Report: Federal Helium Program Full of Hot Air
"Washington Watchdogs," a periodic feature of the Post's Investigations blog, looks at the findings of the federal government's official investigators.
The federal government, the chief supplier of the nation's crude helium, has entered into sweetheart deals with a group of private refiners, potentially costing taxpayers more than $100 million, according to an inspector general's report (PDF) released this week by the Department of Interior.
The report faulted the Bureau of Land Management's Amarillo field office for making improper deals with four refiners mining a crude helium pipeline stretching from a field northwest of Amarillo, Tex., to central Kansas. The refiners -- operating behind a private shell company formed in July 2000 -- negotiated huge profits by overcharging for construction equipment construction, the report found. Investigators said the arrangement could have more than doubled the government's equipment costs by the time the contracts expire in 2015.
The report didn't name the private company involved in those agreements, but Bureau of Land Management and Department of Interior officials confirmed today that Amarillo-based Cliffside Refiners L.P. was the subject of the investigation.
The Inspector General's office said it began investigating the helium deals after whistleblower flagged a "less-than-arms-length relationship" between government workers in the Amarillo field office and helium contractors. Helium is a key ingredient in federal space shuttle operations and weapons development programs.
According to the report, a former Amarillo field office manager said the bureau agreed to the deals in violation of contracting and procurement rules "because it did not want to fight the refiners," who had lobbied Congress on behalf of a 1996 law privatizing helium refinement and production. The report blamed the violations in part on a lack of oversight by the bureau's New Mexico office and Fluid Minerals Division.
Tony Herrell, deputy state director of the New Mexico office, said his office was taking the report "very seriously," but cautioned that the findings had not been independently substantiated yet.
"We want to bring in a team of experts in contracting and agreements to do a thorough review so we can do the right thing," Herrell said. "We realize after the initial reading that they've done their investigation but have not done the verification."
Herrell noted that the agreements with Cliffside Refiners is based off of an existing anti-trust law and that it has been "mutually beneficial" for the government and the company, which has a limited partnership in Delaware, a tax haven for many private firms.
By Derek Kravitz |
August 21, 2008; 5:31 PM ET
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