"A contributing factor to people's frustration with Hanford is its out-of-control overhead costs — too much money is going to management and not enough is going to cleanup," Smith said. "The
contractors and the Department of Energy are nowhere close to achieving their self-pronounced goal of limiting overhead costs to 30 percent of their budget. This language will address that concern."

The Department of Defense Authorization bill passed by 373-50 this afternoon. Smith, a member of the National Security Committee, has worked on the Hanford issue since he took office in 1997. 

The Smith language was added during this year's committee markup and amended during Conference Committee. It directs the Department of Energy to reduce Fiscal Year 1999 overhead costs below its established baseline and use the additional funds for critical cleanup projects at Hanford. Fluor Daniel (the Project Hanford Management Team leader) will receive a $1.9 million award if overhead costs are brought down to $237 million, $23 million less than the baseline of $260 million. That $23 million will pay for pumping out roughly ten tanks that are leaking radioactive waste.

"All along, my goal has been to reduce overhead costs to free up funds for cleanup," Smith explained. "The leaking tanks are top priority for two reasons: first of all, the leaking waste is dangerously close to the Columbia River; and second, the Department of Energy has not kept their end of the bargain with regards to cleanup and could be facing a lawsuit from the state of Washington if they don't speed up the cleanup efforts."

Earlier this year, Smith questioned the integrity of the Department of Energy's overhead disclosure. Smith argued that the Department of Energy simply redefined overhead costs, by not including previously calculated overhead costs, to give the appearance of significant overhead cost reduction. This has been a continuing point of contention between Congress and the Department of Energy.

To clarify the Department of Energy's accounting practices and to objectively define Hanford overhead costs, this legislation directs the Defense Contractor Audit Agency to identify and assess methods for calculating overhead costs at Hanford.

"Objectively calculating costs is absolutely necessary so that policymakers and the public have a true understanding of how the money is being spent," Smith said. 

The Senate is expected to pass Defense Authorization bill tomorrow or early next week, and the President should sign it into law soon after.