblower's claim has merit. 
However, the proposed reforms were never finalized. Why? 
According to a recent memo from DOE's Office of General 
Counsel, ``There is no one championing movement on this rule.''
    The failure of leadership has resulted in a state of 
confusion, with inconsistent whistleblower protection policies 
and inconsistent contract provisions at the Department's 
different sites. Because whistleblower retaliation is just as 
serious at one DOE site as at another, there should be one 
policy on whistleblower protection that applies to all 
contracts and to all contractors. Without tough and clear 
contract provisions, contractors can continue to play games 
with both DOE and whistleblowers and avoid having to pay any 
real cost for retaliation.
    The whistleblower cases we will review today are not cases 
we have dug up from the past. These are active cases that 
demonstrate how far DOE and its contractors will go to fight 
whistleblowers who have identified significant safety issues.
    When serious safety issues were raised by David Lappa, 
Randy Walli, and Joe Gutierrez, the Department turned its back 
on them. Instead of protecting these whistleblowers and 
investigating their complaints, the Department sided with its 
    When a contractor knows the Department is on its side, 
financially and otherwise, the contractor is encouraged to 
continue to retaliate against all whistleblowers. When 
employees find out that the DOE will work overtime to fight 
whistleblowers and protect its contractors, the message becomes 
clear: if you identify safety violations, you will be punished.
    The Department claims to have zero tolerance for 
retaliation against employees who blow the whistle on safety 
violations. Zero tolerance is supposed to mean that not a 
single case will be tolerated, that every instance will be 
punished. Five years have passed, and there have been numerous 
cases in which whistleblowers have been retaliated against by 
DOE's contractors, but where is the punishment, where is the 
accountability? After 5 years, the examples, if any, are few 
and far between.
    Secretary Richardson recently declared in another context 
that he wants to put an end to the cozy relationship between 
DOE and its contractors. Although we have heard that before, 
what better place to start than here, where nuclear safety is 
at issue?
    Thank you, Mr. Chairman.
    Mr. Burr. I thank the chairman. The gentleman's time has 
    The Chair would recognize Mr. Ganske for the purposes of an 
opening statement.
    Mr. Ganske. I thank you, Mr. Chairman.
    I would just echo the words of Chairman Bliley. I think it 
is very important that an oversight committee in Congress be 
able to get the information related to nuclear safety. 
Whistleblower protections are, I think, absolutely necessary.
    Senator Grassley, the senior Senator from my State, has 
been a strong proponent of whistleblower protection as it 
relates to the Department of Defense, and even strongly 
supports quit-type suits.
    I think it should be noted also that the House of 
Representatives passed a strong patient protection bill last 
October that had strong whistleblower protections in it, too. 
There are a lot of analogies between the type of whistleblower 
protection that we ought to have the people who are working in 
the nuclear industry in terms of health and safety and those 
who are working in the health industry, in terms of making sure 
that there are not abuses or risks. Those people need to be 
protected for stepping forward and drawing attention to 
potential problems.
    And so, Mr. Chairman, I thank you for having this hearing, 
and I look forward to the testimony.
    Mr. Burr. I thank the gentleman.
    We do have a series of votes, and for that reason I am 
going to wait until we get back to bring up the first panel and 
to swear them in.
    I will take this opportunity, as the Chair, to suggest that 
the problem is not cleared up even today. This subcommittee 
made requests of the Department of Energy for the last several 
weeks about other cases that we are not here to hear about from 
individuals, and it was specifically requests as it related to 
whether, in fact, the Department of Energy had reimbursed 
Kaiser Hill at Rocky Flats for legal fees, and we were assured 
that they had not and that the Department had not signed off on 
that issue, specifically with the Graff whistleblower case at 
Rocky Flats, only to be notified by the Department of Energy 
yesterday at 4:30 that they had discovered in the billings last 
week that all along they had been billed by Kaiser Hill for the 
legal costs of that fight.
    This brings a number of questions to this committee that we 
will explore today. One that is obvious is who is reading the 
invoices submitted by the contractors to DOE that were paid and 
how closely are they checking them if, in fact, invoices were 
paid with legal fees, yet those who are responsible to account 
for any legal fees paid out to contractors didn't know that the 
Department of Energy was, in fact, reimbursing Kaiser Hill.
    I am sure that we will get into this in greater depth on 
both sides of the aisle.
    At this time, I would ask unanimous consent to enter both 
the original response from the Department of Energy, as well as 
yesterday's response clarifying their participation into the 
    Without objection, so ordered.
    [The information referred to follows:]


    Mr. Burr. This hearing will be adjourned until 11:15.
    [Brief recess.]
    Mr. Burr. The subcommittee will come back to order.
    At this time, the Chair would call up our first panel: Mr. 
Tom Carpenter, director, Seattle office, Government 
Accountability Project; Mr. Joe Gutierrez, assessor, audits and 
assessment division, Los Alamos National Laboratory; and Mr. 
Randy Walli from West Richland, Washington.
    Gentlemen, welcome.
    Let me first turn to Mr. Strickland for the purposes of an 
opening statement, if he has one.
    Mr. Strickland. Mr. Chairman, I have an opening statement I 
would like to submit for the record.
    Mr. Burr. Without objection, all statements of all members 
will be a part of the record.
    Gentlemen, it is the history of this committee to take 
testimony under oath. Do any of you have a problem with that?
    [No response.]
    Mr. Burr. It is also incumbent on the Chair to advise each 
of you that, under the rules of the House and rules of the 
committee, you are entitled to be advised by counsel. Do any of 
you choose to have counsel sworn in to advise you during this 
    [No response.]
    Mr. Burr. None. Okay.
    I would ask all of you to stand up. Raise your right hand. 
Do you swear to tell the truth, the whole truth, and nothing 
but the truth, so help you God?
    [All witnesses respond in the affirmative.]
    Mr. Burr. Please be seated.
    Mr. Carpenter, we would recognize you for the purposes of 
an opening statement.


    Mr. Carpenter. Thank you, Congressman, and thank you for 
inviting my testimony here today about whether there really is 
a zero tolerance for reprisal policy against whistleblowers at 
Department of Energy nuclear facilities.
    I am an attorney and the director of the Seattle office of 
the Government Accountability Project, and I am primarily 
responsible for overseeing the activities of the Department of 
Energy nuclear weapons production facilities, a position I have 
held since 1985.
    Our organization provides nonprofit legal counseling and 
support for whistleblowers who suffer reprisal for exposing 
health, safety, and environmental abuses. With over 20 years of 
experience in successfully representing literally thousands of 
government and corporate employees who have challenged unsafe, 
fraudulent, and environmentally unsound practices, our 
organization has developed a unique and effective strategy for 
helping whistleblowers.
    Based in Washington, DC, GAP opened an office in Seattle in 
the summer of 1992 to effectively respond to the growing number 
of cases and issues at the Hanford nuclear site. We also 
represent or have represented employees at various Department 
of Energy sites nationally, including at Los Alamos in New 
Mexico, Knolls Atomic Power Lab in New York, Hanford in 
Washington, Oak Ridge National Laboratory in Tennessee, 
Savannah River site in North Carolina, Rocky Flats plant in 
Colorado, the Fernald site in Ohio, Idaho National Engineering 
Labs, Lawrence Livermore National Laboratories in California, 
and Pantex in Texas.
    The ability of employees to raise concerns is fundamental 
to safe and efficient operations, especially at nuclear 
facilities. The Department of Energy has for a decade 
recognized the important concept of protecting whistleblowers, 
but has not taken the necessary steps to change the culture to 
make a policy shift more than window dressing. In fact, in 
total contradiction of its oft-cited zero tolerance for 
reprisal policy, the Department has assisted its contractors in 
every possible way to fight whistleblowers, even when they 
prevail in court.
    After years of a zero tolerance policy, can the Department 
point to a single instance where the policy has actually been 
    The Department has effectively dismantled safety oversight 
and regulation of its contractors in many ways, but has removed 
qualified safety professionals from the management chain for 
its most dangerous operations.
    The problems surfaced by whistleblowers are troubling 
symptoms of the lack of safety enforcement and in absence of 
safety professionals who are empowered in the management chain 
to heed the concern of whistleblowers.
    Since 1993, the Department of Energy has enacted a policy 
of zero tolerance for reprisal against whistleblowers. This 
started with Secretary Hazel O'Leary, who announced a set of 
whistleblower initiatives in 1994 and 1995 to address what she 
called a ``miserable, miserable history'' of reprisal within 
her agency. Her reforms were echoed and embraced by Secretaries 
Federico Pena and the current Secretary, Bill Richardson.
    Among the reforms pledged to by the Department was a 
commitment to curtail the practice of reimbursing contractor 
litigation expenses associated with whistleblower cases. Many 
contracts within the Energy Department were subsequently 
modified to explicitly disallow the payment of contractor costs 
associated with litigation in cases where an adverse 
determination was found against the contractor. Where costs 
were advanced by the Department of Energy and the contractor 
lost, the DOE required the repayment of any advanced fees.
    The Department has consistently ignored its own policies on 
zero tolerance. The agency continues to reimburse contractor 
costs, even when the whistleblower prevails.
    Earlier we talked about the case of David Lappa. Mr. Lappa 
is a nuclear engineer. He was formerly employed at the Lawrence 
Livermore National Lab. His case is a prime example of how the 
DOE has failed in its policies.
    Mr. Lappa refused to engage in a coverup of nuclear 
criticality safety violations as part of an Investigation 
Committee. The University of California removed his name from a 
final report, of which he was a part. Mr. Lappa was then 
removed from his position and subjected to harassment and 
intimidation. He filed a complaint with the U.S. Department of 
Labor, which investigates claims of whistleblower reprisals, 
and after an extensive investigation the Labor Department found 
that management had illegally retaliated against Mr. Lappa an 
ordered the lab to pay damages and to cease its harassment 
    U.C. did not appeal this finding. It became the final 
agency order of the Labor Department. Yet, the Department of 
Energy refused to recognize this finding and reimbursed all of 
the University's expenses associated with Mr. Lappa's 
    When the University continued to harass Mr. Lappa and 
denied him meaningful work, Mr. Lappa filed a lawsuit in State 
court. The Department continues to side with the University and 
has actively sought to block access to information and 
witnesses to Mr. Lappa, while at the same time paying the 
University's legal bills.
    It took a Federal judge to order the DOE to produce 
documents and to make DOE officials available for deposition. 
Meanwhile, Mr. Lappa, who has appealed for help repeatedly from 
the Department of Energy in his case, has been insulted and 
rebuffed by U.C. management and DOE. DOE managers have told him 
that they didn't put credence in the Department of Labor's 
findings and have attempted to create a joint defense 
relationship with the contractor in order to hide documents and 
witnesses from Mr. Lappa.
    After suffering repeated harassment and mental anguish, Mr. 
Lappa finally resigned due to the emotional toll and refusal of 
the university to provide him meaningful work.
    It is cases like this that have led to many employees 
within the Department to characterize the DOE's true 
whistleblower policy as ``zero tolerance for whistleblowers.''
    For an agency with such critical safety and health 
responsibilities, effective financial management controls are 
also essential. The U.S. GAO describes DOE's contractor 
oversight as an undocumented policy of blind faith in 
contractors' performance, which it calls its ``least 
interference policy.'' This is no more apparent than at the 
DOE's Hanford site in Washington State.
    Over the past several years, David Carba, a former 
accountant for the Westinghouse Hanford Company, reported that 
Westinghouse was deliberately inflating cost, adding up to over 
$100 million, in violation of the Federal accounting system. 
These findings were subsequently verified in September, 1997, 
by the Defense Contracting Audit Agency. The agency also found 
that Fluor Daniel Hanford Company, which succeeded 
Westinghouse, not only continued these fraudulent practices, 
but refused to correct them.
    Shortly after the Hanford audit was completed, an internal 
request called a ``form 2000'' was filed to initiate a fraud 
investigation, but, for reasons that have not been provided, it 
was not acted upon.
    Despite these actions, the DOE has done little, if 
anything, to correct these and has closed ranks against Mr. 
Carba, who filed a False Claims Act case against the 
    Given DOE's consistent blind faith in its contractors, we 
are concerned that DOE may be paying contractor legal fees to 
defense a False Claims Act case for the same contractors that 
were found to have violated the Federal acquisition cost 
accounting standards now subject to litigation.
    The Department of Energy could act differently. It need 
look no further than the Nuclear Regulatory Commission for 
help. The NRC, which is responsible for the commercial nuclear 
industry, has enacted policies that promote a safety-conscious 
work environment at commercial nuclear operations. Under NRC 
rules, licensees and contractors are routinely subjected to 
civil penalties and even license suspension and revocation for 
chilled reporting atmospheres.
    The DOE would be well advised to follow the NRC example if 
it is serious about changing its 50-year culture of reprisal.
    Protecting employees who speak about illegality, threats to 
public health and safety, mismanagement, and fraud deserve 
protection and encouragement. Congress can do its part by 
beefing up protection for these workers, which remain 
inadequate, and by passing legislation that resolves a conflict 
of interest situation at DOE by affording external regulation 
of these facilities to OSHA and the NRC.
    Thank you for inviting my testimony today.
    [The prepared statement of Thomas E. Carpenter follows:]
    Prepared Statement of Tom Carpenter, Director, Seattle Office, 
                   Government Accountability Project
                      introduction and background
    Thank you for inviting my testimony today about whether there is 
really ``zero tolerance for reprisal'' against whistleblowers at 
Department of Energy nuclear facilities. My name is Tom Carpenter, and 
I am an attorney and the Director of the Seattle Office of the 
Government Accountability Project. I am primarily responsible for 
overseeing the activities of Department of Energy nuclear weapons 
production facilities, a position I have held since 1985.
    Our organization provides non-profit legal counseling and support 
for whistleblowers who suffer reprisal for exposing health, safety, and 
environmental abuses. We also work to ensure that whistleblower 
concerns are addressed through by appropriate federal agencies, public 
exposure in the media, Congress, and the courts. With over twenty years 
of experience in successfully representing over thousands of government 
and corporate employees who have challenged unsafe, fraudulent, and 
environmentally unsound practices, GAP has developed a unique and 
effective strategy combining first-hand investigation of whistleblower 
concerns with broad public education, grassroots coalition-building, 
congressional action, media pressure, and selective litigation. 
Moreover, our efforts have brought together diverse groups to press for 
reforms, such as industry, workers, local unions, grassroots 
organizations and citizens who face toxic exposures from nearby 
    Based in Washington, D.C., GAP opened an office in Seattle in the 
summer of 1992 to effectively respond to the growing number of cases 
and issues at the Hanford Nuclear Site. GAP also represents or has 
represented employees at various Department of Energy sites nationally, 
including: Los Alamos National Laboratory in New Mexico; Knolls Atomic 
Power Laboratory in New York; Hanford Nuclear Reservation in 
Washington; Oak Ridge National Laboratory in Tennessee; Savannah River 
Site in South Carolina; Rocky Flats Plant in Colorado; Fernald Site in 
Ohio; Mound Laboratories in Ohio; Idaho National Engineering 
Laboratories in Idaho; Lawrence Livermore National Laboratories in 
California; and Pantex Nuclear Weapons Assembly and Disassembly Plant 
in Texas.
    In addition to providing legal representation to whistleblower 
employees, the Government Accountability Project also advances policy 
reform within the Department of Energy. For instance, in 1990, we filed 
the Rulemaking Petition that led to the establishment of the DOE's 
whistleblower protection program under 10 C.F.R. Part 708, and we have 
commented extensively on similar reforms. We have also affected policy 
reforms through Congress, where we helped draft and advocate for 
changes to the Nuclear Whistleblower Protection Act, to provide 
whistleblower protection to DOE contractor employees in 1992.
    At Hanford, the Department's most contaminated and dangerous site, 
I have represented dozens of employees who have blown the whistle on 
illegalities, threats to public health and safety, mismanagement and 
environmental abuses since 1987.
    I serve on the Hanford Advisory Board, which advises the Department 
of Energy, the Washington State Department of Ecology, and the 
Environmental Protection Agency on matters related to environmental 
cleanup and remediation and health and safety issues at Hanford.
    I was also instrumental in the formation and continued operation of 
the Hanford Joint Council for Resolving Employee Concerns, a highly 
successful and unique mediation board that resolves cases of 
whistleblower allegations and personnel actions at a low level, in a 
manner that protects the employee and the interests of the company and 
the government and in a full, final and fair resolution.
GAP's Work with DOE Employees and Contractor Employees
    It has been repeatedly demonstrated that employees who have raised 
environmental, safety and health concerns (whistleblowers) at DOE 
nuclear weapons production facilities have subsequently experienced 
significant workplace reprisal that has impacted their careers, 
financial stability, and personal and familial relationships. 
Frequently, they are courageous people of integrity who have observed 
and documented health-threatening safety and environmental hazards, and 
refused to remain silent despite adverse consequences. Society should 
protect and applaud whistleblowers, who, in looking beyond narrow self-
interest uphold a professional code of ethics, save lives and preserve 
not only public health and safety but also vital fiscal resources.
    The historical policy of retaliation against whistleblowers 
throughout the DOE complex has been well-documented. Reprisals have 
come in the form of poor performance appraisals, terminations, 
psychiatric evaluations, physical threats, harassment, creation of 
hostile working environments, transfers, layoffs, security clearance 
abuses and salary cuts.
    On November 6, 1993, Energy Secretary Hazel O'Leary, at my 
invitation, attended a national conference entitled ``Protecting 
Integrity and Ethics.'' The conference, held in Washington, D.C., was 
co-sponsored by the Government Accountability Project and Public 
Employees for Environmental Responsibility. Secretary O'Leary met 
privately with a number of DOE whistleblowers, and then gave the 
keynote address of the conference. She stated,
        And finally, not just to make whistleblowing acceptable, but to 
        celebrate it. To have, not just me and you, but every manager 
        and every employer in the DOE to understand that whistleblowing 
        is simply being proactive. That's what it is. It's being 
        proactive. It's saying, `for God's sake this is a problem let's 
        handle it.'
                            * * * * * * * *
        Here's my commitment. I've talked a lot in my life about zero 
        tolerance for discrimination. How about zero tolerance for 
        reprisals, doesn't that get everybody under the same tent? Now 
        that's my piece and I own that . . . What we are going to do 
        here is agree that that's the goal and we're going to stick on 
        it . . . I commit today, zero tolerance, zero tolerance for 
  --Secretary Hazel O'Leary, November 6, 1993, Holiday Inn,
        Bethesda, Maryland, at the Protecting Integrity and Ethics 

    Secretary O'Leary's commitments were an invitation to the public 
and the workforce to encourage the Department to examine and improve 
its own policies and practices in regards to whistleblower protection.
    Secretary O'Leary's commitments translated into a series of reforms 
which she adopted as ``Whistleblower Initiatives.'' On August 9, 1995, 
the DOE issued a press release announcing the adoption of a series of 
reforms to protect whistleblowers. The reforms were meant to carry out 
Secretary O'Leary's policy of ``zero tolerance for reprisal.'' The DOE 
announcement stated:
        The reforms adopted by O'Leary include measures to ensure that 
        whistleblowers are not retaliated against by misuse of security 
        clearance procedures; a limit on payment of contractor 
        litigation costs in whistleblower cases, and establishment of 
        an enhanced ``employee concerns'' program which would have the 
        effect of strengthening DOE policies and programs to ensure 
        that employee concerns are given full attention by DOE and DOE 
        contractor managers and supervisors.
    The whistleblower reforms, and particularly the ``zero tolerance 
for reprisal'' policy was recognized by Secretary Federico Pena, and 
subsequently Secretary Bill Richardson, who issued a ``Safety and 
Accountability Policy Memorandum'' to all employees on March 10, 1999. 
The policy stated,
        There must be open communication between management and 
        employees and a zero tolerance policy for reprisals against 
        those who raise safety concerns. Free and open expression of 
        employee concerns is essential to safe and efficient 
        accomplishment of the Department's missions.
    However, the DOE's commitment to these reforms has flagged. 
Secretary O'Leary, in sworn testimony in a whistleblower case involving 
a DOE Resident Inspector in 1998, observed,
        ``. . . [W]hat I was after was what I then knew and know even 
        more deeply after having spent four years in the Department of 
        Energy, as the longest Secretary of Energy in this history of 
        the government, has been a practice of repeated and long-term 
        reprisal that visits the employee in the place that he or she 
        is most vulnerable and that is, first of all, in the 
        questioning of the employee's competence to do his or her work, 
        and once that happens to any employee, that individual is 
        almost dead in terms of promotion or having people even attend 
        what is being said.''
doe's policy on reimbursing contractor litigation fees in whistleblower 
    As part of the new era of employee protection ushered in by 
Secretary O'Leary, the Department took action by requiring the 
insertion of language in new contracts made by the Department 
specifically limiting the payment of contractor litigation fees in 
whistleblower cases.
    Subsequently, the Department issued a new regulation under its 
procurement rules, called DEAR (Department of Energy Acquisition 
Regulations) regulations, mandating the insertion of clauses relating 
to whistleblower cases against contractors in site contracts throughout 
the complex.
    Pursuant to 48 C.F.R. Part 970.2274-1(d) of the DEAR regulations, a 
contractor may not submit for payment by the Department costs incurred 
in connection with a final decision in Departmental whistleblower 
findings under 10 C.F.R. Part 708. Additionally, 48 C.F.R. Part 970 (h) 
states that contractors ``shall not be reimbursed if such liabilities 
were caused by contractor managerial personnel's (1) Willful 
misconduct, (2) Lack of good faith, or (3) Failure to exercise prudent 
business judgment,'' including in actions brought by employees.
    The DEAR regulations, however, only mention proceedings under 10 
C.F.R. Part 708 proceedings, and are silent on other actions brought in 
other fora, such as a Labor Department or state court proceeding.
    Additionally, the Whistleblower Initiatives signed by Secretary 
O'Leary after an opportunity for public comment, clearly stated the 
Department's policy, and many site contracts were modified throughout 
the complex reflecting these new policies. However, a review of the 
various site contracts reveals little consistency in this area.
    For instance, the Hanford Site and the Savannah River Site 
contracts state that DOE may reimburse contractor litigation costs in 
connection with whistleblower cases before an adverse determination, 
which is defined as an initial determination under 10 C.F.R. Part 708, 
a finding by an Administrative Law Judge in the Labor Department, or a 
state or federal court ruling. If an adverse determination against a 
contractor is filed, the DOE will not reimburse costs or expenses 
associated with the case, and in fact requires the repayment of any 
such costs that were ``fronted'' by the Department for the litigation. 
The Hanford Contract states:

C. Litigation costs and settlement costs incurred in connection with 
        the defense of, or a settlement of, an employee action are 
        allowable if incurred by the Contractor before any adverse 
        determination of the employee's claim, if approved as just and 
        reasonable by the Contracting Officer and otherwise allowable 
        under the contract. Costs incurred in pursuit of mediation or 
        other forms of alternative dispute resolution are allowable, if 
        approved as just and reasonable by the Contracting Officer, and 
        no adverse determination of the employee's claim has occurred. 
        Additionally, the Contracting Officer may, in appropriate 
        circumstances, reimburse the Contractor for litigation costs 
        and costs of judgements [sic] and settlements which, in 
        aggregate, do not exceed any prior settlement offer approved by 
        the Contracting Officer and rejected by the employee.
D. Except as provided in Paragraphs C, E and F of this clause, any 
        other cost associated with an employee action (including 
        litigation costs connected with, a judgement [sic] resulting 
        from, or settlement subsequent to the employee action) are not 
        allowable unless the Contractor receives a judgement or final 
        determination favorable to the Contractor. In such event, 
        reasonable litigation costs incurred by the Contractor are 
        allowable, and the Contractor may submit a request for 
        reimbursement for all such costs incurred subsequent to the 
        adverse determination.
Project Hanford Management Contract, Contract No. DE-AC06-96RL13200, 
Section H-40.
    The contract at the Rocky Flats site in Colorado is more open to 
interpretation. There, the contract provides, in whistleblower or labor 
actions, that ``if the dispute was occasioned by contractor actions 
which are unreasonable or were found by the agency or board ruling on 
the dispute to be caused by unlawful, negligent or other malicious 
conduct, the costs would be unallowable.'' The DOE has apparently 
ignored the policy enumerated in the Whistleblower Initiatives at Rocky 
Flats and in the DEAR regulations, which prescribe the insertion of a 
clause in all DOE contracts that prohibit reimbursement of claims 
reimbursed ``if such liabilities were caused by contractor managerial 
personnel's (1) Willful misconduct, (2) Lack of good faith, or (3) 
Failure to exercise prudent business judgment.''
    The contract covering Lawrence Livermore National Laboratory and 
the Los Alamos National Laboratory is the most convoluted. While 
disallowing costs associated with whistleblower claims when there is an 
adverse determination, there are a few loopholes that still allow 
reimbursement. For instance, where the DOE ``approved the Contractor's 
request to proceed with defense of the action rather than entering into 
a settlement with the employee or accepting an adverse determination or 
other interim decision prior to a final decision,'' the costs are 
    The Livermore contract provides for the ability of the contractor, 
subsequent to an adverse determination, to obtain ``conditional payment 
from contract funds upon provision of adequate security, or other 
adequate assurance, and agreement by the Contractor to repay all 
litigation costs if they are subsequently determined to be 
    In our experience, the current DOE policy on reimbursement of 
contractor litigation fees, however well-intentioned, serves to 
actually frustrate the Department's stated policy of ``zero tolerance 
for reprisal'' against whistleblowers.
    As an initial matter, taxpayers should not be subsidizing illegal 
retaliatory activities by contractors. Subsidizing a contractor's legal 
costs in these circumstances sends the wrong message to the work force 
as well as the contractor that DOE will support the contractor, until 
proven guilty. This policy actually promotes lengthy and expensive 
legal battles since the contractor can always count on a well-funded 
defense campaign that will financially and personally wear down the 
worker, who typically does not have access to large law firms or a big 
war chest.
    Typically, legal fights in administrative fora, such as that 
provided by the Department of Energy's 10 C.F.R. Part 708, can take 
years to ever reach a Hearing Officer. A final decision in Part 708 
cases can literally take as long as ten years, accounting for the 
contractor's right to file an appeal of an agency action pursuant to 
the Administrative Procedures Act--a six year statute of 
    \1\ In one case, involving a whistleblower named Larry Cornett, the 
DOE took over four years to issue a final decision in his favor, at 
which time the contractor, who was no longer employed by DOE, refused 
to pay. A district court likewise declined to order the agency to honor 
its commitment under 10 C.F.R. Part 708 to enforce the judgment on the 
contractor. Negative publicity against the agency and imminent 
Congressional action eventually forced the agency to itself pay Mr. 
Cornett's damages on behalf of the contractor. In the opinion of the 
author, the actions of DOE did not serve as much of a deterrent against 
contractor malfeasance.
    Even if the contractor realizes that it is culpable, it may decide 
to wait to settle the claim until the last possible minute before an 
adverse decision is rendered that might prevent the contractor from 
recovering its legal fees from the DOE. The advantage to the contractor 
using this strategy is multi-faceted:

 the complainant is not at work during the period of the 
        pendency of the legal action, and the contractor may reason 
        that it has successfully removed a ``troublemaker'' who was 
        raising inconvenient safety or health issues;
 the absence of the complainant during the years of litigation 
        sends a powerful message to the rest of the work force that 
        those who raise concerns will face termination and a lengthy 
        period of costly and stressful litigation--it is a deterrent to 
        other employees to not raise health and safety issues;
 in many instances, the contractor may actually profit from the 
        expenditure of litigation funds by adding on a ``cost-plus'' 
        adder on expenditures (the more you spend, the more you make);
    In short, for the DOE to indemnify the contractor's legal fees in 
some cases actually facilitates and encourages reprisals and lengthy 
legal battles by subsidizing contractor malfeasance. This alone flies 
in the face of the Departmental policy on ``zero tolerance for 
reprisal'' against whistleblowers.
    There is another troubling aspect to the Department's current 
policy in that there are several cases where the policy has been 
ignored or subverted. In several recent high-profile cases, the 
contractor was adjudged guilty of reprisals, but still had its fees 
reimbursed by the DOE.
    This includes the case of David Lappa versus the University of 
California, where the Secretary of Labor issued a Final Agency Decision 
that found that the Lawrence Livermore National Laboratory contractor 
(UC) had violated the law by engaging in retaliation and discrimination 
against Mr. Lappa. Mr. Lappa, a twenty-year veteran of the Lab and an 
accredited nuclear engineer raised concerns about nuclear criticality 
violations. Ironically, DOE investigated Mr. Lappa's substantive 
concerns and issued a civil finding under the Price Anderson Act 
against the University of California for deliberate violations of 
nuclear safety protocols. Yet inexplicably, DOE has paid, and continues 
to pay, all expenses related to Mr. Lappa's claims against the 
University of California. The best that can be said about the DOE's 
attitude towards Mr. Lappa's case is that it is ``gaming'' the system 
to come up with the result that it wants--to reimburse the contractor 
no matter what.
    The Government Accountability Project therefore recommends that the 
DOE enact clear, comprehensive and effective rules that prohibit the 
payment of litigation fees in whistleblower cases in any circumstance 
other than when a contractor can clearly show a written directive from 
a DOE official ordering the behavior complained of by the 
          need for a safety conscious work environment at doe
    It is fundamental to the mission of the Department of Energy that 
it protect the public safety and health in the regulation and control 
of its nuclear weapons production facilities. It is also fundamental to 
DOE's safety programs that DOE and DOE contractor employees be 
encouraged to voice environmental, safety and health (ES&H) concerns 
without experiencing reprisal. Past and recent revelations of long-
standing ES&H deficiencies in DOE operations, along with a continuing 
stream of DOE and DOE contractor employees who allege reprisal for 
voicing concerns, indicate that DOE has not achieved what the 
commercial nuclear industry calls a ``safety-conscious work 
environment'' which is fundamental to DOE reliably accomplishing its 
    A safetyconscious work environment is defined as a work environment 
in which employees are encouraged to raise concerns and where such 
concerns are promptly reviewed, given the proper priority based on 
their potential safety significance, and appropriately resolved with 
timely feedback to employees. Attributes of a safetyconscious work 
environment include (1) a management attitude that promotes employee 
involvement and confidence in raising and resolving concerns; (2) a 
clearly communicated management policy that safety has the utmost 
priority, overriding, if necessary, the demands of production and 
project schedules; (3) a strong, independent quality assurance 
organization and program; (4) a training program that encourages a 
positive attitude toward safety; and (5) a safety ethic at all levels 
that is characterized by an inherently questioning attitude, attention 
to detail, prevention of complacency, a commitment to excellence, and 
personal accountability in safety matters.
    Indicators of lack of a ``safety-conscious work environment'' at 
DOE include:

 The deficient safety programs and situations described in the 
        current annual Defense Nuclear Facilities Safety Board (DNFSB) 
        report to Congress (as well as previous annual DNFSB reports).
 Wide-spread environmental, safety and health (ES&H) 
        deficiencies at sites such as Hanford and Pantex, which 
        represent a direct threat to the safety of the work force and 
        the public.
 The numerous well documented cases of whistleblower reprisal 
        for voicing ES&H concerns in DOE, as documented in independent 
        studies such as by the National Academy of Public 
        Administration (NAPA).
 Deficient implementation of employee concern programs by the 
        responsible managers, as detailed in the audit by the NIC 
        Corporation performed for headquarters DOE, which analyzed 
        employee concerns programs at the Hanford Site. (See, Employee 
        Concerns Program, Hanford Site Assessment Performed for the 
        U.S. Department of Energy, Richland Operations Office, National 
        Inspection & Consultants, Inc. (NIC), November 1996.)
 The many deficient safety and management conditions that led 
        to the tank explosion at Hanford in May 1997, which 
        unnecessarily exposed over a dozen Hanford workers to toxic and 
        hazardous vapors and conditions, and led to the imposition of a 
        $110,000 fine from the State of Washington.
 The DOE Environment and Health (EH) review of the radiation 
        protection program in Transportation Safeguards Division (TSD) 
        identified a complete breakdown in the employee concern 
        program, noting that management threatened to fire employees 
        who persisted in raising concerns about the lack of radiation 
        protection provided in their jobs as nuclear materials 
 The recent highly publicized allegations about deficiencies in 
        DOE's safeguards and security program at Rocky Flats, and the 
        recent Labor Department ruling that a high-ranking officer in 
        the guard force was illegally retaliated against by management 
        for voicing concerns.
 Tens of tons of plutonium 239 and highly enriched uranium 
        remain in unsafe or questionable storage containers around the 
        country. Unresolved problems abound--unstable nuclear 
        solutions, residues, metals, and powders in deteriorating 
        containers and tanks; nuclear weapon parts in ill-suited 
        containers; a wide variety of fire and explosion risks; 
        degraded equipment and safety systems; and deteriorating 
        storage facilities--some dating back to World War II. Skilled 
        personnel who can safely fix these problems are disappearing.
 The July 28, 1998 death of a worker severe injuries suffered 
        by others when a high-pressure carbon dioxide fire suppression 
        system unexpectedly went off in a facility at the department's 
        Idaho National Engineering and Environmental Laboratory. Within 
        seconds 13 workers found themselves struggling to escape a 
        lethal atmosphere under zero visibility. The rescue team was 
        put at great risk as they entered the building without 
        breathing equipment. An investigation found that the accident 
        could have been avoided. Several similar accidents at the 
        laboratory, including two very serious ones, had been ignored. 
        The investigators concluded that management ``had not been 
        aggressive or effective in monitoring contractor performance . 
        . . or in ensuring that corrective actions and improvements in 
        hazard and work controls are completed or consistently 
 The recently publicized dissenting safety report by Frank 
        Rowsome, a senior Energy Department safety expert, who wrote, 
        ``The case of DOE's nuclear weapons program has been made 
        particularly acute by some vicious circles . . . Those of us 
        who help to cover up deficiencies are rewarded, and those that 
        bring them to the fore . . . are at best ignored, resented, or 
        dismissed as troublemakers.'' In his February dissent, Rowsome 
        said that Energy Department officials heavily censored safety 
        reports while engaging in wholesale removal of safety experts 
        from the nuclear weapons management chain. ``No one in our 
        management hierarchy is a safety professional today,'' he said. 
        Many safety professionals ``are disaffected and are seeking to 
        leave.'' In calling for the shutdown of Pantex, Rowsome also 
        wrote, ``We have seen nuclear weapons accidentally destroyed 
        but not exploded at Pantex in recent years. We might see an 
        accident in which the chemical high explosive is detonated or 
        burned while still in a nuclear weapon. That would destroy one 
        bay or cell at Pantex, and kill the technicians . . . and 
        possibly a few outside.'' Rowsome believes that an accidental 
        nuclear detonation, even if it is a fizzle, would have much 
        more serious consequences:
      It ``would destroy Zone 12 at Pantex, and kill the several 
            hundred workers there, and induce the chemical explosive to 
            go off in a few dozen other nuclear weapons, but probably 
            not detonate them. It would produce radioactive fallout not 
            unlike those resulting from one of our above ground nuclear 
            weapon tests in the 1940s and 1950s.'' Higher-yield nuclear 
            explosions are substantially less likely, he says, but they 
            could create more radioactive fallout because they might 
            ``vaporize the many plutonium pits'' stored at the site.
    Employees like Frank Rowsome are far and few between in attempting 
to warn the bureaucracy about the potentially fatal consequences of 
ignoring safety. Such actions suppress, or ``chill'' the reporting of 
concerns because employees understandably become fearful of suffering 
reprisal when they report a concern. The systematic dismantlement of 
safety systems within the DOE, and the suppression of the safety 
professionals like Mr. Rowsome will likely only lead to future 
preventable nuclear catastrophes.
    Even the DOE facilities with the most sophisticated programs and 
the most experience with employee concerns issues have been found to be 
in failure mode. The Hanford Site, which boasts a DOE employee concerns 
office with four staff members, the support of upper management, and a 
large array of contractor employee concerns mechanisms, was audited by 
the National Inspections and Consultants, Inc. at the request of DOE 
Headquarters in late 1996. NIC's report, entitled, ``Employee Concerns 
Program Hanford Site Assessment,'' concluded that senior management did 
not support the program and that ``the lack of support by management 
has not promoted a work environment in which workers were comfortable 
in identifying concerns to their supervision.'' Additionally, NIC 

 there was a lack of training for program investigators;
 employee concerns staffing was inadequate;
 the program did not address concerns in a timely manner;
 employees who used the program were not informed of their case 
 concerns filed by employees were turned over to the 
        organization or manager that the employee had accused for 
        investigation in a third of all cases reviewed;
 evidence was not available or maintained in the case file 
        supporting disposition of the concern;
 all of the program users interviewed stated that their 
        confidentiality was not maintained.
    A recent review by my office indicated that many of these problems 
persist. In over a third of the cases that come to the Hanford employee 
concerns program, the employee was simply referred back to the 
contractor, a practice that was harshly criticized by the NIC team. In 
many other cases, the Concerns Program simply decided that it did not 
have jurisdiction over the concern, and closed the concern without 
further action. More disturbingly, the Employee Concerns office at 
Hanford has divulged the identity of employees against their wishes, 
subjecting them to reprisals, and in one case even sent a warning 
letter to a contractor that an employee was seeking outside legal help 
and was likely to file a lawsuit against the contractor.
    This dismal assessment of the DOE's flagship site for handling 
employee concerns underscores the urgency of the need for immediate and 
deliberate reform. But appeals to the DOE bureaucracy have gone 
                   zero tolerance for whistleblowers
    For nearly seven years, the Department of Energy, through the 
commitment of three Energy Secretaries, has pledged to institute a 
policy of ``zero tolerance for reprisal'' against those who raise 
employee concerns. Although the Department has made some efforts 
towards reform, the de facto policy of the Department, as embodied by 
the behavior of its personnel and its actions, remains a zero tolerance 
policy for whistleblowers. Several recent cases illustrate this point.
                             i. david lappa
David A. Lappa v. Regents of the University of California, et. al.
Alameda County (CA) Superior Court No. V-015785-4
    A square-mile complex of buildings southeast of suburban Livermore, 
California, Lawrence Livermore National Laboratory (LLNL) is one of 
three Department of Energy labs that conducts nuclear weapons research. 
It is run by the University of California on a long-term contract with 
DOE. But unlike nuclear power plants and other private, commercial 
users of radioactive material, which are monitored by the Nuclear 
Regulatory Commission, the lab's compliance with environmental and 
safety regulations is monitored by the Department of Energy itself. And 
while it doesn't take whistleblower David Lappa to realize that self-
monitoring is a dangerous prescription in work involving deadly 
materials, both his disclosures and his subsequent treatment reveal 
exactly how wrong the continuing experiment can go.
    In the summer of 1997, manufacturing workers at LLNL's plutonium 
facility were preparing wafers of plutonium to be shipped to Nevada for 
underground nuclear weapons testing. Officials ordered an emergency 
work stoppage, however, when they discovered that some employees were 
placing excessive amounts of plutonium in enclosed handling platforms 
called glove boxes. Such actions placed the metal in danger of 
criticality, or uncontrolled nuclear reaction, in which the silvery 
substance explodes and/or releases lethal amounts of radiation into the 
surrounding environment.
    Following the incident, DOE officials appointed an Incident 
Analysis Committee to investigate what happened, and in July 1997, 
David Lappa, a nuclear engineer with 20 years service to the Lab, was 
appointed to the committee.
    To his shock, Lappa found that the statements of workers involved 
in the incident suggested that some of the safety violations were 
intentional. Lappa was convinced that the committee's report should 
explore the veracity of the allegations and publish its findings.
    The final report, however, contained no mention of possible 
deliberate violations. Lappa refused to sign it.
    Alan Copeland, the head of the IA-Committee, deleted the ``willful 
violations'' thesis from the report while Lappa was on vacation. When 
Lappa refused to sign the redacted report, Copeland threatened, ``I'll 
be damned if there's going to be a blank signature line on the cover of 
this thing.'' Copeland then whited out Lappa's name from the report and 
U.C. In pretrial discovery in whistleblower litigation filed by. Lappa 
against U.C. in state court, U.C. has now taken the position that Lappa 
was not really on the IA-Committee and did not have to sign the report, 
rather than admitting that Lappa was removed for dissenting.
    Later, during pretrial discovery in the state case, Lappa 
discovered that Ron Hoard, Lappa's immediate supervisor, who had him 
transferred after this dissent, sent two performance evaluations on 
Lappa--one positive version for Lappa and for general consumption, the 
other a negative secret evaluation that was critical of Lappa his 
activities on the IA-Committee. The secret evaluation contained the 
following direction: ``FYI--kindly destroy this after reading it.'' The 
secret evaluation explained that Lappa's reports of safety violations 
has made U.C. customers ``somewhat reluctant to continue offering 
[Lappa] assignments.'' The negative evaluation was circulated to 
    Lappa filed a Department of Labor administrative complaint, on 
which he prevailed. It is worth noting that throughout that 
investigation U.C. withheld production of the secret evaluation. Lappa 
found that job assignments were withdrawn from him and anticipated pay 
raises were withheld. Supervisors moved him into his new ``office''--an 
isolated, windowless storage closet. After he contacted national DOE 
officials and the DOE Office of Inspector General's office about the 
situation at LLNL, supervisors told him that he should not have done so 
and that he was ``unemployable.''
    Seeing no action taken on his concerns and the work environment 
around him becoming ``unbearably hostile,'' Lappa filed a 
discrimination complaint with the Department of Labor in the spring of 
1998. OSHA investigators found that the ``weight of evidence'' 
indicated that the lab was retaliating against Lappa, and ordered the 
lab to protect Lappa from further reprisal, eliminate negative 
references in his personnel file during the time in question, and 
provide him $32,500 for counseling and legal fees.
    While LLNL did not appeal the ruling, it also refused to address 
the hostile working environment against Lappa, and harassment 
continued. Continuing retaliation forced Lappa to sue LLNL in state 
court to protect himself and obtain remedy for the damage LLNL did to 
his career.
    During the pending suit, Lappa was forced by stress and exhaustion 
to quit his job at the lab on February 4, 2000. Quoted in the San 
Francisco Chronicle, Lappa said: ``It's pretty clear I have no future 
at the laboratory.''
Current Status
    Lappa's suit against the University of California, which manages 
LLNL, is currently in discovery. GAP attorneys are to uncover evidence 
demonstrating the scope of the unlawful retaliation against him after 
he raised safety concerns at the lab. The case is slated for trial in 
September 2000.
DOE's Involvement in the Case
    Despite its avowed policy of ``zero tolerance for retaliation'' 
against whistleblowers, and despite DOE spokeswoman Susan Houghton's 
statement that ``perceptions may not be realities,'' DOE has conspired 
with the University of California in David Lappa's case to punish him 
for seeking a full investigation (per the Incident Analysis Committee's 
mandate) into evidence suggesting that dangerous safety breaches at 
LLNL involving plutonium--one of the deadliest substances known to 
humankind--were willful.
    The evidence is both plentiful and damning. DOE officials--

 Have continually resisted Lappa's requests for permission to 
        interview DOE's investigators and public documents necessary to 
        his civil action against the University of California without 
        offering justification. Lappa was forced to sue the agency 
        under the Freedom of Information Act (FOIA) in U.S. District 
        Court. His recent victory in that case, after several months of 
        litigation, vindicated his assertions. Judge Maria-Elena James 
        found the DOE's refusal to allow its investigators to be 
        interviewed ``arbitrary and capricious,'' and, citing 
        Department of Energy Secretary Bill Richardson's own memorandum 
        calling for ``open communication between management and 
        employees'' and ``zero tolerance for reprisals,'' criticized 
        DOE for its demonstrated failure to live up to its word. As of 
        this document's preparation, DOE is continuing despite the 
        District Court decision to prevent GAP's attorneys from 
        conducting depositions with its officials that were slated to 
        occur on Wednesday, May 24, 2000, in D.C.
 Waived $153,000 in fines that the University would otherwise 
        have had to pay the government for safety violations discovered 
        by the DOE during its own investigation of the plutonium 
        handling incident.
 Pledged to reimburse the University's legal fees in the 
        lawsuit unless Lappa wins (in which case the university would 
        have to pay its own legal fees and any judgment Lappa is 
 Neglected to investigate Lappa's original disclosures to DOE 
        officials and the DOE Office of the Inspector General.
    Should this Committee, or the public, care about the fate of David 
Lappa? The Government Accountability Project argues that employees like 
David Lappa are the public's first line of defense on nuclear safety. 
Without conscientious employees who are willing to challenge and expose 
safety and health threats, the public would often only discover these 
violations after it is too late--as happened in Tokaimura, Japan.
    On September 30, 1999, the worst nuclear accident in Japanese 
history occurred just 87 miles northeast of Tokyo after workers loaded 
35 pounds of uranium into a mixing tank, nearly eight times the proper 
amount. The material reached criticality, and a self-sustaining nuclear 
reaction continued for more than 18 hours. Forty-nine workers were 
exposed to high levels of radiation; 160 people were evacuated, and 
313,000 people were warned to stay indoors. Twelve hours after the 
accident began, radiation levels at one mile away from the plant 
measured 15,000 times greater than normal. Two workers have died as a 
result of the accident.
    In the aftermath of the nuclear criticality accident at the 
Tokaimura uranium plant in Japan, can a similar tragedy take place in 
the United States? After the accident, eyes are now turned to 
comparable commercial uranium processing plants in the United States, 
licensed by the Nuclear Regulatory Commission (NRC). Certainly, these 
facilities need to be carefully reviewed to ensure that a similar 
problem isn't lurking. However, what is not fully appreciated is that 
if such an accident were to take place, it would most likely be at a 
government-owned facility operated by the U.S. Department of Energy 
    Nearly all U.S. criticality accidents have occurred at federal 
facilities. DOE is responsible for one of the world's largest 
inventories of concentrated fissile materials. Hundreds of tons of 
these materials--principally plutonium and highly-enriched uranium 
produced for nuclear weapons and nuclear energy research--are stored at 
DOE sites across the nation.
    Nuclear criticalities are among the most serious accidents in the 
nuclear industry. A criticality event occurs when a relatively small 
amount of fissile material (as little as pound of plutonium or highly-
enriched uranium) is concentrated and starts a nuclear chain reaction. 
This small nuclear explosion has a characteristic blue flash, produces 
levels of radiation in the form of neutrons and gamma rays lethal to 
nearby workers, and may release significant amounts of radioactive 
fission products to the environment. Controls to avoid a nuclear 
criticality accident in storage and processing facilities are of 
paramount importance.
    Unfortunately, these essential safety controls are diminishing at 
DOE sites, as tens of tons of fissile materials remain in unsafe or 
questionable storage modes. Since 1994, several official reviews have 
identified significant complex-wide environmental, safety and health 
vulnerabilities associated with DOE's storage of fissile materials--
many of which remain to be corrected. Dozens of problems were 
identified at sites such as the Hanford nuclear reservation in 
Washington, the Rocky Flats facility in Colorado, the Oak Ridge nuclear 
complex in Tennessee, the Los Alamos National Laboratory in New Mexico, 
the Idaho National Environmental and Engineering Laboratory, the Pantex 
weapons facility in Texas, the Savannah River Site in South Carolina, 
and Lawrence Livermore National Laboratory in California. They include 
unstable nuclear solutions, residues, metals and powders in 
deteriorating containers and tanks, nuclear weapons parts in ill-suited 
containers, fire and explosion risks, degraded equipment and safety 
systems, deteriorating storage facilities (some that date back to World 
War II), and a growing number of inadequately trained workers.
    Last year, the General Accounting Office found that: ``Leakage from 
corroded containers or inadvertent accumulations . . . pose health and 
safety hazards, especially in aging, poorly maintained, or obsolete 
facilities.'' The Y-12 nuclear weapons plant at the DOE's Oak Ridge, 
Tennessee site is a case in point. It holds the largest quantity of 
highly enriched uranium (HEU) of any DOE site, over 189 metric tons, or 
the rough equivalent of 9,450 Hiroshima-size atomic bombs. Sixty 
percent of the drums containing HEU at the Y-12 plant have never been 
opened. In fact, some HEU materials at Y-12 have been in their present 
storage form for almost 40 years. A very large amount is stored in 
decades-old wooden buildings that are vulnerable to fires and provide 
little protection if an accident occurs.
    According to a December 1996 DOE safety review, ``At some of the Y-
12 buildings, the available information is insufficient to determine if 
HEU is stored within nuclear criticality safety limits.'' The review 
concluded, ``The lack of controls necessary to ensure that systems are 
being kept fully operable jeopardizes barriers relied on to separate 
HEU from workers, the public and the environment.'' A subsequent 
follow-up in September 1998 by DOE's Office of Environment, Safety and 
Health found that ``. . . criticality risks remain unchanged'' for one 
of Y-12's most hazardous buildings.
    Of additional concern, skilled and qualified personnel needed to 
ensure safe storage and processing of fissile materials in the DOE are 
rapidly disappearing. ``Some sites are in danger of losing this 
expertise through retirement and have not implemented provisions to 
maintain the necessary knowledge base,'' says a September, 1998 DOE 
oversight report. This problem is made worse by contractor and DOE 
management blunders. At DOE's Hanford site, some 3.5 metric tons of 
unstable plutonium are stored at the Plutonium Finishing Plant (PFP), 
which was closed in 1996 because of criticality safety problems. The 
following year, in order to grab a financial incentive for cutting 
costs, the site-wide contractor, Fluor-Daniel Hanford Inc. (FDH), 
greatly weakened the site's nuclear safety function by moving key 
criticality experts off their payroll. As a result, DOE found in 1998 
that ``the FDH Nuclear Safety organization does not have sufficient 
resources to staff an effective NCS [nuclear criticality safety] 
program.'' To date, this problem has yet to be fixed.
    Despite the fact that almost all of these problems were identified 
years ago, lengthy delays in fixing a large backlog of serious nuclear 
material safety vulnerabilities plague the system. As a result, the GAO 
finds that ``DOE is unlikely to meet its commitment date for 
stabilizing and storing plutonium . . .'' and concludes that ``These 
delays result in continued risk to workers' health and safety and have 
increased costs to DOE and taxpayers and likely will continue to do 
so.'' A major reason why these delays persist is that DOE has yet to 
establish an adequate tracking and safety enforcement system to ensure 
that these problems identified years ago are being corrected.
    In response to the Tokaimura accident, DOE recently launched a 
``Nuclear Criticality Safety Self-Improvement Initiative.'' True to 
form, the DOE is, once again, investigating itself using an ``honor 
system'' without any enforcement follow up. What is needed is a truly 
independent assessment of the DOE's nuclear material risks. Finally DOE 
and the Congress must take immediate steps to hold people accountable 
for failing to address these long-standing and unacceptable safety 
problems. Otherwise, the growing risk of yet another ``blue flash'' 
    The public's first line of defense against nuclear accidents is the 
workforce in our nuclear facilities. Employees must be free to speak 
out when there are violations; they should not be forced to choose 
between preserving safety and preserving their jobs. Tokaimura 
happened, in part, because workers willfully violated safety rules at 
the direction of their managers. A similar situation may have happened 
at Lawrence Livermore National Laboratory, and the American public has 
the right to know the truth about such events.
    The public owes employees like David Lappa its full support, and 
the laws protecting their careers should be enforced. Secretary Bill 
Richardson would do well to honor his commitment to a safety-conscious 
work environment that protects whistleblowers from reprisal, and 
encourage disclosures of wrongdoing, instead of assisting the 
University of California in its legal case with Mr. Lappa.
                        ii. hanford pipefitters
Brundridge et. al. v. Flour Daniel, Inc. et. al.
Benton County (WA) Superior Court No. 99-2-01250-7
    The Hanford Site has a long history of controversy regarding the 
issue of employee freedom to raise concerns either internally or 
externally without fear of reprisal. An open, non-retaliatory 
employment climate is critical to safety and environmental protection 
at Hanford. Recent developments have contributed to the perception that 
the Hanford employment climate chills safety disclosures by employees.
    As the U.S. government's first largescale plutonium production 
site, Hanford occupies 560 square miles of steppe, sand and sagebrush 
in southeastern Washington. Over the decades, about 50 tons of 
plutonium were produced there and as a result, some 440 billion gallons 
of contaminated liquids were poured into the ground--enough to create a 
lake the size of Manhattan, 80 feet deep. There are 177 large 
underground high-level radioactive waste tanks--the many which are 40 
to 50 years old and are in significant states of deterioration and have 
leaked over 1 million gallons. Also, Hanford has some 1500 soil dumping 
sites containing very large amounts of radioactive and hazardous 
wastes, including as much at least a half ton of plutonium. Since the 
last free running 51-mile stretch of the Columbia River runs through 
the site, contamination from Hanford of this largest fresh water artery 
of the Pacific Northwest is not a trivial matter.
    In 1989, the Department entered into a tri-party environmental 
compliance agreement with the State of Washington and the U.S. EPA. The 
agreement sets forth several milestones that focus on waste 
stabilization, storage and removal actions. The two highest risk-based 
priorities in the agreement are:

 Stabilization and removal of some 3,000 metric tons of 
        deteriorating spent nuclear fuel from leaking the K-reactor 
        basins in near the Columbia River; and
 The conversion of wastes in Hanford's high-level radioactive 
        waste tanks into glass for disposal--known as the Tank Waste 
        Remediation System (TWRS).
    Other compliance milestones of importance include:

 Removal of as much liquid as possible from single-shell high-
        level waste tanks to reduce environmental contamination risks 
        from aging and leaking tanks.
 Removal of soil that pose contamination risks to the Columbia 
 Deactivation and interim entombment of 8 closed reactors near 
        the Columbia River.
 Characterization and stabilization/removal of contaminants in 
        soil disposal sites, mostly in the center of the site.
    In addition to environmental compliance requirements Hanford has a 
large amount of unstable nuclear materials, which pose significant 
safety risks. Some 4,000 metric tons of plutonium are stored in 
unstable forms, in questionable storage modes at a deteriorating 
facility, known as the Plutonium Finishing Plant.
    In the 200-West area of the Department of Energy's Hanford Nuclear 
Site, located along the Columbia River in eastern Washington, 
pipefitters and other workers labor amidst fields of massive storage 
tanks holding millions of gallons of the most radioactive waste in the 
custody of the U.S. government. Several years after whistleblower 
disclosures forced DOE to concede that dozens of the tanks were 
leaching contaminants in the porous soil beneath, DOE is undertaking 
emergency measures to transfer waste from the oldest, most decayed 
tanks into newer ones. And, while inherently dangerous, such transfers 
become even more hazardous when safety rules are dismissed.
    In May 1997, seven pipefitters--Terry Holbrook, Clyde Killen, Pete 
Nicacio, Shane O'Leary, Dan Phillips, James Stull, and Randy Walli--
discovered management's disregard for basic safety firsthand. Employed 
by Fluor Daniel Northwest (FDNW), the principal contractor at Hanford, 
the seven were instructed to work under conditions both dangerous and 
illegal. Their concerns included:

 Supervisor's instructions, despite the pipefitters' protests, 
        to install underrated valves in pipes which were destined to 
        carry high-level nuclear waste liquids from old tanks into new 
        storage facilities
 Working in an area where another subcontractor's crew was 
        performing high-intensity x-ray testing of pipe welds, despite 
        regulations requiring that areas undergoing such testing be 
        evacuated and guarded to prevent unnecessary radiation exposure
 Working in ``confined space'' areas, which are enclosed areas 
        where air supply is limited, and workers are susceptible to 
        gases that can displace oxygen and cause rapid suffocation, 
        without proper adherence to federal safety regulations
 Workers were especially concerned about the installation of 
        the underrated valves, because the failure of the pipes could 
        result not only in death for workers in the immediate vicinity, 
        but also jeopardize the structural integrity of the massive 
        storage tanks themselves.
    Two days after the seven refused to install underrated valves, 
management notified them that they would be laid off. A week later, on 
June 5, 1997, they were unemployed.
    The Government Accountability Project (GAP) took on the 
representation of the Hanford pipefitters and filed a complaint in July 
1997 pursuant to the Energy Reorganization Act with the Department of 
Labor (OSHA).
    Each of the original seven pipefitters sought to use the DOE-
subsidized Hanford Joint Council, a mediation board that is supposed to 
resolve Hanford whistleblower cases at an early stage. Even though the 
contractor was a member of this Council, it refused to utilize the 
services of the Council, and chose to litigate instead--using free 
taxpayer money supplied by the Department of Energy.
    In October 1997, OSHA found that five of the seven had been 
retaliated against. Rather than undergo the administrative hearing set 
for February 1998, after extensive pre-trial discovery, Fluor Daniel 
settled with the pipefitters the day before the hearing, granting each 
reinstatement, full back pay, compensatory damages, and attorneys' 
    In order to ``make room'' for the returning pipefitters, however, 
Fluor Daniel laid off seven employed pipefitters. Evidence indicates 
that this layoff was not only unnecessary but also deliberately 
designed to create hostility toward them. Notably, four of the seven 
who were laid off--Don Hodgin, Ray Richardson, Jessie Jaymes, and Scott 
Brundridge--were vocal supporters and witnesses in the pipefitters' 
original claim. These four filed complaints with OSHA alleging that 
they were retaliated against for supporting their co-workers.
    Finally, having returned to work as part of the original 
settlement, the seven pipefitters found a hostile work environment. Not 
only were the pipefitters given discriminatory job assignments, denied 
overtime, and given strict surveillance, but they were told by fellow 
employees that they had to ``watch their backs'' around one 
particularly irate foreman and were laid off less than a year later.
    The Department of Labor is charged by Congress with investigating 
nuclear whistleblower complaints through the Energy Reorganization Act, 
42 U.S.C. Sec. 5851. The Labor Department has tasked OSHA with the 
initial investigations of such complaints.
    The regional OSHA office, after an extensive investigation into the 
pipefitter allegations, found that Fluor Daniel NW had established and 
maintained a hostile working environment to retaliate against the 
pipefitters after raising safety and health concerns. The decision 
cited a handwritten statement signed by the pipefitters' foremen which 
reflected the resentment of the foremen about the reinstatement of the 
pipefitters to their jobs pursuant to a settlement agreement in March 
1998. The same foremen chose the whistleblower-pipefitters for layoff 
within six months, and then immediately replaced them with other 
    The decision also cited disparaging remarks made by foremen who 
directed the work of the pipefitters. In one case a foreman was quoted 
as saying ``. . . the complainants should have stayed laid off. I'll do 
anything in my power to get rid of them.'' The decision stated, 
``Another foreman was so vocal in his hostility towards the 
complainants, they were warned by other employees to `watch their 
backs' around him.'' Fluor Daniel refused to make available key foremen 
for OSHA to interview, stated the report.
    The Labor Department ordered Fluor Daniel Northwest to immediately 
reinstate the pipefitters and pay them back pay, compensatory damages 
and attorney fees and costs. It also ordered--
        ``Immediate and continuing cessation of harassment and 
        intimidation and all acts of reprisal against complainants, or 
        anyone of them, or anyone who acknowledges their support of the 
        complainants for instituting or causing to be instituted any 
        proceeding under the [Nuclear Whistleblower Protection Act].''
    Fluor Daniel was also ordered to implement ``training and/or formal 
discipline for respondent's agents and representatives'' to ensure that 
they are aware of employee rights to raise concerns. Fluor Daniel 
refused to implement the findings, and filed an appeal.
    In March 2000, ten pipefitters who either raised safety concerns or 
supported their co-workers in doing so filed a state civil lawsuit 
against Fluor Daniel, Inc., and its local subsidiaries, alleging 
wrongful discharge and civil conspiracy against them for their 
terminations after having raised serious safety concerns.
Current Status
    Due to strategic considerations involving the disclosure of key 
evidence, GAP attorneys and their clients decided that the 
administrative hearings that had been set for April 2000 to consider 
both the complaint of the second group of pipefitters and the second 
complaint of the original group of pipefitter whistleblowers should be 
dropped in order to focus attention on the larger, more significant 
civil case now pending in Benton County Superior County in Washington. 
The case is currently in the discovery phase, with GAP attorneys 
working to bolster an already-solid set of evidence documenting Fluor 
Daniel's violation of state employment law. The case's trial date is 
set for September 2000.
    Meanwhile, as the discovery process continues, more employees step 
forward with ever more incriminating information against the company. 
During the first deposition, taken on June 11, 1999, Fluor manager Ivan 
Sampson produced a page from his journal dated March 9, 1998. This was 
the same time period in which the original seven pipefitters had been 
reinstated, and the second set laid off. Sampson testified that Jim 
Holladay, the Constructions Operation Manager for FDNW (at the time), 
called Jerry Nichols, a foreman, while Sampson was in the room. Sampson 
could overhear the conversation. According to the Sampson, Nichols told 
Holladay that he had a place for a couple of the pipefitters who were 
being laid off. Holladay responded, ``no, you don't.'' Nichols 
persisted in trying to explain that he could find work for some of the 
pipefitters, and Holladay responded, ``you are going to lay off 
seven.'' Holladay then stopped and asked Nichols who else was in the 
room. Nichols responded that Sampson was in the room. Holladay told 
Nichols to tell Sampson that he ``would tear off [Sampson's] balls'' if 
Sampson were to tell anyone about the call. Sampson stated that he felt 
intimidated and feared that he would be retaliated against.
    On July 2, 1999, the deposition was reconvened. At that deposition, 
Mr. Sampson produced even more journal entries. He stated that on 
September 10, 1998 that he had been called into a meeting by Jim 
Holladay, along with two others, and told that the meeting was to be 
considered confidential. Holladay stated that they were to be members 
of a new audit team. Holladay stated that the FDNW auditor, a man named 
Arslanian, was ``a fucking idiot,'' and that he did not want ``that 
stupid motherfucker looking over his shoulder,'' and making him fill 
out 900 pages of paperwork.
    Holladay stated that he would call with an incident to investigate, 
and they were ``to drop everything and come running.'' Holladay stated 
he did not want them to take more than two or three hours looking at 
anything, but to make a quick overview and report it. Sampson stated, 
``We would have no findings.''
    Sampson testified that there had been three ``events''--a rigging 
event in the 100 Area, an asbestos event in the 100 Area and ``some 
event at S Plant.'' ``We were told that specifically, there would be no 
findings,'' by Jim Holladay. Sampson stated that the goal was audit the 
event before it ``got too big'' and Arslanian got involved. When 

Q. Was it your understanding that the purpose of your doing the audit 
was to somehow coverup what may have been improper conduct?
A. Cover up anything. That we were to have no findings.
Q. So did you understand at the time that Mr. Holladay was asking you 
to do something that was against company policy?
A. Yes, I did.
    Later, Sampson testified that he attended a meeting on September 
29, 1998, at the Jadwin Building (FDNW HQ) with ``a bunch of big 
managers'' including Holladay. Sampson testified that the managers were 
all worried that the three events on site could be perceived as 
``setting a trend and had any possible liability for the Price Anderson 
Act.'' Immediately following the meeting, Holladay, in the presence of 
two other managers, stated, ``that we would go out and come back with a 
conclusion that they were just dumb mistakes, which was a quote.''
    When asked why he had failed to report this obvious wrongdoing, 
Sampson stated that he had considered making the report but decided 
against it. He then related an event in 1995 (or 1994, which was when 
Kaiser was in charge, not Fluor Daniel) where he had walked into a 
meeting where top-level managers, including Dave Foucault, the 
Construction Manager for FDNW, were gathered around a conference table 
listening to a tape recording of a man's voice. A manager came over and 
informed Sampson that ``We're listening to the recording from DOE 
trying to figure out who made the call.''
    Sampson stated, ``And that pretty much floored me, and I left. From 
that point forward, I never figured you could call any of these hot 
lines with any privacy.''
    The testimony offered by Sampson, which is documented by his daily 
journal, evidences a high-level corporate conspiracy to not only 
deliberately establish a hostile working environment against employees 
who report safety concerns, but to deliberately engineer a cover-up of 
potentially significant safety events in order to evade the Price 
Anderson Act.
DOE's Involvement in the Case
    Despite its avowed policy of ``zero tolerance for retaliation'' 
against whistleblowers, DOE has shown its willingness in the case of 
the Hanford pipefitters to facilitate Fluor Daniel's efforts to 
retaliate against them, undoubtedly silencing in the process other 
employees at Hanford with crucial safety and health disclosures.
    More specifically, the DOE:

 Not only failed to investigate the concerns of the 
        pipefitters, otherwise intervene in Fluor Daniel's retaliation, 
        or hold them accountable following adverse Department of Labor 
        investigative findings, but actually reimbursed Fluor Daniel 
        nearly $500,000 for expenses the company incurred in settling 
        the original pipefitter case and in a frivolous suit against 
        the pipefitters for filing union grievances, which was 
        dismissed with costs assessed against Fluor Daniel by a Federal 
        District Court.
 Has ignored the extraordinary findings of fact by a sister 
        federal agency, and the finding of a hostile working 
        environment that impacts safety at Hanford.
 Pledged to reimburse Fluor Daniel for legal costs associated 
        with the current civil case.
 Participated, and continues to participate, in litigation 
        strategy meetings with attorneys representing Fluor Daniel, and 
        has entered into a ``joint defense'' relationship with the 
        contractor despite the fact that DOE has not been named as a 
 According to the testimony of a Fluor Daniel manager, allowed 
        answering machine tapes from its own ``anonymous'' hotline for 
        reporting safety disclosures at Hanford to fall into the hands 
        of Fluor Daniel managers. FD manager Ivan Sampson testified in 
        a July 1999 deposition that he accidentally interrupted a 
        meeting where senior managers were listening to a tape of one 
        such call, trying--as one of the senior managers informed him--
        to determine the identity of the worker who made the call.
 Mishandled and corrupted an investigation into the allegation 
        of the alleged hotline interception testified to by Sampson, 
        and claimed that there was ``no evidence'' to support the 
        allegation. However, a review of the DOE's investigation file 
        turned up an e-mail message from a witness who had been 
        interviewed by the DOE team who complained to DOE that the 
        legal counsel Fluor Daniel had been allowed to attend his 
        interview. The employee complained that he felt intimidated, 
        and stated that he is sure that DOE will obtain ``the results 
        you are looking for'' in its investigation.
    In summary, what started as a crew of seven pipefitters with a 
simple safety concern has tragically blossomed into major litigation 
involving over fifteen pipefitters, most of whom no longer work at 
Hanford, with a clear message to all Hanford employees that the price 
of making a safety disclosure is your job and years of expensive 
litigation--all paid for by the Department of Energy. Far from 
evidencing a ``zero tolerance for reprisal'' policy, the Department's 
behavior is more akin to a co-conspirator in that it has counseled the 
contractor, paid the contractor's attorney fees in violation of the 
Hanford Site contract, and stood by mute as the career death toll has 
mounted as more and more employees were laid off by the contractor 
because of their support for the original crew of seven.
          iii. david carbaugh and the $240 million fraud case
    The U.S. Department of Energy is responsible for the government's 
largest and most dangerous enterprise. With more than 2.4 million acres 
of land, some 100,000 employees and about 25,000 fixed assets, Energy 
would rank in the top 30 of America's ``Fortune 500'' corporations. If 
it were privately held, DOE would be filing for bankruptcy. Major 
elements of the DOE's complex are closing down leaving a huge unfunded 
and dangerous mess. As a result of a half century of making nuclear 
weapons, DOE possesses one of the world's largest inventories of 
dangerous nuclear materials and has created several of the most 
contaminated areas in the Western Hemisphere.
    Currently, two thirds of DOE's annual $17.4 billion budget goes for 
nuclear weapons activities and to address the daunting environmental, 
safety and health legacy of the nuclear arms race. Inadequate 
investments were made to upgrade facilities, infrastructure, waste 
management and environmental protection. These failures in recent years 
created a very large environmental liability for the DOE estimated in 
the range of $230 billion to a trillion dollars over the next 50 years.
    The single largest and most expensive environmental challenge in 
the United States is at DOE's Hanford site in Eastern Washington. 
Hanford site is one of the most contaminated areas in the Western 
Hemisphere and is responsible for roughly half it the DOE's volumetric 
environmental contamination. Estimated to cost of some $50 billion 
dollars over several decades , the Hanford environmental cleanup effort 
rivals the Apollo Moon program in complexity and scope. Currently, the 
site spends about $1billion a year which is about 5 percent of the 
DOE's total annual budget.
    For an agency with such critical safety and health 
responsibilities, effective financial management controls are 
essential. There are at least 20 different contractor cost accounting 
systems, which make it virtually impossible for DOE to match them up 
and estimate basic expenses, like overhead costs, or compare the 
performance of contractors against each other. In essence, DOE is an 
early Cold War throwback that isn't even remotely comparable to the 
Defense Department (not exactly a paragon of financial management 
itself.) In the Defense Department it is possible to discover that a 
hammer costs 600 dollars and why it costs this much. In DOE, not only 
is it impossible to know how much a hammer costs, it is equally 
impossible to know if the hammer even exists. The U.S. General 
Accounting Office (GAO) describes this as ``an undocumented policy of 
blind faith in its contractors performance, which is called its `least 
interference policy'.''
    For ten years, the U.S. General Accounting Office has identified 
the DOE as one of the government ``highRisk'' agencies susceptible to 
waste fraud and abuse. According to the GAO.

 ``DOE has had difficulty Completing Large Projects. From 1980 
        through 1996, DOE terminated 31 of 80 mission critical projects 
        costing over $100 million, after expenditures of $10 billion. 
        Only 15 percent of these projects were completed, most of which 
        were behind schedule and over budget.''
 ``DOE's organizational structure allows challenges to go 
        uncorrected. DOE's ineffective organizational structure blurs 
        accountability allowing problems to go undetected and remain 
 ``Contract management remains vulnerable to Risk. DOE relies 
        on contractors to perform about 90 percent of its work. In 
        addition, although DOE originally planned to shift risk from 
        the federal government to private contractors, as a means of 
        enhancing its performance, it now considers risksharing more 
 ``DOE staff lacks technical and management skills. At an Idaho 
        facility, DOE turned to a private contractor, in part because 
        it lacked the inhouse expertise needed to evaluate technical 
        cleanup proposals. At the Hanford site, where DOE entered into 
        a multibilliondollar fixed price contract for the next 20 years 
        [with BNFL], DOE has no experts in fixedprice contracting.''
    In October 1998 the DOE Inspector General's Office underscored the 
GAO's concern about the Department's high risk to waste fraud and abuse 
because of the growing number of False Claim Act complaints filed 
against DOE. That year there were 25 open claims, ``the highest number 
ever'', ranging from $400,000 to $100 million. The number of complaints 
increased by 85 percent in that year alone and doubled over the past 
five years.
Lack of Contractor Accountability
    From the 1940's to the 1980, DOE contractors were provided with 
blanket indemnification, even for acts of willful negligence. This 
changed over the past decade as DOE Secretaries attempted to impose 
greater contractor accountability with limited success. In April 1999 
the DOE's Office of Inspector general reported that, ``The Department 
has not been successful in protecting the Government against contractor 
created liabilities in 16 of its 20 major forprofit operating 
contracts. Also the Department has not recognized the implications of 
adding contract reform liability provisions without obtaining a 
performance guarantee with indemnification provisions from parent 
companies of the Department's major operating contractors. As a result, 
the Department may be liable for monetary awards resulting from 
liabilities such as fines penalties, third part claims and damages to 
or loss of Government Property.''
Financial and Project Management Problems at Hanford
    Hanford has been plagued with delays and cost overruns on several 
critical projects. In 1994, the DOE's Contract Reform Team acknowledged 
that DOE's staff were not prepared to oversee contractors. The sites 
two most expensive and highest priorities the KBasins and the TWRS 
Projects have experienced the greatest problems. The KBasins project 
costs have ballooned from $274 million to more than $1 billion in three 
years and the completion date has slipped by 19 months.
    Because of cost and management problems, Congress enacted 
legislation creating a separate Office of River Protection to manage 
the TWRS project which involved several billions of dollars. Contractor 
cleanup work, with some exceptions, is behind schedule in the range of 
$100 million annually. There are several reasons for DOE's failures 
that stem to a large extent from inadequate financial management.
    For several decades the DOE has been exempted from the contracting 
and financial management statutes and regulations required of other 
major federal agencies. DOE has used its own Department of Energy 
Acquisition Regulation (DEAR) which was originally formulated to 
provide maximum flexibility to produce nuclear weapons and develop 
nuclear energy technologies. Because of the high importance given to 
nuclear weapons, combined with the need for experimental latitude 
involving ultra hazardous technologies, the DEAR, in effect required 
little contractor oversight and has vague enforcement policies and 
authorities subject to individual interpretation by DOE field offices. 
In September 1998, the DOE Office of Inspector General ``found varying 
interpretations of existing DEAR provisions'' The IG also noted that, 
``the DEAR did not define or explain,'' policies and procedures to 
analyze the propriety of contractor fees. Thus, the DEAR is a product 
of the early cold war and has institutionalized cost maximization 
practices that remain deeply embedded in the agency.
    Only recently has DOE agreed to adopt the Federal Acquisition 
Regulation (FAR), a. more consistent and enforceable financial 
management requirement. The FAR was established to codify uniform 
policies for the purchase of products and services by federal agencies. 
Additionally, the DOE is now required to comply with Cost Accounting 
Standards (CAS), codified by the Congress. These standards require 
formal written and transparent a cost accounting that is consistent 
with proscribed regulations. It is the primary tool for the U.S. 
government to exercise budgeting, procurement and financial management.
    By the late 1980's the DOE began to adopt the FAR in its contracts, 
and now has policy that requires the FAR to apply to its contracts. 
However, in practice the DEAR, `` implements and supplements the FAR 
for the Department's unique needs.'' In effect the DEAR remains an 
integral element of DOE's financial and contract management, while 
compliance with the Federal Acquisition Regulation and the Cost 
Accounting System is not enforced by DOE field sites or Headquarters.
    At Hanford there appear to be several shortcomings in DOE's efforts 
to adopt the Federal Acquisition Regulation.

 DOE financial management staff lacks technical competency to 
        apply Federal Acquisition Regulation and Cost Accounting System 
 The inability to provide effective oversight of public funds.
 Failure to hold contractors financially responsible for 
        deliberate CAS noncompliance.
 Inability to effectively control unallowed indirect costs bill 
        to the DOE by contractors.
 Limited presence by the Defense Contracting Auditing Agency 
        (DCAA) DOE sites to ensure compliance with the FAR and CAS.
 Refusal of DOE staff at field sites to follow FAR and CAS 
David Carbaugh Uncovers Hanford Contractor's Systematic Cost Inflation
    David R. Carbaugh was first employed as an accountant at the 
Hanford site in 1979, and he served as an accountant there until his 
termination in April 1997 for reporting false claims against the 
government by his employers. During his tenure, Mr. Carbaugh served in 
the accounting departments of both Westinghouse Hanford Company and 
Fluor Daniel Hanford.
    He received a Masters degree in Business Administration from 
Washington State University. In 1992, he was licensed by the State of 
Washington as a Certified Public Accountant. Prior to his termination 
for attempting to blow the whistle, Mr. Carbaugh's served as a budget 
rate analyst for employee fringe benefit costs.
    Mr. Carbaugh discovered the fraud as part of his responsibilities 
to help ensure that the contractors' annual congressional budget 
requests fairly represented their expected costs and complied with 
federal Cost Accounting Standards. What he came to realize is that 
Westinghouse, and later Fluor Daniel, were actually bilking the 
government for millions of dollars each year by inflating their annual 
budget requests with phantom costs. Mr. Carbaugh learned that the 
contractors' financial accounting system, the Financial Data System or 
FDS--double charged fringe benefit ``absence'' costs--paid vacation 
holiday and sick leave, charging these ``absence costs'' once against 
regular time hours and then once again against the overtime. As a 
result, the FDS was creating fictitious statements of costs and 
building these into the contractors' statements of indirect costs in 
their annual budget requests.
    Once Mr. Carbaugh learned that the paid absence rates were being 
double charged against both regular time and overtime, he attempted to 
have Westinghouse reprogram the FDS to apply the absence costs rate 
solely to regular time hours. After Westinghouse refused to correct the 
double billing, he attempted to alert persons in DOE's Richland Office 
(DOE-RL) about the budget inflation caused by the FDS. Westinghouse 
used retaliation and harassment to prevent Mr. Carbaugh from 
communicating with DOE. As a result, Mr. Carbaugh was forced to file a 
qui tam False Claims Act suit in April of 1996.
The September 1997 Defense Contracting Auditing Agency Report
    Mr. Carbaugh's suit is not mere supposition. The double charging of 
absence costs in the budgeting system has been documented in a Defense 
Contracting Auditing Agency (DCAA) audit and Fluor Daniel has actually 
acknowledged that it is wrong. In fact, a federal district court has 
recently ruled that there is sufficient evidence of budget inflation to 
allow Mr. Carbaugh to prosecute the quarter of a billion dollar case. 
However, DOE's oversight of its management contractors is so lax that 
it completely ignored the audit, and the contractors, coming to rely on 
DOE's ``least interference policy,'' have brazenly requested that the 
agency reimburse their legal expenses for attempting to quell Mr. 
Carbaugh's False Claims Act suit.
    The DCAA audit which confirms the double charging that Mr. Carbaugh 
alleged was submitted to DOE in September 1997. The DCAA was asked to 
perform a baseline assessment of contractor accounting at the time when 
DOE was in transition from a Management and Operating Contract it held 
with the Westinghouse Hanford Company (WHC) and a new Management and 
Integrating contract with the Fluor Daniel Hanford Company (FDH). The 
DCAA audit was done to evaluate `` whether FDH has complied with the 
CAS Board's rules, regulations and standards, and FAR Part 31.'' 
Specifically the purpose of the DCAA Audit `` was to determine if FDH 
has complied with the requirements of CAS 407, the Use of Standard 
Costs for Direct Material and Direct Labor.''
    The DCAA audit disclosed four major areas of non compliance with 
respect to CAS 407. According to the Audit:

1. FDH does not have written practices as required by CAS 407 which 
        describe the setting and revising of its labor rate standards, 
        the use of such standards, or the disposition of variances from 
        standard labor costs. The absence of such written practices has 
        resulted in or may result in a material misstatement or 
        missallocation of costs to final cost objectives . . . Because 
        of its failure to meet basic documentation criterion, DH cannot 
        use a standard costing system to estimate, accumulate, and 
        record the cost of direct labor.
2. FDH does not set labor rate standards in accordance with labor 
        grouping requirements of CAS 407. The failure to properly set 
        such standards has resulted in or may result in a material 
        misstatement or missallocation of costs to final cost 
        objectives . . . in setting its standard rates for each 
        [subcontractor] . . . FHD includes all employees in the 
        groupings . . . The presence of highly paid indirect employees 
        in the groupings will skew cost estimates, accumulation of 
        labor upward. Consequently, there is no assurance that FDH cost 
        estimates, accumulations of labor costs, and reported costs . . 
        . are accurate or reasonable . . .
3. FDH does not record variances on the basis of production units as 
        required by CAS 407. FDH does not accumulate variances in 
        separate labor cost variance accounts for each production unit. 
        The failure to properly record variances has resulted in or may 
        result in a material misstatement or missallocation of costs to 
        final cost objectives an entire company consisting of 
        management, employees, engineers, accountants, and other 
        professionals, scientists, skilled technicians, journeymen 
        union employees, unskilled workers, and clerical employees 
        cannot be considered a ``production unit'' in the sense defined 
        in CAS 407 . . . there is no assurance that labor costs 
        reported, accumulated and estimated at standard are either 
        accurate or reasonable, and there is no assurance that labor 
        accounting and estimating practices are being followed in a 
        consistent manner from one accounting period to another.''
4. FDH does not dispose of variances at the level of the production 
        unit as required by CAS 407. FDH does not allocate variances 
        related to direct labor on the basis of labor costs at standard 
        . . . Finally, a pension liability from the predecessor 
        contractor, Westinghouse Hanford Corporation, was transferred 
        to FDH at the beginning of the contract. FDH proposes to 
        `passback' this liability in FY 1997 or FY 1998. This 
        disposition would be in noncompliance with the requirement that 
        variances be disposed of annually . . . The Hanford pension 
        plan is fully funded and at the end of FY 1995 and FY 1996 
        there was no funding obligation on the part of WHC 
        [Westinghouse Hanford Company] to satisfy its fiduciary 
        responsibilities with regard to the pension plan. Nevertheless, 
        during FY 1995 and Fy 1996, WHC made entries in its books 
        representing an $8.0 million over accrual of its pension 
        liability . . . FHD plans to use the FY 1995 and FY 1996 
        pension variance to offset FY 1997 and FY 1998 program costs . 
        . . on August 25 and August 29 [1997], in spite of our 
        conversations with all interested parties. FDH ``distributed'' 
        the $8 M million overaccrued pension cost . . . the $8.0 
        million . . . indirect expense was ``passed back'' as direct 
        labors to offset program costs . . . to the targeted programs 
        as follows:
      Tank Waste Remediation Program    $2.975M
      Waste Management    1.415.5M
      Spent Nuclear Fuel    .742M
      Facility Stabilization    2.559M
      Other Programs    .316M
      Total    $8,007M
    Furthermore according to the DCAA report: `` The distribution of 
overaccrued FY 1995 and FY 1996 pension cost violates CAS 406, CAS 407, 
CAS 412, GAAP, and ERISA. In the distribution process, FDH simply 
changed the costs from pension costs to direct labor and in so doing 
changed indirect to direct.''
    DOE approved this transfer of funds in direct violation of law and 
regulations, on the basis of a ``White Paper'' submitted by FDH. The 
DCAA found that , ``the FDH ``White Paper'' sent to DOERL [ Richland 
Operations Office] . . . contains misstatement of fact, including its 
reference to the appropriateness of the use of cash basis accounting . 
. . CAS, FAR, ERISA and FSAB 87 all specifically state that cash basis 
accounting for pension cost is not acceptable.''
    The Audit concluded that:
        ``The labor accounting practices followed by FDH and the major 
        PHMC [Project Hanford Management Contract] subcontractors under 
        its responsibility are not in compliance with the requirements 
        of CAS 407. `` The contractor accounting system is not adequate 
        for estimating, accumulating and reporting costs based on 
        standards on government contracts . . . In our opinion, FDH 
        does not meet any of basic CAS 407 criteria and consequently, 
        FDH cannot use a standard costing system to estimate, 
        accumulate, and report its costs of direct labor . . . FDH did 
        not contest the fact that its practices . . . are not 
        documented. FDH's response does not indicate any intention to 
        correct this current CAS 407 noncompliance''
    DCAA recommended that DOE: `` (i) . . . make a determination that 
FDH is on non compliance with CAS 407; (ii) require FDH to provide cost 
impact of the non compliance and (iii) disapprove of those portions of 
FDH's accounting system related to the use of standard labor costs in 
estimating, accumulating and reporting labor costs.''
    The DCAA Report was not circulated and stamped ``Official Use 
Only'' to ensure that it could not be obtained under the Freedom of 
Information Act. The audit remained effectively secret until 1999.
A DCAA Request for a Fraud Investigation at Hanford
    Shortly after the Hanford audit was completed, a ``form 2000'' or 
``Suspected Irregularity Referral Form'' was filed by the DCAA employee 
who performed the audit. The form is meant to initiate an investigation 
based on ``information which suggests a reasonable basis for suspicion 
of fraud, corruption, or unlawful activity affecting Government 
contracts . . .'' Several irregularities were identified to justify 
further investigation including mischarging through the ``use of 
Standard Costs in Estimating, Accumulating, and Reporting Direct 
Labor'', accounting mischarging involving improper transfers through 
disposition of labor variances, Unallowable costs though the improper 
use of indirect funds in violation of CAS 407 and possible fraudulent 
performance fees.
    According to the investigation request:

 Mischarging the government ``FDH [Fluor Daniel Hanford] uses 
        standard costs to estimate, accumulate, and report all labor 
        costs. The FDH standard labor rates are composed of a base 
        average rate, an ``absence adder'' factor to overtime and a 
        `Continuity of Service' adder . . . It is not appropriate to 
        apply [sic] the `absence adder' factor to overtime labor. 
        Application of the `absence adder' to overtime labor results in 
        overstated labor cost and cost estimates for fee proposals, 
        baseline budget estimates, control point budget estimates, 
        indirect expense forecasts, indirect cost budgets, estimates to 
        complete, and final certified contract cost proposals . . . 
        FDH's application of the `absence adder' to overtime labor 
        results in a significant overstatement of both estimated and 
        recorded labor costs . . . FDH management knows that it is 
        improper to apply the `absence adder' to overtime labor . . . 
        FDH management knows that the `absence adder' applied to 
        overtime labor will generate a standard labor cost for which 
        there can be no of setting payroll cost. FDH management staff 
        members told the auditor they knew application of the `absence 
        adder' factor to overtime was wrong.
 Improper Transfer of funds ``We are most concerned that the 
        capability to manipulate the targets receiving `passbacks' of 
        variances is built into the [Project Hanford Management 
        Contract] `passback' program. FDH management can use the `pass 
        back' of `pure' variances to offset `troubled programs' ie., 
        overrun program costs. It appears the adjusting troubled 
        program costs using `pure' variances will help earn contract 
        performance fee''
    The effective lack of control by the Department of Energy of its 
contractors' manipulation of the contracting system at the expense of 
the U.S. taxpayer is in and of itself an outrageous breach of the 
public trust. Compounding the outrage, however, is DOE's apparent 
willingness to reimburse the litigation costs of the contractors 
accused of defrauding the government.
    The Major Fraud Act, 41 U.S.C. section 256 disallows costs 
associated with fraud cases brought against contractors by either the 
government or a relator on behalf of the government in False Claims Act 
cases. ``Costs incurred in defense of any civil or criminal fraud 
proceeding or similar proceeding (including filing of any false 
certification) brought by the United States where the contractor is 
found liable or had pleaded nolo contendere to a charge of fraud or 
similar proceeding (including filing of a false certification).''
    DOE's regulations contain a provision which was not a part of the 
1988 Act and is not in s 41 U.S.C. section 256(k). Specifically, DOE's 
regulations allow advancement of costs so long as the contractor repays 
them if it loses:
        ``During the pendency of any proceeding covered by paragraphs 
        (b) and (f) of this section, the Contracting Officer shall 
        generally withhold payment and not authorize the use of funds 
        advanced under the contract for the payment of such costs. 
        However, the Contracting Officer may, in appropriate 
        circumstances, provide for conditional payment upon provision 
        of adequate security, or other adequate assurance, and 
        agreements by the contractor to repay all unallowable costs, 
        plus interest, if the costs are subsequently determined to be 
    48 C.F.R. 970.520461(g). This provision does not appear to be 
expressly in conflict with federal law but there is no evidence that 
the lawmakers intended that agencies should be free to adopt such a 
provision by regulation. Indeed, it appears that NO other agency has 
enacted any such regulation, and the general FAR provisions are silent 
about advancement of litigation costs under these circumstances.
    It would be ironic indeed if the DOE were to reimburse the 
contractor litigation costs in claims where the contractor is accused 
of defrauding the agency. This is tantamount to a business paying the 
attorney fees, expert witness costs and associated trial costs of an 
accountant accused of embezzlement.
                iv. jim bailey and the nuclear couriers
    In their daily travels along the nation's highways, few Americans 
realize that they may be sharing the road with a live nuclear warhead 
secured in an unmarked government vehicle. Until recently, the public 
had little reason to know-or worry about the activities of the U.S. 
Department of Energy's Transportation Safeguards Division, which 
ferries nuclear materials between military bases and nuclear weapons 
facilities. GAP whistleblower Jim Bailey has changed all that.
    Bailey was one of 238 special agents within the Transportation 
Safeguards Division (TSD) charged with transporting nuclear materials 
between sites. Through the bomb-building years of the Cold War and its 
aftermath, TSD couriers have traveled millions of miles along America's 
highways, logging over 3 million in 1996 alone.
    The work is grueling and dangerous; the couriers call themselves 
``road warriors.'' The risks-of terrorist attacks or accidents-are 
detailed in government documents. ``The Department of Energy,'' reads 
one document, ``has taken the position that it is not a question of if 
a nuclear weapons shipment will be attacked, but when.''
    The government has worked hard to prevent such a catastrophe. 
Couriers are trained to protect their cargo from the inherent dangers 
of transporting nuclear devices, including accidents and terrorist 
sabotage. Their schedules and activities are shrouded in secrecy. They 
carry badges and are permitted to use deadly force. They travel in 
convoys that include well-armed tactical teams of up to 23 agents.
    The tractor-trailers that carry the nuclear materials are 
technologically designed to protect their cargo. The armored 18-wheel 
``Safe Secure Trailers' are built to withstand devastating collisions. 
They can endure raging fires without endangering the nuclear materials 
they carry. The trailers are accompanied by special vans carrying 
additional couriers and equipment ranging from night-vision goggles to 
pistols, M-16 rifles and 12-gauge shotguns.
SST, or Safe Secure Transport Truck Carrying Nukes
    These safeguards arguably have served the government and the public 
well. The agency reports no terrorist attacks or deadly accidents 
involving a nuclear weapons shipment to date. The drivers, however, may 
not be so lucky. Evidence gathered in the case of whistleblowing 
courier James Bailey indicates that couriers suffer not only from 
punishing working conditions, but from potential exposure to dangerous 
levels of radiation. The bombs are protected. The public is protected. 
But who protects the protectors?
    For eight years, Jim Bailey ferried nuclear cargo around the 
country for the TSD's Southeast Courier Section, based out of Oak 
Ridge, Tennessee. Then, in March 1995, Bailey's wife gave birth to 
their first child, a daughter they named Kelly. The baby was born with 
a rare form of brain cancer. Afflicted with three aggressively 
malignant tumors at birth, Kelly survived for four painful months. By 
the time she died, her head had swelled to adult size.
    The shock of Kelly's illness and premature death led Bailey to 
question his potential exposure to radiation on the job. He was 
concerned about the hazards posed by some of the nuclear materials he 
had transported and the time his job required him to spend in 
contaminated areas. ``I wasn't hauling watermelons at the time,'' he 
said later. ``That ought to make the alarm bells go off.''
    Bailey sought the advice of several medical experts, including Dr. 
Jay Hunt, a cancer specialist with expertise in genetic mutations. Dr. 
Hunt had Bailey tested and discovered chromosomal damage consistent 
with radiation exposure. After consulting with other medical experts in 
the field of pediatric genetics, Dr. Hunt advised Bailey that if he 
intended to father another child, he should take appropriate measures 
to protect himself. ``You've already had one child with a brain 
tumor,'' the doctor told Bailey, according to his later court 
testimony. ``There's absolutely no reason to take a chance. There's no 
reason to be driving these trucks without adequate monitoring.''
    Bailey took his doctor's advice and refused to continue his courier 
travel. He used several months of leave time and performed light-duty 
desk work. After a few months, however, Bailey's supervisor told him to 
get ready for trip duty in the near future.
    Bailey was not about to give in, however. He wrote his 
congressional representative, Rep. John Duncan, in December 1995, 
describing his many concerns about radiation exposure and working 
conditions on the job. And he studiously gathered evidence from other 
couriers about the hazards they faced on the job.
    His coworkers described a range of health and safety concerns. Some 
involved the harsh working conditions, the stress and exhaustion 
experienced on 36-hour road trips. More troubling to Bailey were the 
tales of possible radiation exposure. Couriers are in routine contact 
with nuclear materials; they are required, for example, to enter the 
trailers to check that their cargo is securely tied down en route. Yet 
they travel in street clothes in order to deflect attention, protected 
only by dosimeter badges designed to register radiation exposure. The 
badges virtually always register ``zero,'' according to the couriers.
    Bailey learned of cases of contamination requiring officials to 
confiscate couriers' clothing and shoes. Some couriers were warned by 
management to ``get in and get out'' when they check tie-downs inside 
the trailers, raising fears of radioactive exposure. On occasion, 
tractor-trailers had set off radiation monitors located at the entrance 
and exit of DOE bases and ports of inspection at state borders. 
Couriers had observed workers at nuclear plants wearing full-body 
protection with respirators while loading, unloading, or positioning 
materials inside their trailers.
    Bailey's concerns mounted, along with his frustration at the DOE 
for failing to act on the health and safety hazards he reported. One 
DOE Health and Safety Manager told him bluntly that if the agency were 
to take inexpensive steps to protect couriers's safety-such as 
increasing radiation training, providing laundry facilities at work, 
and offering routine bioassay tests-the result would be to threaten 
couriers' morale by leading them to believe that there was reason for 
    Bailey's superiors, meanwhile, were not taking his resistance 
quietly. One of his supervisors publicly described Bailey's actions in 
raising health and safety concerns as tantamount to ``committing 
    In late June 1996, Bailey was told to report for travel duty. He 
refused the travel assignment, citing DOE's failure to correct unsafe 
practices. Bailey was fired on September 13, 1996. Soon afterward, he 
filed a complaint under the federal Whistleblower Protection Act 
challenging his removal, and asked the Government Accountability 
Project to represent him.
    Bailey's hearing began in late March 1997. The judge heard damning 
testimony about agency practices. Under cross-examination, the DOE's 
own expert witness, Gene Runkle, could not explain why a dosimeter 
badge did not register exposure even after suspicious couriers had 
positioned a badge on a known radiological source. He said only that 
the badges had to be placed ``just right'' to receive a reading.
    The judge was not persuaded by the agency's arguments. In an April 
6 decision, he concluded, ``I find that a reasonable, prudent person 
would heed [Dr. Hunt's] advice and conclude that courier duties, 
without better health and safety measures, posed a specific and 
objective danger to health. I can imagine that anyone, having just lost 
an infant daughter to three types of rare brain cancers, and with 
chromosomal damage consistent with radiation exposure, would not come 
to the same conclusion the appellant did: that it was not safe for him 
to return to work.''
    Showing little regard for the health and safety implications raised 
by the judge's decision, the Department of Energy refused to reinstate 
Bailey to his job, and appealed the ruling. The fallout from the Bailey 
case, however, forced the DOE to conduct a review to investigate the 
radiological safety practices of the courier program.
    The DOE's investigative panel issued its final report on the 
courier program in November 1997. Its findings are extremely damaging 
to DOE. The report confirms that couriers were subjected to 
radiological conditions that could result in unmonitored exposures to 
contamination. It points to the removal of monitoring equipment from 
TSD tractor-trailers in September 1996, for example, and identifies 
several potential contamination hazards in the ``bone yard,'' where 
vehicles are parked and the break rooms located.
    DOE management responded to the findings not by correcting the 
problems, but by retaliating against couriers who had taken part in the 
investigation. The retaliation was sweeping and systematic. Three 
managers formed a ``Blue Ribbon Panel,'' which met with every courier 
in the Oak Ridge Division. All courier assignments out of Oak Ridge 
were suspended until the panel had interviewed everyone. Couriers were 
told to answer three questions and informed that their answers would be 
reviewed and their futures in the program would be adjusted 
    Not surprisingly, the investigation had a chilling effect among the 
couriers at Oak Ridge. One courier described the experience to GAP 
investigators, ``I answered `don't know' to all three questions on the 
survey, and would soon regret it during my hearing before [the 
supervisors]. I spent approximately 35 degrading minutes before these 
individuals, who told me that my answering `don't know' would result in 
my [security clearance] being rescinded. I was provided a new 
questionnaire, which I hurriedly filled out the way they wanted (yes 
responses) and said, put me in the good guy club. I want to keep my 
job. Coercion. There was no question in my mind that this entire 
humiliating and debasing experience was done to seek out persons not 
considered loyal to the management of TSD. . .''
    At stake is the health and safety of a large group of DOE 
employees. The couriers should have a right to question DOE's 
inexplicable failure to perform radiation testing on employees who have 
consistent and routine contact with radioactive materials-and who risk 
extreme exposures in case of an accident of attack.
    Jim Bailey does not regret his decision. After he stopped working 
as a courier, the damage to his chromosomes disappeared. The Baileys 
gave birth to a healthy child in 1996.
    Bailey's fellow couriers, meanwhile, are still working continuous 
shifts of up to 36 hours and are expected to check tie-downs in trucks 
carrying radioactive cargo without protection. Their confidence in 
DOE's concern for their safety is lower than ever.
    In February 1998, ABC National News aired a story critical of the 
Department's handling of Mr. Bailey's concerns and raising questions 
about the TSD program itself. The Departmental response was swift and 
overwhelming. Every single courier was ordered to report for a 
polygraph test, and to submit to a line of questioning that included 
such questions as to whether or not they agreed with Jim Bailey, 
whether they had been in contact with the news media, and other 
questions of an unconstitutional nature. Eighteen of the couriers 
refused to answer the questions, calling the investigation a witch-hunt 
for whistleblowers. They obtained counsel, and, two years later, remain 
on paid, suspended leave from their jobs.
    Meanwhile, I appealed to Secretary of Energy Frederico Pena to 
conduct an independent assessment of the situation and take immediate 
corrective actions. On February 4, 1998, Pena agreed and appointed a 
Management Review Panel to undertake a ``comprehensive review'' of 
operations of the TSD program. The six-member panel, led by Gordon Moe, 
issued its report in July 1998, vindicating the couriers' concerns. The 
Panel not only found serious management problems, but prescribed 
sweeping organizational changes and management fixes to address the 
problems. In November 1998, Gordon Moe and I met with Assistant 
Secretary Victor Reis to give him an update on the progress--or rather 
lack of progress--in implementing the changes. Secretary Reis promised 
action. However, as of this update, no action has been taken of any 
magnitude. Specifically--

 Settlement has not been reached with Jim Bailey on outstanding 
        legal issues, despite the Moe Panel recommendation;
 The 18 suspended couriers remain on leave, even though the FBI 
        review is reportedly at an end;
 TSD management continues to rule through intimidation, 
        hostility, and threats.
 Couriers are constantly warned to not complain to outside 
        parties, and specifically told not to contact Gordon Moe.
 No settlement has been reached or even attempted in the 
        Southern Cross training/exposure incident where numerous 
        couriers allege that they were exposed to toxins, resulting in 
        health effects.
    In conclusion, the Department's intolerance of employee's raising 
of safety and health concerns is by no means restricted to contractor 
employees--the Department has shown that its own employees will suffer 
egregious reprisals whenever they challenge the system. Even a DOE-
sponsored investigation which found a prevalent culture of hostility 
and mismanagement was ignored, and the recommendations forgotten. 
Meanwhile, eighteen couriers who once had productive careers twist in 
the wind--at taxpayers' expense.
                solutions: the model offered by the nrc
    The commercial nuclear industry has a long history of dealing with 
the issue of employee concerns, and during the past 15 years has 
evolved principles and procedures that establish work environments 
encouraging safety reports and prohibiting retaliatory conduct that 
could chill such reports. The primary regulator of the nuclear industry 
is the Nuclear Regulatory Commission (NRC), which defines its mission 
as the protection of the public safety and health in its regulation of 
commercial nuclear facilities. Last year, DOE announced that it 
intended to put its nuclear safety program under NRC regulation, and 
pilot programs toward this end have been announced recently.
    One example of the NRC's approach to its regulation of licensees in 
the area of employee concerns involves a Connecticut nuclear station 
called Millstone, which has three reactors. Since the late 1980's, 
Millstone Nuclear Power Station has been the source of a high volume of 
employee concerns and allegations related to safety of plant operations 
and harassment and intimidation of employees. Following a TIME magazine 
cover story in March 1995 about the situation, in which the NRC IG 
faulted the NRC for not recognizing that the reactors had been 
operating outside their license requirement for many years, the Nuclear 
Regulatory Commission (NRC) concluded that the large number of 
deficiencies identified at all three Millstone sites implied that some 
employees were reluctant to identify safety issues.
    In an Order issued on August 14, 1996, the NRC mandated 
independent, third party oversight to address licensee noncompliance 
with regulatory requirements concerning, among other things, employee 
safety concerns. In this Order, the NRC directs that, prior to 
resumption of power operations, the Licensee shall develop, submit to 
the NRC, and implement a comprehensive plan for reviewing and 
dispositioning safety issues raised by the Licensee's employees and 
ensuring that employees who raise safety concerns are not subject to 
discrimination. Additionally, the Licensee was ordered to retain an 
independent third party, subject to the approval of the NRC, to oversee 
its implementation of a comprehensive plan. The plan for independent 
third party oversight will continue to be implemented until the 
Licensee demonstrates by its performance, that the conditions which led 
to the requirement of that oversight have been corrected to the 
satisfaction of the NRC.
    At commercial nuclear facilities, the NRC has made a clear and 
cogent determination that the ability of employees to raise concerns is 
integral to the protection of public health and safety. The hazards at 
DOE nuclear facilities are no less dangerous, and yet throughout the 
DOE complex, reprisals against employees continue unabated, and hostile 
working environments are instituted without challenge from the DOE. The 
DOE should take notice of the NRC's actions and promptly incorporate 
the NRC methodology for protecting employee concerns at its facilities. 
If DOE is serious about improving its operations consistent with its 
mission and in accomplishing a work environment that has a ``zero 
tolerance for reprisal'' in fact and not just in rhetoric, it will 
study and implement the NRC model. For instance, the DOE could--

1. Establish Departmental policy in the Code of Federal Regulations 
        that mandates the establishment of a ``safety-conscious work 
        environment'' which actively encourages employees to report 
        health, safety or environmental and other employee concerns at 
        DOE-owned sites;
    This procedural step is necessary to clarify and formalize DOE's 
policy on prohibition of reprisals against employees who raise 
concerns. The Nuclear Regulatory Commission codifies its policy in 10 
C.F.R. Part 50.7. The NRC's statement of policy could easily be 
modified to suit the purposes of the Department of Energy. A DOE 
version of this policy could read like this: 2
    \2\  The language that is in bold typeface is different than that 
already appearing in the NRC's Statement of Policy at 10 C.F.R. Part 
    Employee protection.
          (a) Discrimination by an agency official, or a contractor or 
        subcontractor of the Department against an employee for 
        engaging in certain protected activities is prohibited. 
        Discrimination includes discharge and other actions that relate 
        to compensation, terms, conditions, or privileges of 
        employment. The protected activities are established in section 
        211 of the Energy Reorganization Act of 1974, as amended, and 
        in Departmental regulations codified at 10 C.F.R. Part 708 and 
        in general are related to the administration or enforcement of 
        a requirement imposed under the Atomic Energy Act or the Energy 
        Reorganization Act.
          (1) The protected activities include but are not limited to:
          (i) Providing the Department or his or her employer 
        information about alleged violations of either of the statutes 
        named in paragraph (a) introductory text of this section or 
        possible violations of requirements imposed under either of 
        those statutes;
          (ii) Refusing to engage in any practice made unlawful under 
        either of the statutes named in paragraph (a) introductory text 
        or under these requirements if the employee has identified the 
        alleged illegality to the employer;
          (iii) Requesting the Department to institute action against 
        his or her employer for the administration or enforcement of 
        these requirements;
          Testifying in any Department proceeding, or before Congress, 
        or at any Federal or State proceeding regarding any provision 
        (or proposed provision) of either of the statutes named in 
        paragraph (a) introductory text.
          (v) Assisting or participating in, or is about to assist or 
        participate in, these activities.
          (2) These activities are protected even if no formal 
        proceeding is actually initiated as a result of the employee 
        assistance or participation.
          (3) This section has no application to any employee alleging 
        discrimination prohibited by this section who, acting without 
        direction from his or her employer (or the employer's agent), 
        deliberately causes a violation of any requirement of the 
        Energy Reorganization Act of 1974, as amended, or the Atomic 
        Energy Act of 1954, as amended.
          (b) Any employee who believes that he or she has been 
        discharged or otherwise discriminated against by any person for 
        engaging in protected activities specified in paragraph (a)(1) 
        of this section may seek a remedy for the discharge or 
        discrimination through an administrative proceeding as provided 
        in Departmental regulations codified at 10 C.F.R. 708 or in the 
        Department of Labor. The administrative proceeding must be 
        initiated within 60 days after an alleged violation occurs with 
        the DOE, and within 180 days with the Labor Department. The 
        employee may do this by filing a complaint alleging the 
        violation with the Department of Labor, Occupational Safety and 
        Health Administration. In either proceeding, the agency may 
        order reinstatement, back pay, and compensatory damages.
          (c) A violation of paragraph (a), (e), or (f) of this section 
        by a contractor or subcontractor of the Department may be 
        grounds for--
          (1) Denial, revocation, or suspension of the contract.
          (2) Imposition of a civil penalty on the contractor or 
          (3) Other enforcement action.
          (d) Actions taken by an employer, or others, which adversely 
        affect an employee may be predicated upon nondiscriminatory 
        grounds. The prohibition applies when the adverse action occurs 
        because the employee has engaged in protected activities. An 
        employee's engagement in protected activities does not 
        automatically render him or her immune from discharge or 
        discipline for legitimate reasons or from adverse action 
        dictated by nonprohibited considerations.
          (e)(1) Each contractor or subcontractor shall prominently 
        post the provisions of this policy at DOE-owned facilities. 
        This form must be posted at locations sufficient to permit 
        employees protected by this section to observe a copy on the 
        way to or from their place of work.
          (f) No agreement affecting the compensation, terms, 
        conditions, or privileges of employment, including an agreement 
        to settle a complaint filed by an employee with either the 
        Department of Labor pursuant to section 211 of the Energy 
        Reorganization Act of 1974, as amended, or pursuant to a 
        proceeding initiated under the provisions of 10 C.F.R. Part 708 
        may contain any provision which would prohibit, restrict, or 
        otherwise discourage an employee from participating in 
        protected activity as defined in paragraph (a)(1) of this 
        section including, but not limited to, providing information to 
        the DOE or to his or her employer on potential violations or 
        other matters within DOE's regulatory responsibilities.
2. Empower the existing Office of Employee Concerns with the authority 
        and the resources to set DOE policy on the issue of all agency 
        and contractor employee concerns. Specifically, the Office of 
        Employee Concerns--

 should report directly to the Secretary of Energy, and must 
        standardize DOE policy across the complex.
 should be given adequate funding and staffing and the 
        authority to implement policy, conduct investigations, levy 
        sanctions, and order corrective actions to abate violations.
 should institute rules, procedures and regulations requiring 
        DOE managers and supervisory personnel as well as contractor 
        and subcontractor employers to maintain a safety conscious work 
        environment where employees are free to raise employee concerns 
        without fear of reprisal.
 should require facilities to conduct independent and reliable 
        employee surveys to measure whether employees feel free to 
        raise concerns free of reprisal on a company-by-company basis 
        (including at DOE) to use as a basis for determining whether 
        corrective actions should be undertaken.
    Currently, the DOE's HQ Office of Employee Concerns is a shell of 
an office, with one full-time employee (the Director, Bill Lewis) and 
one and half Full-Time Equivalent (FTE) employees who are mostly 
contracted from the outside. The very existence of this Office is in 
constant doubt. The Office of Employee Concerns is window-dressing. In 
its current incarnation, it cannot effect change.
    The Office of Employee Concerns should have, at a minimum, a 
Director, one administrative support person, two policy staffers and 
two full-time investigators. The Office should be responsible primarily 
for setting and enforcing Departmental policy. Other duties should 

 developing language to insert into the Department of Energy 
        Acquisition Regulations requiring contractors to maintain a 
        safety conscious work environment;
 developing posters and employee communication vehicles to 
        distribute for posting around the complex;
 inspecting and evaluating each facility in the complex to 
        ascertain that the standards set by the DOE in the area of 
        employee concerns are being reached;
 investigating and correcting extraordinary cases of hostile 
        and chilled work environments, high-profile cases, or 
        facilities experiencing a large number of discrimination 
        complaints alleging reprisals for raising concerns.
    A revitalized and effective Office of Employee Concerns is of 
paramount importance for achieving employee protection and safer work 

3. Require DOE and DOE contractor ES&H and quality organizations to 
        implement ``Differing Professional Opinion (DPO)'' processes, 
        using NRC's DPO process as a model, to increase the autonomy of 
        safety professionals employed by DOE and DOE contractor 
4. Amend existing contract(s) at its nuclear weapons production and 
        former nuclear materials production sites to ``incentivize'' 
        the establishment and maintenance of a safety-conscious work 
        environment, and to put contractors on notice that the contract 
        can be conditioned, suspended and/or revoked upon a finding by 
        the DOE that a company has engaged in a pattern and practice of 
        whistleblower reprisals or has failed to maintain a safety-
        conscious work environment;
    This proposal follows the lead of the NRC, which has put licensees 
on notice that the license to operate the facility hinges upon 
maintaining a retaliation-free work environment. As the Department 
moves away from the Management and Operating (M&O) contracting model, 
and towards the performance-based contracts, there is a greater need to 
spell out DOE's policies in relation to prohibition against reprisals 
in the contract and to tie specific awards to this performance.
    The recent history of reprisals at Hanford, Oak Ridge, Rocky Flats 
and Pantex, illustrate that contractual financial incentives and 
penalties are necessary to encourage a climate free of reprisals. A 
substantial portion of every DOE contract in the nuclear complex should 
depend upon employee freedom to report and resolve employee concerns.

5. Address ``hot spots'' where the chilling effect now exists, based 
        upon the investigative reports of the Labor Department, Office 
        of Special Counsel, MSPB, OCEP, or OHA and where there may be a 
        strong perception among employees that there will be reprisal. 
        Corrective actions could include:
 training of supervisory employees and workers by employee 
        concerns experts;
 developing guidelines for use of the ``holding period'' 
        concept recommended by the Nuclear Regulatory Commission for 
        contested proposed job actions;
 instituting a ``personal accountability'' rule to hold 
        individual managers accountable for reprisals.
    These recommendations come from the ``Independent Panel Review'' of 
the Millstone Plant licensee action levied by the Nuclear Regulatory 
Commission. They represent ``state of the art'' thinking of some of the 
most experienced employee concern professionals in the nation.

6. Require the Department of Energy's Office of Enforcement and 
        Investigation, Environment, Safety and Health, to ascertain, 
        through its normal inspection duties or upon request from the 
        Office of Employee Concerns, whether departures from a 
        ``safety-conscious work environment'' or a chilling effect on 
        employee concerns exists at a specific facility or within any 
        DOE division, and to order corrective actions to remedy such 
    Periodically, the Office of Oversight conducts inspections, 
evaluations and assessments at sites around the complex. A key part of 
their mission should be to assess the existence of a ``safety-conscious 
work environment'' and where departures from it exist, to require 
corrective actions. Failure to maintain such an environment, especially 
in a nuclear safety context, could lead to findings of violations under 
the Price-Anderson Act.
    In summary, the Department can only salvage its credibility on the 
whistleblower issue by--

 establishing Departmental policy that calls for the positive 
        presence of a ``safety conscious work environment in its 
 instituting rules, procedures and regulations requiring DOE 
        managers and supervisory personnel as well as contractor and 
        subcontractor employers to achieve and maintain a ``safety-
        conscious work environment;''
 requiring the Department of Energy's Office of Oversight, 
        Environment, Safety and Health, to ascertain, through its 
        normal inspection duties or upon request from the Office of 
        Employee Concerns, whether a demonstrative ``safety-conscious 
        work environment'' exists at a specific facility or within any 
        DOE division, and to order corrective actions to remedy 
        departures from such an environment;
 requiring DOE and DOE contractor ES&H and quality 
        organizations to implement ``Differing Professional Opinion 
        (DPO)'' processes, using NRC's DPO process as a model, to 
        increase the autonomy of safety professionals employed by DOE 
        and DOE contractor organizations;
    The ability of employees to raise concerns is the key to safe and 
efficient operations, especially in nuclear facilities. The Department 
of Energy has, for seven years, recognized this important concept but 
has not taken the necessary steps to change the culture to make the 
policy shift more than a rhetorical chimera. In fact, in total 
contradiction of its oft-cited ``zero tolerance for reprisal'' policy, 
the Department has assisted its contractors in every possible way to 
fight whistleblowers, even when they prevail in court. After seven 
years of a ``zero tolerance'' can the Department point to a single 
instance where the policy has actually been enforced? The Department 
has yet to take a single action against a single contractor or 
individual who has been found guilty of reprisal. The cases of David 
Lappa, the fourteen pipefitters at Hanford, Mr. Jim Bailey and many 
others testify to the ongoing state of affairs at the DOE--where the 
true message seems to be ``zero tolerance for whistleblowers.''
    Congress needs to get serious about reforming, or getting rid of, 
this agency. The General Accounting Office has pointed out for nearly 
twenty years in numerous reports that the Department is seemingly 
incapable of managing itself, much less its contractors or the massive 
cleanup job that lies ahead. Protecting employees who speak about 
illegality, threats to public health and safety, mismanagement and 
fraud deserve protection and encouragement. Congress can do its part by 
beefing up protections for these workers, which remain inadequate, and 
by passing legislation that resolves the conflict of interest situation 
at DOE by affording external regulation of these facilities to OSHA and 
the Nuclear Regulatory Commission.
    Thank you for inviting my testimony today.

    Mr. Burr. I thank you, Mr. Carpenter.
    The Chair would recognize Mr. Walli for purposes of an 
opening statement.


    Mr. Walli. Thank you. Thank you for inviting my testimony 
today. My name is Randy Walli. I am a pipefitter by trade. I've 
worked 24 years in the construction industry. Some of my jobs 
have been at the Hanford Nuclear Reservation in southeast 
Washington State.
    I have come here today on my own accord and at great 
expense to my family and myself. Unlike some that will testify 
here today, I am not being paid to be here. But I am hopeful 
that, by being here today, that somebody is finally taking 
these matters seriously.
    I grew up in the Hanford area and my family is from the 
Hanford area. I have lived there and watched the Tri-Cities 
revolve around the ups and downs of the Hanford site.
    The last 3 years have been a real bad experience for me and 
my fellow pipefitters. This is because we believed in safety 
and we thought we had the right and the duty to talk and 
practice safety in our workplace. But because of the stand that 
we took on some safety issues in the tank farms, we have been 
labeled as ``whistleblowers.'' ``Whistleblower'' is a very 
tough name to live with once it has been pinned on you. People 
misjudge you. They don't want to be seen with you. They leave 
the room when they see you. They feel that they have to choose 
sides when they are around you. We've lost friends over this, 
and we've put great burdens on our families. We are still right 
in what we did and what we are doing.
    The Department of Labor has twice seen that we were wronged 
by this company, yet no one else beside the Government 
Accountability Project people have stepped in to help us fix 
these problems.
    This whole process has driven concerned people into the 
shadows because they have seen what happens to people who raise 
concerns. I have seen people demoted, transferred, laid off, 
harassed for bringing up concerns. This makes for a very bad 
work environment.
    In my case as a pipefitter foreman in the 200 west area of 
Hanford, we had a few issues come up. The last one was a safety 
issue related to under-rated valves in a radiation 
contamination zone. This issue was of great importance, because 
the use of the wrong valves--these were test valves--on a high-
level waste transfer line could cause personal injuries and/or 
environmental contamination. If the valves failed, they could 
flood the nearby underground high-level waste tanks, which is 
both a safety and environmental concern.
    Two working days after, as a crew, we refused to use the 
wrong valves and stopped work over this issue on this project, 
we were told the entire crew was being laid off. At the end of 
that week, my crew and I were terminated. But the job was not 
over, because there was a DOE milestone to be reached in 
October of that year, and this was the first of June, so we 
were replaced by other workers.
    We ended up going through numerous avenues, where we found 
the Government Accountability Project people and ended up at 
the Department of Labor. The Department of Labor, after several 
months of investigations, found in our favor. The company 
appealed it, and, after months of discovery and depositions, 
settled it out of court the day before trial.
    They agreed to take us back under the Whistleblower Act, so 
we were supposed to be treated fairly. We were not.
    I've also learned that the Department of Energy has paid 
the cost of that settlement and the legal fees associated with 
it. The company paid us a total of $334,000 and hired us back 
to our former jobs. The company then sued myself and the other 
pipefitters because of union complaints that we filed. The 
Union complaints had nothing to do with this company, but the 
company held up our settlement checks and dragged us into 
Federal district court, saying we had breached the settlement. 
We hired lawyers to fight back. The Federal court ruled against 
the company and made the company pay the settlement amount with 
interest, as well as our attorney fees. Again, DOE paid for 
that, as well.
    It seems we are fighting a company and DOE and/or the 
company with DOE's money. A little over 6 months after being 
re-hired, we were laid off again. That's not unusual for 
construction people. That's part of our lives. The first day we 
go to work, we're working ourselves out of a job. But Hanford 
is our home and some of the people that we worked with there in 
construction have worked there continuously for 20-plus years. 
It is nice to be able to work at home and be able to come home 
to our families. Most of us have young families. But we have 
been labeled ``whistleblowers'' and we might not ever be able 
to work there again. Most of the people at the Hanford site, if 
they support us, it's from the back door. It is done quietly, 
because they don't want to be seen talking to us. Yet, they'll 
call us at home and want us to hear their concerns.
    We stood up for numerous safety issues and concerns and 
tried to keep people from getting hurt, but these companies and 
DOE don't seem to want to listen. They put window dressing on 
safety first, and that there is no price tag on safety--and 
there really is no price tag on safety if you're doing it the 
wrong way if DOE is going to keep paying for the contractor's 
    After we were terminated a second time, we ended up going a 
different avenue, the Hanford Joint Council. This is a 
mediation board set up to resolve issues at the Hanford site.
    Fluor Daniel, the company that we work for, is a member of 
this DOE-supported council. Some of the gentlemen and I that 
worked together went to the Joint Council, told our story, and 
tried to resolve it out of court. Fluor Daniel Northwest, the 
company we were working for, refused in writing to meet with 
this agency to try to resolve these issues, so we pursued 
things through the legal system again, the Department of Labor 
ruled in our favor again, and the company appealed it again.
    The Department of Labor handed down an amazing finding, one 
of the stiffest findings ever handed a company, and yet here we 
are, we're going through it again. We are on our way to court 
in September, and we have got a lot more evidence this time 
than we ever had the first time. We've got documents that show 
malice, cover-ups, and how they have treated people that worked 
with us. We had people that were in carpools with us and just 
associated with us that were laid off.
    This is the new atmosphere at Hanford. This is the 
atmosphere that DOE is helping or allowing to create.
    When I grew up in this community, there was a great deal of 
pride. There was pride that Hanford was part of the war effort. 
This was the town that gave a day's pay for a bomber. There was 
a great deal of pride in this community. I don't believe you'll 
find this there again.
    You know, it is a sad thing that some people have to stand 
up alone and put so much on the line to try to make safety 
work. There are some sincere, honest people working out there, 
but they are not up front.
    We've got proof that DOE's counsel is helping the company 
fight us again, and this means that the people sitting in this 
room today are paying to fight us, the public.
    There was a DOE manager that once said in an interview, ``I 
don't expect we'll get zero concerns being raised.'' The zero 
is not for concerns raised. It's supposed to be zero tolerance 
for reprisals against those who bring them.
    Mr. Richardson also stated that there must be zero 
tolerance policy for reprisals linked to the contractor safety 
records of their performance reviews. I thought that would be a 
fine, not a payment.
    DOE should be out there guiding these companies and not 
paying for their mistakes. This is not the way to do business.
    There are a lot of good, skilled people out there. Let's 
back the workers. Let's clean up the mess and make it in a safe 
manner so that we can watch our children grow up.
    Thank you.
    [The prepared statement of Randall Walli follows:]
                  Prepared Statement of Randall Walli
    I have worked numerous jobs at the Hanford Site in southeastern 
Washington for different contractors over a number of years. I grew up 
near Hanford. My family is from the Hanford area. You know, we have 
lived there and watched the Tri-Cities grow, and revolve around 
Hanford. We have seen a lot of people testify to the pride of this 
community. It's been a bad experience for me and some of my fellow 
pipefitters over the last three years, because we took a stance at the 
Hanford Site over some safety issues. We've since been labeled as 
whistleblowers. Which is a bad term for people that were concerned over 
safety issues or their fellow workers.
    In my case I was a pipefitter foreman, 200 West Area. We had some 
issues that came up over some testing of some new pipe systems that 
were being put in. And subsequently we were terminated. The whole crew 
that worked for me was terminated.
    We ended up going through numerous avenues, including lawyers, over 
a period of time. We tried to go through what we call the Hanford Joint 
Council, which is an agency that is set up to try to resolve issues 
here at the Hanford Site.
    Some of the gentlemen that I worked with, we all met with the Joint 
Council, told our stories, tried to get it resolved by keeping it out 
of court, kind of an in-house deal.
    The company we worked for refused in writing to meet with this 
agency that DOE has set up to handle these issues.
    We then pursued things through legal systems. The Department of 
Labor ruled in our favor. The company appealed it. The company, the day 
before we went to trial, settled this out of court. They agreed to take 
us back under the whistleblower acts. We are supposed to be treated 
fairly. I have learned that the Department of Energy paid the costs of 
that settlement and the company's legal fees associated with it.
    Then, the company sued myself and the other pipefitters because we 
filed a union complaint. The complaint had nothing to do with the 
company. But the company held up our settlement checks and dragged us 
into federal district court, saying that we breached the settlement. We 
had to hire lawyers to fight back. The federal court ruled against the 
company and made the company pay the settlement amounts, with interest, 
as well as our attorney fees. Again, the Department of Energy paid for 
that, as well.
    Six months and four days after we were rehired, most of us were 
laid off again.
    It's not a big deal to construction people to be laid off. I mean, 
it's part of our life. We know the first day we go to work, we are 
working ourselves out of a job.
    But to work near home was an honor. Most of us have families, young 
families. It would be nice to stay home once in a while and work with 
them, play with them, watch your kids grow up.
    But because we have been labeled as whistleblowers, we can't work 
out there anymore.
    Most of the people out there at the Hanford area, if they do 
support us, it's around the back door, it's quietly, they don't want to 
be seen talking to us, but yet they want us to listen to their 
    We stood up for some safety concerns, numerous different safety 
issues, to try to help keep people from getting hurt.
    And these companies don't want to really listen to this. They put 
on a window dressing all the time about safety first, there's no price 
tag on safety. But it seems like it's window dressing.
    There are some very concerned people working out there, but they 
are getting harder and harder to talk to, and most of them are going 
into hiding, because if they bring up a safety issue, they are either 
demoted or they are replaced.
    After we were released the second time we ended up calling the 
Department of Labor again. They came in, looked at it. They handed down 
an amazing finding on our behalf again. One of the stiffest findings 
they have ever handed the company. Six months after they hired us back. 
And yet here we are, we are out of work, we are going through it again. 
The company has now appealed it again. And it will be a matter of time, 
we will be back in court. And we have got a hundred times more evidence 
this time than we had the first time. We have got truckloads of 
paperwork, documents that shows malice, cover-ups, how they've treated 
people that have worked with us.
    We have had people that were in car pools with us and just because 
they associated with us, they got laid off.
    This is the new atmosphere at Hanford. And I tell you, from people 
that have grown up here, thought Hanford did a good thing for this 
country, I mean, this was the town that gave a day's pay to buy a 
bomber for the war effort.
    I don't believe that would happen again, you know, and it's a sad 
thing that you have to have people that have a little bit of backbone 
and can stand up to a company and take it through the court system to 
try to make safety work.
    I know there's some sincere, honest people out there, but they're 
not up-front. And I just wish that maybe DOE could step in and help the 
workers instead of the company.
    We've got proof that DOE counsel is helping the company counsel 
fight us on our own lawsuits.
    That means that you people sitting there, your tax dollars are 
going to the government to help fight ourselves. My own tax dollars, 
I'm fighting myself. You know, this shouldn't be.
    DOE is supposed to be out there guiding these companies. I think 
they should step in and make them either toe the line or kick them out. 
This is not the way we do business. There's a lot of skilled people out 
there that know their jobs and they're willing to do their jobs. Let's 
get a company in here that will back the workers, let's do the work to 
clean up this mess that we've got sitting in our back yards so that our 
kids can grow up in a safe environment.

    Mr. Burr. Thank you, Mr. Walli.
    The Chair would recognize Mr. Gutierrez for the purposes of 
an opening statement.


    Mr. Gutierrez. Good morning, and thank you, Mr. Chairman. 
Thank you for inviting me to give this testimony.
    My name is Joe Gutierrez. I reside at Los Alamos, New 
Mexico, specifically White Rock. I have completed 11 years of 
employment with the University of California at Los Alamos 
National Laboratory.
    Since October 1992 through the present time, I have 
collected information about the management practices of 
officials and managers at Los Alamos National Laboratory, the 
University of California, the Department of Energy, some 
supporting government agencies, and, as I've heard today, I 
must add one more party. And let me preface my statement by 
stating that there is no I am castigating or criticizing 
Congress. We need your help. We are the ultimate body that we 
can defer to for help. However, I must include and ask you to 
investigate the relationship between those representatives and 
Senators who have a DOE facility located in their Districts, 
because that relationship is one that I feel, at least in my 
experiences, has a big bearing in this issue, because that is 
an underlying reason why the Department of Energy and the 
University of California, in particular, is remiss in not 
enforcing and implementing these zero tolerance safety policy. 
I will address that in more detail here in a minute.
    Let me state that in 1996, October 1996, I found it 
necessary, after having disclosed some information that the 
University of California and the Los Alamos National Laboratory 
was perpetrating a deception to the surrounding Los Alamos 
community and the Nation, as a whole. There was a claim that 
Los Alamos National Laboratory was in compliance with the Clean 
Air Act. I had personal knowledge and documentation to clearly 
show that that was not the case, so I found it necessary to 
blow the whistle. That was in 1996.
    In the spring of 1997, I met with Senator Pete Domenici, at 
his request, to address some very important and very critical 
employee concerns at Los Alamos. In that meeting, Senator Pete 
Domenici pointed at me in anger because I had blown the 
whistle. In his view, he felt that I had given the laboratory a 
black eye. But he completed his statement by stating that, ``I 
tell the University of California and Los Alamos to fight you 
guys to the hilt, and I'll give them all the support and all 
the money they need.'' And taking a pause and realizing what he 
said, he then added, ``Only if they're right.'' Well, who is 
making sure that they are right? Certainly he's not and 
certainly the DOE is not.
    That was in the spring of 1997. By the end of that year, 
during the August timeframe, when I received a performance 
appraisal, I detected some subtle retaliation. I pursued to 
investigate, and, in fact, I felt that there was retaliation 
being perpetrated against me and I filed a claim in November of 
that year.
    By the spring of 1998, the Department of Labor had made a 
determination and gave a favorable determination in my behalf. 
The University of California appealed that determination.
    In the spring--January 1999, after a 5-day hearing, again 
the administrative law judge for the Department of Labor issued 
a 72-page ruling on my behalf, again a favorable ruling in my 
behalf and determination on my behalf.
    The University of California has appealed that ruling, and 
I am now going through that appeal. If--the Administrative 
Review Board has that appeal in front of them. If that ruling 
should again be in my favor and the University of California 
chooses to again appeal, I am facing, as I understand it, in 
the 10th District, a potential 10-year wait before my case gets 
in front of that court.
    Again, not only do I have to wait and incur additional 
expenses, but at the end of that I am still probably expecting 
a large expense, and who knows how much longer for a final 
outcome in my favor. I'm hoping it will be in my favor.
    In closing, I would like to make two comments, one relating 
to recommendations and the other perhaps--it has been 
fashionable for officials at DOE to refer to these laboratories 
as the ``crown jewels of this country.'' I think we need to 
take a pause, in light of this issue, in light of the issues 
that surround this concern. We need to really stand back and 
take a look at it.
    What benefits are derived from the technical innovations at 
those laboratories I believe are greatly undermined and perhaps 
even there's a detraction from that benefit due to the waste, 
fraud, and abuse that surrounds the management of those 
technical endeavors.
    With that, I think I would like to close. I'd like to just 
add that I was quite impressed about the statements that were 
made this morning by you, Mr. Chairman, and the rest of the 
panel. They are quite strong, and I'm hoping that, in fact, 
there will be follow-up and corrective action.
    Mr. Burr. I thank you, Mr. Gutierrez.
    Let me make two comments.
    One, the purpose of this subcommittee and specifically this 
hearing is to try to get at the truth and to make sure that a 
zero tolerance policy, if has not been adopted, is adopted, 
because that's the stated objective of the Department of 
    I'm sure that Mr. Carpenter will be very informative to 
this committee, because I think that he helped to set the draft 
policy with Secretary O'Leary, who I believe was well intended 
with her drafting.
    The second statement would be I thought I was very 
controlled in my comments this morning, much more controlled 
than last night at 11 when I was not only walking through 
today's testimony but looking at the hearing that we had a year 
ago and the answers that I got from the Department of Energy 
then that are inconsistent with the actions that have taken 
place since then, and with the testimony that I had in my lap 
in my bed last night reading. I can assure you that I think we 
will be much more specific and hopefully as controlled as this 
hearing goes on.
    The Chair would recognize himself for the purpose of 
    Mr. Carpenter, you did participate with Secretary O'Leary 
in the draft proposals, didn't you?
    Mr. Carpenter. Yes, sir.
    Mr. Burr. And share with everybody here what she intended 
to accomplish with those proposals, in your estimating.
    Mr. Carpenter. Secretary O'Leary attended a conference 
sponsored by our organization to look at the issue of 
whistleblower protection in 1993 and she became the keynote 
speaker at this conference and met privately with a number of 
DOE employees and DOE contractor employees following or right 
before that speech, and she was personally affected by what she 
heard and committed at that point in time with the zero 
tolerance for reprisal.
    So she recognized that this was bad business for the 
Department to countenance reprisal against whistleblowers. She 
committed to addressing that and tried to come up with a set of 
initiatives and policies that would change the course of the 
    Mr. Burr. Did you feel that her initiative was genuine?
    Mr. Carpenter. Absolutely.
    Mr. Burr. And did you ever read the points that she 
attempted to set?
    Mr. Carpenter. Sure. I read and commented on those points 
repeatedly and had numerous meetings with her and tried to tell 
her where they were falling down.
    Mr. Burr. How many of those points that you remember were 
in her initiative have been implemented at the Department of 
    Mr. Carpenter. Well, to a degree, some of the points have 
been implemented, but, in my view, none of them have been 
implemented fully or effectively.
    Mr. Burr. How many of them have been enforced?
    Mr. Carpenter. Same answer, which is that, even when it 
comes to what was a no-brainer at the time to Secretary O'Leary 
and her staff, which was the contractor reimbursement policy, 
everyone agreed that this sent the wrong message. And this was 
the strongest thing she heard from whistleblower after 
whistleblower at her meetings, was: why is it that the 
Department is funding this litigation? And our position is that 
they ought not fund the litigation, even in advance, because 
most agencies don't fund their contractors' litigation for 
whistleblower discrimination cases and in advance of a ruling.
    So this was one that we thought--where we felt comfortable 
where there were going to be some changes made, and, in fact, 
the changes that were made occurred on a haphazard basis. I 
recently reviewed the contracts at the various sites--Los 
Alamos, Rocky Flats, Hanford, Savannah River--and took a look 
at the language in those contracts, and they are all different 
and they say different things, but generally they allow 
reimbursement of these cases for the contractors' costs until 
an adverse ruling, and then, at the point of an adverse ruling, 
it's supposed to cutoff and even cost paid back, but that 
hasn't happened.
    Mr. Burr. Clearly, an adverse ruling and the willingness to 
participate in an appeal of an admitted violation or an adverse 
ruling are two different things. Correct?
    Mr. Carpenter. Yes.
    Mr. Burr. Let me ask you specifically, on the contract with 
U.C. as it relates to Mr. Lappa and his case at Lawrence 
Livermore, do you feel that the Department of Energy has the 
ability under Price Anderson to do a notice of violation?
    Mr. Carpenter. Clearly. In fact, the Department, in--I 
believe it was December 1988, through its Environment and 
Health and Safety Office, put out a notice to all contractors 
saying--recognizing a Department of Labor ruling in favor of a 
whistleblower in the case of a man named Casey Rudee at the 
Hanford site, and said, ``Here is an example of the case where 
the Price Anderson Act allows the Department of Energy to take 
enforcement actions and civil penalties against contractors who 
engage in reprisal, and in the future you are on notice, 
contractors, that this might happen.'' So notice was given to 
the contractor community, but there was no follow-up.
    In Mr. Lappa's case, it was even more egregious, in our 
opinion, that it wasn't done, because Mr. Lappa was a witness 
to the very Price Anderson Act enforcement investigators that 
ended up issuing a notice of violation for the underlying 
safety problems and the nuclear criticality violations at the 
laboratory, and so he was a helpful witness to the DOE.
    Mr. Burr. Let me ask you, the 1st of January 1999 the 
Department of Energy was prepared to send a notice of 
violation, or at least a proposed notice of violation, to U.C., 
and I've got an e-mail--1/6/2000, excuse me--where--from Keith 
Christopher to Sharon Hurley. Let me just read you a portion of 
it. And this is referring to a decision that Ms. Sullivan has 
    ``I advised her that, during the enforcement and conference 
and in responding to any subsequent PNOV, if one were issued, 
the lab would have an opportunity to make their case. Sullivan 
stated that she felt this process was inadequate due process 
without DOE conducting another separate investigation of the 
case, regardless of DOL findings.''
    I would only ask you, in your opinion, do you believe that 
the Department of Labor's findings are substantial enough for 
them to pursue a notice of violation, even a proposed notice of 
violation, or is Ms. Sullivan's counsel right that they have 
not allowed due process?
    Mr. Carpenter. They were certainly allowed due process. The 
University of California, if it disagreed with the findings of 
the Labor Department, had an opportunity to appeal. They chose 
not to exercise that option. What resulted was a final agency 
order of the Department of Labor, which was, again, not 
appealed. So the due process was there. The University simply 
chose not to pursue it, and, in my view, admitted to the 
violations, which was an even stronger result than having an 
ALJ come out and make a finding.
    This was a great case for the Department to be able to 
vindicate zero tolerance for reprisal policy, but, instead, 
chose to, I think, getting the system to support the 
    Mr. Burr. Let me read one additional sentence and just get 
your comment on it. This is the next paragraph.
    ``Sullivan stated that the laboratory was pressured by DOE 
to accept the DOL findings and did not appeal the findings, and 
had that not been the case the laboratory would have appealed 
DOL's findings.''
    The Department of Energy pressured U.C. to accept DOL's 
findings, yet turn around and participate in continued 
litigation, unlimited, possibly, based upon the wording of a 
    Mr. Carpenter. I actually didn't know that the DOE had 
pressured the laboratory to----
    Mr. Burr. I'm only going based upon somebody at DOE's e-
mail referencing the meeting they had.
    Mr. Carpenter. That would be amazing to me in that the DOE 
has taken the position that the Labor Department finding has no 
credence to them. If they're going to tell the contractor to do 
one thing and accept this as a finding and let's all move on, 
and then turn around and fund their litigation, what kind of 
message is that sending to the rest of the workforce and to the 
contractor community? I think the message is, ``litigate these 
    Mr. Burr. And if I remember some of the comments of 
Secretary O'Leary, the intent was to make sure that we sent a 
loud message to employees that if you work in unsafe areas, if 
there is retaliation we want you to feel comfortable to come to 
the Department of Energy. We want you to feel comfortable to 
use whatever means you need to voice that opposition, with the 
confidence that no contractor will retaliate against you.
    Does that pretty much sum up some of the----
    Mr. Carpenter. That was the intent of Secretary O'Leary, 
and the reality is that there is a great deal of fear out 
there, and we advise clients not to go to the Department of 
Energy with safety and health concerns. It is not the right 
place to go. The Department has a very bad track record of 
supporting whistleblowers.
    Mr. Burr. The Chair would ask unanimous consent to enter a 
significant amount of records into the record. My understanding 
is that minority and majority have----
    Ms. DeGette. Reserving an objection, let me just review 
that. Thank you.
    Mr. Burr. The Chair has one additional question and then he 
will turn to the ranking member for questions.
    Mr. Walli, you remember those valves that you refused to 
put in?
    Mr. Walli. Yes.
    Mr. Burr. Are they in today?
    Mr. Walli. No, they are not. Those valves----
    Mr. Burr. Did they ever go in?
    Mr. Walli. Yes, they did.
    Mr. Burr. For how long?
    Mr. Walli. A matter of hours.
    Mr. Burr. And they took those valves out why?
    Mr. Walli. The valves that we were objecting over were 
given to us as test valves. They were just to test the new 
systems that we were putting in. We were going to run a hydro 
test on them.
    When they were first given to us, we noticed right away 
that they were not rated for the pressures that we were going 
to be putting against them. We objected. We raised the 
concerns. We went through our company and through our 
management and our safety department and they tried to force us 
to use them. They backed myself and my colleagues, my crew into 
a corner, stating that, ``Yes, that was a--they weren't rated, 
but they were still okay to use.''
    We agreed. I agreed that we could go ahead and use them if 
none of my personnel or the people I was responsible for were 
going to be anywhere near those valves when they were under 
pressure, and that they, as the company, took sole 
responsibility for anything that might happen to the system 
and/or the environment where they were going to be used.
    It came to a head to the fact that we either had to quit or 
use them. When they assured me that none of my personnel were 
going to be close to them and the safety of the personnel which 
I was responsible for would not be injured, we agreed to use 
them, but these were solely for test purposes.
    It came time to use these valves. The scope of work 
changed, and any time you change the scope of work from what 
the plan of the day was, you're supposed to stop work, reassess 
what is going to happen, and either make a new plan and have a 
new meeting and then move on.
    We went down there. We had what we call the ``pre-job.'' 
The scope of work changed. They wanted my personnel and the 
personnel of another company that had charge of this tank farm 
to go in and operate these valves under these high pressures 
that they were not rated for, which had changed from the 
agreement that we had said that we would install these valves.
    Now they wanted us in the confined space in the 
contaminated radiation zone operating these valves under the 
pressures that they weren't rated for, and that's not what we 
had agreed we would do.
    Now my personnel and these other people that were assisting 
us would be at danger if those valves come apart, blew up, or 
just let go.
    This was also at the end of two lines that had about three-
quarters of a mile of water against them, that if those valves 
let go all that water would end up in the pit where they were 
at, which was just feet from the drain that went into the 101SY 
tank, which was one of the Hanford's watch list hydrogen tanks 
at the time.
    At that time, we stopped the work. We found out that the 
subcontractor that was working with us had the right valves all 
along, like we had been telling the company--my people in the 
company were out there some place.
    The company managers came down there, after yelling, 
cursing, throwing what we call an ``animal act'' on me and my 
personnel, got us the right valves. We installed those valves. 
We went ahead and did the test, like should have been done the 
first place, and we pulled the test off like was required.
    At the end of that test, we drained the system in the 
normal manner that we would have.
    Mr. Burr. I just want to make sure all the members 
understand. You objected to the installation of the valve 
originally because the valve was not rated at the pressure that 
you knew the system would be tested. Given an assurance of this 
safety of your personnel during testing, you agreed to go ahead 
and install the valves, and it wasn't until your people were 
put back in what might have been a dangerous position that you 
stopped work.
    Mr. Walli. Yes, that statement is true.
    Mr. Burr. And I would only ask one last question before I 
recognize Ms. DeGette.
    Mr. Carpenter, given that that was nuclear safety related 
solutions, or whatever was going through there, would this also 
be a Price Anderson violation?
    Mr. Carpenter. You bet, sir. This is a nuclear safety issue 
and it impacts the safety of a nuclear system at the Hanford 
site. There's probably no more sensitive nuclear area than the 
high-level nuclear waste tanks at Hanford, which, if you fool 
with those tanks, if you add materials to these tanks, they can 
become unstable. Millions of curies reside in these tanks. It 
could be an environmental disaster of the first magnitude.
    Mr. Burr. Are you aware of any investigation by the 
Department of Energy relative to Price Anderson authorities?
    Mr. Carpenter. No. And, in fact, we have been asking the 
Department of Energy to investigate and take action on these 
issues, and the Department of Energy has consistently refused 
to do so.
    Mr. Burr. Ms. DeGette has been very patient, so let me at 
this time recognize her.
    Ms. DeGette. First of all, Mr. Chairman, we have no 
objection to your entering----
    Mr. Burr. Without objection, so ordered.
    Ms. DeGette. Thank you.
    [The information referred to follows:]


    Ms. DeGette. In his written testimony, Mr. Van Ness of the 
University of California makes the statement that, 
``Whistleblowers aren't really hurt when the contractor is 
reimbursed for the legal fees because the whistleblowers can 
find counsel to take cases on a contingency fee basis.'' So I 
was wondering, Mr. Gutierrez, is your attorney doing the work 
on a contingency fee basis with no money out of your pocket?
    Mr. Gutierrez. No.
    Ms. DeGette. Tell me about what your legal fees are to 
    Mr. Gutierrez. My estimate is at 50,000, but there is still 
some ongoing litigation. What that does not include, however, 
is opportunity cost, interest that is being lost in investments 
that I've had to take out to incur these expenses.
    The litigation that I have undertaken has been paid fully 
by my resources. I haven't been able to--I have appealed to the 
Department of Energy. I have appealed to my Congressman for 
help. Everybody has just simply turned the other way.
    Ms. DeGette. So you are paying that money to your lawyer 
out of your own pocket?
    Mr. Gutierrez. Yes.
    Ms. DeGette. Now, Mr. Carpenter, you folks were set up to 
defend whistleblowers, and I assume part of the reason was 
because many of them had a hard time finding attorneys. I'm 
wondering if you can comment on what you see with the 
whistleblowers who you deal with, whether attorneys are beating 
down the door to take these cases on a contingency fee basis.
    Mr. Carpenter. It is very, very difficult for these 
employees to find attorneys to represent them, much less on a 
contingency fee basis.
    The reason that we take as many cases as we do is that no 
one else will take on these kind of cases. Even in our 
representation, the client has to come up with expenses, 
because we are a small organization without the resources to 
front expenses on these kind of cases.
    It is very difficult. These cases are very difficult, very 
time consuming, can take up to 6 or 7 years to resolve, and 
commercial law firms don't see any profit in it, especially 
when the defense contractor has an unlimited source of funds to 
be able to just go and go and go, and they'll spend hundreds of 
thousands or even millions of dollars to avoid paying a $20,000 
employee finding. I mean, how could you--as a private law firm, 
how could you possibly beat that? You know, you're not going to 
take on those kind of odds, especially for the reward at the 
    You know, the name of the game in these kind of cases is 
wear down the other side, and have motions, have delays, you 
know, take numerous depositions, run up a cost, and the DOE is 
paying for that process.
    Ms. DeGette. And when they take all those numerous 
depositions and all of that, those are costs that even your 
clients have to pay out of their own pocket.
    Mr. Carpenter. Absolutely.
    Ms. DeGette. And that's not cheap in a major litigation 
either, is it?
    Mr. Carpenter. That's correct. It is oftentimes $2 a page 
for a transcript, and these pages can run thousands and 
thousands of pages. The costs are just phenomenal.
    Ms. DeGette. Do you think that the fact that these 
companies are reimbursed for their legal costs by the DOE if 
the litigation is ongoing is an incentive or a disincentive to 
early settlement and resolution of the cases?
    Mr. Carpenter. Certainly it is an incentive for the 
contractors to litigate the case. If they had to pay the cost 
of the litigation, they would have a much more realistic view 
of what these cases cost them, and, therefore, they would have 
a cost/benefit analysis done on these cases. They wouldn't say 
to themselves, ``Well, heck, the DOE will write us a blank 
check for our expenses and our costs.'' They'd have to say, 
``Well, we're going to have to pay for this, so does it make 
sense for us to delay this case and run up the cost over 
time?'' And I think the answer would be a much better answer 
for everyone involved.
    So the DOE providing this amount of money to the 
contractors with no consequence at the end of it is certainly 
an incentive to drag it out. And even if they drag it out, they 
can always settle at the last minute by saying, ``Whatever you 
want in your hearing, you can have right now. We'll just settle 
for it,'' knowing that DOE will pay that, as well.
    Ms. DeGette. And yet--but what that has done to people like 
Mr. Gutierrez for all of those years, they have been having to 
pay out to their lawyers every month, and it is hard for the 
individual whistleblower to ever get to that settlement point a 
lot of times.
    Mr. Carpenter. That's correct. And, again, the name of the 
game is delay it, delay it, delay it. I mean, all this time 
that Mr. Walli and his fellow pipefitters have been litigating, 
they have mostly not been employed at the site.
    Ms. DeGette. Right. That's the other part.
    Mr. Carpenter. So they are kept out away from the work 
force, and it is a strong message to the rest of the work 
force. ``This is what happens to you. Don't go there.''
    Ms. DeGette. Let me change focus a little bit. I think 
everybody could get the sense here that we'd all like to see 
the actual implementation of a zero tolerance policy for DOE 
contractors, but what we're hearing from you, I think, there 
has been a serious commitment on behalf of at least the last 
three DOE administrators, and yet the agency hasn't implemented 
the policy.
    Do you really think that we can achieve a zero tolerance 
policy, or is this just pie in the sky?
    Ms. DeGette. Absolutely. In fact, the Nuclear Regulatory 
Commission has such a policy. They don't call it that, but they 
call it a ``safety-conscious work environment.'' And if, at a 
commercial nuclear facility, a contractor retaliates against an 
employee, the manager that engaged in that retaliation can go 
to jail under 10 CFR appendix B. The contractor can be 
subjected to civil penalties up to $100,000 or $200,000. There 
was recently a $200,000 civil penalty in that case. And the 
agency, itself, will decide whether or not--the NRC will decide 
whether or not there has been reprisal or retaliation. They 
won't wait for the Labor Department. It will do its own 
    This is what the Department of Energy could do. I've asked 
them to do it in rulemaking petitions, and they won't.
    If they want to get serious about it, they've got to change 
the culture. They've got to have consequences and penalties for 
contractor misbehavior.
    Ms. DeGette. It also sounds to me like you might need some 
statutory changes, because, of course, you can't promulgate 
criminal penalties by rule, last I heard.
    Mr. Carpenter. That's true.
    Ms. DeGette. Okay. It is my understanding that contractors 
can incur penalties for security or safety violations under 
both the Price Anderson Act and also in the contract for a 
site. Is that your understanding, as well?
    Mr. Carpenter. Yes. The Price Anderson Act is a tool that 
is available to the Department.
    Ms. DeGette. And so do you think that a system with two--
the two complementary penalties under the Price Anderson Act 
and the contractor would be the most effective, or do you think 
the NRC thing would be----
    Mr. Carpenter. I'd prefer the approach of the NRC, which is 
more of a stand-off approach. The Price Anderson Act attempts 
to get there, but, let's face it, there are six people in 
charge of Price Anderson Act enforcement for the entire Leppins 
Complex, which is just a massive complex with numerous--
thousands and thousands of facilities. No way can six people 
get out there and do the job that they need to do. Plus, they 
don't enjoy the support of upper management of the Department 
of Energy, as we have been hearing from employees in that 
branch, even with what we heard with this e-mail right here. 
When they would like to take an action to support, for 
instance, Mr. Lappa, the general counsel slaps them down and 
says, ``No, we can't go there.''
    Ms. DeGette. All right. Just one last question. There has 
been some argument made that the way we can fix this problem is 
contract by contractor, and by putting specific language into 
each contract, as they did with the new Rocky Flats one, for 
example, and that you can solve it that way. Others think that 
there needs to be generic boilerplate language, even, as you 
say, criminal penalties.
    Which do you think is the best approach, or can they both 
be used?
    Mr. Carpenter. Certainly, the contract-by-contract method 
is--that's something that the Department has said it is going 
to be doing for the last decade, and it is a failure. There 
needs to be institutionalized protections for these 
whistleblowers. There needs to be an institutionalized approach 
to changing the culture at these sites so that there is not 
fear, so that contractors feel the pinch and feel it that they 
cannot--it is not acceptable to retaliate against a 
whistleblower. Right now, the other message is being sent, 
which is that DOE will support that. So institutional changes 
are needed.
    Ms. DeGette. Thank you, Mr. Chairman. I'll yield back.
    Mr. Bryant [presiding]. The Chair would recognize the 
gentleman from Ohio, Mr. Strickland.
    Mr. Strickland. Thank you.
    Mr. Carpenter, in your opinion, what does ``zero 
tolerance'' mean?
    Mr. Carpenter. Well, I see that sign on the highway, when 
referring to either speed limits or drunk driving. And what it 
means to me is, if I'm doing 66 miles an hour in a 65 zone, I 
don't get cut any slack, I get a ticket. If I am over the drunk 
driving limit, then I go to jail. And whatever excuse you might 
have doesn't matter. That's what it means to me, is that they 
don't--in every case where there is a reprisal, the Department 
of Energy will take some action.
    Mr. Strickland. I think of it in terms of, if a child takes 
a gun to school, there is zero tolerance for that.
    Insofar as the DOE is concerned--and I would like for each 
of you to respond--do you see the DOE as an advocate for the 
whistleblower, a neutral observer of this process, or an 
adversary of the whistleblower? I'm just asking for your 
    Mr. Carpenter. An adversary, sir, in most cases, and 
especially as indicated by the Department entering into joint 
defense relationships with the contractor in cases of 
whistleblowers suits, not only in the case of David Lappa, but 
in the case of the pipefitters at the Hanford site.
    We recently attempted to get information from a contractor 
who said, ``Well, a DOE attorney was in the room, and therefore 
it was privileged.'' And we fought out a motion to compel the 
testimony of that contractor manager, but the DOE came in with 
an affidavit that said, ``No, we are in legal privity with the 
contractor, and therefore you can't get to this information.'' 
And the judge, of course, then agreed that we couldn't get to 
the information in that case.
    That sent a very clear message to us exactly where the 
Department of Energy is and was on these issues, even while 
saying, ``We're going to wait and see what the court says about 
    So I think they act as basically a support mechanism for 
the contractor.
    Mr. Strickland. Mr. Walli?
    Mr. Walli. I agree with Mr. Carpenter that that is part of 
our case, and we do know from testimonies of depositions of our 
ongoing case that some of these managers have met with DOE. 
They said they met with DOE, but they can't talk about that. 
And that we know that, through this investigation that we are 
ongoing through, that they are meeting with DOE's counsel.
    I don't feel comfortable that DOE is helping us. They 
haven't stepped up. We've asked for help and nobody has come 
    Mr. Strickland. Mr. Gutierrez?
    Mr. Gutierrez. My observation and experiences show that 
there is a revolving door between the Department of Energy and 
many of the contractor personnel, and that is one contributing 
factor, not all of it. But primarily it is an adversary, and 
that can be demonstrated quite well through chronological case 
histories of how DOE responds to these issues and appeals for 
    Mr. Strickland. So we've got a situation where there is a 
department of Government that enunciates--talk is cheap. I 
understand that. But they say they have a policy of zero 
tolerance, and yet, in your experience, this Department is 
colluding with those who would retaliate against 
    I mean, I'm trying to just say it the way I think you are 
presenting it. Is that a reasonable way to----
    Mr. Carpenter. Yes, sir.
    Mr. Gutierrez. Yes.
    Mr. Strickland. Now, Mr. Walli, I understand that Mr. 
Hansen from Fluor Daniel is going to testify today that Fluor 
has a ``stop work'' policy which ``gives every employee, both 
bargaining unit and unrepresented, the responsibility and the 
authority to stop work immediately without fear of reprisal 
when they are convinced a situation exists which places them, 
their coworkers, or the environment in danger.''
    Did this policy protect you and your workers?
    Mr. Walli. I don't believe so. No. That policy is there. 
When I hired in, actually under Kaiser, and then the contract 
turned over to Fluor Daniel while I was employed there, they 
gave you stop work cards. They gave you the authority to do 
    As I stated in my statement, we thought we had the right 
and the duty with these cards and the training that we had to 
be able to do that. This is why we brought up these concerns. 
This is what we were trained to do in our jobs.
    Like I said, when that--basically, we were backed into a 
corner. When this whole thing originally started with us, we 
had the option to either quit our jobs or do as they had told 
us to do, and we tried to work out a solution to protect us, 
our people, and try to work with the company, get the project 
and the job done and not get anybody hurt.
    And when this revolved into a situation where my people 
were going to be put in possible danger, we did stop work.
    Mr. Strickland. I understand. Now, is it your understanding 
that this ``stop work'' policy was in effect at the time that 
this incident occurred?
    Mr. Walli. Well, the policy existed, I guess, because we 
had the cards and the paperwork that said we had the authority 
to do it, but, as I stated, as soon as we did do it we had 
managers coming down there screaming and yelling and cursing at 
me and my people for doing it.
    Mr. Strickland. Yes, sir, I don't understand how----
    Mr. Walli. They didn't want----
    Mr. Strickland. I don't understand how you could have 
gotten into this kind of difficulty if the policy is--if the 
policy actually says, ``when they are convinced,''--``they'' I 
suppose meaning the employee--``are convinced a situation 
exists which places themselves or their coworkers in danger.'' 
And I assume that's what you expressed to whoever was giving 
you the direction.
    Mr. Walli. Yes, this is what we expressed.
    Mr. Strickland. So even if you were wrong in your judgment, 
even if this valve was, in fact, a safe valve, it seems to me 
that, if you used your judgment and you informed the management 
or the supervisors that that was your judgment, that you 
perceived it to be unsafe, that you should have been protected 
from retaliation, even if you were wrong in your judgment.
    Mr. Walli. This is correct. This is what we thought, and 
this is what we were trained to do. I mean, you have to realize 
that these are not just people that walk in off the street and 
pick up a tool and go to work. They go through extensive 
training. We go through a lot of schooling. You just don't go 
out there and work on these plants. I mean, there's a lot of 
money spent on training these people, and to get them in to do 
the work, there's thousands and thousands of dollars in 
training in each employee that goes out there. And these are 
people that are trained to do this in a specific manner. We're 
following the rules that they set up, the guidelines. And, like 
I said, we had these cards. We thought we were doing what we 
were supposed to be doing. We were following their rules.
    Mr. Strickland. And, Mr. Carpenter, one quick statement, or 
I guess sort of a comment, but I'd like your reaction.
    If the Department has a zero tolerance policy and there are 
whistleblowers who come forward, it seems to me that the 
Department should partner with the whistleblower, not with the 
person or entity that may be opposed to the whistleblower.
    I mean, if the Department is not going to be neutral or 
objective, if they are going to take sides, if they are going 
to put resources into one side or the other, it seems to me 
that the resources should go into trying to help the 
whistleblower demonstrate the danger, and if there is an 
accusation of retaliation, to help the whistleblower at least 
equally support the whistleblower's point of view versus the 
exclusive support for the contractor.
    Would you say that is a reasonable point of view?
    Mr. Carpenter. I think it is reasonable, and especially 
when it come to cooperation with the whistleblower in trying to 
obtain information that the contractor has access to, the 
Department has access to, but the whistleblower is denied 
access to, in one cases, you know, needing to file a lawsuit 
under the Freedom of Information Act.
    Mr. Strickland. Have there been times when the 
whistleblower has requested such assistance or information from 
the department and that assistance has not been forthcoming?
    Mr. Carpenter. Yes, sir. In the case of David Lappa at the 
University of California, it required a lawsuit against the 
Department of Energy to get information through the Freedom of 
Information Act that the request was over a year old, to get 
access to employees of the Department that have knowledge that 
would be helpful to Mr. Lappa's case. DOE refused to provide 
information on both counts, refused even up to the point where 
finally, earlier last month, the judge--or I guess a couple of 
weeks ago the Federal judge ordered the Department to produce 
the documents under the Freedom of Information Act and produce 
the witnesses necessary for Mr. Lappa's case and chided the 
Department quite severely for, you know, failing to do this in 
the first place voluntarily.
    So, you know, this is a prime example of the Department 
taking sides once again against the whistleblower, and this is 
just inexplicable behavior on my--you know, I can't fathom why 
they would do this.
    Mr. Strickland. Thank you.
    Thank you, Mr. Chairman. I understand you didn't put on my 
time, but thank you. You have been very generous.
    Mr. Burr. I wanted the gentleman to fully explore every 
possibility he needed.
    The Chair would recognize the gentleman from Tennessee, Mr. 
    Mr. Bryant. Thank you, Mr. Chairman. I apologize to the 
committee and to the witnesses for not being here to hear all 
of your testimony, but I have just arrived and had to stay home 
last night to take care of some family business.
    I had not intended to make a long statement here, because I 
realize this is the time we question and we've members have 
already given statements. But I would like to say, from 
reviewing not all the testimony but some of the preliminary 
matters for this hearing and as one who typically and strongly 
sides often with business interests and believes that we need 
to support our businesses who provide our jobs as much as we 
can, and coming from also a background of some procurement law 
with the JAG Corps when I was in the Army, I saw the 
contracting process work and saw the good side of it and 
sometimes not-so-good side of it.
    I am concerned about what I am hearing from you, although 
not from you today because I haven't been here, but indirectly 
through reading some of the information about this file.
    You know, we have established as a Congress, I guess some 
time ago, a policy and enacted the Whistleblower's Act and 
other things that support that. But we do want people within 
businesses, who, again, I generally support, but we want 
employees to be able to have the freedom and confidentiality 
and incentive, even in some cases, to report dangerous 
practices, and so forth.
    It seems to me, if we've established that policy, that 
businesses ought to understand that's the policy and there's a 
good reason we do this.
    In order to help make that work, which that's one of the 
things that I also advocate a private sector, as much as 
possible, but to make the private sector really work properly 
you have to have people willing to do what they are supposed to 
    That's why I'm concerned in this case where I hear examples 
of where businesses aren't doing what they are supposed to do. 
There are allegations of retaliation and doing things they 
shouldn't do.
    I read in the statement from the general counsel of DOE, 
who will testify next, that zero tolerance does not mean that 
every whistleblower claim must be accepted as valid without an 
opportunity for response or appeal by the Department 
contractors, and I agree with that totally. But, on the 
contrary, I think Mr. Carpenter mentioned zero tolerance as 
riding down a road and you've got a 65 speed limit, and you 
know if you go 66 you'll get caught.
    To have a zero tolerance policy, you've got to have some 
enforcement, and I guess that's where I'm going. I don't really 
see the enforcement of this being done, and particularly, as 
Mr. Carpenter testified--and I totally agree--it is very 
difficult to do that when there is an incentive not to 
cooperate or to extend, stretch out litigation, try to chase 
the plaintiff away, knowing in the end that you are going to be 
reimbursed fully for your attorney fees, and court costs if you 
    So, given what I am hearing--and I hope I can hear from the 
second panel maybe some examples I have missed where actually 
there have been contractors who did not get awarded attorneys' 
fees or who had some sort of contractual consideration, made 
when they were, in fact, guilty of retaliation against 
    I hope I can hear some examples, because, quite frankly, 
all I've seen and read about so far is that zero tolerance 
makes a great sound bite for television and for coming before 
hearings like this, but, again, if you're not doing anything 
about it through the enforcement mechanisms, I think that sound 
bite rings very hollow.
    Again, I hope someone can cite me some examples where 
people, businesses are not being reimbursed for their cost of 
defending this litigation.
    Again, if it is not meritorious, if it is frivolous--again, 
I know not every complaint is legitimate, but the other way, 
too, some of these are, and I think the only way that we can 
strike a chord with apparently some businesses is to hit them 
in the pocketbook and not guarantee that we're going to 
reimburse them every penny of expense that they incur.
    The fact that we are using very expensive law firms around 
the country, the fact that--having, again, come from a private 
practice, I know how this works, and it is not right.
    Mr. Carpenter, I do have a couple of questions. I'll climb 
down off my little, short soap box there.
    In the testimony, DOE highlights the success also--I 
mentioned, in the statements of its counsel, general counsel--
they highlight the success of their employment concerns 
program. Now, what has been your experience with the 
effectiveness of this program?
    Mr. Carpenter. Well, I'm not impressed with the employee 
concerns program. There is a well-intentioned person that is 
there, but he is a person, and there is no other staff there. 
It has not received the budget. It has not received the 
authority or the resources to accomplish the mission.
    I work in the policy arena, but mostly I actually work 
around folks like Mr. Walli and Mr. Gutierrez and Mr. Lappa, 
and so I am very aware of how employees feel at these sites and 
whether or not they can raise concerns, and the Department has 
utterly and totally failed to address that culture and has not 
looked at the fear factor, which is so important to safety. If 
you're going to have safe operations, people have to be able to 
raise the concerns.
    Mr. Bryant. Are you speaking about confidentiality? Is 
there confidentiality in----
    Mr. Carpenter. That's just one piece of it. You know, the 
Hanford site has one of the best employee concerns departments 
in the whole complex, and we did a little survey of their 
employee concerns program a few months ago and found that a 
third of the cases, employees that came to them simply got 
referred back to the contractor that was accused, and they 
didn't take jurisdiction in other cases at all, just failed to 
investigate. They did very little in the way of actually 
helping any employee that I could see.
    In one remarkable case the employee concerns program asked 
the contractor to write up a report about an employee's, you 
know, whistleblowing concerns. The contractor did write up such 
a report, but then the DOE simply put their own letterhead on 
it and filed it as if they had written it, down to where it 
said, ``We conducted investigations and found that the 
workplace was a safe place to work, raise concerns.'' And they 
had not conducted a single investigation or interview. It was 
all the contractor.
    Well, subsequently, the Department of Labor and other 
entities came in and said, ``This is a horrendous place work,'' 
and they fired the contractor manager, they fired the safety 
manager, they fired a foreman, all for engaging in very ugly 
reprisals at the Hanford site, and the employee was well 
reimbursed after that, but only because of the employee had 
some support behind him.
    But, according to the DOE, everything was fine just about a 
month before all this happened, relying on, again, the 
contractor's say-so.
    Mr. Bryant. Okay.
    Mr. Carpenter. So it's not there.
    Mr. Bryant. Let me ask Mr. Walli about your efforts to 
utilize DOE's employee protection processes, and even possibly 
the whistleblower hotline that DOE operates.
    What was your experience in using these types of protective 
    Mr. Walli. Well, when I worked out there, there was always 
rumors. You know, people talk. And it has always been rumored 
that, in the circle where I was at, that DOE had somehow 
released statements or a copy of a tape of workers calling into 
the DOE hotline. So the workers that I worked with, it was 
always talked about, you know, it didn't matter if you called 
the hotline because it would get back to your contractor.
    We later found out, after we started litigation and 
depositions, that one of the superintendents actually had 
walked in, or he says he walked in on this event happening, so 
the rumor that we had listened to over the years actually, 
according to the superintendent's testimony, was true--that 
somehow one of these tapes of a worker calling into a DOE 
hotline had gotten back to the contractors and the managers 
were listening to it trying to figure out who was on the tape.
    We called--I had an apprentice work for me while this issue 
had come up, had originally started. He called the Fluor Daniel 
hotline. Thirty-five minutes after he had called the hotline, 
our union stewart was over there chastising him for calling 
that and not coming to them and keeping it in-house. So the 
company hotline--I mean, there was a direct link that these 
things come back to your managers really fast.
    Mr. Bryant. Let me very quickly ask one question of Mr. 
    As I heard just the end of one of your answers, and another 
type of concern--something of the nature of the relationships 
of people moving back and forth--not moving back and forth, but 
moving, let's say, from the DOE to the contractor as an 
employee. Did I understand you to say people are leaving, have 
left DOE and gone to work for a contractor?
    Mr. Gutierrez. Yes. Actually, both cases. We have change of 
stations status, but, aside from that, we have employees from 
the University of California at Los Alamos National Laboratory 
that quit that entity and go to work for DOE, and vice versa--
managers and officials from DOE take an assignment or a job 
with University of California or at Los Alamos National 
Laboratory. That's done routinely.
    It is amazing, I guess. I've collected names over the 
period of time, but you lose track of it all, it just becomes 
so routine.
    Mr. Bryant. Why do you think that would have any effect 
    Mr. Gutierrez. It has an effect in this manner: if there is 
a complaint--I mean, you know, the individual that you file a 
complaint against at the University of California at Los Alamos 
then ends up at DOE having to oversee that effort on your 
complaint, and vice versa. Or you have the Department of Energy 
official that knows of your complaint--or it doesn't have to be 
yours, but, in general, knows of a series, a number of 
personnel that have filed complaints, then he goes to work at 
the University of California as counsel or in some other 
capacity, so now he has first-hand information about how to 
advise the University of California on how to protect 
themselves against this reprisals and concerns.
    It is a major problem, because, in trying to locate 
somebody that you can trust and have some confidence in, you 
end up against these people routinely.
    In some instances, when you do file a complaint, I've 
utilized the employee concerns program at DOE. That was my 
first choice. The response was, ``Well, you know, we only have 
15 people, and we've got, you know, hundreds of complaints. It 
is going to be a year before I can get to yours. Just give me 
some time and bear with us and, you know, we'll take care of 
    Well, you call back 2 weeks later, and that individual is 
no longer in that office. They've moved on back to the 
University of California at Los Alamos or I find out they're 
working at Los Alamos and somebody else comes into the slot and 
says, ``Well, I'm new here. I need to catch up, and it is going 
to take me, you know, a couple of weeks or 6 months to catch 
up.'' So you end up in this run-around.
    Mr. Bryant. Mr. Chairman, thank you for your consideration.
    Mr. Burr. I thank the gentleman, and I hope the graduation 
went well.
    I know there are several members that have just a few 
additional questions. I will take the opportunity to ask one 
    I want to go back to the e-mail that I was referring to 
earlier, Mr. Carpenter, and just get some comments. I want to 
read from the third paragraph.
    This, again, is Keith Christopher, director of the Office 
of Enforcement at the Department of Energy. He says in the 
third paragraph: ``While I disagree with this legal position--
'' he's referring to Ms. Sullivan's decision--``I have advised 
Dr. Michael that he should defer to the advice given by DOE's 
general counsel.''
    Go down to the last paragraph, at the beginning: ``I 
recommended to Dr. Michaels that, while we may be precluded 
from issuing an enforcement action based on the general 
counsel's position, we should, given the facts that you now 
have another employee raising safety concerns at this lab and 
fearing retaliation, that we should at least issue an 
enforcement letter stating our concern and require them to 
provide a response demonstrating what management processes they 
have in place to ensure that employees will feel free to raise 
safety concerns.''
    It is my understanding that there was never an enforcement 
letter sent. Do you find that as a shock?
    Mr. Carpenter. I find it shocking that the general counsel 
is dictating safety policies at the Department of Energy, No. 
1. I guess I'm not too shocked that the DOE is not acting on 
this, because that has been their history all along.
    Mr. Burr. Having it laid out this starkly is unusual for 
    Let me read you another one. Could I?
    Mr. Carpenter. Sure.
    Mr. Burr. Again, from Keith Christopher. This is 2/9/2000, 
and he says, in the concluding paragraph of that e-mail, ``I 
think the combination of the enforcement letter, having the lab 
director come in and meet with T.J. so DOE can express his 
concerns on this topic without reaching new conclusions outside 
of DOL's position, might give us a path forward. The biggest 
barrier I see is whether DOE is willing to accept 
responsibility for pressuring them to settle in the first 
    What do you think of that?
    Mr. Carpenter. Well, again, I think DOE really put itself 
in a position here, and is conflicted as to what it should do, 
and they ought to be following their announced policies, which 
is having zero tolerance.
    Mr. Burr. I take for granted that these e-mails summarize 
meetings--at least there are other people referred to in the e-
mails, stated that they met. Do you get the impression that the 
topic in those meetings were the adherence to stated policies 
for worker protection and safety?
    Mr. Carpenter. No, sir. I get the impression that this is 
simply image enhancement and control, how are they looking.
    Mr. Burr. I thank you, Mr. Carpenter.
    I believe Mr. Strickland has some additional questions and 
the Chair would recognize him.
    Mr. Strickland. Thank you. I just want to address Mr. 
Gutierrez and thank you for taking the time and bearing the 
expense to come here. I want to thank all of you for coming 
here today, as a matter of fact.
    Mr. Gutierrez, you have prevailed to the point of receiving 
adverse determination from an administrative law judge, but the 
University of California, your employer, has appealed, even 
though it is not supposed to receive any money from DOE for its 
efforts. Why do you think the university is going forward?
    Mr. Gutierrez. That has been a question that I have 
struggled with and also a number of people have asked me about. 
My experiences with the University of California is that, one, 
they do have an actual written policy. I located this policy on 
their website. The University of California board meets every 
month to review cases that are under litigation to look at the 
    But, in the course of doing that research, I located a 
policy that clearly states that the University of California 
will, in all instances, regardless of the merits of a case, 
litigate all cases, and that is their stated policy. It is in 
written form.
    I really didn't believe that until I started to look at--
searched the cases that were case filed against the University 
of California and found that, in fact, all cases are litigated, 
regardless of the merit.
    When I look at mine, I understand that probably one of the 
things--the reason they litigate this is, if my case stands, 
then the employees will have some very ground on which they can 
come forward and perhaps have a little more comfort to come 
forward with concerns, but it also is a precedent, and that's 
something the University of California does not want.
    That's my guess.
    Mr. Strickland. So it may be precedent and it may be 
    Mr. Gutierrez. Well, it is intimidation. I mean, that's 
part and parcel of it. If you look at the 72-page ruling by the 
administrative law judge, the judge goes through and he sorts 
through the evidence and actually discusses the many different 
types of pretexts that were used to intimidate and harass.
    Mr. Strickland. My understanding is that you're not asking 
for much. You want your raise and you want the removal of the 
offensive statement in your performance evaluation and you want 
your attorney fees. Is that correct?
    Mr. Gutierrez. That's correct. But at the outset, I was--
the only thing I was asking for was the removal of that one-
sentence or two-sentence comment from my performance appraisal. 
That's all I was asking for. I wasn't even asking for 
reimbursement of any costs that I had incurred up to that time, 
I just wanted removal of that sentence.
    The University of California was adamant that they would 
not remove that comment. They were willing to give me $3,000, 
but those $3,000 weren't being classified as reimbursement of 
costs or anything, it was just, ``We'll give you 3,000 and get 
out of our sight.''
    Since I have had to carry this case forward and I have 
incurred this cost, I feel it is just only right that I recover 
those costs.
    Mr. Strickland. One final question. What is the 
University's defense? Are they saying, for example, that there 
was acceptable data for the radioactive monitoring equipment 
that you ignored?
    Mr. Gutierrez. The claim was that there were 31 out of 33 
stacks that were in compliance with the Clean Air Act--in other 
words, that they were being monitored correctly, that the 
emissions were below the threshold that might have presented a 
problem or below the threshold of the EPA requirement.
    I had assessed all of the nuclear facilities that contained 
those stacks. I had the documentation that clearly showed that 
they were in noncompliance, so they were essentially--they were 
lying to the judge. And it wasn't just the emissions, but the 
entire infrastructure that supported it, the configuration of 
the equipment was not being maintained. Some of the equipment 
was faulty or not operable. The procedures that were required 
to provide direction on how to install that equipment or how to 
maintain it and how to replace it were not in place. The 
individuals that were in charge of the program lacked training, 
lacked knowledge. There was a significant amount of turnover of 
personnel in those areas such that there was no continuity.
    I mean, my one area of specialty that I specialized in is 
quality assurance, and I don't know if you are familiar with 
that, but it is a set of management tools that help you assess 
vulnerabilities in the scope of work. There is essentially no 
quality assurance program at Los Alamos National Laboratory. 
That has been written up many, many times.
    Mr. Strickland. I want to thank all three of you.
    Mr. Chairman, I yield back.
    Mr. Burr. I thank the gentleman.
    The Chair would also like to thank this panel, especially 
Mr. Walli and Mr. Gutierrez, for your belief that it is 
important enough to come in here personally and tell about your 
specific instances that have happened to you.
    Again, to you, Mr. Gutierrez and to you, Mr. Walli, it is 
the deep belief of this committee that we are not going to let 
this go. We are not here to do anything other than to try to 
figure out what has transpired and what we need to do to make 
sure we have a system that functionally works, to make sure 
that the public statements of the Department of Energy are, in 
fact, fulfilled in the policies that not only they put out but 
that they live by. My hope is that we will be enlightened by 
the next panel and we will have an opportunity to thoroughly 
try to figure out their level of commitment to these policies.
    The first panel is excused.
    The Chair would call up the second panel: Ms. Mary Anne 
Sullivan, General Counsel, United States Department of Energy; 
accompanied by Dr. David Michaels, Assistant Secretary for 
Environment, Safety, and Health; Mr. Ronald Hansen, President, 
Fluor Hanford; Mr. Robert Van Ness, Assistant Vice President 
for Laboratory Administration, the University of California.
    Good afternoon, and the committee's apology for the delays 
that we have had so far. We thank each of you.
    You are aware that this subcommittee is an investigative 
subcommittee, and, as such, it has the practice of taking 
testimony under oath. Do any of you object to taking testimony 
under oath?
    [All witnesses respond in the negative.]
    Mr. Burr. The Chair then advises each of you that, under 
the House rules and the rules of the committee, you are 
entitled to be advised by counsel. Do any of you seek to have 
counsel advise you?
    Mr. Hansen. I do, Mr. Chairman.
    Mr. Burr. You do?
    Mr. Hansen. Yes.
    Mr. Burr. Would you identify that counsel, please?
    Mr. Hansen. Yes. Jennifer Curtis, Rich Bliss. There are 
some matters that could arise in which I may have to ask 
specific questions.
    Mr. Burr. You've introduced Jennifer.
    Mr. Hansen. Yes.
    Mr. Burr. Is this also a counsel?
    Mr. Hansen. Yes, Rich Bliss.
    Mr. Burr. Rich Bliss. I would ask the two counsels to 
continue to stand, as well as the witnesses.
    I'd ask you to raise your right hand. Do you solemnly swear 
to tell the truth, the whole truth, and nothing but the truth, 
so help you God?
    [All witnesses respond in the affirmative.]
    Mr. Burr. Consider yourself sworn and under oath for 
    The Chair would recognize Ms. Sullivan for the purposes of 
an opening statement.


    Ms. Sullivan. Thank you, Mr. Chairman, members of the 
committee. I appreciate the opportunity to testify concerning 
Department of Energy whistleblower policies.
    More than 10 years ago, the Department took an important 
first step to protect its contractor employees from retaliation 
for disclosures relating to health and safety, fraud, 
mismanagement, waste, and abuse. Specifically, the Department 
proposed a formal process for resolving contractor employee 
complaints of retaliation.
    I think it is worth noting that, at that time, in 1990, 
Congress had not yet enacted statutory protections for DOE 
contractor employees apart from the relatively limited 
provisions contained in the Major Fraud Act. The Department 
took the initiative.
    The final DOE rule establishing the contractor employee 
protection program was issued in early 1992. It established 
procedures for adjudicating contractor employee complaints of 
reprisal by their employer for reporting what they believed in 
good faith to be unlawful, unsafe, or wasteful practices by the 
    These procedures included independent fact finding and a 
hearing before a hearing officer at the affected DOE site, 
followed by an opportunity for review by the Secretary or his 
    Four years later, in a continuing attempt to improve its 
whistleblower protections, the Department invited the public, 
particularly those with experience under the contractor 
employee protection program, to recommend regulatory changes 
that would help streamline the process and make it more 
    After considering the comments we received, the Department 
made substantial revisions to the process. Those became 
effective a year ago.
    Even more important than the steps the Department has taken 
to give whistleblowers a forum in which to present their claims 
of retaliation are the steps we have taken to encourage the 
early resolution of employee concerns, and thereby reduce the 
likelihood that employees will become whistleblowers.
    In 1996, the Department established the Office of Employee 
Concerns. Its goal is to have employee concerns receive full, 
fair, and final resolution, while involving management and 
employees directly in the resolution process.
    The Office of Employee Concerns' activity reports for 1996, 
1997, and 1998 suggest that this objective is being met. These 
reports show that each year the Office of Employee Concerns, 
through its field office representatives, receives just under 
500 concerns and resolves between 75 and 80 percent of them. 
This trend continued in 1999.
    These data suggest to me that a significant number of 
employees feel comfortable calling on the Office of Employee 
Concerns, and that the office does a pretty good job of closing 
out the concerns that are raised. I know that the director of 
that office, Bill Lewis, wants to continue to improve upon that 
    It should be noted that DOE's Office of Employee Concerns 
supplements the employee concerns programs that individual 
contractors maintain. The joint efforts of employees and 
management at several of our sites have produced some wonderful 
prototypes for ensuring that concerns about safety, security, 
waste, fraud, and abuse get resolved promptly and directly in 
the work unit where they arise.
    Rocky Flats and Savannah River are among the sites where 
some of the most successful programs are found. My office has 
invited the Savannah River Guard Force Team that developed one 
of these programs to make presentations around the DOE complex, 
including to all of the DOE counsel and contractor counsel, so 
that we can all learn from them the many benefits of resolving 
issues early and directly between those most affected before 
they become whistleblower cases.
    In addition, the Department has taken steps to help ensure 
that its contractors are, if I may use what is probably not a 
word, ``disincentivized'' from retaliating against employees 
who come forward with information that they believe evidences 
unsafe, unlawful, fraudulent, or wasteful practices.
    The reimbursement of legal costs under management and 
operating contracts provides little incentive for the early 
resolution of employee complaints of reprisal, so we developed 
a model contract clause addressing the allowability of 
contractor defense costs in whistleblower cases.
    The model clause provides that contractor litigation and 
settlement costs are allowable costs if the employee complaint 
is resolved prior to an adverse determination.
    In order to achieve consistency in the Department's policy 
on the allowability of whistleblower defense costs, we issued a 
proposed rule in January, 1998, to incorporate the model clause 
into the Department of Energy acquisition regulations.
    In parallel with the rulemaking, we took steps to include 
the model clause in new contracts. Currently, most of the 
Department's major contracts contain either the model clause or 
a variation of the clause under which contractor defense costs 
are allowable only until the issuance of an adverse decision.
    In response to comments on the proposed rule which 
criticized the model clause as likely to encourage settlement 
of even non-meritorious complaints, we re-opened the comment 
period to invite consideration of an alternate approach, which 
would give contracting officers greater discretion to consider 
all the facts and circumstances of each case in making a 
determination of allowability. We are carefully considering the 
two alternative approaches in the allowability of whistleblower 
defense costs and plan to issue a final rule in the near 
future. Whichever approach we select, however, as far as my 
staff has been able to determine, we are the only Federal 
agency to disallow any contractor whistleblower defense cost as 
a matter of policy.
    In addition, retaliation against contractor employees may 
lead to the imposition of penalties under the Price Anderson 
Amendments Act of 1988. Under our implementing regulations, if 
an act of retaliation by a contractor results from an 
employee's involvement in matters of nuclear safety, the 
retaliation could constitute a violation of a DOE nuclear 
safety requirement and result in the imposition of civil 
    Recently, the Department took steps to strengthen the 
connection between retaliation and the application of the civil 
penalty enforcement process by clarifying that information 
collected in a Department of Labor whistleblower proceeding 
could be used as the basis for such an enforcement action.
    In closing, I would like to emphasize that the Department 
continues to have zero tolerance for reprisal against 
whistleblowers, and we will continue to explore new and better 
ways to realize that goal.
    Zero tolerance does not mean that every whistleblower claim 
must be accepted as valid without an opportunity for response 
or appeal by the Department's contractors, but we are 
determined to make every effort to ensure that our contractors 
conduct their activities responsibly, safely, efficiently, and 
in an atmosphere which encourages their employees to raise 
concerns about unsafe, unlawful, or wasteful practices without 
fear of reprisal.
    In pursuit of that objective, we want to continue to 
provide both positive encouragement to resolve employee 
concerns early without assessing blame, as well as punitive 
measures such as the disallowance of costs and the imposition 
of penalties when retaliation is established.
    Thank you very much.
    [The prepared statement of Mary Anne Sullivan follows:]
 Prepared Statement of Mary Anne Sullivan, General Counsel, Department 
                               of Energy
    More than ten years ago, the Department took a decisive and 
unprecedented step to protect its contractor employees from retaliation 
by their employers for disclosures relating to health and safety, and 
fraud, mismangement, waste and abuse. The Department proposed a process 
for resolving complaints of retaliation by establishing procedures for 
independent factfinding and a hearing, followed by an opportunity for 
review by the Secretary or his designee. At that time--1990--
Congressional attention to contractor employee whistleblower concerns 
was very limited. For example, section 2 of the Major Fraud Act of 
1988, 18 U.S.C. Sec. 1031, gave contractor employees a right of action 
against their employer for reprisals relating to the employee's 
participation in the government's prosecution of the contractor under 
that section for fraud against the United States. And section 210 of 
the Energy Reorganization Act, 42 U.S.C. Sec. 5851, granted employees 
of Nuclear Regulatory Commission licensees, and their contractors and 
subcontractors, the right to bring whistleblower complaints to the 
Department of Labor. (In 1992, this provision was amended to include 
employees of DOE contractors and subcontractors.) There was, however, 
no comprehensive statutory scheme to address whistleblower concerns of 
government contractor employees.
    The final DOE rule establishing the Contractor Employee Protection 
Program was issued in early 1992 and codified at 10 CFR Part 708. The 
rule established procedures for adjudicating contractor employee 
complaints of reprisal by their employer for reporting what they, in 
good faith, believed to be unlawful, unsafe or wasteful practices by 
the contractor. These procedures included an independent fact-finding 
and hearing before a Hearing Officer at the affected DOE field site, 
followed by an opportunity for review by the Secretary or his designee. 
Four years later, in a continuing attempt to improve its efforts in 
this area, the Department published a Notice of Inquiry in the Federal 
Register inviting members of the public, particularly those with 
experience under the contractor employee protection program, to 
recommend regulatory changes that would help to streamline the process 
and make it more responsive to the needs of both complainants and 
contractors. After considering those comments, the Department, in early 
1998, issued a proposed rule suggesting substantial revisions to the 
Part 708 process and, subsequently, issued an interim final rule which 
became effective a year ago.
    To encourage the early resolution of employee concerns and thereby 
reduce the likelihood that employees will become whistleblowers, the 
Department, in 1996, established the Office of Employee Concerns at DOE 
Headquarters. Each of the DOE Operations Offices and major field 
offices also has an Office of Employee Concerns. This office's goal is 
to have employee concerns reach full, fair, and final resolution, while 
involving management and employees more directly in the resolution 
process. The Office of Employee Concerns Activity Reports for 1996, 
1997 and 1998 show that the objective is being met. During this period, 
over 1000 concerns, out of approximately 1500, were resolved by DOE 
field element employee concern programs nationwide. Similarly, the data 
for 1999 indicate that approximately 75 percent of the concerns 
addressed by the field office employee concern programs were resolved.
    In addition to these efforts which provide mechanisms to address 
employee concerns and complaints of reprisal, the Department, as part 
of its Contract Reform effort, has taken steps to help ensure that its 
contractors are dissuaded from retaliating against employees who come 
forward with information they believe evidences unsafe, unlawful, 
fraudulent or wasteful practices. Recognizing that the reimbursement of 
legal costs under the Department's cost-type management and operating 
contracts provides little incentive for the early resolution of 
employee complaints of reprisal, we developed a model contract clause 
addressing the allowability of contractor defense costs in 
whistleblower cases. The model clause provides that contractor 
litigation and settlement costs are allowable costs if the employee 
complaint is resolved prior to an adverse determination. In order to 
achieve consistency in the Department's policy on the allowability of 
whistleblower defense costs, we issued a proposed rule in January 1998 
to incorporate the model clause into the Department of Energy 
Acquisition Regulation. Prior to issuing this proposed rule, we took 
steps to include the model clause in competitive solicitations for the 
Department's site management contracts and to negotiate the clause into 
existing contracts. Currently, most of the Department's major contracts 
contain either the model clause or a variation of the clause which 
provides that contractor defense costs are allowable until the issuance 
of an adverse decision.
    After considering comments submitted in response to the proposed 
rule, which criticized the clause as overly prescriptive and 
encouraging settlement regardless of the merits of an employee's 
complaint, we issued a notice in March 1999 to reopen the comment 
period to invite consideration of an alternate approach. As an 
alternative approach we proposed a cost principle which would address 
the allowability of costs relating to labor disputes generally, 
including whistleblower actions. The cost principle would give 
contracting officers greater discretion to consider the circumstances 
of each case in making a determination of allowability. Specifically, 
the proposed cost principle provides that if a labor dispute results 
from contractor actions that are those of a prudent business person, 
then the contractor's costs related to settlement or defense of the 
action would be allowable. If, however, the labor dispute arises from 
contractor actions which are unreasonable or constitute unlawful, 
negligent or malicious conduct, then the contractor's costs would be 
    We are carefully considering the two proposed approaches to the 
allowability of whistleblower defense costs--the cost allowability 
clause and the cost principle--and plan to issue a final rule in the 
very near future.
    The review of allowable costs is not the only approach we have 
taken to address the issue of employee reprisal by Department 
contractors. Retaliation against contractor employees may also lead to 
the imposition of penalties under the Price Anderson Amendments Act of 
1988, Public Law 100-49, implemented by the Department at 10 CFR Part 
820. Under these regulations, to the extent an act of retaliation by a 
contractor results from an employee's involvement in matters of nuclear 
safety, the retaliation could constitute a violation of a DOE Nuclear 
Safety Requirement. The retaliation would therefore be subject to the 
investigatory and adjudicatory procedures of Part 820 and could warrant 
the imposition of civil penalties on the contractor.
    Recently, in response to issues raised in a whistleblower matter 
involving a Lawrence Livermore employee, the Department took steps to 
strengthen the connection between retaliation against an employee by a 
DOE contractor and the application of the Part 820 enforcement process. 
Two months ago, the Department amended the General Statement of 
Enforcement Policy appended to Part 820 to clarify that information 
collected by the Department of Labor in a whistleblower proceeding 
under its procedures at 29 CFR Part 24 could be used as a basis for 
enforcement action under Part 820.
    In closing, I would like to emphasize that the Department's efforts 
on many fronts over the past ten years to provide protection to 
contractor employees who raise legitimate concerns about contractor 
activities evidence a continuing, strong commitment to the goal of 
``zero tolerance for reprisal.'' Zero tolerance does not mean that 
every whistleblower claim must be accepted as valid without an 
opportunity for response or appeal by the Department's contractors. 
Zero tolerance is a goal to which we remain committed, and we will 
continue to identify and explore ways of moving closer to it. To the 
best of our knowledge, no other Federal agency has undertaken 
comparable initiatives, particularly with respect to the allowability 
of whistleblower-related costs. We are determined to make every effort 
to ensure that our contractors conduct their activities responsibly, 
safely, efficiently and in an atmosphere which encourages their 
employees to raise legitimate concerns about unsafe, unlawful or 
wasteful practices without fear of reprisal.

    Mr. Burr. Thank you, Ms. Sullivan.
    Dr. Michaels, do you have a statement?
    Mr. Michaels. No, I did not come prepared with a statement.
    Mr. Burr. We'll be happy to let you make one.
    Mr. Michaels. I'm sure you will give me the opportunity in 
the future.
    Mr. Burr. I may give you the opportunity to answer some 
questions today.
    Mr. Michaels. I assumed as much. Thank you.
    Mr. Burr. The Chair would recognize Mr. Van Ness.


    Mr. Van Ness. Thank you, Mr. Chairman. I am thankful for 
the opportunity to appear before you today to discuss the 
committee's concerns about whistleblower protections for 
workers at DOE sites. I am the assistant vice president for lab 
administration at the University of California. My 
responsibilities with the labs involve oversight of 
administrative and operations activities.
    The concept of whistleblower retaliation is totally 
inconsistent with the culture of the university and labs that 
we manage for the Department of Energy. A constant in the 
culture of our campuses and the laboratories is open debate and 
consideration of varying ideas and approaches. Dissent is both 
commonplace and highly valued. Some of our campuses are seen as 
almost synonymous with diversity of opinion, protest, and 
    Further, there is a sense of repugnance associated with the 
silencing of any voice. We believe at our core that such values 
are essential to great universities, great laboratories, and a 
great Nation. We take whistleblower protection very seriously.
    The University of California has had procedures in place 
since the 1980's, long before the Federal policies and 
subsequent contract requirements. We see the DOE's requirements 
as complementary to long-existing University of California 
policy. Across our nine campuses, five medical centers, and 
three laboratories, complaints are very rare and incidents of 
true retaliation even rarer.
    At the Lawrence Livermore National Laboratory we have about 
8,000 University of California employees. During the past 10 
years, 6--about 1 every 2 years--have made claims of 
retaliation. Of those 6, 4 resulted in findings of no 
retaliation. Of the 2 remaining, 1 was settled before there was 
a formal complaint filed, and the single remaining case is that 
of Mr. Lappa.
    The experience at Lawrence Livermore is consistent with 
statistics for the University of California's system overall. 
We employ over 100,000 people. We see less than ten claims per 
year system-wide, and most of those, just as at Livermore, do 
not result in a finding of retaliation.
    I would like to take a few minutes to outline the U.C. 
    At the University of California, the campus chancellor--or, 
at our laboratories, the laboratory director--appoints a 
retaliation complaint officer who investigates complaints of 
retaliation. Complaints are made in writing within 1 year of 
the alleged incident of retaliation. The retaliation complaint 
officer conducts and investigation and furnishes draft findings 
to the complainant, who has 20 days to prepare any rebuttal or 
to provide supplemental information.
    A retaliation complaint officer then submits a finding to 
the chancellor or the laboratory director, who has 90 days--or 
within 90 days of the complaint being filed. The chancellor or 
lab director then makes a determination within 15 days and 
orders any appropriate relief. When retaliation is found to 
have occurred, the retaliating individual is disciplined.
    Finally, appeals can be made to the Office of the President 
of the University.
    Our employees at the laboratories can choose to use this 
U.C. process or the Department of Energy's process or, in the 
case of worker safety matters, the Department of Labor's 
process. Regardless of the process chosen, it is our objective 
to have fair and balanced reviews of all claims.
    It is our desire and continued commitment to ensure the 
full protection of any and all individuals from retaliation for 
protected disclosures.
    I thank you very much for the opportunity to speak with you 
this morning.
    [The prepared statement of Robert L. Van Ness follows:]
Prepared Statement of Robert L. Van Ness, Assistant Vice President for 
          Laboratory Administration, University of California
    Mr. Chairman and Members of the Committee, I am Robert L. Van Ness, 
Assistant Vice President for Laboratory Administration for the 
University of California (UC). The University operates three DOE 
laboratories--the Los Alamos National Laboratory (LANL), the Lawrence 
Livermore National Laboratory (LLNL), and the Lawrence Berkeley 
National Laboratory (LBNL). My responsibilities include administering 
the performance-based management aspects of our contracts with the 
Department of Energy (DOE) and conducting oversight of the 
administrative and operational activities of the laboratories.
    Thank you for the opportunity to appear before you today to address 
the Committee's concerns regarding the implementation of whistleblower 
protections for workers at DOE sites.
    It is an objective of the University's at the UCDOE laboratories to 
provide an atmosphere in which employees can openly communicate and 
have a frank and candid exchange of views. This is wholly consistent 
with the academic philosophies of critical review and debate that are 
the routine of daily life at the University. We believe the entire 
process benefits from such an approach.
    All of the federal and state procedures in place are intended to 
foster this result as well. Below, I briefly describe the internal 
procedures used by the University.
    In the rare instance where an employee feels that they have been 
retaliated against for the views they have expressed, the process to 
resolve these complaints needs to be fair to both the individual 
employee, the alleged retaliator, and the University. We believe the 
procedures we have in place effectively accomplish this and the 
following testimony will set forth how this occurs.
    The University provides a variety of protections of its employees--
both at University campuses and the UCDOE laboratories--against 
retaliation for notifying management, DOE, local authorities, the 
Congress, and the public of variances between any University activities 
and contractual or other legal requirements. These protections do not 
arise at the University solely from DOE's ``zero-tolerance'' policy and 
the provisions of 10 C.F.R. Part 708. In the 1980's the California 
State legislature codified what had been an evolving area of case law 
into California Government Code 10540 et seq. This law made it clear 
that public employees should not be retaliated against for disclosing 
public entity activities that were unlawful or inconsistent with the 
public trust.. The statute codified the type of conduct that employees 
could report and be protected from retaliation and established a right 
of judicial review. The University of California is a state entity.
    Pursuant to the code the University modified its internal grievance 
procedures to expressly cover issues of retaliation for protected 
disclosures. But even before that revision employees who felt they had 
been retaliated against for whistleblowing could file a grievance, 
obtain a full evidential hearing before an American Arbitration 
Association arbiter, and obtain judicial review in many instances if 
they were not satisfied with the outcome of the grievance process.
    The statute referenced above was revised recently and recodified as 
California Government Code 8547.
    Such protections were already in place in September, 1994, when the 
DOE whistle blower protection provisions were incorporated into UC-DOE 
contracts. More recent federal legislation extended DOL whistle blower 
protections to DOE contractual activities.
    Let me briefly outline the University's procedure:
    The campus Chancellor or Laboratory Director appoints Retaliation 
Complaint Officers (RCOs) who investigate or oversee complaints of 
retaliation. Complaints are made in writing and must be made with a 
year of the alleged incident of retaliation. The RCO conducts an 
investigation and furnishes draft findings to the complainant who 
normally has 20 days to prepare any rebuttal or supplemental 
information that will become a part of the record. Normally the RCO 
submits a finding to the Laboratory Director within 90 days of the 
complaint being filed. The Laboratory Director then makes a 
determination within 15 days and orders any appropriate relief. When 
retaliation is found to have occurred, the retaliating individual is 
disciplined. That discipline can include termination. Appeals can be 
made to the Office of the President.
    Employees are required under California law to utilize the internal 
procedure before seeking judicial review. However, Laboratory employees 
can elect to utilize the external procedures of the Department of Labor 
for claimed retaliation for disclosing worker safety issues and the 
Department of Energy for claimed retaliation for other protected 
    During the past 10 years, six employees at the Lawrence Livermore 
National Laboratory have made claims of whistle blower retaliation. 
Four of these cases resulted in a finding of no retaliation--1 solely 
through the independent administrative review at the University and 3 
as a result of a federal administrative proceeding alone or through 
both the University and federal administrative proceedings. Of the 
remaining 2 cases, one resulted in a settlement before there was even a 
formal complaint and in one case a federal investigator made a finding 
of retaliation. This Committee has asked for and received substantial 
information about this latter case. Information from Los Alamos was not 
available due to the current emergency and we were unable to get 
information regarding the Lawrence Berkeley National Laboratory due to 
the short period of time to prepare this testimony.
    We believe that the data from Lawrence Livermore demonstrates that 
employees are aware of protections and that in almost all instances 
supervisors and managers are acting appropriately with regard to 
individuals who make protected disclosures.
    The experience of Livermore is consistent with statistics for the 
UC system. The University operates nine campuses, five medical centers, 
and the three UCDOE laboratories, employing nearly 100,000 people. 
Since the adoption of the California statute, the University has 
averaged less than 10 claims per year system-wide and most do not 
result in a finding of retaliation.
    The costs for all employee grievances and defense of external 
claims and judgement are generally reimbursable under cost-type 
contracts such as DOE's management and operating contracts. Every 
enterprise would like to have perfect relations with its employees and 
others, but that simply is not the case. Consequently costs of 
investigation, defense and payment of settlements and judgements are 
ordinary and necessary business expenses of all enterprises whether 
they are governmental, commercial, or educational.
    DOE federally-funded research and development centers (FFRDCs) are 
entities established by the federal government for its purposes. 
Contractors enter into agreements with DOE to operate these facilities 
with the understanding that DOE will reimburse all reasonable ordinary 
and necessary business expenses allocable to the contract work. There 
are exceptions that exist for certain types of cost that contractors, 
including the University, absorb through charging a fee to the 
government. One of these exceptions to reimbursement of reasonable and 
ordinary business expenses involves the cost of defending a claim of 
retaliation for a protected disclosure and a judgement when the 
contractor is determined after hearing by an administrative law judge 
or court to have retaliated. In all other circumstances, including a 
settlement before hearing, the costs are reimbursed to the contractor.
    For non-profit entities such as the University it would be 
preferable for the government to reimburse all costs and the University 
not charge a fee. If the record of performance is unsatisfactory, 
including its record on litigation costs and judgements, then a non-
profit contractor could be terminated or the contract not renewed at 
its expiration. However, the Congress and DOE have determined that they 
believe it is better policy to decline to reimburse certain costs even 
though the government then pays a fee in the case of a non-profit 
    The intent of the DOE non-reimbursement policy is to encourage 
contractors to use appropriate judgement with respect to the costs of 
litigation and to avoid conduct that can result in adverse judgements 
altogether. Because the University of California returns all fees not 
required for unreimbursed costs to research at or for the UCDOE 
laboratories, costs of litigation and judgements--whether reimbursed by 
the government or not--result in less funds available for research. 
Therefore laboratory directors and their management team are sensitive 
to these costs without regard to whether or not they are federally 
reimbursable. Settlements are often made in instances where management 
believes there was no wrongdoing as a means of avoiding greater costs 
and adverse impacts on the conduct of scientific research.
    Similarly, DOE policy is to reimburse the costs of settlements to 
promote lower cost resolutions regardless of fault. Nevertheless, on 
occasion, management does need to fully litigate claims where 
settlement demands are unreasonable in light of all the facts and 
    Does this reimbursement policy give an inappropriate advantage to 
management in contrast to the claimant? No for several reasons:

1. Claimants are able to find counsel willing to take cases on a 
        contingency fee basis.
2. DOE FFRDC contractors pay for litigation with a reduction in 
        research and therefor are ``losers'' whenever litigation occurs 
        and reasonable settlements cannot be achieved. Similarly, DOE 
        FFRDC contractors are not motivated to protract litigation and 
        run up expenses: typically extensions of time are driven by 
        plaintiffs counsel in hope of securing a richer settlement.
3. DOE contractors are not absolutely assured of reimbursement in these 
        types of claims.
    In summary, the University has a history of affording protection to 
employees who identify misconduct or improper activities and the 
University's policies and practices predate federal regulation in this 
area. Employees know of these protections and they are being used. The 
rate of adverse determinations against University managers, both in 
internal and external proceedings, suggest that although not perfect 
the University does do a good job of appropriately treating employees 
who make protected disclosures. The University is already motivated to 
avoid inappropriate conduct as well as minimize any litigation, 
reimbursed or not, due to the adverse impact on the cost of research. 
Finally, DOE's policy of limiting non-reimbursability of defense costs 
to those situations in which there is an adverse determination after an 
administrative or court hearing, represents an appropriate balance for 
FFRDC contractors to encourage limiting defense of retaliation claims 
to those cases which the contractor believes are most compelling.

    Mr. Bryant [presding]. Thank you, Mr. Van Ness.
    Our next witness is Mr. Hansen.


    Mr. Hansen. Thank you, Mr. Chairman.
    My name is Ron Hansen, and I am the President of Fluor 
Hanford, Incorporated.
    The title of today's hearings is, as I wrote on my 
statement, both intriguing and disturbing. I can state from the 
offset that Fluor neither condones nor tolerates retaliation 
against employees of any form. As the President of Fluor 
Hanford, I take the responsibility of ensuring a safety 
conscious work environment very seriously.
    Fluor is one of the largest engineering, construction, 
maintenance, and diversified services companies in the world. 
We are also recognized as a leader in on-the-job safety. Our 
incident rates--OSHA, lost work day--are consistently less than 
the national averages for major contractors. This does not mean 
from time to time that we have disputes regarding facts or 
motivations that arise. However, they are generally resolved in 
an amicable fashion.
    Our success as a company is indicative of our commitment to 
employees and their wellbeing. Safety, therefore, is a clear 
value at every level within Fluor. Contractors are successful 
if they create an environment of safety and well-being for 
their employees. If workers are retaliated against and an 
environment exists where safety concerns and issues are not 
routinely raised and addressed, then you will fail.
    Fluor's record of success strongly suggests that 
retaliation is not part of our ethic and would, quite frankly, 
be extremely counterproductive. At Hanford, increased employee 
involvement, labor partnerships, and a focus on defining our 
safety management system have produced significant results. 
There has been a 76 percent reduction in lost work day 
injuries, a 64 percent reduction in OSHA reportable injuries, 
and a 32 percent reduction in radiological dose of recent years 
at the Hanford site.
    We have achieved these results by not only encouraging 
employee input, but by actively involving employees in 
recognizing, preventing, and resolving safety concerns. 
Throughout Fluor, including our operations at Hanford, there 
are numerous policies, procedures, and programs, both defined 
by contract and those that we use throughout our worldwide 
operations, geared toward accident prevention and safe work 
    We provide multiple mechanisms for our employees to address 
and seek remedies for any unsafe work condition or perceived 
hazard. These remedies enable employees to go to the highest 
levels of management without fear of retribution. And our 
employees also have the right to stop work if necessary and 
have their concerns addressed and resolved.
    Our contract at Hanford, by law, demands that Fluor provide 
a comprehensive environmental safety, health, and quality 
program to assure that workers, the community citizens, and the 
environment are protected. Every employee, regardless of 
position, is expected to contribute to the safety consciousness 
required by the serious nature of our work that are currently 
being performed at Hanford. It is a consciousness that demands 
worker involvement, and an attitude that all accidents are 
    We've added, of our own initiative, worker involvement into 
all our work planning, processes, and practices.
    The bottom line is quite simple: there is a culture of 
safety within Fluor and all our Fluor employees. We strive to 
create an atmosphere where employees, the communities in which 
we work, and our clients are valued. To condone any form of 
retaliation against employees is just not tolerated.
    Thank you, Mr. Chairman. That concludes my remarks.
    [The prepared statement of Ronald D. Hansen follows:]
 Prepared Statement of Ronald D. Hanson, President, Fluor Hanford, Inc.
    Mr. Chairman and Members of the Committee, my name is Ron Hanson 
and I am President of Fluor Hanford, Inc., a subsidiary of Fluor 
Corporation. I am the corporate official responsible for overseeing 
Fluor's activities at the Hanford Site, in Richland, Washington. The 
title of today's proceeding is intriguing, and disturbing. It seems to 
conclude that there is contractor retaliation and that retaliation is 
condoned by the Department of Energy (DOE). One would hope that a 
question of this nature would not have to be asked. I can state 
categorically that retaliation of any kind against any employee of 
Fluor is neither condoned nor tolerated.
    As the President of Fluor Hanford, Inc., I take the responsibility 
for ensuring a safety conscious work environment very seriously. This, 
of course, does not suggest that disputes regarding facts or 
motivations will never arise about safety issues. Nor does it mean that 
in most circumstances disputes cannot be amicably resolved, or that 
``perception'' is never a factor in determining the best course of 
    Concerns or actions that affect worker safety should never be used 
manipulatively. This is Fluor's philosophy, which is not only morally 
right, but it promotes efficiency as well as safety. That is in our 
interest and our client's.
    Fluor is one of the largest engineering, construction, maintenance 
and diversified services companies in the world. With more than 40,000 
employees, working in some 125 countries, the company currently manages 
about 2,000 projects. Fluor's partnering and alignment approach has 
become internationally known for producing results in the form of 
accelerated schedules, improved safety and quality, and reduced costs.
    More importantly, Fluor is a recognized leader of on-the-job safety 
worldwide. Our incidence rates (OSHA, Lost Workday) are consistently 
less than the national averages for major contractors. The true meaning 
of this accomplishment is best shown by the safety achievements of 
Fluor's employees throughout the United States. Many projects have 
established long and continuing periods of safe work performance 
ranging from two to seventeen years.
    It should be noted that the world safety record for contractors was 
established by Fluor in 1993--24,000,000 safe work hours on an 
individual project without a lost time accident. This achievement is 
without question a true milestone in the industry, and it represents a 
profound demonstration of what absolute management commitment to 
employee involvement and accident prevention can accomplish.
    To have such a continued outstanding record of growth and success, 
while also being one of the safest contractors, is no small 
achievement. It is also indicative of Fluor's commitment to its 
employees and their well being. Contractors who are committed to their 
employees will succeed. As you can deduce, safety is clearly a value at 
every level--top to bottom--for every Fluor manager and employee at 
every Fluor project site--including Hanford. Does that mean there are 
not incidences--of course not. What it does mean is that safety is 
viewed as a key to success and is treated as an absolute corporate 
    I have taken the time to expound on this topic because it goes to 
the heart of the issue before us. No contractor, including Fluor and my 
operation at Hanford, can be successful if it does not create an 
environment of safety and well being for its employees. If workers are 
retaliated against and an environment exists where safety concerns and 
issues are not routinely raised and addressed--then you will fail. I 
believe that the record of success that I have outlined above strongly 
suggests that ``contractor retaliation'' is not part of Fluor's ethic 
and would, quite frankly, be extremely counterproductive to doing our 
work and being recognized as one of the leading firms in the world.
    At Hanford, for example, increased employee involvement, labor 
partnerships and a focus on defining our safety management system have 
produced significant results. We have seen a 76% reduction in Lost 
Workday injuries, a 64% reduction in OSHA recordable injuries, and a 
32% reduction in radiological dose in recent years.
    We have achieved these results by not only encouraging employee 
input, but by involving employees in recognizing, preventing and 
resolving safety concerns. We depend upon and reward employee 
involvement in safety management systems, job hazard analyses, and 
enhanced work planning. Overall, Fluor uses a number of procedures and 
incentives to actively seek input from and to reward employees for 
raising safety concerns. Thus, as set out in our corporate Zero 
Tolerance Policy, we are committed to ``sustaining an open work 
environment where employees feel free to raise concerns.''
    Fluor uses safety orientations to reinforce our belief that safe 
work practices are a job necessity. At many Fluor projects each 
employee is required to attend regular toolbox safety meetings to 
discuss specific safety subjects as well as current safety performance 
and issues related to recent, current or future work activities. Other 
safety activities include the Job Safety Analysis, a basic procedure 
for establishing the safe approach for performing a task, and setting 
up Safety Task Assignments. Safety Task Assignments are given to one or 
more employees to spot job hazards and to actually demonstrate how the 
job can be performed safely.
    Additionally, several years ago, Fluor launched a Zero Accidents 
Program that not only meets, but also exceeds, the Construction 
Industry Institute's Zero Accidents task force model for excellent 
safety performance.
    Specifically at Hanford, there are additional policies and 
procedures both defined by contract and those that we brought to the 
site from other projects. The contract, by law, demands that Fluor 
provide a comprehensive environmental, safety, health and quality 
program to assure that workers, community citizens and the environment 
are protected from the hazards of the chemicals, machinery and 
operations that are used to perform the work. In fact, a requirement of 
the Integrated Safety Management System (ISMS) is that the value and 
culture of safety is embedded into every work plan, every work process 
and practice at all levels. Every employee, regardless of position, is 
expected to contribute to the safety consciousness required by the ISMS 
program. It is a consciousness that demands worker involvement and an 
attitude that ``all accidents are preventable.''
    Fluor, by its own initiative, added ``worker involvement'' to the 
ISMS list of Guiding Principles. This addition is not required by law 
or contract--we simply felt that a truly safety conscious work 
environment must be based upon the needs of those closest to the work 
and its potential hazards. Those who know those needs best have 
numerous opportunities to positively effect the work process. All 
facets of work planning--the Automated Job Hazard Analysis, pre-job 
briefings, Stop Work Authority and post-job reviews require worker 
    Workers are intimately involved in the ISMS program. In support of 
ISMS initiatives, an Enhanced Work Planning/ISMS Activity Level Core 
Team consisting of 16 bargaining unit employees meets bi-monthly to 
focus on improving work control practices.
    There have been several notable accomplishments achieved by these 
ISMS project teams. One team redesigned the risk/complexity screening 
criteria for the Job Hazard Analysis. Another drafted and taught ISMS 
training. Fluor and the Hanford Atomic Metal Trades Council (HAMTC) co-
sponsored three ISMS Workshops for 2,500 employees. Each workshop was 
designed and conducted with heavy involvement from represented labor. 
Fluor was the first contractor to involve bargaining unit 
representation on the National Enhanced Work Planning Steering 
Committee. We are also eliciting worker involvement from the building 
    Worker involvement, along with other tenets of the ISMS program, 
are also being passed down to subcontractors in their contract terms 
and conditions. Contractual enforcement is another vital tool in the 
successful implementation of ISMS.
    Yet another initiative that we use to elicit employee involvement 
in preventing and resolving safety issues is the President's Zero 
Accident Council (PZAC). PZAC was formed to champion safety awareness 
at every level. The Path to Zero Accidents campaign is on going. It is 
based on the premise that each management level must reflect an 
interest in company safety objectives, set a good example of compliance 
with safety rules, and effectively and consistently communicate to the 
workers in order to achieve zero accidents. It has been found that a 
worker is most apt to believe in safety only to the degree that the 
company or management believes in it. Management interest must, 
therefore, be vocal, visible, and continuous--from top management to 
departmental supervisors. In fact, managers must ``manage by walking 
around.'' They must maintain an active presence in the field and 
advocate worker involvement.
    PZAC works to improve the health and safety of all Hanford 
employees and visitors by demonstrating commitment to affect positive 
change within the elements of the Department of Energy's Voluntary 
Protection Program. Union Representatives, including stewards, meet 
with Fluor's project directors, the director of ES&H, the Chief 
Operating Officer and me, to deliver reports on emerging issues or 
changes in the safety program. We commission investigations and 
evaluations of workplace injuries, share success stories from project 
safety efforts and formulate action plans to resolve concerns with 
performing work safely. Finally, PZAC is a method of recognizing 
outstanding safety performance through the ``Path To Zero Accident 
Program.'' PZAC serves as an excellent opportunity for employees to 
raise safety concerns and receive feedback regarding resolution each 
and every month from the highest levels of management at Hanford.
    Moreover, PZAC and Employee Zero Accident Councils (EZAC) are 
proponents of two of the most powerful tools for worker, stakeholder 
and environmental safety. Those tools are the Hanford site ``Stop 
Work'' responsibility and the ``Project Hanford Worker's Bill of 
Rights.'' The Stop Work policy gives every employee, both bargaining 
unit and unrepresented, the responsibility and the authority to stop 
work immediately, without fear of reprisal, when they are convinced a 
situation exists which places themselves, their coworkers or the 
environment in danger. As part of the ``Stop Work'' authority, 
employees are expected to report any activity or condition that they 
believe is unsafe--first, to possibly affected worker(s), then to the 
supervisor or his/her designee where the condition exists. After 
notification, the responsible supervisor must resolve the issue. Thus, 
an employee who reasonably believes that an activity or condition is 
unsafe is expected to stop or to refuse to perform work without fear of 
reprisal by management or co-workers, and is entitled to have his or 
her safety concern addressed prior to participating in the work.
    The Project Hanford Worker's Bill of Rights guarantees every 
employee performing work a set of rights, to be exercised without fear 
of reprisal. Among the guaranteed rights are:

 the right to file a complaint to request a workplace 
        inspection or otherwise address a safety or health concern;
 the right to contribute to accident investigations, hazard 
        evaluations, pre-job planning, assessments, policy/procedure 
        development, safety goals;
 the right to be informed about the results of accident 
        investigations and workplace inspections; and
 the right to hazard information associated with work tasks, 
        provided in a timely manner.
    All Fluor management, employees and unions at Hanford are committed 
to upholding these rights and respect those that invoke them for their 
personal safety or the safety of others.
    Another route to resolve safety concerns is through union safety 
representatives. We increased bargaining unit involvement in safety 
through use of safety representatives at Hanford. We expanded both 
worker involvement and partnering with labor by identifying Union 
Safety Representatives within projects and subcontractors. The safety 
representatives promote open communication and feedback between 
employees and management on safety concerns, policy, and safety 
improvements. This program has resulted in better communication with 
employees and better responses to safety concerns.
    Additionally, senior management at Hanford meet with the bargaining 
unit safety representatives monthly to discuss emerging issues and 
employee safety concerns. At these meetings, the ``shop floor'' safety 
efforts are assessed and the workers provide any issues or concerns 
that are not being adequately addressed to senior management for 
special attention.
    It should be noted that if an employee has a safety concern there 
are several specific options available to address those concerns. 
Should an employee feel uncomfortable or unsatisfied with one process 
or mechanism, the employee can go to the next mechanism. Experience 
shows, however, that concerns are most effectively managed by the level 
of the organization closest to the employee. That is the immediate 
supervisor, the work group EZAC or union. If the employee is 
uncomfortable reporting at that level or feels that the problem has not 
been adequately addressed, the employee can go to a mid-level manager 
or his safety representative for resolution. From there the employee 
can approach me through the Open Door Policy.
    In addition, the WORKPLACE HARASSMENT policy specifically states 
that an employee who believes he is experiencing harassment in the 
workplace and is uncomfortable with the first level of management MUST 
take the issue either to Human Resources, Industrial Relations or any 
higher level of management.
    Finally, non-bargaining unit employees can utilize the Employee 
Concerns Program. Workers can approach the Employee Concerns staff in 
confidence to investigate, report back and assist in resolving safety-
related issues.
    Moreover, workers can engage other site-related investigation 
mechanisms. Employees can submit their concern either anonymously or by 
identifying themselves to the Office of Contractor Employee Protection 
within the Department of Energy (DOE). The DOE can investigate and 
resolve the complaint or forward the complaint to Fluor for Fluor's 
investigation and resolution.
    Alternatively, non-bargaining unit workers can approach the Hanford 
Joint Council (HJC), a forum consisting of a neutral facilitator, 
whistleblower representatives, a former union representative and 
company representatives. The HJC is a body that provides a mechanism 
for an employee to take his concerns out of, perhaps, a confrontational 
or uncomfortable atmosphere of his work site and have the Council 
investigate, report back and resolve the concern through a variety of 
techniques. We support the operations of the HJC as specified by our 
    Bargaining unit employees at the Hanford site are obligated to use 
the binding grievance/arbitration procedures to resolve their concerns, 
including safety. Represented workers and Fluor have an agreed 
procedure and forum in which to receive a full and fair hearing and 
resolution of issues. Workers have expert representation, free of 
charge, who can fully express the issue in controversy. The arbitration 
process is usually quick, inexpensive and binding. The typical 
grievance-arbitration process goes on daily, many times over in the 
workplace. However, it is the cornerstone of dispute resolution between 
workers represented by organized labor and Fluor. Often, issues--
including safety concerns--are resolved prior to filing grievances.
    During Fluor's tenure at Hanford the number of grievances filed has 
dropped 50%. This is an indication that issues, including safety 
concerns, are being resolved, particularly through increased use of 
worker involvement mechanisms.
    It is our sincere hope and expectation that employees who have 
safety concerns utilize the systems provided by the company. Even after 
all that I have outlined, however, there is still one more way an 
employee may chose to resolve his or her concerns. He can file an 
administrative complaint with the Department of Labor under 10 CFR 708 
or 29 CFR 24 for redress of retaliatory or discriminatory action by 
Fluor. Under the terms of the Project Hanford Management Contract such 
retaliation or discrimination is defined as discharge, demotion, 
reduction in pay, coercion, restraint, threats, intimidation or ``other 
similar negative action taken against the employee'' as a result of 
certain protected activities, such as reporting safety concerns. 
Paragraph H.40 entitled ``Costs Associated with Whistleblower Actions'' 
requires us to segregate the cost of defending an action brought under 
10 CFR 708 or 29 CFR 24. The contract does provide that litigation 
costs and settlement costs incurred in connection with the defense of, 
or settlement of, an employee action are allowable if incurred by Fluor 
before any adverse determination of the employee's claim, if approved 
as just and reasonable by the Contracting Officer. If Fluor suffers a 
final ``adverse determination'' as defined in our contract, the DOE can 
direct us to repay all litigation costs, as well as costs associated 
with any interim relief granted. Additionally, there are very detailed 
terms and conditions in the Litigation Management Plan, approved by the 
DOE, by which administrative claims and particularly litigation, must 
be handled. Allowability of certain costs and expenses is determined by 
application of the management plan.
    The bottom line is quite simple--there is a culture of safety 
within Fluor and with all Fluor employees. We value our employees 
because they are what make us successful. We strive to create an 
atmosphere where employees, the communities in which we work, and our 
clients are valued. To condone any form of retaliation against 
employees is counterintuitive to this philosophy--and is just not 

    Mr. Bryant. Having concluded the testimony of the panel, I 
would yield time to my colleague from Colorado, Ms. DeGette.
    Ms. DeGette. Thank you, Mr. Chairman.
    I'm so happy that everybody in this room today agrees that 
we need a zero tolerance policy, and maybe we can explore a 
little bit how we can come to some common agreement how we can 
coordinate between what the two panels said.
    Let me start with you a little bit, Ms. Sullivan. First of 
all, you said that the goal is to have positive encouragement 
for an early resolution of these complaints of these 
retaliation complaints; is that correct?
    Ms. Sullivan. What I said was that the goal is to have in 
place mechanisms that encourage early resolution before things 
become retaliation complaints. That should be our first goal.
    Ms. DeGette. And I----
    Ms. Sullivan. To have people raise their concerns in their 
work unit, get them resolved.
    Ms. DeGette. Okay.
    Ms. Sullivan. If that doesn't succeed, then you want to 
have additional mechanisms in place to try to achieve early 
    Ms. DeGette. So I would assume that the stated goal would 
be you want early resolution all along the way. Somebody comes 
up with a whistleblowing concern, you want to get that 
resolved. And if there is an allegation of retaliation, you 
want to get that resolved before formal complaint. If a formal 
complaint is filed, you want to get that resolved as early as 
possible. I would assume you would want incentives for early 
resolution throughout the process. Wouldn't that be correct?
    Ms. Sullivan. Yes, that is correct.
    Ms. DeGette. And so I guess I'm wondering how the policy, 
whether a stated policy or a de facto policy, of paying the 
contractors' attorneys' fees all along the route would help to 
achieve the early resolution that you would hope to have.
    Ms. Sullivan. We don't have a policy to pay contractors' 
defense costs all along the route. We have policies--and, as I 
pointed out, as far as we can tell, we are the only Federal 
agency that has any policy like this--to cutoff the 
reimbursement. The point at which it is cutoff----
    Ms. DeGette. Let me stop you here----
    Ms. Sullivan. [continuing] varies depending on the 
    Ms. DeGette. Excuse me, ma'am. Let me ask you a question. 
Is it your testimony today that the DOE is not reimbursing 
these contractors for defense costs----
    Ms. Sullivan. No.
    Ms. DeGette. [continuing] along the way?
    Ms. Sullivan. It is not. I said it's not all along the way.
    Ms. DeGette. It is happening, isn't it?
    Ms. Sullivan. What I said is that our policy is to cut it 
off at some point along the process.
    Ms. DeGette. Which point would that be?
    Ms. Sullivan. The point at which it is cutoff is a function 
of the provisions of individual contracts. There is a balancing 
act here. Not every person who identifies himself as a 
whistleblower has a legitimate concern.
    Ms. DeGette. Of course not, but----
    Ms. Sullivan. One of the things we discovered during the 
reductions in force, for example, was that many employees who 
saw themselves at risk of losing their jobs suddenly tried to 
create themselves as whistleblowers as a way to try to protect 
their employment. You don't want to create incentives where 
employers have legitimate reasons for, for example, downsizing 
the work force being precluded by somebody just labeling 
themselves as whistleblower without substantiation----
    Ms. DeGette. Let me stop----
    Ms. Sullivan [continuing]. So you want to have a process 
that allows enough looking into the facts to determine----
    Ms. DeGette. Let me stop you right there, because I 
understand that. As I just said, I practiced employment law for 
about 15 years, and same thing as with whistleblowing--a lot of 
the claims are--you know, may be specious, or whatever. But it 
would seem to me that a policy that allows the payment of legal 
fees all along the route would encourage the drawing out of the 
litigation versus the early resolution, because the contractor 
knows that its legal fees are going to be reimbursed by the 
DOE. It also knows that it is litigating, oftentimes, against 
one worker who is spending their life savings here.
    How is that an incentive to early resolution, even in a 
case that is determined--I mean, let's say they make an 
informal allegation of retaliation, and that's investigated and 
found to be unwarranted, so let's say they make a formal 
filing, and that's, at the initial stage, found to be 
unwarranted. There is no incentive for the contractor to cut it 
off at some point.
    Ms. Sullivan. Well, in fact, we have a number of contracts 
under which they get no reimbursement if there is an adverse 
decision. We have other contracts that they get no 
reimbursement after a single adverse decision. In other words, 
they can't keep litigating and litigating at the Government's 
    Ms. DeGette. But they get reimbursed after the adverse 
decision is made, right? So there is no incentive for them. I 
mean, there has to be an adverse decision for them to not get 
reimbursed, right?
    Ms. Sullivan. Under some contracts, yes, that's right.
    Ms. DeGette. Right.
    Ms. Sullivan. They have an opportunity to defend 
    Ms. DeGette. Right. So there is an incentive for them to 
just litigate and litigate up to the eve of the decision and 
then to resolve it.
    Ms. Sullivan. The balance we are trying to draw--and let me 
say I don't think we've reached it--as evidenced by the fact 
that we don't yet have a final rule on this, I don't think the 
Department has concluded where the best place to draw the line 
is to achieve the policy result we want, which is encouraging 
early settlement.
    Ms. DeGette. So you are still trying to work this out 
within the agency?
    Ms. Sullivan. Consistent with allowing contractors to 
defend themselves against unsubstantiated claims. The Office of 
Employee Concerns report for 1998 found that something like 42 
percent of the cases they pursued were unsubstantiated.
    Ms. DeGette. Right. Now, let me ask you this. For 
legitimate claims, would you say it is your and your agency's 
position that you want zero tolerance for retaliation?
    Ms. Sullivan. Absolutely.
    Ms. DeGette. Okay. And what is happening now, it sounds to 
me like, you're trying to figure out how to work that out 
contract by contract, right?
    Ms. Sullivan. No. We're trying to come to a decision that 
we'll put in a final rule.
    Ms. DeGette. Okay. When is that rule expected?
    Ms. Sullivan. Soon.
    Ms. DeGette. How soon?
    Ms. Sullivan. We have----
    Ms. DeGette. Six months? One year? Five years?
    Ms. Sullivan. I would say it will certainly be before the 
end of the year.
    Ms. DeGette. Okay. Now, you heard testimony from the 
previous panel that what might help in a situation like this is 
a procedure similar to that of the NRC. How do you feel about 
that, if Congress were to, for example, enact some criminal 
penalties to really put some teeth into this?
    Ms. Sullivan. Well, we have the authority already to impose 
civil penalties.
    Ms. DeGette. Right. But you know what I have found in many 
years is that, for corporate employees, they oftentimes don't 
feel upset about civil penalties, but if they think that they 
might go to jail--I mean, if your goal is to change the 
corporate culture in these places, to really institute a zero 
tolerance policy, what would be wrong with having a criminal 
statute on the book, as well, so before someone retaliated 
against these workers, that the person about to do the 
retaliation might think, ``You know, if I really do this, I 
could go to jail.'' Would you object to that kind of a 
    Ms. Sullivan. I would not object.
    Ms. DeGette. Great. Thank you very much.
    I think at this time I'll reserve time. I might have a 
second round.
    Thank you.
    Mr. Bryant. Thank you.
    Ms. Sullivan, as a result of the Department's 1995 policy 
announcement, there were also other avenues of sanctions that 
exist to discipline a contractor, including suspension or 
debarment or penalizing them in the award fee evaluation 
    Can you give me any examples where the Department of Energy 
has taken any such actions to sanction a contractor for 
whistleblower retaliation?
    Ms. Sullivan. I can't, but that doesn't mean there aren't 
some. I just am not personally aware of a debarment or a fee 
adjustment based solely on a whistleblower claim.
    Mr. Bryant. Okay. Dr. Michaels?
    Mr. Michaels. I know of none. I wouldn't necessarily know.
    Mr. Bryant. It kind of gets to the point that I was 
rambling through in my statement that, you know, we have a zero 
tolerance policy, which sounds great, but in reality that speed 
limit sign sounds great, but you and I both know if they never 
have a policeman out there enforcing it and they never take 
anybody to court on a ticket, over a period of time it is not 
going to be worth the metal the sign is on or the paper that 
the zero tolerance policy is written on.
    So, in terms of examples, there aren't any that come to 
mind about where you've gone back and made some adjustment on 
attorneys' fees that the contractor has incurred in one of 
these issues?
    Ms. Sullivan. We certainly have----
    Mr. Bryant. Okay. Beyond this now on attorneys' fees.
    Ms. Sullivan. I just--I don't know of any. That's a 
contracting officer function. That's not handled in my office, 
so I'm not sure that I would know.
    Mr. Bryant. I want to be clear, because I asked the 
question involving suspension, debarment, or penalizing an 
award fee evaluation. Beyond that, is there any situation you 
are aware of where a company has been through this type of 
litigation that we're talking about today and then come back to 
be reimbursed for their attorneys' fees? Are you aware where 
there has been any example of that being denied or reduced in 
any fashion?
    Ms. Sullivan. I am aware of several instances of ongoing 
cases where no final decisions have been made about whether 
attorneys' fees will be paid.
    Mr. Bryant. Okay. I was----
    Ms. Sullivan. And where contractors have been advised 
provisionally that they will not be paid.
    Mr. Bryant. Okay. If you could provide those list of cases 
you are familiar with that might be ongoing where this could 
be--I guess where you're saying this could be a factor. I don't 
    Ms. Sullivan. Yes. I, in fact, thought that information had 
already been provided to committee staff, but we'll be happy to 
provide it again.
    [The following was submitted for the record:]

    The following is a list of on-going cases in which the Department 
has denied, or provisionally denied, reimbursement of the contractor's 
litigation costs:
    U.S. ex rel. Natural Resource Defense Council, Inc., et al. v. 
Lockheed Martin Energy Systems, et al. (D.D.C.) This is a qui tam 
action in the Oak Ridge office. The contractor's costs have been 
provisionally denied.
    O'Connor v. Boeing North American, Inc. and Rockwell International 
Corp., (C.D.Cal.) This is a toxic tort suit in the Oakland office. The 
contractor's cost have been provisionally denied.
    U.S. ex rel. Ridenour, et al. v. Kaiser-Hill Company, L.L.C., et 
al. (D.Colo.) This is a qui tam case in the Rocky Flats office. The 
contractors costs have been provisionally denied.
    U.S. ex rel. Stone v. Rockwell International. (10th Cir.) This is a 
qui tam case in the Rocky Flats office. The contractor's costs were 
denied subsequent to the government's intervention in the lawsuit.
    Shepherd, et al. v. Babcock and Wilcox of Ohio. (S.D.Ohio) This 
case, in the Ohio field office, alleges age discrimination and 
violation of section 3161 provisions. The contractor's cost have been 
provisionally denied.
    U.S. ex rel. Mock and Lebow v. Lockheed Martin Idaho Technologies, 
et al. (D.Idaho) These are two qui tam actions, one filed in 1996 and 
one in 1998, in the Idaho Operations Office. The contractor's costs 
have been provisionally denied.
    U.S. ex rel. Harrison v. Westinghouse Savannah River Corporation. 
(D.S.C.) This is a qui tam case in the Savannah River office. The 
contractor's costs have been provisionally denied.
    U.S. ex rel. Becker v. Westinghouse Savannah River Corporation. 
(D.S.C.) This is a qui tam case in the Savannah River office. The 
contractor's costs have been provisionally denied.
    Christos, et al. v. Westinghouse Savannah River Corporation. 
(D.S.C.) This is a case, in the Savannah River office, involving 
severance pay. The contractor's costs have been denied.
    U.S. ex rel. Carbaugh v. Westinghouse Hanford Company and Fluor 
Daniel Hanford, Inc. (E.D.Wash.) This is a qui tam case in the Richland 
office. The contractor's costs have been provisionally denied.

    Mr. Bryant. I've read about two cases where there were some 
problems, and one case actually full attorneys' fees were 
    Again, like my colleague from Colorado, I guess a lot of us 
have been in litigation before, so it's not anything unique to 
me or to her, but it does--if you've got a Goliath and a David 
out there and Goliath is getting their attorneys' fees paid and 
David is on his own pretty much, there is not much of an 
incentive there to continue the battle. Again, hence you lose 
your incentive in this issue of the whistleblower cases and the 
public policy we're trying to have in this country.
    Let me ask you--again, in your testimony, an issue that I 
didn't mention, but this model contract clause that I'm 
concerned about. In your testimony you assert that DOE did 
draft a model contract clause in response to the 1995 
whistleblower reforms from Secretary O'Leary and that this 
model was used by the field sites in negotiating new contracts, 
yet apparently our committee staff has asked your office for a 
copy of this model clause and no one can find it, and we were 
told actually that there never was really a single, final model 
clause, but rather that there were several different drafts 
that were circulated within the Department at various times.
    Why didn't the Department of Energy provide its field 
offices with a single model clause separate and apart from all 
these troubled efforts you have had in rulemaking which you've 
discussed in your testimony? Why haven't you already given a 
single model clause out there to be used?
    Ms. Sullivan. If we want to apply a uniform clause in all 
our contracts, that has to be done through a rulemaking, and 
that's why we issued the proposed rule containing the format--
what I think of as the model clause.
    In response to the notice of proposed rulemaking, we 
received a number of comments expressing concern that it gave 
the contractors an incentive to settle even nonmeritorious 
cases, and it has been in response to those comments that we 
have had different approaches that are reflected in the 
contracts so that there is not a single model clause. But there 
was a proposed rule that was at the time the approach we 
proposed to take, and now we are taking into account the 
comments we received and, in addition, the experience we've had 
under the different approaches reflected in our contracts.
    Mr. Bryant. Let me ask you another question in follow-up to 
that. When these sample models were sent out--and your office 
has indicated that there have been variations that have 
occurred, arisen from this, and really some of them quite 
different--did your office approve all of these variations? And 
if you did, why?
    I've seen different variations at----
    Ms. Sullivan. There are definitely----
    Mr. Bryant. Did you approve those? And why?
    Ms. Sullivan. [continuing] different variations.
    We do not--my office does not negotiate the contracts. 
Those are negotiated typically at individual sites. I believe 
my assistant general counsel for procurement does review 
contracts, the entire contract. They tend to be a couple 
binders deep. And I just don't know the answer to whether they 
have focused in each case on this particular clause. Usually 
they focus their attention on areas that are viewed as problems 
in particular contracts.
    Mr. Bryant. Yes. But you would have the power to review and 
approve this particular----
    Ms. Sullivan. I can give you a recent example. The Rocky 
Flats negotiations got quite far along and had no version of 
the clause in the contract, and that came to my attention, and 
I said, ``We are not going to enter into a contract that 
doesn't have some restriction on contractor litigation--
reimbursement of contractor litigation costs.'' So if those 
things come to my attention, I have taken an aggressive posture 
to make sure that we are not giving contractors an incentive to 
engage in unlimited litigation against whistleblowers.
    Mr. Bryant. The Rocky Flats situation, are you saying that 
the contract did not have any provision for reimbursement to 
    Ms. Sullivan. For disallowing reimbursement. Remember, our 
contracts are what are, generally speaking, cost-plus 
contracts. We reimburse the contractor for all of its costs, 
including its litigation costs for discrimination--racial 
discrimination, for example, as to which we also have zero 
    Mr. Bryant. When did this particular contract come to your 
    Ms. Sullivan. Months ago.
    Mr. Bryant. Months?
    Ms. Sullivan. Months ago. Some months ago.
    Mr. Bryant. Some time in the year 2000?
    Ms. Sullivan. I can't remember if it was the end of 1999 or 
beginning of 2000.
    Mr. Bryant. I think that points out just maybe an 
institutional problem. Maybe that's what we're dealing with, to 
some extent, that you said this contract had gotten way down 
the road and you had to step in.
    Ms. Sullivan. And everybody admitted it was an oversight.
    Mr. Bryant. Yes.
    Ms. Sullivan. And it was caught.
    Mr. Bryant. Yes.
    Ms. Sullivan. We had a process in place and it was 
renegotiating an old contract. As I say, we caught it because 
people are concerned about this and do believe this is 
something we need to be on top of.
    Mr. Bryant. Is the rulemaking process--are we in the fifth 
year of that?
    Ms. Sullivan. Pardon me?
    Mr. Bryant. I mean, 1995 is when it was initially announced 
that the Secretary of Labor wanted to do this--Secretary of 
Energy, Ms. O'Leary, wanted to do this. Are we 5 years into 
this trying to get this rule on the uniform--the model clause?
    Ms. Sullivan. We are 5 years into finalizing a rule. We 
have a provision--a variety of different provisions disallowing 
contractor whistleblower defense costs in virtually every one 
of our major contracts. So we haven't sat on our hands by 
virtue of the absence of a final rule, but we do need to move 
to a final rule.
    Mr. Bryant. And that's my point. It has taken much too long 
to get through this process to establish a uniform model clause 
for this purpose. You've got a variation of these provisions 
out there which we've seen, that some are much better than 
others, and you are sitting back, letting the contracting 
officers negotiate these things, and even to the point, like I 
said, the Rocky Flats where they forgot to put it in there. So 
they are so negligent in reading this thing that they didn't 
catch that that wasn't in there or they simply didn't care.
    There is----
    Ms. Sullivan. They used an old contract as a starting point 
that predated the policies.
    Mr. Bryant. And they had gotten far down the road on that.
    Ms. Sullivan. And they had gotten far down the road. But, 
as I say----
    Mr. Bryant. Obviously, for you to step in, it got way on 
down the road. I'm saying----
    Ms. Sullivan. I was not the first one to raise it. The 
chief counsel at Rocky Flats raised it and the contractor was 
saying, ``Gee, we've negotiated everything else. We've priced 
everything else out.'' So it was brought to my attention and I 
said, ``No way we are going to close this contract without the 
    Mr. Bryant. Well, I think--and I appreciate your efforts 
there, but I think the adequate and right priority has not been 
put on this during that 5 years, and I think it is time that 
you develop a uniform model clause to be used here so you don't 
leave it to the negotiating skills or the position where one of 
the witnesses testified that, they're swapping back and forth 
in these. To allow people like that to negotiate an important 
provision of a contract like this----
    Ms. Sullivan. Mr. Chairman, I agree with you entirely.
    Mr. Bryant. And it shouldn't take 5 years to do it. And I 
would suggest that, if it could be done, then we need to 
enforce it and implement it and not--I like to think I am just 
as pro-business as they come, and I'd like to think it is a 
perfect world out there where everything would be done the 
right way, but I know it is not, and I guess the fact that 
there are no examples of where people are being denied their 
recovery under their attorneys' fees and so forth, there's not 
one example----
    Ms. Sullivan. There are examples.
    Mr. Bryant. I'm sorry. I misunderstood your testimony.
    Ms. Sullivan. No, I'm sorry. We have advised contractors 
that--and the cases I'm aware of are pending cases----
    Mr. Bryant. Right. They're ongoing.
    Ms. Sullivan. [continuing] since I have been general 
counsel where we have advised contractors that we are not 
    Mr. Bryant. Okay. My point is there has not been----
    Ms. Sullivan. [continuing] reimbursement.
    Mr. Bryant. [continuing] any in 5 years where it is final. 
It has not been done.
    I read an example where you were telling somebody you were 
going to do it, and in the end you turned around and paid them 
anyway. I'll get that, if you don't recall which one that is. I 
have been very vague. I'll find that reference to that case and 
get it to you.
    Anyway, you folks are, I know, very good at what you do. I 
know all these witnesses here are very good at what they do. 
But I think, again, from a pro-business Member of Congress, I 
am greatly concerned about this issue and especially the legal 
side and not getting a uniform standard, model, clause out 
there in all of our Government contracts in the Department of 
Energy and then enforcing it once you get it out there.
    Thank you very much.
    The gentleman from Ohio?
    Mr. Strickland. Thank you.
    Ms. Sullivan, you used a statistic, and if I jotted it down 
correctly you said some 42 percent of the whistleblower cases 
had been determined to be invalid?
    Ms. Sullivan. Let me be very clear, because I am relying on 
the 1998 Office of Employee Concerns activity report, and for 
1998 what the report indicates is that, of the cases they 
pursued--they concluded that a certain number of cases were not 
their jurisdiction. They were discrimination cases, civil 
rights cases----
    Mr. Strickland. But of those they pursued?
    Ms. Sullivan. Of those they pursued, 42 percent had--were 
concerns that were unsubstantiated, 58 percent were 
substantiated in whole or in part.
    Mr. Strickland. So--I mean, I say this respectfully, but it 
seems to me that someone who is charged with protecting 
whistleblowers, if they were to share information with us, 
would put the emphasis on the substantiated case, rather than 
emphasize the 42 percent who were nonsubstantiated. Would say, 
``58 percent seemed to be substantial.''
    That leads me to this question: do you see yourself----
    Ms. Sullivan. Let me be clear. These were not whistleblower 
cases. These were employee concerns. These were cases resolved 
in the very early stages before they got to litigation.
    Mr. Strickland. Okay. But it leads me to a question that I 
think is a legitimate question. Do you see yourself in your 
office as more concerned with protecting whistleblowers or 
mostly concerned with protecting contractors from 
unsubstantiated accusations, because it seems to me that there 
is a--that you can't be--you can't set both of those priorities 
as the No. 1 priority.
    What is your top priority and your office's top priority?
    Ms. Sullivan. Our top priority is to carry out the 
Secretary's policy of zero tolerance for reprisal.
    Mr. Strickland. That's not what I'm hearing from you. I 
mean, it seems to me that you talk in terms of trying to make 
sure that unsubstantiated cases are not pursued to a greater--
with a greater emphasis than in making sure that substantiated 
cases are pursued. You know, if I am mischaracterizing what 
your position is here, I'm sorry, but----
    Ms. Sullivan. I really think you are. What I am concerned 
about is the law of unintended consequences--that if you create 
a system that is entirely weighted in one direction or in the 
other, people behave in ways that produce bad results.
    Mr. Strickland. If I can--I mean, that's my point. There is 
no balance here. You know, I have here a case that was brought 
by constituents who lived within six miles of the uranium 
enrichment facility in Piketon, Ohio, in 1990. In 1996, this 
post-settlement offer was put forth. There has been no 
response. I believe that the Department is accepting 
responsibility for the litigation expenses. It has been going 
on for 10 years.
    I think there is no balance. As my colleague from Colorado 
says, here is the Department, and the contractor, perhaps in an 
adversarial relationship with an individual employee who has 
limited resources, and there is every incentive, it seems to 
me, for the litigation to continue.
    I mean, what I would hope to see from the Department is at 
least some balance. If we are going to assist--if we are 
looking for the truth and we are going to assist the contractor 
by paying expenses, ought you not also assist the whistleblower 
in gathering information and helping them make their case, as 
    Ms. Sullivan. In fact, in the case that has been referred 
to several times today, the Department had provided thousands 
of pages of documents to the whistleblower at the time the 
judge issued a decision saying we had provided nothing, and I 
can't explain why--it was actually a magistrate--why the 
magistrate did not have the correct facts that we had provided 
virtually all of the documents the whistleblower was seeking.
    Mr. Strickland. Was the witness provided with this 
information and were--in other words, were you doing everything 
you could to make sure that the truth came out by assisting the 
whistleblower in every possible way, legitimate way?
    Ms. Sullivan. I don't know which situation you're talking 
about. In general, I encourage all of my staff to be 
cooperative with document requests, to not be overly formal 
about following procedures; that if we have documents available 
that people want, to try to provide them, assuming they're not 
privileged documents.
    Mr. Strickland. Our counsel tells me that you have a joint 
defense agreement with the University of California. Is that 
    Ms. Sullivan. I would very much like to speak to the issue 
of joint defense agreement, because the implication today has 
been that that means we support the University of California's 
position. We have joint defense agreements that enable us to 
obtain privileged documents from our contractors as part of our 
ability to oversee our contractors. All it means is that they 
share privileged documents with us, but we are then under an 
obligation to keep them as privileged documents. It does not 
mean necessarily, in a particular case, that we are supporting 
the contractor's position. It means we have--``legal privity'' 
I think was the term Mr. Carpenter used, and I think that is a 
fair term.
    But when a contractor provides us with a privileged 
document under a joint defense agreement, it means we have to 
keep it confidential because it is a privileged document. They 
haven't waived their privilege by sharing it with us. That's 
all it means.
    Mr. Strickland. Does that extend to the payment of fees?
    Ms. Sullivan. The payment of fees is governed by our 
contracts with the particular contractor.
    Mr. Strickland. Who determines what those contracts say?
    Ms. Sullivan. Contracting officers in their negotiations. 
And, as the chairman has pointed out, we need to get to a final 
rule so that we have a uniform policy across the system.
    Mr. Strickland. And you said that would require formal 
    Ms. Sullivan. We've already done a proposed rule. We just 
need to issue a final rule. In fact, we have been through two 
comment periods on the rulemaking.
    Mr. Strickland. Ms. Sullivan, in 1998, former----
    Mr. Burr. Would the gentleman yield for 1 second?
    Mr. Strickland. Absolutely.
    Mr. Burr. Just for a clarification----
    Mr. Strickland. Sure.
    Mr. Burr. [continuing] on his last inquiry.
    I just find it interesting. I've got a document here that I 
think was to Bob Emmett from Amy--and I believe the last name 
is Roiden. I may have the spelling incorrect. And I think they 
are in your office. I would just flip to the second page. Is 
there a Mary Ann Masterson present?
    Let me just ask if this is an accurate depiction. This is 
under the section, ``reimbursement of contractor whistleblower 
litigation costs.'' The last point is, ``DOE has issued a final 
rule. According to Mary Ann Masterson, there is no one 
championing a movement on this rule.'' Is that an accurate 
depiction? Last bullet point. I think this is dealing with the 
model clause, isn't it?
    Ms. Masterson. I don't recall.
    Mr. Burr. So----
    Ms. Masterson. It had a champion, but I just don't recall 
this exchange.
    Ms. Sullivan. I think what would be fair to say is the 
Office of General Counsel typically is not the moving party in 
a rulemaking. There is a program office. This rule did not 
start out as our rule, and the folks who promoted it have left 
the Department. We have picked it up because no one else picked 
up the rule.
    Again, I would go back to the point that the----
    Mr. Burr. Well, I think that's what she said right here is 
``there is no one championing movement of this rule,'' or what 
somebody has at least put in this memo, according to Mary, that 
nobody is championing this final rule.
    Ms. Sullivan. I don't know who the author of this document 
is, and the points----
    Mr. Burr. I go to the front of it. Is Amy Royden not in 
your office?
    Ms. Sullivan. Amy Royden used to be in my office.
    Mr. Burr. She used to be in your office?
    Ms. Sullivan. She is at the State Department now.
    Mr. Burr. She's at the State Department. But clearly when 
Amy Royden was in your office this pertained to the general 
counsel's office, because it was a document produced----
    Ms. Sullivan. No. I think it pertained to the Department. I 
think the point--and I don't know what Mary Ann said, but I 
think the point was the Office of General Counsel doesn't 
initiate rulemakings in the ordinary course. It comes from the 
program office. This rule is somewhat unusual, and so we have 
taken it over because there has been no natural champion for 
    Mr. Burr. The gentleman was very kind to yield, and I 
    Mr. Strickland. Well, I would just like to ask who 
initiated this if it was not your office.
    Ms. Sullivan. I assume that it came out of the Office of 
Procurement Policy. It predates my time as general counsel, and 
so I am not certain who----
    Mr. Strickland. Would you please find out for us and let us 
    Ms. Sullivan. Sure.
    [The following was submitted for the record:]

    The whistleblower costs clause was developed in parallel with the 
Department's Contract Reform Team effort to address concerns raised by 
Former Secretary O'Leary and a Steering Committee which she established 
in late 1993 to consider whistleblower issues. Many of the Contract 
Reform action items, including an item addressing defense costs in 
whistleblower actions, were incorporated as contract provisions in the 
Model Contract for Profit Making Contractors released for comment in 
February 1995. See Commerce Business Daily February 13, 1995.
    As a result of comments received from the public in response to the 
release of the Model Contract for Profit Making Contractors and 
experience gained by the Department from negotiating the contract 
provisions into its management and operating contracts, many of the 
provisions were determined ready for the public rulemaking process. The 
Department proceeded with its Contract Reform rulemaking initiative 
covering these provisions, publishing a notice of proposed rule on June 
24, 1966, 61 FR 32588, and a notice of final rule on June 27, 1997, 62 
FR 34842.
    At that time, there were also a number of provisions with 
unresolved issues, and the whistleblower costs clause fell into this 
category. Issues relating to the whistleblower costs clause were 
subsequently resolved and a notice of proposed rule prepared. Since 
this clause added legal defense costs, the Office of Assistant General 
Counsel for Procurement and Financial Assistance prepared the initial 
draft of this rulemaking and then coordinated the draft with the Office 
of Procurement Policy, which would normally have the lead for a 
procurement regulation. The Office of General Counsel provided 
concurrence on the rulemaking package, following concurrence by the 
Deputy Assistant Secretary for Procurement and Assistance Management, 
in July 1997. The notice of proposed rule was published simultaneously 
with the notice of the proposed rule amending 10 CFR Part 708; the 
Department's whistleblower protection program regulation on January 5, 
1998, 63 FR 386.
    As a result of comments received in response to the notice of 
proposed rule, a notice to reopen the comment period was prepared which 
contained an alternate cost principle proposal. The Office of Assistant 
General Counsel for Procurement and Financial Assistance drafted this 
rule and then coordinated the issuance of the notice with the Office of 
Procurement Policy. The notice to reopen the comment period was 
published on March 24, 1999, 64 FR 14206. It is anticipated that a 
final rule will be issued in the near future.

    Mr. Strickland. I would like to switch my questioning, if I 
could quickly, to Dr. Michaels.
    Ms. Sullivan. Good.
    Mr. Strickland. One of my favorite people. Dr. Michaels, 
are you familiar with the Rocky Flats contract provision 
concerning Price Anderson fines?
    Mr. Michaels. Yes.
    Mr. Strickland. The Price Anderson Office of Enforcement 
reports to you, does it not?
    Mr. Michaels. It does.
    Mr. Strickland. As I read this provision, it appears that 
the DOE field contract officer will now set the amount of Price 
Anderson fine and offset any fines with any performance fee 
reductions that might also result; is that correct?
    Mr. Michaels. It is my understanding that, while that 
exists in the current contract, I've already informed the 
program office responsible for that, that that is unacceptable 
to me and I have been told it will be removed. But yes.
    Mr. Strickland. Who will remove it?
    Mr. Michaels. The Department of Energy contracting officer 
will contact the contractor at Rocky Flats to make it clear 
that that has to be removed from the contract.
    Mr. Strickland. Why is it there in the first place?
    Mr. Michaels. That's a very good question. My office--my 
staff who looked at it claimed they didn't see it.
    Mr. Strickland. Did anyone from the counsel's office ask 
you to review this provision for its impact on Price Anderson 
    Mr. Michaels. The counsel's office doesn't particularly get 
involved. The contracting--the program office, environmental 
management, that negotiated that contract sent us a number of 
contracts to review. My staff look at parts, evidently missed 
that, and when I heard about that I was obviously very upset.
    Mr. Strickland. Is it your position that the provision may 
contravene section 234(A) of the Atomic Energy Act and will 
substantially, if kept in place, undermine DOE's regulatory 
authority under Price Anderson?
    Mr. Michaels. I can't speak to the specific provision, but 
yes, I think that the concept is basically there that that's--
it is contrary to our policy in the way we set fines, that we 
can use fines. We can set the level of fines higher when we see 
no mitigation by the contractor or lower if we see a good faith 
attempt to mitigate.
    This approach really eliminates that ability of our Price 
Anderson office to work with the contractors that enforce what 
we need to enforce. So we question, in fact, the legality of 
that, that we may be contrary to either public rule or law.
    Mr. Strickland. Ms. Sullivan, did you approve that 
    Ms. Sullivan. No.
    Mr. Strickland. No? Did your office have any involvement?
    Ms. Sullivan. Not as far as I know. This is the first I'm 
hearing it.
    Mr. Strickland. Do we know where it originated? I mean, 
could you give us some insight?
    Mr. Michaels. I inquired. I can only give you second-hand 
information, but when I inquired I was told that it was in the 
agreement between--in the discussions between the Environmental 
Management program and the Rocky Flats contractor, and we were 
not told of it, and I assume the general counsel was not told 
of it, either. I believe the general counsel would have reacted 
to it the same way I did.
    Ms. Sullivan. I would have.
    Mr. Michaels. No. We----
    Ms. Sullivan. This is the very first I'm hearing it.
    Mr. Michaels. Yes.
    Mr. Strickland. So it would appear to me that the 
contractor attempted to slide something in this contract 
without certainly full exploration on the part of those of you 
who should have had some involvement, I would think. Is that a 
reasonable assumption?
    Mr. Michaels. It's certainly not unreasonable. Between the 
contractor and--the various parties negotiating that contract 
certainly agreed to something that I think neither Ms. Sullivan 
nor I would have agreed to.
    Mr. Burr. Would the gentleman yield for just one 
    Mr. Strickland. Sure.
    Mr. Burr. Ms. Sullivan, would it be correct on my part to 
believe that there is a chief counsel for the DOE at Rocky 
    Ms. Sullivan. Yes.
    Mr. Burr. And would it be also correct on my part to 
believe that any contractual agreement negotiated at Rocky 
Flats, that the chief counsel would be party of that 
    Ms. Sullivan. Yes.
    Mr. Burr. And would it also----
    Ms. Sullivan. In this case it was.
    Mr. Burr. Would it also be correct to assume that that 
chief counsel at Rocky Flats would, in fact, report to you?
    Ms. Sullivan. Yes, she does.
    Mr. Burr. And if such a negotiation took place, is it also 
reasonable for the committee to believe that the chief counsel 
would have shared with you what had been negotiated?
    Ms. Sullivan. She shared with me certain issues that she 
was concerned about. I have not heard about this issue before 
    Mr. Burr. But this very crucial piece that Mr. Strickland 
has run, you are completely sure that that was not shared, even 
though it was part of the chief counsel's responsibility to 
    Ms. Sullivan. It----
    Mr. Burr. It never came to your attention?
    Ms. Sullivan. The contracting officer--as a formal matter, 
the contracting officer negotiates contracts for the 
department. The chief counsel at Rocky Flats was involved. I 
don't recall that I have ever heard of this provision. I think 
I would have had the same reaction Dr. Michaels did 
immediately--that it undercuts what we are trying to accomplish 
with Price Anderson.
    As I say, I don't recall that it has ever been brought to 
my attention before today, and it surprises me because the 
chief counsel did bring to my attention a number of provisions 
that she correctly concluded I would be concerned about, and 
she was looking for my support to take a more aggressive 
    Mr. Burr. Could it be at all because Price Anderson is 
something that the chief counsel's office has chosen not to use 
in any way, shape, or form in any of these cases?
    Ms. Sullivan. The chief counsel doesn't use Price Anderson. 
That's the Office of Environment, Safety, and Health that 
administers that program.
    Mr. Burr. When I said chief counsel, I should have said 
``general counsel.'' I was, in fact, directing that to you--
that you had counseled in one of the e-mails that Dr. Michaels 
not use Price Anderson.
    Ms. Sullivan. We had a very specific notice problem there, 
as I explained to Dr. Michaels, which was that his guidance--
not his guidance, but the guidance issued with the nuclear 
safety regulations that he administers--said that findings in 
part 708 proceedings, whistleblower proceedings conducted 
within DOE, would be taken into account, made no reference to 
Department of Labor proceedings, and we had separately 
indicated that we wouldn't rely on other agency findings 
without providing specific notice.
    Mr. Burr. So the general counsel's office has a very 
specific view of Price Anderson, or you have a very technical--
    Ms. Sullivan. No. I have a specific----
    Mr. Burr. No, you understand it.
    Ms. Sullivan. [continuing] view of due process----
    Mr. Burr. But you understand----
    Ms. Sullivan. You have to put people on notice of what the 
potential penalties are before you impose penalties.
    Mr. Burr. I'm just--please don't take anything that is not 
meant out of my inquiry. I'm only trying to understand how the 
general counsel's office understands Price Anderson 
specifically but the chief counsel on the site at this facility 
butchered it in these negotiations and they didn't understand 
it quite as well as what you do.
    Ms. Sullivan. Without knowing how that provision evolved, I 
don't want to characterize it. I do want to look into how that 
provision got into the contract.
    Mr. Burr. I thank you. And I thank the gentleman for 
    Mr. Strickland. Thank you. I've had more than my time. 
Thank you, Mr. Chairman.
    Mr. Burr. I thank the gentleman. The Chair would recognize 
    Ms. Sullivan, let me give you an opportunity to try to 
convey to the committee the discrepancies in the two memos that 
I referred to before we started with panel one, and that deals 
with the May 18 notification to the committee--and this is in 
reference to the Graff case--that Kaiser Hill was not 
reimbursed for legal fees and the May 22 notification yesterday 
to the committee that they had been reimbursed.
    Ms. Sullivan. Mr. Chairman, let me first preface my 
comments by saying I think you found out about this maybe 10 or 
15 minutes before or after I did, so this is very new 
information to me. I will tell you what I understand to be the 
    The chief counsel at Rocky Flats directed the contractor 
not to reimburse its subcontractor--in this case, I believe 
Wackenhut--for these defense costs as the matter was proceeding 
and said, ``We'll look at it at the end.'' That was her 
instruction. That was what she understood to be occurring.
    She received no invoices. When a contractor is getting its 
litigation expenses reimbursed, our Office of Chief Counsel 
reviews invoices from the law firms providing legal services 
and approves them.
    In this case, no invoices were being provided. As I 
understand it--and, as I say I don't have the full facts, but, 
as I understand it, the subcontractor was submitting these 
costs to Kaiser Hill and they were getting lumped into a larger 
amount. When Kaiser Hill's management discovered that these 
payments had been made, contrary to the instructions of the DOE 
chief counsel at Rocky Flats, the DOE chief counsel, Kaiser 
Hill wrote a check to the government. And the issue of whether 
and how much of the subcontractor's legal expenses will be 
reimbursed has to be determined. It's not----
    Mr. Burr. So, I mean, if this subcommittee had not had this 
hearing, would we have caught this?
    Ms. Sullivan. As I understand it, the question of how much 
of the legal expenses were reimbursable was being looked at.
    Mr. Burr. Let me redefine my question, if I could, restate 
my question.
    Ms. Sullivan. Okay.
    Mr. Burr. Our request of DOE was, ``Have you reimbursed 
Kaiser Hill for legal fees?'' The response that we got back 
was, ``No, we have not.''
    Ms. Sullivan. And that's what we believed to be the case--
    Mr. Burr. Now----
    Ms. Sullivan. [continuing] based on our instructions.
    Mr. Burr. My question was: had we not held this hearing 
where we asked you, ``Have you reimbursed Kaiser Hill for legal 
fees,'' would this have been caught? Would, in fact, the 
revelation that you've now gone through that you did reimburse 
for legal fees, when would it have been caught?
    Ms. Sullivan. In fact, that's what I was trying to explain. 
There are two different processes: one, reimbursement as you go 
along, and, two, a determination of allowability. We sometimes 
pay costs--a whole variety of costs--as they are incurred and 
subsequently conclude that, under the terms of the contract, 
they are not allowable costs and they are recouped.
    Mr. Burr. I would take for granted----
    Ms. Sullivan. The recoupment process would have occurred in 
this case, because review of the legal costs incurred in the 
Graf case had commenced.
    Mr. Burr. I'm less concerned with the recovery, because 
that has already taken place. I'm more concerned with my 
apparent belief that these did not show up--whatever mechanism 
was turned over to DOE for payment, for reimbursement, 
apparently on that it didn't say, ``For legal reimbursements.''
    Ms. Sullivan. Apparently it didn't, but I don't know. I 
haven't seen any of the documentation here. What I know is that 
my chief counsel at Rocky Flats directed that the costs not be 
    Mr. Burr. Who at DOE----
    Ms. Sullivan. [continuing] and they were----
    Mr. Burr. Who at DOE looks at that on whatever monthly, 
weekly, whatever basis it is turned in for reimbursement? Who 
looks at it to determine whether, in fact, the charges are 
appropriate to be reimbursed?
    Ms. Sullivan. What charges are you referring to? Are you 
talking about legal charges, in particular?
    Mr. Burr. I'm talking about all charges. At Rocky Flats, 
does Kaiser Hill turn over to DOE on a monthly basis an invoice 
that says, ``Here is what we are to be reimbursed for''?
    Ms. Sullivan. I don't know the answer to that question. I 
know what we do with respect to legal costs incurred by our 
contractors. Those are the only costs that my office----
    Mr. Burr. So had it been reimbursed as a legal cost, you 
would be aware of it, correct?
    Ms. Sullivan. As a contractor legal cost. This issue of 
subcontractor legal costs not getting the review that 
contractor legal costs get is a problem that we had identified 
some time ago, and we are in the process of adding to our 
contractor litigation management review process a requirement 
that subcontractor legal costs be looked at in the same way we 
look at our contractors legal costs.
    Mr. Burr. My question is slightly broader than that. If 
Kaiser Hill is seeking reimbursement for legal costs, whether 
it was a separate invoice to DOE or part of an invoice for 
other things, my understanding is that your department would 
look at those charges and would sign off on the reimbursement 
for legal fees. Is that a correct understanding on my part?
    Ms. Sullivan. That is a correct understanding with respect 
to legal costs incurred by our contractors. We are in the 
process of adding to that legal costs incurred by our 
    Mr. Burr. So you----
    Ms. Sullivan. This system is fairly new.
    Mr. Burr. You reimbursed Kaiser Hill, or you reimbursed 
    Ms. Sullivan. We reimbursed----
    Mr. Burr. Kaiser Hill?
    Ms. Sullivan.  [continuing] Kaiser Hill.
    Mr. Burr. Okay. And that's your----
    Ms. Sullivan. And they were not--as I understand it----
    Mr. Burr. So----
    Ms. Sullivan. [continuing] what we reimbursed was not 
identified as a legal cost.
    Mr. Burr. So what you reimbursed was not identified as a 
legal cost; therefore, it did not come to the general counsel's 
office to be approved? Am I correct?
    Ms. Sullivan. That's correct.
    Mr. Burr. Now, can you think of any other instance where a 
legal cost, a reimbursement for litigation for any retaliatory 
actions like what we're looking at today have not been billed 
to the DOE as a legal cost, where it has been lumped into a 
contractor operations?
    Ms. Sullivan. I'm not aware of any others.
    Mr. Burr. Share with me, if you will, now that you know, 
what recommendations, if any, you might suggest to the 
Secretary or to whatever division might be your enforcement 
division. What penalty are you going to place on Kaiser Hill 
for not billing you legal costs and billing them as something 
    Ms. Sullivan. First, I want to find out exactly what the 
facts are, and then I'll decide what penalty is appropriate. 
But the other thing we are doing and were doing before this 
situation came to light, to get better control over legal 
costs, is to include subcontractors by rulemaking in the 
requirements our direct contractors are already subject to, 
which is a whole series of procedures for approval and review 
of legal costs.
    Mr. Burr. Let me turn to a letter dated April 28. And this 
is a letter from you, I believe. Yes. It's from you to Chairman 
Bliley. I want to read from the first page, the fourth 
    Ms. Sullivan. Is somebody going to share a copy with me?
    Mr. Burr. It is about six pages, so I wouldn't expect you 
to remember the entire thing.
    First page, fourth paragraph, second sentence: ``When the 
DOL decision was issued, the Oakland operations office met with 
Mr. Lappa and reviewed the DOL decision, and Lawrence Livermore 
Nuclear Labs plans to comply with its terms and conditions. 
Oakland accepted the deal, the decision, as an equitable 
resolution of Mr. Lappa's concerns and concluded no contractual 
action was appropriate, provided that Lawrence Livermore 
complied with the terms and conditions of the DOL decision and 
engaged in no retaliation against Mr. Lappa.''
    Have, in fact, charges of additional retaliation been 
    Ms. Sullivan. Yes, they have.
    Mr. Burr. And, given that, what has DOE done?
    Ms. Sullivan. DOE is awaiting the determination of whether 
retaliation, in fact, occurred--a determination that will be 
made in a State court in California because that was the forum 
in which Mr. Lappa chose to bring the retaliation claims.
    Mr. Burr. And does that preclude you from using Price 
    Ms. Sullivan. I believe under the new policy that we issued 
it would not, but I'd want to look at the specific terms of the 
    Mr. Burr. Now, you believe that prior to this--well, share 
with the committee, if you will, why you counseled Dr. Michaels 
that a proposed notice of violation was inappropriate.
    Ms. Sullivan. Because the published guidance accompanying 
the Price Anderson rules said that we would rely on findings in 
DOE part 708 whistleblower proceedings, and separately we had 
said that we would not rely on proceedings of other agencies 
without providing specific notice, roughly to that effect.
    And so, in my view, we had not given the contractors 
adequate notice that accepting a preliminary determination of 
the Department of Labor and allowing it to become final could 
provide the basis for a Price Anderson enforcement proceeding.
    Mr. Burr. Let me share with you, if I can, a June 29, 1999, 
subcommittee hearing here, worker safety at DOE nuclear labs. 
Page 115 of that testimony--I'll just read the whole--
``Separately, through the enforcement process of 10 CFR part 
820, DOE has the discretionary authority to issue notice of 
violation when appropriate to a contractor who is determined to 
have retaliated against a contractor employee for raising a 
nuclear safety concern.
    ``In the case of Mr. Lappa, the Department of Labor issued 
an opinion that Mr. Lappa was subject to reprisal. DOE is 
awaiting information from the Department of Labor to determine 
whether there is sufficient basis upon which to issue a notice 
of violation.''
    These were questions, as I understand it, that were posed 
to the Department of Energy at the conclusion of the hearing 
where they had ample time to determine the answers, to have 
your office go through those answers to make sure that they 
were accurate and depicted DOE's position, and the answer was, 
``DOE is awaiting information from the Department of Labor--'' 
that information came--``to determine whether there is 
sufficient basis--'' it concluded there was--``upon which to 
issue a notice of violation.''
    You counseled Dr. Michaels after you reviewed the material 
that DOE couldn't do that.
    Ms. Sullivan. I counseled Dr. Michaels that he couldn't do 
it solely on the basis of the preliminary determination by the 
Department of Labor. I further counseled Dr. Michaels that his 
staff could conduct an investigation which could include 
information developed in the Department of Labor proceeding.
    Mr. Burr. Is that what the answer said a year ago?
    Ms. Sullivan. I think that is a legitimate interpretation 
of this answer. I mean, I don't know who the author of this 
answer is, but we have not said that there is no way to pursue 
a Price Anderson penalty----
    Mr. Burr. In the case of Mr. Lappa, the Department of Labor 
issued an opinion that Mr. Lappa was subject to reprisal. ``DOE 
is awaiting information from the Department of Labor to 
determine whether there is a sufficient basis upon which to 
issue a notice of violation.''
    Now, I would interpret that so say that if you did not 
issue a notice of violation there was not sufficient basis, not 
that you couldn't, based upon the Department of Labor's 
investigation, but that, if there was sufficient basis.
    Was there sufficient basis?
    Ms. Sullivan. I don't know. I haven't looked at----
    Mr. Burr. Dr. Michaels, was there sufficient basis?
    Ms. Sullivan. The problem we have is published guidance to 
our contractors telling them the circumstances under which they 
can be subject to a Price Anderson penalty.
    Mr. Burr. Why----
    Ms. Sullivan. Code of Federal Regulations published 
    Mr. Burr. Why----
    Ms. Sullivan. This does not have----
    Mr. Burr. Why did the counsel's office----
    Ms. Sullivan. [continuing] the same standing.
    Mr. Burr. [continuing] allow this answer then if there is 
another issue?
    Ms. DeGette. Would the gentleman yield?
    Mr. Burr. I'd be happy to yield.
    Ms. DeGette. Were you, in fact, in this position a year ago 
when these answers were written?
    Ms. Sullivan. Yes, I was.
    Ms. DeGette. And was it your responsibility to review those 
answers before they were submitted?
    Ms. Sullivan. No. I do not typically review answers. They 
are reviewed in the counsel's office, not by me. Again, I would 
point out that I think where the disconnect may occur is the 
author of this answer may have thought that this meant the 
Department of Labor conclusion would, standing alone, be 
enough. The reviewing lawyer may have thought this answer 
allowed a further investigation by the Department of Energy.
    Ms. DeGette. Well, now, let me ask you something. These are 
questions from this committee, a Congressional committee. I 
would assume anybody drafting those answers would want them to 
be as clear and without--so no one could misinterpret the 
meaning. Wouldn't you agree with that?
    Ms. Sullivan. Yes, I would agree with that.
    Ms. DeGette. And this seems to me that it is open to wide 
interpretation, just based on my colleagues' questioning and 
your interpretation here of words that aren't even there.
    Ms. Sullivan. When it used to be my responsibility to 
review Q's and A's that were on their way to the Hill, I spent 
a fair amount of time trying to make them as clear as possible. 
We may have failed in this case have an answer that was as 
clear as it should have been, or we may have just made a 
    Ms. DeGette. Let me just say--and you realize this, but I 
hope you go back to your staff. This is exactly why you want 
unequivocal, clear answers is because a year later people come 
back and they interpret your actions based on those words.
    I'll yield back to my colleague.
    Mr. Burr. The same person that answers Congressional 
inquiries doesn't review invoices from contractors, do they?
    [No response.]
    Mr. Burr. Thank you for that opportunity to have a little 
    Dr. Michaels, I'd like for you to answer that question 
about whether there was, to use their term, a ``sufficient 
basis upon which to issue a notice of violation from the 
Department of Labor's conclusion.''
    Mr. Michaels. We certainly believed that there was. It's 
the legal and jurisdictional issue which I think has stopped us 
from moving forward in issuing a notice of violation in this 
case. It wasn't a question of the amount of information 
available or the quality or the content of it.
    Ms. Sullivan. In fact, I'd like to just clarify. It is a 
question of the quality of the information in the sense that 
the University of California declined to go the next step in 
the process, to go to a hearing at which witnesses would be 
questioned, the judge could ask answer questions.
    What Dr. Michaels' staff could look at, because it is all 
there was, was a paper record that involved no hearing. As a 
lawyer, I like to think that the hearing process is valuable in 
developing the truth.
    So I think that may explain why the policy previously was 
that we were not going to rely on a preliminary decision based 
on one guy's investigation--in fact, Dr. Michaels' staff 
indicated that that level of decision in the Lappa case is not 
a level of decision that they----
    Mr. Burr. When you say ``one guy's,'' are you referring to 
the Department of Labor?
    Ms. Sullivan. The investigator for the Department of Labor.
    Mr. Burr. So the Department of Labor's investigation is not 
a sufficient investigation in worker retaliation?
    Ms. Sullivan. It is a sufficient investigation to kick off 
a process. In the Department of Labor system, after a 
preliminary determination, you go to a hearing, or, as happened 
in this case, you simply accept the recommendations.
    Mr. Burr. In this particular case, at the time that they 
brought a PNOV to you, you had had a contractor----
    Ms. Sullivan. They did not bring a PNOV to me.
    Mr. Burr. You counseled them that one was not appropriate; 
am I correct?
    Ms. Sullivan. I counseled them that, given their guidance, 
their published guidance----
    Mr. Burr. And Dr. Michaels thought your were wrong. I think 
that's what he said. He----
    Ms. Sullivan. I don't think he disagreed with me on the 
    Mr. Burr. Keith Christopher, the director of the Office of 
Enforcement, said in his e-mail, ``While I disagree with this 
legal position, I've advised Dr. Michaels that he should defer 
to the advice given by DOE's General Counsel,'' and that would 
be you; am I correct?
    Ms. Sullivan. That would be me.
    Mr. Burr. The Chair would notify the members that he has 
some questions that he just can't make before this vote.
    Ms. DeGette. Will the Chair yield for a minute----
    Mr. Burr. I'd be happy to yield.
    Ms. DeGette. [continuing] because I just have one more 
question, and I'll try to make it back after the vote, but I 
can finish this question.
    Mr. Burr. You feel free to go ahead.
    Ms. DeGette. Thank you so much.
    Mr. Van Ness, I just wanted to ask you a question to clear 
up the record. I believe that you testified that you had one 
complaint at Livermore, and that was Mr. Lappa that ended up 
being legitimate; is that right?
    Mr. Van Ness. We had six complaints overall. Four had a 
finding of no retaliation, one----
    Ms. DeGette. And two----
    Mr. Van Ness. [continuing] was settled prior to----
    Ms. DeGette. And the other was Mr. Lappa?
    Mr. Van Ness. Right.
    Ms. DeGette. Well, I was a little bit curious, both in your 
written and oral testimony, because, you know, you testified 
about Livermore, but we just heard from Mr. Gutierrez about Los 
Alamos, and I guess I was wondering what the situation was at 
Los Alamos.
    Mr. Van Ness. Well, to my understanding it is very similar. 
The problem with Los Alamos is we were notified very late that 
there was going to be a--that Mr. Gutierrez was going to be a 
witness and that that would be part of the discussion, so I 
didn't have as much time to review that.
    Ms. DeGette. So you don't have the statistics for how many 
whistleblower retaliation complaints you have?
    Mr. Van Ness. I don't have it for Los Alamos in the same 
specifics I have it for Livermore, but I would be glad to 
submit it.
    Ms. DeGette. I would appreciate that.
    Here's the concern--and I think we all share this concern--
when you have an atmosphere that retaliation or that 
whistleblowing can create, that can often exist throughout one 
facility, so you might have one facility that you oversee, like 
Livermore, where there is a healthy attitude of management 
toward resolving whistleblower complaints. You might have 
another facility like Los Alamos where there is fear of 
retaliation, and that is creating a very, very negative 
atmosphere toward whistleblowing, which is why I get back to 
what I was talking about before--we should have generalized 
standards for all facilities, including criminal penalties, as 
well, because you might have one model situation and then you 
might have another one where it is very different, and a lot of 
it is based on management of the facility and on actual 
supervisory personnel.
    Just one final thing, to clarify--and I appreciate the 
Chair's indulgence. You detailed the complaint process quite in 
depth. And, as I hear it, that is the academic route if people 
should choose to make complaints through the U.C. system, not 
the DOE process.
    Mr. Van Ness. That's correct.
    Ms. DeGette. Would that be correct?
    Mr. Van Ness. That's correct.
    Ms. DeGette. And so that's a very different process, and 
you decided, for whatever reason, not to talk about that 
process today, even though that is the subject of this hearing.
    Mr. Van Ness. Well, I want to clarify that the DOE--the 
University of California at a DOE laboratory has the right to 
choose that U.C. process that I described.
    Ms. DeGette. No, I understand, but that's the process you 
    Mr. Van Ness. Right.
    Ms. DeGette. [continuing] even though what we're talking 
about is the DOE process, correct?
    Mr. Van Ness. Well, I believe that DOE would be best suited 
to describe their process.
    Ms. DeGette. Okay. Great.
    Thank you very much. Thank you, Mr. Chairman.
    Mr. Burr. I thank the gentlelady.
    The Chair would announce that we have three votes, a 
fifteen and two fives. I think it will be fairly short. The 
Chair would try to reconvene about 2:35.
    The hearing is in recess.
    [Brief recess.]
    Mr. Burr. We'll reconvene the subcommittee hearing. I know 
Congressman Strickland is on his way back. Again, I apologize 
for how long this has taken, but I know this is a very 
important hearing.
    Ms. Sullivan, let me turn to something I think Mr. 
Strickland pointed out and just get a clarification.
    I think you defined what the joint defense relationship was 
between DOE and the University of California.
    Ms. Sullivan. Actually, what I was trying to do was 
describe what I think of as our joint defense agreements, 
generally. I wasn't speaking to any particular one.
    Mr. Burr. Would there be a different interpretation of the 
joint defense agreement with U.C. as it relates to the Lappa 
    Ms. Sullivan. Not that I am aware of.
    Mr. Burr. Well, let me ask you. You said that when the 
contractor shares documents with you under a joint defense----
    Ms. Sullivan. Privilege.
    Mr. Burr. [continuing] relationship----
    Ms. Sullivan. Privilege.
    Mr. Burr. [continuing] they're privileged. You can't share 
    Ms. Sullivan. No.
    Mr. Burr. [continuing] with any person, including the 
whistleblower; am I correct?
    Ms. Sullivan. No. When a contractor shares privileged 
documents with us, attorney/client privileged documents with 
us, then we can't share those.
    Mr. Burr. Would it be--and I'm not a lawyer by profession, 
so would it be correct for me to assume that the reverse is 
also true? When you join a joint defense with a contractor, any 
DOE documents that you might share with them fall under the 
same protection?
    Ms. Sullivan. Attorney/client privileged documents, if we 
shared them. The joint defense example I'm most familiar with 
and was directly involved in was a joint defense agreement we 
had with our contractor when we were trying to get the Waste 
Isolation Pilot Plant opened in New Mexico, and Westinghouse 
was the contractor. They were also on the permit with us. We 
entered into a joint defense agreement, which meant that we 
shared attorney/client privileged documents freely with all the 
lawyers for both the contractor and DOE----
    Mr. Burr. But for those documents, they are then privileged 
    Ms. Sullivan. They were privileged documents to start with 
and they stayed privileged, even though we shared them with the 
contractor with whom we have a joint defense agreement.
    Mr. Burr. What, if any, effect does DOE entering into a 
joint defense agreement with a contractor do to limit a 
whistleblower's access to information?
    Ms. Sullivan. It does not, because the documents that we 
would be talking about would be privileged documents.
    Mr. Burr. So even if you had not entered into a joint 
defense agreement, every document that would have been 
available to a whistleblower upon their request would have been 
    Ms. Sullivan. I was----
    Mr. Burr. It doesn't renew----
    Ms. Sullivan. I was not directly involved in the document 
dispute that I think you are referring to, so I'm speaking 
generally and not to that specific case, but typically, when 
you share a privileged document with another party, it loses 
its privilege. If you share it with someone you have a joint 
defense agreement with, it doesn't lose its privilege. That's 
the only point I'm trying to make. So typically it wouldn't--
the result of not having a joint defense agreement would be the 
privileged document wouldn't be shared with us, because the 
contractor would be wanting to preserve the privilege. It's a 
way that we can see a document they would otherwise----
    Mr. Burr. Why did the judge that looked at this joint 
defense privilege between you and the contractor in Mr. Lappa's 
case refer to it as incredulous?
    Ms. Sullivan. I don't know.
    Mr. Burr. No idea?
    Ms. Sullivan. No.
    Mr. Burr. But you're familiar with the court's findings?
    Ms. Sullivan. I have read that--I read that decision some 
time ago. I don't remember it in its entirety.
    Mr. Burr. He just said that it was incredulous that you 
would claim a joint defense agreement with a contractor.
    Ms. Sullivan. We do it all the time as a way of ensuring 
that we can get access to privileged documents of our 
    Mr. Burr. How many times have you done a joint defense 
agreement with a contractor on a whistleblower issue?
    Ms. Sullivan. I don't know.
    Mr. Burr. But you said you do it all the time?
    Ms. Sullivan. We do joint defense agreements with our 
contractors all the time in all kinds of matters.
    Mr. Burr. Do you--can you think of one where you have 
entered into a joint defense agreement on a whistleblower?
    Ms. Sullivan. I believe the issue recently arose in 
connection with the pipefitters case in Hanford, and the court, 
I believe, upheld that.
    Mr. Burr. Mr. Van Ness, let me ask you, as the 
representative from University of California, was this your 
idea that you enter--that DOE enter into a joint defense 
    Mr. Van Ness. I don't know whose idea it was. I think it is 
done to allow the Department of Energy to have access to 
information that they otherwise would not have access to, so it 
is generally at their initiation.
    Mr. Burr. Are you aware of whether anything might become 
privileged that was not privileged prior to the joint defense 
    Mr. Van Ness. No. I don't believe that.
    Mr. Burr. Before you gave your testimony today, was your 
testimony approved by the Department of Energy?
    Mr. Van Ness. No.
    Mr. Burr. And did they read it prior to hearing you give it 
    Mr. Van Ness. I doubt it.
    Mr. Burr. Did you share your testimony with the Department 
of Energy?
    Mr. Van Ness. I did not.
    Mr. Burr. Okay. Dr. Michaels, today Mr. Gutierrez shared 
with us how the Department of Labor determined he was 
retaliated against for identifying nuclear safety violations in 
Los Alamos. Why haven't you investigated the University of 
California under Price Anderson for retaliation against Mr. 
Gutierrez for raising nuclear safety violations at Los Alamos?
    Mr. Michaels. This is the first I've heard of Mr. 
Gutierrez' allegations or of the Department of Labor's 
    Mr. Burr. Is that the case with you also, Ms. Sullivan?
    Ms. Sullivan. Yesterday was the first time I heard of Mr. 
Gutierrez, as far as I can recall, and that was just to hear 
that he would be a witness at the hearing today.
    Mr. Burr. Dr. Michaels, today Randy Walli explained how he 
was retaliated against for refusing to install faulty valves on 
a nuclear waste transfer pipe; that the Department of Labor 
determined Fluor Daniel retaliated against Mr. Walli. Can you 
explain why your office has refused to investigate this 
retaliation under Price Anderson?
    Mr. Michaels. I wouldn't say we've refused to investigate. 
We pick and choose our cases very carefully. As you know, we 
have a small staff. We try to use them around the complex in 
places where we think we'll have the biggest impact.
    We've just recently, a year ago, since we took on the 
question of whistleblower retaliation as something we would 
take on in Price Anderson, previous to Mr. Lappa's case we had 
not taken on any Price Anderson----
    Mr. Burr. How many whistleblower cases have you used Price 
    Mr. Michaels. That was the first we considered, and 
obviously we----
    Mr. Burr. It has never been used by you?
    Mr. Michaels. Correct.
    Mr. Burr. Is there any reason for the committee to believe 
that the Department of Energy will choose to use this in the 
future, given that we've got three what seem to be fairly 
substantial cases that have been won by whistleblowers pointing 
out specific retaliation, and that nobody questions whether 
they dealt with nuclear safety?
    Mr. Michaels. As of March 22, 2000, with the publication of 
the final rule in 10 CFR Part 820, we can now use Department of 
Labor findings as the basis for our Price Anderson notices of 
violations. We plan to do that for new cases.
    Mr. Burr. Was Mr. Christopher's e-mail correct that it was 
your understanding that Ms. Sullivan's legal opinion was that 
you not move forward on Price Anderson as it related to Mr. 
Lappa's case?
    Mr. Michaels. Yes. There were two issues that she raised. 
Correct. One was due process and the other was, because we 
hadn't notified the contractors, we didn't have the legal basis 
for going there.
    Mr. Burr. Did you hold Mr. Christopher's view that you 
agreed or disagreed with the legal opinion that you received?
    Mr. Michaels. Well, I'm not an attorney----
    Mr. Burr. No, but you are in a very, very important role--
    Mr. Michaels. That's correct.
    Mr. Burr. [continuing] and we look to you for the guidance 
and wisdom for the Energy Department's actions.
    Mr. Michaels. Correct, and the Energy Department looks to 
Mary Anne Sullivan as their general counsel for legal opinions 
on--as the final arbiter----
    Mr. Burr. The only reason I ask you is that he went on, in 
his e-mail, to say, ``I have discussed with Dr. Michaels that 
he should defer to the advice given by DOE's general counsel,'' 
which suggests to me that at some point a question was posed, 
``What do I do?''
    Mr. Michaels. Correct.
    Mr. Burr. ``Should I follow what DOL's conclusion is and 
take that, or should I follow general counsel's legal 
    Mr. Michaels. No. And Mr. Christopher suggests that I defer 
to the general counsel.
    Mr. Burr. Did you have some reservations about her 
    Mr. Michaels. Not legally. I felt it was very important 
that we use the Price Anderson program to take on whistleblower 
    Mr. Burr. What concerns did you have about her decision or 
her guidance?
    Mr. Michaels. Well, I was primarily concerned they came so 
late in the game, that we already had moved forward on this. 
But her guidance was her guidance, and we deferred to her on 
    Mr. Burr. Were you involved in last year's hearing in this 
    Mr. Michaels. I certainly was.
    Mr. Burr. And would you agree that the information that is 
on the record in that hearing suggests that there was no 
hesitancy by DOE officials to not use DOL's findings?
    Mr. Michaels. That is correct. We were preparing a notice 
of violation on that basis.
    Mr. Burr. So it was a surprise when Ms. Sullivan came in 
and said, ``Based upon our interpretation of things, you can't 
go forward''?
    Mr. Michaels. Yes, sir.
    Mr. Burr. Okay. Let me ask you, Mr. Van Ness, did the 
Department of Energy pressure U.C. to accept DOL findings and 
not to appeal, to settle the Lappa case?
    Mr. Van Ness. I don't know on that specific incident. I 
know that it is the general DOE policy to settle where that is 
appropriate, that that would be a preferred course.
    Mr. Burr. Is there any whistleblower case at the University 
of California that is bigger than Mr. Lappa's case?
    Mr. Van Ness. Not that I am aware of.
    Mr. Burr. And your role at U.C. is what?
    Mr. Van Ness. I'm the assistant vice president for 
laboratory administration.
    Mr. Burr. And who in the makeup of administration at U.C. 
would be in charge of making sure that safety existed at all 
the facilities that you contract with DOE to oversee?
    Mr. Van Ness. At the University of California?
    Mr. Burr. Yes.
    Mr. Van Ness. I would have that responsibility.
    Mr. Burr. You would have that responsibility. So you would 
be fairly well versed on Mr. Lappa's case and claims as it 
related to U.C? Would that be a correct assumption on my part?
    Mr. Van Ness. I have a good deal of information. Yes.
    Mr. Burr. But you don't know whether DOE pressured U.C. in 
any way to agree with the findings of DOL and choose to settle?
    Mr. Van Ness. That's correct. Such a matter would be dealt 
with by our attorneys rather than my office.
    Mr. Burr. Let me remind you that a year ago I asked you 
this question: ``Would you share with this committee in writing 
what procedures, in fact, took place at your directive or based 
upon the procedures in place at the University of California 
relative to his complaint?'' meaning Mr. Lappa's complaint. 
Your answer was yes. We're still waiting for that information. 
I'm not sure whether it is normal practice at U.C. to make 
agreements with requests of Congress and not to fulfill the 
requests that were asked for, but I will assure you I won't 
wait until next year to read this year's testimony. Will you 
supply that for me?
    Mr. Van Ness. Yes, I will.
    Mr. Burr. Okay.
    Mr. Van Ness. And I apologize for the delay.
    Mr. Burr. Let me ask you how much you know about the Lappa 
    Mr. Van Ness. Well, I know the circumstances in which it 
came to happen, and I know the laboratory's view of what has 
transpired since that time to some level. I don't know that I 
know everything about it, but I know a fair amount.
    Mr. Burr. Do you agree with the statement that the 
University of California retaliated against Mr. Lappa?
    Mr. Van Ness. No, I do not.
    Mr. Burr. You don't agree with that?
    Mr. Van Ness. No.
    Mr. Burr. Was that not the findings of the Department of 
    Mr. Van Ness. That was the findings of the individual 
investigator who reviewed the case.
    Mr. Burr. You had an opportunity to appeal, but you chose 
not to?
    Mr. Van Ness. Yes.
    Mr. Burr. And what was the reason for not appealing?
    Mr. Van Ness. To settle the matter if it could be settled 
and move beyond it.
    Mr. Burr. You are----
    Mr. Van Ness. We thought we had done that.
    Mr. Burr. You are still in litigation?
    Mr. Van Ness. Because Mr. Lappa chose to file a 
    Mr. Burr. Has Mr. Lappa ever requested documents from the 
University of California that he has been denied?
    Mr. Van Ness. I don't know that.
    Mr. Burr. Isn't that one of the cases that he brought up in 
civil court, that he made a request under the Freedom of 
Information Act originally? Are you familiar with any of those?
    Mr. Van Ness. I'm not. Again, that would be on the legal 
side of----
    Mr. Burr. Did the Department of Energy ever talk to you as 
their representative from U.C. about the possibility of a 
notice of violation being sent?
    Mr. Van Ness. Not to my recollection.
    Mr. Burr. What would a notice of violation do to the 
trustees of the University of California? Would that make them 
a little bit edgy?
    Mr. Van Ness. They are always concerned when there is a 
notice of violation, and it represents some kind of a lapse.
    Mr. Burr. Is that a frequent thing that you receive at the 
University of California?
    Mr. Van Ness. Not frequent, but it has happened.
    Mr. Burr. So in this particular case would you have found 
it surprising to receive a notice of violation, given that you 
had just chosen not to appeal?
    Mr. Van Ness. Well, I think that the basis on which one was 
not issued is that the facts have not been determined yet in 
this case, and I don't know as much as Dr. Michaels may know 
about the basis that he would view for issuing such a notice. 
But I believe that it would be inappropriate to do that before 
the facts are determined.
    Mr. Burr. Dr. Michaels openly admitted that he thought it 
was appropriate. Now, he was counseled that he shouldn't and he 
didn't, and I appreciate the fact that he listened to his 
counsel. I think that there was also a belief--at least I got 
it from this e-mail, Dr. Michaels--that an enforcement letter 
would be sent. Was there ever an enforcement letter sent to the 
University of California?
    Mr. Michaels. No, sir.
    Mr. Burr. And what was the--who made the decision relative 
to the enforcement letter?
    Mr. Michaels. Essentially, I was counseled that that same 
issue applied.
    Mr. Burr. Counsel at the Department of Energy suggested to 
you that you couldn't send an enforcement letter based upon the 
fact that DOE had not done their own investigation, that they 
couldn't rely on a conclusion that was arrived by the Secretary 
of Labor, and that for an enforcement letter due process and 
notification would have been needed?
    Mr. Michaels. That's my recollection. Yes.
    Mr. Burr. Can you share with me the basis that they made 
that opinion on?
    Mr. Michaels. Well, the enforcement letter would focus on 
the same issue, essentially.
    Mr. Burr. The enforcement letter is a significantly 
different thing than exercising Price Anderson, isn't it?
    Mr. Michaels. My recollection is that I was----
    Mr. Burr. You must have gotten the opinion from Ms. 
Sullivan, then, didn't you?
    Mr. Michaels. That was my understanding. Yes.
    Mr. Burr. Then let's let Ms. Sullivan try to state for me 
exactly what the opinion was based on.
    Mr. Michaels. I'm reminded that an enforcement letter is a 
Price Anderson action and it has the same--it has to be based 
on the same considerations. It is--and I would essentially not 
be able to go into a Price Anderson action because I hadn't--we 
hadn't notified the contractor that we could use a Department 
of Labor finding to get there.
    Mr. Burr. Do you conclude with that, Ms. Sullivan? Can you 
issue an enforcement letter using the conclusions of the 
Secretary of Labor--an institution, a contractor that chooses 
not to appeal, and clearly there is a nuclear safety issue, can 
you send an enforcement letter without notification?
    Ms. Sullivan. What Dr. Michaels is telling me is that an 
enforcement letter is a lesser form of penalty than a notice of 
violation, but it----
    Mr. Burr. He is, in fact, correct. And we understand the 
same thing.
    Ms. Sullivan. Based on the same regulations that have the 
guidance that was the problem with issuing the notice of 
violation. I, frankly, don't remember discussing this issue 
    Mr. Burr. I find it somewhat amazing to me that Dr. 
Michaels could have been in disagreement with your legal 
opinion on the proposed notice of violation, and when we chose 
to go to a lesser use of Price Anderson he voluntarily chose 
the same basis not to send that.
    Ms. Sullivan. He's saying he relied on my advice, and all 
I'm saying is I don't remember discussing an enforcement letter 
as separate and apart from the general issue of the problem 
I've already described, which is that the regulations and the 
guidance accompanying the regulations did not put contractors 
on notice that enforcement action under Price Anderson would 
have been taken based on a Department of Labor preliminary 
    Mr. Burr. Okay. Let me go a step further. Now we know that 
there was no notice of violation. There was--even though there 
was a recommendation for an enforcement letter, there was no 
enforcement letter.
    Let me go to Mr. Christopher. Again, he is the director of 
the Office of Enforcement. Let me go to Mr. Christopher's e-
mail of 2/9/2000, last paragraph: ``I think the combination of 
an enforcement letter, having the lab director come in and meet 
with T.J. so DOE can express his concerns on this topic.''
    Did we have the lab director come in?
    Mr. Michaels. No, sir. Not to my knowledge.
    Mr. Burr. Now, is that because of Price Anderson?
    Mr. Michaels. No. I didn't recommend that. What I did in 
that case, once I realized I couldn't pursue this under the 
Price Anderson direction, I said, I'm still very concerned 
about this, and it struck me that the other direction was to 
look at this as a contract matter.
    And, given I don't have direct role in contract disputes 
but still was very concerned, I called up the Oakland area 
office and inquired whether there had been an investigation 
into this matter so an appropriate penalty could be taken 
within the contract system. In my conversation with them, the 
Oakland area office, I was not satisfied that they had done a 
sufficient investigation so they could do that, I then drafted 
a letter.
    Unfortunately, I couldn't--I can't direct the Oakland area 
office to audit anything because it is part of the NNSA. It is 
outside my purview. But I could write a letter--a memo to 
General Giaconda requesting that the facts and circumstances of 
the situation be examined a part of the contract process. 
That's as close as I could get.
    Mr. Burr. And the letter is dated what?
    Mr. Michaels. March 3.
    Mr. Burr. Of this year?
    Mr. Michaels. This year.
    Mr. Burr. So just a couple months ago?
    Mr. Michaels. Yes. Once we decided in February that----
    Mr. Burr. Share with me his response, if you would.
    Mr. Michaels. He then wrote back a letter. He wrote a 
letter to me saying that he had--the manager of the Oakland 
operations office has committed to take immediate actions to 
reinforce DOE's zero tolerance policy--essentially said that 
they're looking at the case.
    Mr. Burr. Read the rest of that response, if you would. 
    Mr. Michaels. This was April 22.
    Mr. Burr. No. When are they going to follow through?
    Mr. Michaels. Excuse me?
    Mr. Burr. They're going to investigate it when?
    Mr. Michaels. I'm sorry. Let me see if he addressed that.
    Ms. Sullivan. The new director at the Oakland operations 
office has issued a letter to Livermore reiterating the 
Department's zero tolerance policy.
    Mr. Burr. I'd like to get the remainder of----
    Mr. Michaels. This is the letter on April----
    Mr. Burr. [continuing] the response to you.
    Mr. Michaels. The April 27 response to my letter. It 
discussed how there's a court case going on and this will be 
looked at.
    Mr. Burr. When?
    Mr. Michaels. At the conclusion of the State court 
    Mr. Burr. At the conclusion of the case?
    Mr. Michaels. Excuse me?
    Mr. Burr. At the conclusion of the case, right? That's 
where I was trying to get you.
    Mr. Michaels. At the conclusion of the State court's 
    Mr. Burr. I haven't got that letter sitting in front of me, 
but I have read that letter and I remember that one point.
    Mr. Strickland. Mr. Chairman?
    Mr. Burr. I would yield to the gentleman.
    Mr. Strickland. Could we ask that those letters be included 
in the record, please, unanimous consent?
    Mr. Burr. I would ask you to provide not only your letter, 
but the response to your letter if it is not already in the----
    Mr. Michaels. I think you have my letter and the response 
I'm referring to.
    Mr. Burr. I have been told that it has not been entered 
into the record, and I would ask unanimous consent that they be 
supplied and entered into the record.
    [The following was received for the record:]

    Dr. Michaels letter to General Gioconda dated March 3, 2000, and 
the General's response to Dr. Michaels (EH response) dated April 27, 


    Mr. Burr. I would also, as a follow-up question to you, ask 
you, Dr. Michaels, what precludes the Oakland office from doing 
this prior to the conclusion of the civil trial?
    Mr. Michaels. I know of no legal reason, but I am, again, 
not an attorney here.
    Mr. Burr. Well, maybe Ms. Sullivan can share that with us.
    Ms. Sullivan. I don't know that they are precluded. I think 
it is not unreasonable for the process that Mr. Lappa has 
chosen for the resolution of his retaliation claim to work 
itself through, so that he gets that issue resolved where he 
chose to have it resolved. He could have chosen to come to the 
Department. He chose not to.
    Mr. Burr. I think several of the witnesses were very 
specific in why the preference of whistleblowers is not to go 
to the Department of Energy.
    Ms. Sullivan. Could I speak to those, because I was quite 
concerned about some of the things that were said in that 
    Mr. Burr. I have you here to speak to anything you'd like 
to, and we would love to hear it.
    Ms. Sullivan. In the Office of Employee Concerns report, 
the 1998 report, that I was reading from earlier, it reports 
fewer than 25 percent of the cases took more than 6 months to 
resolve. In the prior years, roughly 30 to 32 percent took more 
than 6 months to resolve. That means the overwhelming majority 
of cases that went through the Office of Employee Concerns were 
resolved in less than 6 months.
    Somebody made reference to the fact that the Office of 
Hearings and Appeals, doesn't provide for discovery. Before I 
went to the Department, I used to litigate before the Office of 
Hearings and Appeals. No matter what kind of case, they do 
require a showing of need for discovery. It is not that they 
prohibit discovery altogether.
    And, in addition, there were some problems about how long 
cases were taking in the part 708 process, DOE's whistleblower 
adjudication process. That was why we went through a rulemaking 
to try to streamline it, and the process has been considerably 
    So I think there were some problems. We have taken steps to 
try to address those and, as you know, whistleblowers are 
entitled to bring their claims wherever they want, but at the 
moment I'm not sure they're giving the DOE process a fair 
    Mr. Burr. Mr. Strickland has been very patient with me, and 
I need to recognize him, but is it really difficult for the 
Department of Energy to understand Mr. Lappa's reluctance to 
come to the Department of Energy when you are in a joint 
defense agreement with the contractor who has retaliated 
against him?
    Ms. Sullivan. I feel as if I've adequately explained the 
purpose of a joint defense agreement, which is not to agree 
with the contractor. It is to ensure that we have access to 
documents we wouldn't otherwise be entitled to so that we can 
conduct the oversight of our contractors that I think this 
committee expects us to conduct.
    Mr. Burr. I would only make this point, and then I would 
recognize Mr. Strickland.
    Given that this is the one case where we've used the joint 
defense agreement on a whistleblower case, I'd be happy for you 
to supply to us any other cases on a whistleblower where the 
Department of Energy has entered into a joint defense 
    [The following was received for the record:]

    A more precise description of the term ``joint defense agreement'' 
is ``joint defense privilege'' or ``common interest privilege.'' In 
most cases, as in Lappa, the Department does not enter into a written 
agreement with the contractor with regard to documents related to the 
case. Rather, the Department chooses to exercise the joint defense 
privilege. As I explained earlier, the reason for exercising this 
privilege is to ensure that the Department has access to documents and 
information in order to conduct oversight of the contractors. Without 
the use of the privilege we would not otherwise be entitled to see the 
documents. The joint defense privilege was also invoked in one of the 
pipefitter cases in the Department's Richland office, Brundridge, et 
al. v. Fluor Daniel, Inc., which is being litigated in state court in 

    Mr. Burr. I don't find it too unusual to understand Mr. 
Lappa's decision not to seek review through the Department of 
Energy but to seek a review through the court system.
    Ms. Sullivan. Mr. Lappa chose to go to the courts 2 years 
before the issue of joint defense arose, so I don't think that 
can be his reason.
    Mr. Burr. Well, I'm not suggesting that I know his reason. 
I'm trying to piece together a puzzle that has been as 
difficult for this subcommittee to put together as I think it 
is for whistleblowers to obtain documents from the Department 
of Energy and from contractors. But I will assure you that we 
are going to continue to try to figure out what the picture 
looks like of the puzzle.
    With that, I would yield to the gentleman from Ohio.
    Mr. Strickland. Thank you.
    I would just like to say that I am wondering where the 
decision to enter into these joint defense agreements comes 
from. Does that come from your office? I mean, do you have the 
discretion to not enter into such an agreement or to enter into 
the agreement? That's your legal judgment, is it?
    Ms. Sullivan. It is the judgement of somebody in counsel's 
office. It doesn't necessarily come to me. It may be a decision 
made in the field. But I want to emphasize, all it does for us 
is get us access to contractor documents that we would not 
otherwise be able to see.
    Mr. Strickland. I understand, but----
    Ms. Sullivan. And it doesn't keep anything away from a 
whistleblower that they would be able to see.
    Mr. Strickland. Doesn't it keep the whistleblower from 
getting access to that information that has been provided to 
    Ms. Sullivan. Not, it does not.
    Mr. Strickland. It does not?
    Ms. Sullivan. No. It is a privileged document to begin 
with. It is an attorney/client document. The whistleblower 
would have no access to that document. The question is whether 
only the contractor has access to the document or whether the 
contractor is forced to share it with DOE because we insist on 
a joint defense agreement, by which we are simply saying, ``We 
will keep this as a privileged document.'' Mr. Strickland. So 
you keep that information away from the whistleblower? So the 
    Ms. Sullivan. He couldn't get it otherwise.
    Mr. Strickland. But why do you need it if you are, in fact, 
a passive or an impartial participant? Why do you need it? For 
what purpose do you need it?
    Ms. Sullivan. For example, I believe that one of the 
privileged documents was a communication between somebody at 
the University of California or at Livermore--I don't 
remember--and counsel for the University of California 
describing Livermore's efforts to comply with the original 
settlement of Mr. Lappa's case.
    Mr. Strickland. You know what? It seems to me----
    Ms. Sullivan. That is of interest to us.
    Mr. Strickland. Well, I understand it is of interest to 
you, but it seems to me, when this occurs, you and the 
contractor are viewed--and I think accurately so--as being 
together against the whistleblower.
    If I were the whistleblower, that's how I would see it. I 
could see this information being used between DOE and the 
contractor to conspire, to strategize, to develop arguments, 
for all kinds of reasons. I do not see why the Department of 
Energy should place itself in that kind of compromising 
position unnecessarily.
    There may be some legitimate benefit, but when you weigh 
the legitimate benefit against the down side--you know, the 
impression of impartiality and the lack of confidence that it 
generates--I don't see why you would do it.
    Ms. Sullivan. With due respect, if we didn't ask for these 
documents, I can well imagine sitting here being asked, ``Why 
didn't you ask to see whether Livermore was, in fact, complying 
with the Department of Labor direction?'' We ask for the 
information as part of our oversight function, and if that is 
being interpreted as taking sides against the whistleblower, 
that is unfortunate and it is not an accurate understanding of 
the reason why we want access to those documents.
    Mr. Strickland. Why don't you do your own investigation 
without depending upon the contractor to do that with or for 
    Ms. Sullivan. Well, just as you are interested in seeing 
internal documents of ours as a way of better understanding 
what is really going on, we think there is a value in seeing--
    Mr. Strickland. Can you subpoena documents or----
    Ms. Sullivan. Subpoena documents? No. We have no subpoena 
    Mr. Strickland. What access do you have to gathering 
information? How did the Department of Labor reach their 
conclusion, for example, in the case that we have been 
    Ms. Sullivan. They sent out an investigator who did 
interviews, as I understand it. I was----
    Mr. Strickland. And couldn't DOE conduct a similar kind of 
investigation without depending upon the contractor for----
    Ms. Sullivan. In fact, I advised Dr. Michaels that, if he 
wanted to pursue a Price Anderson penalty against the 
University of California, he could send somebody out to do an 
investigation. What he concluded was that, since there was 
already an ongoing process and since his staff--his Price 
Anderson staff had limited resources, that he didn't want to do 
that. I mean, we can do as many duplicative investigations as 
people want to support, but if there is already a process in 
place that we believe will provide us good information, taking 
advantage of that information seems wise.
    Mr. Burr. Will the gentleman yield for one point of 
    Mr. Strickland. Yes, I will.
    Mr. Burr. When you made that recommendation that Dr. 
Michaels could pursue a Price Anderson case if he did his own 
investigation, was that at the conclusion of the trial in 
California or was that now?
    Ms. Sullivan. No. I said they could do it any time.
    Mr. Burr. So what would be different with him pursuing an 
investigation under Price Anderson and the question that I 
asked you before, Dr. Michael, where it required you to wait, 
or the recommendation you were given was that you would have to 
wait until the trial was over with? I think that was pertaining 
to a letter of enforcement or even pulling in Giaconda's 
    Ms. Sullivan. All Giaconda said was that he was going to 
wait until the----
    Mr. Burr. So he doesn't have to wait?
    Ms. Sullivan. He didn't say he had to. He said he would, 
rather than duplicate a process that is already ongoing and 
that is the process the whistleblower himself chose.
    Mr. Burr. But that doesn't restrict----
    Ms. Sullivan. What if Dr. Michaels went out----
    Mr. Burr. [continuing] The Department of Energy from doing 
an investigation.
    Ms. Sullivan. [continuing] and did an investigation and 
concluded there was no retaliation? Mr. Lappa might feel as if 
that was interfering with his right to get that issue decided 
in the court he chose, the State court of California.
    Mr. Burr. I thank the gentleman for yielding.
    Ms. Sullivan. I don't think it is suspicious. It is just--
    Mr. Strickland. You know, based on our discussion here 
today, do you have any second thoughts regarding this joint 
arrangement or do you have any plans to change your former 
practices regarding entering into such joint defense 
agreements, or are you satisfied with the way things are 
currently, even if the perception is there that it is out of 
balance and unfair to the whistleblower?
    Ms. Sullivan. We absolutely must continue to enter into 
joint defense agreements with our contractors. What this 
hearing has taught me is that doing that in whistleblower cases 
is perceived in a way that it is not perceived in other cases, 
and so yes, of course, we should rethink it, because we are not 
trying to send a message to whistleblowers that we are on the 
side of the contractor and against them.
    The whole program that I described in my testimony is 
designed to send a different message, and so if that is how 
people are perceiving it, it has us operating with our hands 
tied behind our backs and it doesn't make sense to me. But if 
that is how it is being perceived, then we should rethink our 
    Mr. Strickland. I made reference earlier to a case in my 
District, Theresa Boggs, et al. versus Divested Atomic 
Corporation, et al.
    Ms. Sullivan. I'm sorry. What's----
    Mr. Strickland. Theresa Boggs, et al. versus Divested 
Atomic Corporation, et al., a case that was brought in 1990 and 
is still ongoing.
    Could you provide me with the total cost to the taxpayer 
through the Department of Energy that has gone to the 
contractor for continuing to litigate this case? I just think 
it would be instructive, at least in one case that is 10 years 
old, to know how many tax resources have gone into providing 
attorney fees and the like. Would you be able to do that?
    Ms. Sullivan. We began collecting that information in a 
systematic way several years ago, and we certainly can provide 
it for the period that we have been collecting information, and 
I will explore whether we have information from the beginning 
of the case. If I could get----
    Mr. Strickland. I would hope that information would be 
    Ms. Sullivan. I would hope so, too. I just am unfamiliar 
with the particular case.
    Mr. Strickland. Thank you.
    [The following was received for the record:]

    The costs of outside counsel in Teresa Boggs, et al. v. Goodyear 
Atomic Corporation and Martin Marietta Energy Systems, Inc. are 
$10,580,277.05. These costs cover the period from the beginning of the 
case in June 1990 through the second quarter of FY 2000. It should be 
noted that most of the outside costs were incurred prior to the DOE 's 
implementation of contractor litigation management policies and 
procedures in 1994. Only $1,835,051.05 of the total outside costs have 
been incurred since the policies were promulgated.

    Ms. Sullivan. Could I just get the citation to the case 
before I leave?
    Mr. Strickland. Sure. Absolutely.
    I'm going to ask a question about a separate issue, but I 
think it pertains to perhaps the operation of the counsel's 
office here.
    Mr. Burr. The gentleman has the microphone.
    Mr. Strickland. When the uranium enrichment was 
privatized--one of those facilities was located in my District, 
one in Mr. Whitfield's District in Paducah, Kentucky--two 
memorandum of understanding were entered into for the purpose 
of providing resources for worker transition, and I think a 
total of $60-plus million was to be set aside through those 
MOUs to provide for worker transition.
    There has been an announcement of a significant layoff at 
those two facilities, and we are very interested--I am, as well 
as others--in trying to make resources available to the laid 
off--the workers to be terminated so that they can have access 
to early retirement, so that jobs can be saved for the younger 
employees and the older employees can get resources for early 
retirement. We have asked both DOE and we've asked the 
Enrichment Corporation to provide resources for that purpose.
    I especially think it is morally defensible, given the fact 
that the CEO of the privatized corporation has negotiated for 
himself a $3.6 million golden parachute so that if he is fired 
or laid off he walks away with $3.6 million, and there are 
employees at these facilities who have worked decades in life-
threatening situations, I think we are finding out through Dr. 
Michaels' research, and they are not being offered such an 
early retirement.
    When we asked your office if moneys from this MOA source 
could be used to provide early retirement for these folks, I 
think we were told that that was, in your opinion or your 
office's opinion, not legal.
    Is there any opportunity for a review or second opinion? 
And I would like to know if you would commit with me today that 
there could be an independent legal assessment as to whether or 
not the conclusion of your office is, in fact, the only 
possible conclusion that could be reached in the use of these 
MOU funds.
    Ms. Sullivan. I would certainly be happy to have that issue 
re-looked at and to look at it personally. I'm not sure what 
you mean by an ``independent legal review,'' but I am the chief 
legal officer for the Department, so----
    Mr. Strickland. And once a decision is made by your 
Department, is there any recourse at all, or is a decision from 
you or your department a final decision with no potential 
appeal or recourse for additional opinion?
    Ms. Sullivan. Well, I am frequently asked to re-look at an 
issue, and sometimes I have been known to find some new facts 
that enable me to come to a different conclusion.
    Mr. Strickland. Would you----
    Ms. Sullivan. Or I can be sued and proved wrong.
    Mr. Strickland. I don't know if I can do that, but I'm 
looking for the options.
    Ms. Sullivan. I know we have worked very hard to try to be 
supportive of the workers who are being laid off there. I have 
a labor lawyer on my staff who, I have been told by a number of 
people, has really made an enormous difference in helping the 
contractor and helping the Enrichment Corporation find their 
way clear to do more. We are very sympathetic to that 
    Mr. Strickland. But if you would take an additional look at 
that issue, I would be appreciative.
    Ms. Sullivan. I'd be happy to.
    Mr. Strickland. Mr. Van Ness, in your testimony you state 
that the University of California provides an open environment 
for frank discussions, and, having worked in an academic 
institution, I know how important that is.
    You say that the University protects its employees against 
retaliation for notifying management, DOE, local authorities, 
the Congress, and the public of any variance between any 
University activities and contractual or other legal 
    Now, that sounds really, really good, but both Mr. 
Gutierrez and Mr. Lappa did that and the University seems to be 
pursuing them with some kind of vengeance. Can you explain why 
that would be the case?
    Mr. Van Ness. Well, it's not that we are pursuing them with 
some kind of vengeance. They are really two different cases.
    In the case of Mr. Lappa, the facts have not yet been 
settled in that case, and our view of it is that he has not 
been retaliated against, that there is no basis for that 
    In the case of Mr. Gutierrez, it is a situation that 
focuses on his job, which is an internal auditor at the Los 
Alamos National Laboratory, and the principle at stake here is 
an internal auditor has a responsibility--it is the core of 
their job--to go out and determine whether there are 
inappropriate activities happening in the laboratory.
    It is very important for the success of their job for 
people to have confidence that they are going to work within 
the rules of the laboratory, and in this case, he chose not to 
do that. He did not take this information to his management. He 
went directly to the press. And that issue, we believe, is 
related to a recent Supreme Court decision that talks about 
weighing the proper interest of the employer with such 
activities on the part of the employee. It's really not about 
whistleblower retaliation in that circumstance.
    Mr. Strickland. Is your statement to me consistent with 
what the administrative law judge found in this case or 
determined to be?
    Mr. Van Ness. In which case are you referring to, Lappa 
    Mr. Strickland. The case involving Mr. Gutierrez.
    Mr. Van Ness. It is the--what we are appealing is the 
administrative law judge's decision, which we don't believe 
took into account the Supreme Court decision or this principle 
adequately, and what we are trying to do is make sure that that 
point is appropriately reviewed. That is our endeavor.
    Mr. Strickland. Now, I mean, if that's the case, then it 
seems to me that you don't protect them against retaliation for 
notifying management, DOE, local authorities, the Congress, and 
the public. There is a code of conduct that apparently you 
asked Mr. Gutierrez to sign, and that code of conduct seems to 
put the interests of the University of California above the 
interests of DOE and the public when it comes to public or 
worker health and safety.
    According to the decision by the administrative law judge, 
several of your employees told him that his biggest error was 
telling outsiders about the lab's problems, particularly its 
lack of effective monitoring equipment.
    Is that what you are referring to when you say he didn't 
follow the procedure?
    Mr. Van Ness. His obligation was to bring that to the 
attention of his management. If his management was not 
responsive, then he would have--if he had proceeded, he would 
have been properly a whistleblower.
    In our situation, the issue of whether he is a 
whistleblower or not remains somewhat uncertain here. It is the 
laboratory's position that he didn't do what he was supposed to 
do in terms of his job.
    Mr. Strickland. Apparently, U.C. employees told Mr. 
Gutierrez and the administrative law judge that Mr. Gutierrez 
violated the lab's confidentiality rules by telling Congress 
and others that the lab was missing radioactive emissions 
monitoring data and therefore couldn't demonstrate that the 
equipment was working properly. Is this the University's 
position that unclassified quality assurance reports concerning 
radioactive emissions are secret documents?
    Mr. Van Ness. No, it is not.
    Mr. Strickland. Well, there seems to be a contradiction 
then in the response of the University and your response to me 
just then. I mean, isn't this what Mr. Gutierrez alleges at 
least has happened, that he made information of this nature 
public and, consequently, there is retaliation against him? I 
mean, are we dealing with who is telling the truth here? I 
mean, is it that simple? Or are we----
    Mr. Van Ness. I'm not sure it is about who is telling the 
truth. I think it is about----
    Mr. Strickland. So it is about procedure?
    Mr. Van Ness. It'd about the view of what happened in this 
specific circumstance and does that constitute a whistleblower 
    Mr. Strickland. And----
    Mr. Van Ness. That's at issue right now with our 
    Mr. Strickland. Yes. You know, it seems to me, if there is 
a safety matter, that the public has a right to know, and that 
there ought not to be a procedure in place that would prevent 
the public from knowing. Now, perhaps it is also a part of the 
procedure that, once a manager, or whoever, is informed, that 
at that point the public would be given the information, but it 
seems to me that there is a whole lot of fairly intense 
response here directed toward Mr. Gutierrez if the only thing 
we're talking about here is a procedural thing and not an 
actual substantive issue as to whether or not there were 
violations in terms of his concerns.
    Does that seem reasonable to you, that we're engaged in 
this, I don't know, contest, confrontation, litigation, or 
whatever, over something that is not substantive in nature?
    Let me ask you this: was he correct in what he said about 
safety and health concerns? I mean, are you contesting his 
conclusions that there was a problem there?
    Mr. Van Ness. The laboratory's perspective on that is that 
what he brought up was out of context, and it is the reason why 
we would not want an employee, based on that individual's slice 
of the picture, to say to the press, ``My gosh, we have a 
tremendous problem,'' especially at a nuclear laboratory.
    What you want to do is to have management operate so that 
the whole picture is brought into place and that we don't alarm 
needlessly the public.
    If, on the other hand, as that process proceeds, it doesn't 
do its job effectively, that's what whistleblowing is about and 
that's what we protect.
    Mr. Strickland. Okay. Mr. Lappa was a nuclear engineer with 
20 years experience, a successful career at Lawrence Livermore. 
Surely, with all of the controversy this case has generated, 
you have made some legitimate efforts to try to determine if, 
in fact, his concerns were valid concerns and need to be 
    Now, you say the lab says this or the lab says that. Do you 
feel confident that the concerns he was raising were not 
legitimate or not valid and, therefore, did not merit the kind 
of response that he gave to it?
    Mr. Van Ness. I don't have enough information on the 
specifics of this case to make that judgment.
    Mr. Strickland. That seems like a fairly basic place to 
begin. Otherwise, we are just arguing about process and 
procedure, and I guess I would be interested to know if there 
has been any change in procedure, any change in equipment or 
anything as a result of concerns that he has raised. I mean, 
it's sort of like the valve. Did they use the valve? That was 
thought to be----
    Mr. Burr. I'm going to urge the gentleman from Ohio to wrap 
up as quickly as he can. I think we have kept them here quite a 
    Mr. Strickland. I'm finished.
    Mr. Burr. You're finished? I thank the gentleman, and I 
just want to follow up with a couple of questions. Prerogative 
of the Chair.
    Ms. Sullivan and Dr. Michaels, both of you I think told me 
that today was the first day you've heard about Gutierrez; was 
that correct?
    Ms. Sullivan. I said I heard yesterday afternoon.
    Mr. Burr. Yesterday. Yesterday or today. Mr. Van Ness, how 
long has this been going on? Twenty-two months?
    Mr. Van Ness. I don't know the answer.
    Mr. Burr. I'm pretty close though, aren't I?
    Mr. Van Ness. That's probably a reasonable guess.
    Mr. Burr. Have you ever been reimbursed for any litigation 
costs yet?
    Mr. Van Ness. I assume----
    Ms. Sullivan. The answer to that is no. That I do know. 
That's the one piece of information I got when I heard about 
this case.
    Mr. Van Ness. I don't know the answer.
    Mr. Burr. Their answer is I think you've done a majority of 
it in house.
    Mr. Van Ness. I don't know the answer.
    Mr. Burr. But you have been reimbursed for what you've done 
in house?
    Mr. Van Ness. I don't know the answer to the question.
    Mr. Burr. Do you know? Am I correct in that, Ms. Sullivan?
    Ms. Sullivan. My understanding is it has been done in house 
and so there is no separate reimbursement.
    Mr. Burr. But would it be correct to assume that it is 
treated separately from a standpoint of whatever report is made 
to the Department of Energy? Would it not be for reimbursement 
of in-house counsel for litigation in the Gutierrez cases?
    Ms. Sullivan. I'm not sure I follow your question.
    Mr. Burr. Well, I started off this morning with you trying 
to determine how a situation could have existed where over 
$200,000 was reimbursed to a contractor for subcontractors' 
litigation, and the Department of Energy, in response to this 
committee, said, ``No, we haven't reimbursed anything,'' and 
then reversed it a week later and sent us a letter yesterday 
that said, ``In fact, we did pay for the litigation costs.''
    I was trying to determine how that could slip through the 
payment system at the Department of Energy, the reimbursement 
system, without knowing that part of that went for litigation.
    What I'm simply trying to get to on this is that I believe 
that the Department of Energy has reimbursed the University of 
California for their in-house counsel to litigate the Gutierrez 
case, which would mean somewhere at the Department of Energy, 
hopefully seen by your office, would have been charges for 
reimbursement in the Gutierrez case, and I'm trying to figure 
out why until yesterday nobody told you that there was another 
whistleblower case being litigated by the University of 
    Ms. Sullivan. We have a cost tracking system that is 
designed to track the cost of outside counsel--we put it in 
place 4 to 6 years ago--because we discovered we were paying 
very high outside counsel costs.
    The cost of laboratory counsel is part of the overhead that 
they get reimbursed for, but there is not an additional charge 
that we pay because they have one particular case or another.
    Mr. Burr. I'm told that they are supposed to separate it 
out. I would hope that, for the purposes of this committee, 
that you would supply for us whatever directives exist at DOE 
that Mr. Van Ness and the University of California and other 
contractors follow for, one, outside litigation, outside 
counsel in whistleblower cases; two, in-house counsel 
reimbursements and how those would be claimed under whatever 
procedures DOE has in effect. If they don't have anything in 
effect, then I hope you would point that out to us.
    [The following was received for the record:]

    The following documents, which are attached, provide guidance to 
the contractors regarding the reimbursement of litigation costs:
    1) Litigation Management Procedures issued by General Counsel 
Nordhaus on March 23, 1994.
    2) Memorandum on Outside Litigation Costs from General Counsel 
Nordhaus dated October 14, 1994.
    3) Article 35, Costs Associated with Discriminatory Employee 
Actions, from model contract for profit making contractors. The model 
contract was distributed in the spring of 1995.
    3) Notice of final policy statement on Contractor Litigation Cost 
Policies; Policies, Terms of Law Firm Engagement, and Allowability of 
costs, published at 61 FR 14763 (April 3, 1996). (The notice of interim 
policy statement was published at 59 FR 44981 (August 31, 1994)).
    4) Final Rule, published on June 27, 1997, at 62 FR 34842, which 
amended the Department of Energy Acquisition Regulations (DEAR) to 
implement contract reform initiatives. In particular, sections 
970.5204-13, Allowable costs and fixed-fee (management and operating 
contracts); 970.5204-31, Insurance-litigation and claims; and 970.5204-
61, Cost prohibitions related to legal and other proceedings.
    5) Notice of proposed rulemaking for acquisition regulation related 
to the Department's Management and Operating Contracts. This notice, 
published on January 5, 1998, at 63 FR 386, proposed a clarification of 
what costs are allowable and unallowable in whistleblower cases.
    6) Supplemental proposed rule, published on March 24, 1999, at 64 
FR 14206, on the acquisition regulation for costs associated with 
whistleblower actions. (Note: The Department currently has in its 
internal review process a final rule on whistleblower costs. This rule 
is expected to be published by the end of this fiscal year.)


    Mr. Burr. Whatever that tracking system is that you put in 
4 or 6 years ago, apparently, given the Kaiser Hill case this 
morning, doesn't work.
    Ms. Sullivan. As I explained this morning, that is directed 
to contractor counsel, and we are in the process of expanding 
it to cover subcontractor counsel. We had not previously 
identified that as a significant cost that needed to be 
tracked, and we have--not as a result of this, but some other 
situations--discovered that there can be significant legal 
costs at the subcontractor level, and therefore we have 
determined to expand the system to cover subcontractors.
    Mr. Burr. Mr. Hansen, I felt like I have cheated you today. 
I must admit, I got so little out of your opening statement 
that I read last night relative to the issue that we were 
dealing on, other than a buffet of different programs that your 
company supported and that you had in place personally, all of 
which apparently failed in the case of Mr. Walli and his 
associates, or, in fact, his issue would have never gotten to 
the point that it had.
    You also said in your conclusion to your statement, 
``Additionally, there are very detailed terms and conditions in 
the litigation management plan approved by the Department of 
Energy by which administrative claims and particularly 
litigation must be handled.''
    What are those detailed terms and conditions?
    Mr. Hansen. Our contract that we have with the Department 
of Energy requires us to have a litigation plan by which we can 
engage in conversation with them with respect to our desire, 
recommendation to proceed to do any litigation that we have at 
the site.
    Mr. Burr. So it is spelled out specifically in your 
    Mr. Hansen. That's correct.
    Mr. Burr. Is that the case with the University of 
California, too?
    Mr. Van Ness. Yes.
    Mr. Burr. But there has been some question in the case of 
the University of California as to whether, one, there may be 
some faulty areas as it relates to our contract on what we will 
reimburse for and how lenient we are; or, two, on our ability 
to alter the performance bonus, based upon any adverse outcomes 
on liability cases; is that correct?
    Mr. Van Ness. I wouldn't describe them as weaknesses. I 
think the----
    Mr. Burr. If we, in conjunction with Department of Energy--
if they share with us--which I think they have, in some 
documents that I just can't put my hands on right now--if they 
share with us we can't do that because of our contractual 
agreement, would the University of California be willing to, 
given the commitment that everybody has expressed toward 
whistleblowers, be open to rewriting that portion of the 
contract to make sure that nobody hid behind an existing 
contract for either the reimbursement or potential penalties 
that might come into play?
    Mr. Van Ness. I think we would be open to certainly looking 
at that kind of a situation, and if it made sense----
    Mr. Burr. I will certainly instruct the counsel on our side 
and to also work with the minority on this side to work with 
the Department of Energy to identify any areas of the contract 
as it relates to U.C. to figure out whether some revisions need 
to be made.
    Let me ask you one last question as it relates to Mr. 
Lappa. I don't want to beat a dead horse, but the Department 
has reimbursed the University of California over $300,000 in 
legal costs to fight Mr. Lappa's DOL complaint and subsequent 
civil suit. Also, in response to a Freedom of Information 
request, the Department refused to provide documents to Mr. 
Lappa, refused to make DOE personnel available for interviews. 
He sued DOE, and last month the judge ordered DOE to provide 
Mr. Lappa with the information and called the Department's 
actions arbitrary and capricious.
    Ms. Sullivan, can you share with us what basis the 
Department of Energy used to refuse the request for documents 
or the interview of personnel?
    Ms. Sullivan. The document requests were not refused. There 
was a FOIA request, and it was being processed.
    Mr. Burr. How long has that been in process?
    Ms. Sullivan. A long time.
    Mr. Burr. How long is a long time?
    Ms. Sullivan. I don't know exactly in this case, but----
    Mr. Burr. Dr. Michaels, can you help us with it at all?
    Mr. Michaels. I'm not familiar with the request or the 
    Ms. Sullivan. The documents were ultimately provided, 
almost the entirety of what was requested. I think the only 
documents not provided were attorney/client privileged 
documents, although I'm not----
    Mr. Burr. Before or after the judge's decision?
    Ms. Sullivan. Before.
    Mr. Burr. Before the judge's decision?
    Ms. Sullivan. Before the judge's decision.
    Mr. Burr. How about the interview of DOE personnel?
    Ms. Sullivan. We received a request--one of my staff 
attorneys received a request for interviews with three 
witnesses. He determined that two of the witnesses had no 
relevant information, offered the third witness, and that was 
unsatisfactory to--I think it was Mr. Carpenter. And he 
subsequently sought to depose a significantly larger number of 
witnesses. He did not follow the regulations. They're called 
the Touhey regulations under which Federal Government employees 
are made available in third-party litigation, and the Oakland 
office, in conjunction with the U.S. Attorney's office in 
California, defended against the argument we should make the 
witnesses available. The magistrate disagreed with us----
    Mr. Burr. So you lost?
    Ms. Sullivan. [continuing] and the witnesses are being made 
available starting tomorrow.
    Mr. Burr. You lost?
    Ms. Sullivan. Yes, we did. I would have preferred that case 
had been handled differently.
    Mr. Burr. Tell me how the decision at the Department of 
Energy not to make those witnesses available, not to supply the 
documents until suit was at least taken out--and maybe the 
documents were supplied before the judge's decision--tell me 
how that is an example of zero tolerance.
    Ms. Sullivan. I think the slowness in providing the 
documents is a reflection of a slower process in providing 
documents in response to FOIA requests than I would like to see 
generally in the Department and generally in the Federal 
Government, that----
    Mr. Burr. We started this hearing today with an 
acknowledgement that it was Secretary O'Leary's belief that the 
Department of Energy can do better, that the Federal Government 
could do better in creating an atmosphere for individuals who 
were concerned with their safety, the safety of others, and the 
integrity of the program; could raise those questions of this 
agency with this agency about subcontractors, about 
contractors, and, yes, about the agency; and that this would be 
a responsive agency.
    My biggest concern is that, for a majority of this hearing, 
it has done nothing but reconfirm what I thought I read last 
night, and that was a willing participation by the Department 
of Energy to prolong the whistleblower cases, to wait out, in 
many cases, the individual's financial capabilities to fight, 
even though in some cases, like U.C., they chose not to appeal 
the Secretary of Labor's decision, and in many cases it seemed 
like and does seem like more of a partnership than it does the 
spirit of what Secretary O'Leary set out to design.
    What have we learned today?
    First, the Department has several tools available to 
enforce zero tolerance policy. Unfortunately, the Department 
uses few of these tools, and in several cases has decided to 
side with contractors to fight whistleblowers.
    Second, the Department could take steps to fully implement 
reforms announced by Secretary O'Leary, including limiting 
reimbursement of contractors' legal defense costs. But, 
unfortunately, the Department seems to prefer to 
indiscriminately approve its contractors' legal costs and team 
with its contractors to defeat the whistleblower, sometimes 
never even knowing that they reimbursed the contractor.
    So what we are left with are weak whistleblower protection 
policies that are inconsistently applied at different field 
sites. There is no real leadership here, and the whistleblowers 
are left waiting while they face insurmountable odds. There is 
no way to run the Department, and the DOE ought to find the 
backbone to finally implement fully whistleblower procedures.
    If, for some reason, the ability to utilize existing laws 
on the books--be it Price Anderson or anything else--is not 
clear, I hope that at the end of this hearing the two of you 
will sit down and determine what the tools are that we can use 
at the Department of Energy to investigate safety concerns by 
    My hope is that this committee will continue to work to 
make sure that we complete this puzzle, to make sure that, if 
there is appropriate action for us to take, that we do it, and 
I do hope that the Department of Energy will be a willing 
participant in that process.
    With that, I'd like to thank panel two. I'd like to thank 
all the witnesses for their attendance.
    At this time, the hearing would adjourn.
    [Whereupon, at 3:47 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]