Firm at center of Hunters Point fraud scandal rewarded with more government work

Tetra Tech, the engineering firm paid more than $250 million by the U.S. Navy to remove radioactive contamination from San Francisco’s Hunters Point has so far escaped any serious punishment, with a $7,000 fine from the U.S. Nuclear Regulatory Commission waived on appeal.

Instead, the company has been rewarded.

Since news of the scandal at the city’s biggest redevelopment project in a century first broke in Curbed SF, Tetra Tech and its investors have enjoyed record stock prices, a valuation fueled by a steady stream of additional work from the very government that sued Tetra Tech EC on Monday for defrauding it.

Tetra Tech EC, the legal entity that worked at Hunters Point, is a wholly owned subsidiary of Tetra Tech, Inc.

In the past two years, Tetra Tech has been awarded more than $1 billion worth of government work, from public agencies including the Department of Defense, USAID, and the U.S. Environmental Protection Agency, despite the fact that a third-party review accepted by the Environmental Protection Agency (EPA) found signs of organized and deliberate fraud in the company’s work dating back more than a decade.

This constant flow of dollars includes the award in 2017—after the Navy had been made aware of serious problems with the Hunters Point project—of a contract to perform more work removing dangerous radioactive pollution at other U.S. military sites.

And on at least one occasion, a Tetra Tech manager and worker involved with the fraud at Hunters Point were transferred to another project to remove radiation from a former Navy site, according to records—this one at a public park in Seattle frequented by children.

That manager, Bill Dougherty, was named as a participant in fraudulent activity in a lawsuit filed Monday by the United States Justice Department seeking more than $800 million in damages from the company.

Dougherty is also a named defendant in a lawsuit filed last summer by residents of the SF Shipyard, a community of more than 300 market-rate condos and townhomes overlooking the dirtiest parts of the shipyard, where Tetra Tech’s troublesome work was done. The project is on indefinite hold after a third-party review accepted by the Environmental Protection Agency (EPA) found signs of organized and deliberate fraud in the company’s work dating back more than a decade.

“We named [Dougherty] in our suit for a reason—he was project manager” at those parcels, said attorney Anne Marie Murphy. “That’s not excusable.”

Both Dougherty and Tetra Tech were named in a separate $27 billion class-action lawsuit filed by Bayview residents who contend that contamination from the shipyard are responsible for a litany of health problems, including cancers and autoimmune problems.

And in a separate development, another company co-founded by Daryl DeLong, a Tetra Tech contractor also involved in the Hunters Point work, was awarded a work order in December to return to Hunters Point and conduct soil removal, according to an interview with his partner—a do-over made necessary by the initial Tetra Tech work in which he participated.

Reached on his cell phone last month, DeLong declined to discuss either his past or future work.

“I’ve read all of your guys’ articles, and the real truth has yet to come out,” said DeLong. He has not responded to further requests for comment.

A Tetra Tech spokeswoman refused to comment to Curbed SF on the company shuffling workers from the beleaguered Hunters Point project to similar projects across the United States, and repeated earlier insistences—contrary to the Navy and EPA’s findings—that the work done in San Francisco is sound.

“Tetra Tech EC is confident that its work at Hunters Point complied with all contractual requirements and that conditions at the site pose no risk to the surrounding community,” spokeswoman Cassandra Sweet wrote in an email. “We want to make it clear that after identifying isolated instances of past employee misconduct at Hunters Point, Tetra Tech EC took corrective measures to prevent any such misconduct from recurring.”

But elected officials and other critics say that this revelation raises legitimate and serious questions about the integrity of other Tetra Tech work elsewhere in the United States.

“The question is whether Hunters Point was isolated, or part of a pattern,” said Jeff Ruch, executive director of Public Employees for Environmental Responsibility, a Washington, DC-based nonprofit that advocates for whistleblowers. “It’s something the Navy should be looking at.”

“As for Tetra Tech, were they acting to please their client?” asked Ruch. “That would explain why they keep getting business.”

A Tetra Tech executive once dismissed questions surrounding a remediation project around a Pennsylvania school by pointing out that nobody who worked there was involved with the San Francisco project.

Nahal Mogharabi, a spokesperson for the EPA, would not say if the agency had any problems or suspected problems with other work performed by Tetra Tech or Tetra Tech employees connected to Hunters Point.

“Questions regarding the Navy’s selection and oversight of its contractors at Hunters Point or at other locations are most appropriately addressed by the Navy,” Mogharabi wrote in an email.

In a brief statement, a Navy spokesman said that there is currently no reason to question other work done elsewhere in the country by Tetra Tech or employees it engaged at Hunters Point.

“Navy health physicists were the first to identify the data falsification by Tetra Tech EC at Hunters Point,” spokesperson Bill Franklin wrote in an email. “According to their reviews, all final data sets for other Navy bases meet the requirements of the project work plans.”

Critics respond that the Navy’s continued relationship with Tetra Tech highlights what they say is a “cozy” and largely unsupervised relationship between the U.S. government and its contractors, which include some of the world’s biggest corporations.

“The people that make the mistakes are rewarded for their mistakes,” said Scott Kovac, research director with New Mexico-based Nuclear Watch, a public-accountability group that focuses on the U.S. nuclear-weapons complex.

In addition to cleanup projects, Tetra Tech is “also in the business of writing environmental impact statements,” Kovac pointed out. These are the findings that often determine whether a cleanup project is necessary.

In late 2017, the company won a contact to determine whether uranium mines on Navajo nation land need to be cleaned up—an expensive undertaking that the company could later bid to do.

The problems with this arrangement are highlighted starkly at Hunters Point, where Tetra Tech presented data to federal, state, and environmental regulators—who accepted the data and released land for development that could still be contaminated with radioactivity based on that data.

Only after whistleblowers accused the company of organized fraud did the Navy conduct a review. That review found widespread problems that had previously escaped notice.

“It sounds like the perfect scam,” said Kovac. “We need to trust the data. If the people can’t trust the data, then we’ve got nothing, really.”

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Taxpayer-funded projects have been central to Tetra Tech’s success, and perhaps no more so than in the months and years since the problems at Hunters Point were first identified.

Tetra Tech’s new military contract, called RADMAC II, was part of more than $2 billion worth of government work that the company secured in 2017.

That year, Tetra Tech also inked deals with the U.S. Army Corps of Engineers, with USAID, and with the United States Environmental Protection Agency, which would later tell the Navy that as much as 97 percent of the work Tetra Tech did at Hunters Point showed signs of fraud.

The government contracts guaranteed the company its “highest quarterly revenue and operating income” in its history, CEO Dan Batrack said in a message to investors.

And with a “record backlog”—work secured from the government but yet to be conducted—the company entered 2018 “stronger than ever,” said Batrack.

Through the end of 2018—after the full extent of the fraud at Hunters Point became public knowledge beginning in January 2018, and after two former contractors with the company pleaded guilty to fraud and were sentenced to prison for their roles in faking the soil cleanup—Tetra Tech announced to its investors another $950 million worth of government work.

Tetra Tech is a large company with more than 10,000 employees and operations throughout the United States and in foreign countries.

Until recently, the company could argue that there was no link between the problems at Hunters Point and its other work.

But sometime before later 2016, when his signature appeared on a document on file with environmental regulators in Washington state, Tetra Tech sent Bill Dougherty, its project manager for much of the work at Hunters Point, to Seattle.

There, Dougherty was responsible for signing off on the removal of radium—a radioactive compound in wide use by the U.S. military during the Cold War for dials and other markers because it glows in the dark—from a former Navy base that’s now a city park.

In Seattle, according to Navy standards, the “release criteria”—the lowest level of radiation acceptable for the site to be cleared for public use—at Magnuson Park was 1.41 picocuries (a measurement of radioactivity) per gram for radium 226.

Buildings in current public use at Magnuson Park, which was cleaned by Tetra Tech, include a recreation center used by schoolchildren.

According to Tetra Tech’s scan, a project where Dougherty was manager, the amount of radium present clocked in at 1.41 picocuries exactly.

In San Francisco, before his transfer to Seattle, Dougherty was a “site manager” for Tetra Tech’s project at Hunters Point.

At the time, Tetra Tech was the Navy’s “prime contractor for radiological work” at the site.

According to documents on file with the state Department of Toxic Substances Control, Dougherty also oversaw much of Tetra Tech’s “time-critical” removal of radioactive contaminated soil, sewer pipes, and buildings at Hunters Point between 2006 and 2015, work in which the Navy says it has “lost confidence.”

“It’s frightening,” said Washington state Representative Gerry Pollett, an attorney who is also executive director of Heart of America Northwest, a nuclear-watchdog group. “Were they motivated to commit the same fraud at Magnuson Park?”

Daryl DeLong, a Tetra Tech contractor at Hunters Point who worked on the parcels that now must be retested by the Navy and was later hired by the company, also worked at the Seattle project beginning in 2013, according to a document.

Dougherty and DeLong were the technical lead and project manager, respectively, for Tetra Tech’s cleanup of Building 351 on Parcel G in Hunters Point.

In 2010, Michael Cohen, then the city’s development director for then-Mayor Gavin Newsom, who is now California governor, argued that Parcel G was clean enough to be transferred for development early.

Parcel G is a rectangular-sized area that was at one point marked for early transfer from the Navy to San Francisco for redevelopment. Building 351 housed lab space for the Naval Radiological Defense Laboratory, a top-secret nuclear-warfare research facility that operated on the shipyard from the 1940s until the late 1960s. The Navy admits that both the building and the surrounding area may be contaminated with cesium, strontium, radium, and thorium, byproducts of nuclear fission that can lead to serious health problems in humans.

According to whistleblowers, the building remains highly radioactive after workers were directed to discard soil samples revealing radioactivity and instead collect samples from other areas to pass the building off as clean, allegations that the Navy and EPA are accepting as sufficient cause to re-test Dougherty and DeLong’s work.

Following Hunters Point, DeLong worked at Navy cleanup projects in both Yorktown, Virginia, and Jacksonville, Florida, according to a copy of his resume and public records on file with the Navy and the NRC.

And in a twist that has left shipyard cleanup project critics astounded, DeLong may also be returning to Hunters Point.

In a telephone interview in December, Victor Letourneaut, DeLong’s partner at his current company, Up-Side Radiological Services LLC, said that the firm is the recipient of a $1 million work order from the Navy to perform soil removal at Parcel G.

Reached briefly on his cell phone, DeLong said that he personally would not be returning to Hunters Point, where his company would be engaged in soil collection and removal rather than scanning.

“Companies that have had any tie with Tetra Tech’s work should have nothing to do with retesting at Hunters Point,” said Anne Marie Murphy, an attorney with litigation firm Cotchett, Pitre, and McCarthy.

Both a review of Tetra Tech’s data conducted by engineering firms hired by the Navy and a subsequent EPA investigation found issue with Tetra Tech work dating as far back as 2006.

As the EPA told the Navy in a September letter, “All prior Tetra Tech EC Inc. radiological data has been called into question and the Navy has stated openly that they can no longer rely on it.”

Though no problems on the scale of Hunters Point have been identified at other Tetra Tech work sites, the company’s continued success with publicly funded contracts baffles environmental and nuclear watchdogs, who so far have seen efforts to have the company removed from public projects, including a $1 billion cleanup of radioactivity at Los Alamos National Laboratory in New Mexico, rejected by the government.

At Hunters Point—where the Navy processed ships returning from above-ground nuclear-weapons tests in the South Pacific and where the Navy ran a top-secret nuclear-research lab between 1946 and 1969—Tetra Tech EC Inc. was one of several companies hired by the Navy to remove radioactive storm and sewer lines, and clean up radioactively contaminated soil and buildings so that the area could be redeveloped into a new neighborhood with more than 10,000 housing units.

According to whistleblowers’ sworn statements, the company began cutting corners once the terms of its contract with the Navy were changed so that the company would be paid only when the work was completed.

Whistleblowers claim that radiation-detecting monitors were shut off or operated too quickly to detect radiation, soil from areas known to be clean were passed off as soil coming from areas known to be contaminated, and large blocks of data were fudged—in some instances allegedly copied-and-pasted.

One whistleblower, former radiation-control technician Anthony Smith, said in a declaration filed with a petition sent to the Nuclear Regulatory Commission seeking the removal of Tetra Tech’s nuclear-materials license that all this fraud was overseen and in some cases initiated by Dougherty, whom the company referred to as one of its “key onsite personnel” on separate documents sent to the NRC.

When Smith expressed concern, he was told, “That’s what Bill Dougherty wants,” by “Tetra Tech HP supervisor Steve Rolfe,” according to filings.

Rolfe was one of two former workers who pleaded guilty to fraud in federal court and were sentenced to prison terms.

“Do you know how much that machine cost to rent for two weeks?” asked Dougherty, according to Smith. “We can’t afford to do that again, get rid of that sample.”

In a telephone interview, former Hunters Point cleanup worker Bert Bowers, whose direct superior at Hunters Point was Dougherty and who worked alongside DeLong—and who says he was fired by Dougherty after he raised concerns about the quality of the work—said it was highly unlikely that Dougherty would have been unaware of any potential fraud at the work site, even if he had not participated in it.

“He was the bottleneck” who would review data before it was submitted to regulators, said Bowers. “Whenever I found irregularities, I would report them to him.”

As for why Dougherty, DeLong, and Tetra Tech would all continue to find work in the radiological remediation field after the disaster at Hunters Point, Bowers could not say.

“I wonder if the Navy thinks they’re bigger than any problem,” he said.

In past statements to the press and the public, Tetra Tech officials have denied any knowledge of or role in any wrongdoing.

However, the EPA, which is responsible for regulating cleanup at Hunters Point, has indicated that the company’s work at the site is not to be trusted.

“The previous soil data collected by Tetra Tech EC Inc. since 2006 at the Hunters Point Naval Shipyard should be viewed with significant uncertainty due to widespread signs of potential falsification, data quality concerns, and extensive allegations from former workers of fraudulent practices,” the EPA said in a March 2018 letter to Navy officials. “Given these factors, none of the previously collected samples or data reported by the Navy’s former contractor TtEC [Tetra Tech] should be considered suitable for decision making at this site and this data should not be used as such.”

Exposure to radioactive materials such as the ones present at Hunters Point can lead to serious health complications, including cancer.

In addition to possible health risks, the EPA has identified eroding public trust as a key problem with Tetra Tech’s work at Hunters Point.

“[T]his issue dominates regulator and public concerns,” the EPA told the Navy in a September 2018 letter. “They show this issue has significantly undermined trust in the Navy, and stakeholders are frustrated by the Navy delays and want more communication and transparency.”

Shipyard critics argue say that the company’s shuttling of key personnel involved in the Hunters Point project from one site to another shows a disregard for these concerns.