The Case of CH2M Hill: $2 Billion in Crony Stimulation

“Not very much.”

This was the answer that the Department of Energy Secretary, Steven Chu, recently provided when asked of the amount the federal government will be able to recover from the Solyndra bankruptcy.

The same could be said for the amount of research that the federal government has put into other companies involved in the Solyndra scandal. One such company, CH2M HILL, should be next on the House GOP radar, having used nearly $10 million in stimulus funding to design the elaborate Solyndra facility in Fremont, California. While CH2M HILL is in no danger of suffering the same bankruptcy plight, they also languish in a pool of mismanaged taxpayer funds. The firm has a history of fraud, kickbacks, violations, and cover-ups, not to mention one particular parallel with the Solyndra scandal—layoffs. This, despite receiving almost $2 billion in stimulus funding.

Why, having been awarded more than three times as much funding as Solyndra, has CH2M escaped serious scrutiny? Perhaps it is the significant donations and lobbying efforts they have doled out, targeting key Democrats in charge of the stimulus. Perhaps it is the no-bid contracts, the influence they had in shaping the stimulus, or the revolving door of employees and White House administrative positions that have allowed them to continue their dominance in procuring government funding.

Now, however, is the time to place the company that has become a consistent government favorite, under the microscope.

Even as the House Oversight and Government Reform Committee investigates the handling of over $35 billion in stimulus funding granted to the Department of Energy (DOE) in 2009—a hearing prompted by the failed loan program that funded the now bankrupt solar panel manufacturing company, Solyndra—some fans of the administration are calling for the President to stay the ‘green jobs’ course, citing the potential to add three million more jobs through his latest bill.

President Obama is currently marketing his American Jobs Act, another $447 billion stimulus bill masquerading as a job creation program. “We can’t wait,” has become the mantra of a President and an administration desperate to see the job market reverse course. In order to better understand how money is being utilized, Republicans are trying to retrace the flow of dollars to companies that the Energy Department knew would fail, or rewarded without competition.

And it isn’t, as the President suggests, that Republicans want “dirtier air” and “dirtier water.” It is simply that Republicans are tired of watching this administration turn taxpayer funds into dirty money.

The Department of Energy under Obama has continually thrown money into spurring economic development in the ‘green jobs’ or environmental cleanup industries. More often than not, funds rarely hit their intended target, rarely generate tangible job growth, and rarely succeed by any measure.  Testimony at the recent House Oversight subcommittee hearing on the “Green Jobs Debacle,” led by Chairman Jim Jordan (R-OH), bears this out. Any question as to the stimulus program’s failure to create jobs dissipated when DOE Inspector General, Gregory H. Friedman, said in testimony, “…the political push to quickly create jobs and spur economic development didn’t match up with economic realities on the ground.” A report in The Washington Post indicates that Friedman and his department have uncovered $2.3 million in stimulus fraud and sparked five criminal prosecutions within the Energy Department alone.

Elliot P. Lewis, assistant inspector general for the Labor Department added, “Green jobs have not materialized, and therefore job placements had been much less than expected.”

Companies such as Solyndra and other alternative energy/environmental investments have at best only been able to produce short-term jobs. In addition to Solyndra, two other companies working on alternative energy products—Evergreen Solar and SpectraWatt—received stimulus funding only to eventually file for bankruptcy. The problem?

Job creation in environmental or infrastructure projects only lasts as long as the stimulus funds are available.

Solyndra had been heralded by the Obama administration as a prime example of how the Recovery Act could create new jobs while simultaneously promoting the President’s vision of renewable energy. Once a beacon of solar light in the progressive green jobs agenda, the defunct company had received a $535 million federal loan with the help of newly minted energy secretary, Steven Chu, only to find themselves staring down bankruptcy and the release of more than 1,100 workers.

But that massive loan only tells part of the story. Another company has, and continues to benefit, from cronyism, so-called job funding, and your money.

That company is CH2M HILL.

CH2M HILL is a $6.3 billion consulting, engineering, and construction firm with nine business groups in over 80 countries. CFO Magazine reports that “the Colorado-based firm is the force behind some of the world’s best-known public-works projects,” including “overseeing the construction of London’s 2012 Olympic venues, the expansion of the Panama Canal, and several of the Environmental Protection Agency’s Superfund cleanup sites.”

The company currently boasts of $1.961 billion in contracts from the Recovery Act, at least $1.36 billion of which was allocated for the Hanford cleanup project.

 The DOE has a long history of funding nuclear clean-up programs, but shelling out $6 billion (more than double the typical allotment) from the stimulus to clean up 18 nuclear sites throughout the country was entering new territory.  Careful measures should have been taken to avoid contractors who had experienced cost overruns, safety violations, delays, or mismanagement of public funds. Yet, in the case of CH2M HILL, the opposite has been true.

An Associated Press investigative report highlighted several past violations committed by CH2M —violations that were committed prior to the stimulus reward, including:

• In 2004, the Energy Department withheld $300,000 from the firm for poor conduct.
• Between 2005 and 2006, the company was fined nearly $400,000 total for the radiological contamination of workers.
• A “major spill” occurred in 2007 that resulted in over $683,000 in both fines and settlements to local agencies.

False claims and paid kickbacks at the Hanford nuclear site between 2003 and 2005 led to a recent settlement in which CH2M HILL agreed to pay the federal government $1.5 million.  In this particular case, two employees made purchases from companies that they or their spouses owned, marked up the costs, and charged the DOE.

How did a company with a sketchy track record such as CH2M HILL become the lucky recipient of an exorbitant amount of taxpayer money? It turns out that certain large companies were collaborating with the Energy Department on how to spend the money, long before a stimulus had even been passed. The Washington Post reported that as far back as December of 2008, “when it became clear that Obama would introduce a huge spending bill to create jobs, Energy Department staff members began meeting with the contractors, including representatives from Bechtel National, CH2M HILL and other large firms” in an effort to begin “shaping their piece of the stimulus.”

House Energy Committee Chairman Fred Upton (R-Mich.) has been investigating White House dealings with the Solyndra loan, citing the administration’s monitoring of the application and loan process, along with the knowledge of a key investor for the company, George Kaiser.  Kaiser is an Oklahoma billionaire, and was a major fundraiser for Barack Obama’s presidential campaign in 2008. The Kaiser connection even caught the eye of the Los Angeles Times when they asked the question point blank—“Is Obama using stimulus funds to reward his political contributors?”

CH2M HILL doesn’t necessarily have a smoking gun contributor like Kaiser. They do, however, have nearly $2 billion in total contracts generated from stimulus funding, which should generate some interest in the company’s finances.

Years 2007-2008 also saw contributions in favor of the Democrats, with Senator Barack Obama himself receiving the most lucrative contributions at over $45,000. ^[24]

One of the more prominent lobbyists CH2M has employed is Matthew Chiller, Senior Federal Affairs Director. Chiller, according to the National Journal, worked as Legislative Director on the staff of four different Democrats, while also serving on the recount committee in 2000 for former Vice President Al Gore. His skills can be seen in a CH2M PowerPoint presentation on how to secure state and federal funding, in which viewers are briefed on congressional earmarks, and given pointers on how to “work the earmark politically.”

Work it, they have.

Of course, collaborating with, cavorting with, and rewarding radicals in the administration certainly doesn’t hurt when trying to secure stimulus funding either—especially when one of those prominent radicals helped in crafting the bill. Phil Kerpin of Americans for Prosperity had confirmed that former Obama ‘Green Energy Czar,’ Van Jones, was on the board of the Apollo Alliance, a group which helped to write the stimulus bill, and a group that Glenn Beck has said “aspires to destroy the U.S. economy by having the federal government fund green jobs scams.”   One particular aspect of the bill was a $60 billion request for green jobs funding, something the Apollo Alliance lobbied for, which was included in the bill the President signed in February.

With millions of dollars having been secured, CH2M clearly outdid themselves on the Solyndra project, building a facility the likes that had never been seen before in the heart of Silicon Valley.  The facility covers 300,000 square feet, ran a price tag of $733 million, and was equated by some to the Taj Mahal. Bloomberg News reported on some of the extravagant amenities—amenities which might surprise for a company using taxpayer funds to maintain operations.

In the wake of several Energy Department scandals it is important to analyze how taxpayer funded projects have developed, and what mistakes were made along the way. It is not a time to rush infrastructure funding in the hopes that temporary jobs will be created in an election year; it is a time to analyze where the funding is going, who is responsible for spending it, and how they will be held accountable for their actions. It is not a time to blindly grant multi-million dollar loans to companies that administration officials know will fail; it is a time to scrutinize the potential use of every dollar so they are not wasted. It is not a time for crony capitalism, but rather a time for competent capitalism.

Perhaps the case of CH2M Hill will serve to remind our government of a commitment to be responsible and restrained with the American people’s money.