Free Statement of Facts - District Court of Federal Claims - federal

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EXHIBIT 40

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The Secretary of Energy Washington, DC 20585

June 15. 1989

Mr. Donald R. Beall Chairman and Chief Executive Officer Rockwell International COrporation 2230 East Imperial Highway E1 Segundo, California 90245 Dear Mr. Beall:

I write to bring to your attention several serious concerns about Rookwell's management and operation the Department's Rocky Flats Plant in Colorado.

of

As you are probably aware, a special departmental~team, headed by the Deputy Secretary of Energy, visited the Rocky Flats-Plant in conjunction with the Department of Justice's ongoing criminal investigation of potential violations of environmental laws .at that facility. The points made in this lett~r.~are not intended to intimate any position on the legal merits of any claims of liabilitybased on past actions, but instead are made to emphasize several points that I believe must be clearly understood in the current management and operation of that facility. I cannot over-emphasize the necessity for individuals at every level to understand completely the need to adopt and adhere to a new culture of professionalism in operating the Rocky Flats Plant. In particular, I emphasize what I be~he..truism that there cannot be any su~6r-~~fO~'~mpllance with environmental, safetyand health requirements to our production missions. Simply stated, we are not in a position to produce at all unless and until we are in a position to meet all environmental, safety and health requirements. In this connection, I know that you and I share the view that any surreptitious actions evading wellunderstood limitations or requirements contained in permits, compliance agreements and other manifestations of the environmental laws cannot be tolerated. Specifically, if any instances of intentional discharges either in excess of, or not sanctioned by, applicable envirom~ental permits or compliance

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2

agreements were to occur, we should both consider that wholly inconsistent with th~ obligations placed on Rockwell by its contract with the Department to operate this facility. The same can be said of any conduct in which any incinerator, designed and constructed for the purpose of reclaiming special nuclear material, were instead used intentionally as an expedient meens for disposal of hazardous waste, a function for which such incinerators are neither designed nor permitted to carryout. The reports that I have received from the departmental team make me uncertain whether these basic principles are sufficiently understood throughout the entire workforce devoted to managing and operating the Rocky Flats Plant. I believe there is a need to enhance our level of confidence that the ground rules ~rewell understood, and that~they will be complied with. Accordingly, I request that Rockwell, pursuant to the requirements imposed upon it by its contract with the Department, prepsre and submit to the Department within 60 days a comprehensive plan that will indicate concisely, but clearly and in particuler, how Rockwell will provide a satisfactory level of assurance that management shortcomings of the types described above will not occur. In all fairness, I must tell you that I am not at all satisfied with the Department of Energy's performance in carrying out its oversight responsibilities in proper operation of the Rocky Flats Plant. As a consequence, I have effected significant management changes there and expect that others will follow after my t~m completes its review. Your personal attention to this cooperation are appreciated. matter and Rockwell's

Sincerely,

~

Admiral,

U.S.

Navy

(Retired)

Mr. Dominick Jo Sanchini President, Aerospace Operations Rockwell International Corporation Rocky Flats Plant

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EXHIBIT 41

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Copyright(c) 19B9 The Neu York Times Company; The Neu York Times June 17, 1989, Saturday, Late Edition -Flnal SECTION:Section I; Page 8, Column I; NationalDesk LENGTH: 700 words HEADLINE: U.S. Suspends Bonuses to Operator of Rocky Flats Plutonium BYLINE: By MATTHEW L. WALD, 5peclal to The Neu York Times DATELINE:DENVER, June BODY: The Departmentof Energy said today that It uas ~locklngthe payment of contract bonuses to the operator of the troubled Rocky Flats plutonium plant, pending the outcome of a Federal investigation violationsof pollutionlaws. of Ab6Ut 90 agents of the Federal B~reau of Investigation and the Environmental Protect~on-Agency contlnueda search at the plant for evidenceof felony violations,Includingthe surreptitious burning of radloactiYeand possibly chemicalwastes and the illegal dumping of other materialsinto drlnklngwater. Plant

~i

" Henson Moore, the Deputy Energy Secretary,~ald this afternoonthat his rtment was suspendingbonus paymentsfor good performance the company, by Rockwell InternationalCorporation,for the period from Sept. I, 19BB, to h ~I, 19~9. He estimatedthe bonuses for that period at as much as ~4 ion to $5 million.

Hr. Moore appearedat the ColoradoCapitol with Boy. Roy Romer to describea new agreementon environmental monitoringbetween Washingtonand the 5tare. The agreementprovidesFor the departmentto give the state a thoroughdescription of all waste strea~s from the plant, somethingit ~as supposedto have done three years ago, and providesmoney to begin a study of the hea~th effects of the operationof the plant, which is IB miles northwestof here. Study on Radiation The agreementannouncedtoday mould provide S700,O00in the first year. Experts say that the study, uhlch uo~id try to reccmstruct the doses of raOlatlon that could have been received by neighbors since operations began 19~3, and trace the health effects, would cost millions of dollars. Mr. Moore also said the department ~ould bring in a team of outside-experts to determine uhether precautionsat Rocky Flats are adequate to prevent an accidental nuclear reaction. The Environmental Protection Agency, studying laboratoryreports of radioactivematerialin the ground uater at the plant, has said that further analysis~s needed to determineuhether such a reactionhas occurredthere. Such a reactioncoul~ result If a certain amount of radioactive BaterlalIs brought togetheraccidentally. T~o reactionsof that type occurred in the 1970'5 at the Hartfordbomb plant near RIchland,~h.

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(c) 1987 The New York Times, dune 17, I787 The Governordescribedthe agreementas a maJo~ step to provide independent tnformatlonon pollutionat the plant. Mr. Moore alternatedbetween describing his agency as turning over a new leaf, and re~surlng the public that the plant had been run without creating health risk. He called the agreement "an addendum or an addition to the existing agreementwe have with the State of Colorado" that would allow public assurance''that we're operatingthls plant In full conformitywith all the state and Federal health, environmentand safety laws.'' The agreementbetween the State and the Departmentof Energy al~o provides for the instaliationof continuouselectronicmonitoringdevices on SmOkestacks at the plant. I~onitoringof P~nt Mr. Romer said the plan includes "every reasonablestep ue could think of'' to monitor the plant. It calls for the Departmentof Energy to drill 50 new ~ells this year to monitor ground water pollution,build an undergrounddam to stop the spread of some materials,Identifyall toxic and ra~loactiveemissions, grant access without prior arrangements state officialswith a security to c!earanc~and provide the state with daily logs of materialsIncinerated, a~ong other steps. Asked at a news conferencehow this agreementdlffer~dfro~ previouspromises ~y the departmentto comply with applicablelaws and assertionsthat it was doing SO, Mr. Moore said, ''We're running the plant now.'' The department stressed compliance with environmentalla~s to Rockwell, in a letter dated June ~5 from James D. Watklns,the Energy ~ecretary,to Donald R. Beall, the chairman. The letter asserted: "We are not in a position to produce .at all unless and untll we are in a positionto meet all environmental, safety and health requirements.''The letter asked Rockwell to provide a plan w~th~n I~0 days on how it would avoid ''management shortcomings'' that would allow violationsof environmental permits. SUBJECT:ATOMIC WEAPONS~ PLUTONIUM;NUCLEAR WASTES ORGANIZATION:ROCKY FLATS NUCLEAR WEAPON5 PLANT (DENVER)~ ENERGY, DEPARTMENT OF; ROCKWELL INTERNATIONAL CORP NAME:WALD, MATTHEW L

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EXHIBIT 42

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The Deputy Secretary'of-Energy Washington. DC 20585

June 20, 1989

Mr. Sam Iacobellis President, Aerospace Operations Rockwell International Corporation 2230 East Imperial Highway E1 Segundo, California. 90245 Dear Mr. Iacobellls:

This letter will confirm our conversation of las~ ~eek regarding the status of the Department's determination of Rockwell's award fee for the most recent completed evaluation period under Rockwell's contract with the Department to. manage and operate the Rocky Flats Plant. As I mentioned during our conversation, the final determination has been suspended pending receip~ bythe ........ L ~ .......... Secretary of the report~of the special departmental ....... team that he dispatched to Rocky Flats. I anticipate that this reportwill have been rendered in sufficient ~time so that the Department may make its determination on Rockwell's award fee in approximately two to three weeks. I am sure you understand our need to review with care, and the Department will make its determination as promptly as possible. Sincerely, this matter

W. Henson

Moore

E 001524

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EXHIBIT 43

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bcc: ~-. H. Harff S. F. lacobellls R. R. Mau J. A. McDivitt D. J. Sanchlni

June 28, 1989

Admiral James D. Watkins The Secretary of Energy Washington, D. C. 20686 Dear Admiral Wstklns:

eoth Sam iaccbellls and I sincerely appreciate the candid and constructive discussions we had with you, Deputy Secretary Moore and your associates last Friday. You made it clear that there is much to be done to achieve the necessary credibillty for both the Department of Energy's and its contractors' commitment to safety, health and protection Of the environment. You also made it clear that the new culture you have announced is necessary to assure the support of both the public and the Congress for this nation's vital weapons programs. Sam Iacobellls and I will personal1~ see to it that our people fully understand and implement that new culture. That culture will make it clear that production is only possible consistent with a high level of safety, health and environmental protection. Since our meeting, we have considered the comments you and others made regarding the need for heightened personnel management of the Rocky Flats Plant, includlng the need for improved procedures, training, supervision and discipline throughout the Plant. As we said Friday and in further discussions with Deputy Secretary Moore, we believe we have a strong management team in place at Rocky. Flats. This team is made up of thirteen senior managers who have s total of 187 mau years of nuclear experience a~d i00 man years of experience at Rocky Flats, It is our judgment that this team now understands and will support the new culture expected in the management of nuclear weapons facilltles and will be dedicated and committed to assuring that it Is equally understood and supported throughout the Rocky Flats Plant.

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Admiral James D. Watklns June 28, 1989

-~m,

~sge 2

Rockwell Interna~onal

We are assessing additlonal functionsthat should be added to heighten the focus on procedures, training and supervisien in the safety, health snd environmental protection areas and will select further managers for those new positions. Sam Isoobellls and I are also taking the following three immediate steps to address the issues we discussed: 1. appointing an overview board to review monthly Rocky Flats Plant's performance in meeting its new objectives;

2. appointing a task force to undertake i~edlately an assessment Of the procedures an~ practices in environmental compliance and waste management; 3. initiating bl-weekly management reports Plant of the type you suggested. at the Rocky Flats

The charter of the overview board is attached as Appendix A. The initial members Of that hoard are identified in Appendix B. Regular senior management review was e particularly effective-means of assuring the broadest availability of resources and management oversight to support psrfo~msn¢e on such national efforts as the Specs Shuttle. I believe this new hoar~ will provide similar assurance in our ongolng-management of the Rocky Flats Plant. The charter of the designated task force is attached'as Appendix Co The members of the task force, which will be chaired ~2 Dr. D. C. Gibbs who has significant nuclear Navy sxperisncm, are identified in Appendix D. The hi-weekly management reports will Include assessments of steps being taken to improve Plant management; identification of problems and descriptions of corrective action plans. The reports will also include, as you suggested,'candld evaluations of the Department of Energy actions necessary for us to do a superior job. Copies of these repo~ts will be furnished to the overview boar~ to each of our senior Rocky Flats managers, and to you via the 10ca1 DOE office. We believe these reports can be a consbru~tlve part of our management proces s.

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AdmiEal~James D. Watklne June 28, 190% Page 3

Rockwell

Intemaaonal

As we undertake the necessary measures to introduce and inculcate the new culture which you intend, wa believe it is most important that we have the support of the more than 5,000 employees st ~he Rocky F1ats Plant. They have confidence in our leadership and we must and can build on that confidence. We will work closely with the new people you are assigning to make the ~aw culture happen. Ssm iacohe111s and Ilook forward to a furthe~ maetlng with you after you have had an opportunity to evaluate the positive s~eps we will be undertaking, as wall as the action plan we are preparing in accordance with your request of June 15. Thank you sgsin for the Opportunity to meet with you and your associates. Sincerely,

D. R. Seall Enclosures

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Organization

APPEHDZX A CORHITTEE CHARTER 16 NO, 3une 27, 1989 Replaces: None

~

Rockwell International

CORPORATE FLATS ROCKY OVERVZEW BOARO The Corporate Rocky Plats Overv~eu Board ~s established to enhance sen~or Rock~e11management v~stb~llty into all aspects of the Rocky Flats Plant. The Board ulll focus on key issues of an operations1 nature, ~ncludlng but not 11m~tedto safety, health, env'~ronmental and ueste management utl1 assure and the application of Co~,~ny-wJde resources as required. ~cons~sts of the foll~ng:

S. F, ZacobellJs (ChaJ~n) R. R. E. D. C. G, 6. R, T. H. Bohlen, Senlo~ V~cePresident --Operations, Corporate L. Catted, SonJo~Vice President -- Research& Engineering, Corporate A. Center, V~cePresident -- AntespaceOperations Suppor~, Corporate C. Gibbs, DJvJslon 01~ector -- Attics International H. Harff, Sen~o~ Vice President & General Counsel, Corporate (Secretary) H, ~e~Fs, Executive V~cePresident For Strategic Defense & Technology, Corporate B, Ner~ck, V~ceP~es~dent-- AerospaceTechnologies, Corporate Re~se~ebe~, D1recto~ -- Env~ron~ntal Control, Corporate O. S~ra11, V~ce President -- Aerospace H~n Resources, Corporate

~-OFFICIORERBER= O, R. Bee11, Ch~l~n o~ the Board ~ ~11 be he]d ~nthly, or as called b~ the Chal~n as necessary carr~ out the responsibilities of the Board. RESPONS[B%L%TEE5 8oard are to: of the 1, 5~rw as a revt~ and ~dvtsor~ bod~ on ~or Rock~ F~ats operational Issues. 2. 3, 4. 5. Rev~e~ the Rocky Flats Plant safety, health, envlron~ntal and ~aste ~nage~nt plans, progress, and ~ssues. Identlf~ ~nd rev1~ specla~ lte~ of concern. to

Revt~ p~esenta~onsby Rocky Flats ~nage~nt, task teams, and 8oard H~e~s, as appropriate. Establish woPLlnggroups/task teams as required to address specific ~tters.

P~oposedagenda 1tome ut1~ be submitted to the Secretary ~o ~11 coordinate them ~th the 8oard Chatr~n for ~ev~and approval. The Secretary w~11~ssue the approvedagenda.

Cha!r~n of the 8o~rd

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APPENDIX B

ROCKY FLATS OVERV]EW - HINZ-RESURES" ~OARp R.S. -Aero; NGA~ 15 yrs. Aerospace experience In Systems Engineering and Oes]gn Analys~s; 3 yrs. on Corporate Developmentstaff; General Hanager for ]0 years. Broad-gauGed bustness executive with technical orientation; excellent understanding of technical systems and processes; penetrating and analytical mind-set; 8ockuell Corporate Sentor Vtce President responsible for Rock.ellis production operatlons and environmental activities across the board. 8.S. - Electrical Engineering; 39 years experience facets of Glectroolcs and Aerospace Engineering. The Chtef Technology Offtcer of the Corporation; In-depth knew]edge the technical resources of the Corporation that can be brought to bear on any lsSUeoHember the Defense Science Board. of Or. - Environmental Engineering; 23 years experience envtronn~ntel n~nage~eet with GuSf 011, Xerox. and Serves as Rock~l]~s top Envlron~ntal Executive. R.S. - Aeronautical Engineering. 42 ~ears experience Aerospace and nuclear energy. Fe]lo~ - ~rlcan Institute o~ Aeronautics and Astronautics. ~lde]~ recognized executive for extenslve contributions to the englneerlng and scientific c~n~t~ and as one of the chle~ architects of ~rtca's Space Progr~. Censure ~nager of co~lex systems and processes. Served as Progr~ Vice President ~or the Apollo Program; Vice President & Program ~nager of the Space Shut~le Program; and President of Roc~ll's Space Division. In addition, Hr. ~s rezponslb]e for the overall ~nage~nt of ~ock~ll's energ~ actlvttles~ Including H~nford, Rock~ Flats, ETEC, and Atomtcs Internatlonal 01vision. Currentl~ Roc~ue]]*s Executive Vtce President ~or Strategic Defense& Technology. H.S. - Engineering Science'S, U.S. N~val Academy; Ph.O - Huclear Engr'g. ~ava] Acad~ p~us 7 years utth U.S. Naval Huclear Progr~. As statton engineer £or Hetropo~lt~n Edlson Colony, ~s responsible £or the construction of ¯ nuclear reactor F~ct~tt~ at the Three-Htle Island nuclear po~er station. As a U.S. nave] o~tcer and chief engtneer on a nuclear sub.fine, ~as a nucte~r po~er plant operator. As ~n engineering duty offtcer uas responsible ~or the p]ant qualification o~ over 500 enlisted and oFF~cer trainees. Sktlls In ~nagtng l~rge, ~Itt-dtsclp]tne organizations; h~ghly ~ttvated, disciplined approaches to program Issues; effective, technically d~ndlng executive. Served as Genera] Hanager Director of AdwncedNucSe~r Po~r Generation ~or EPR[, Served as 01rector of the Basalt ~aste Isolation Pro~ect at Ha~£ord. Currently. Dlvlston Dlrector -- Atomtcs International For Rockue11.

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H,S. - Aeronautical Engineering, 40 years Aerospaceexperience tn rn~nagtng ~a3or space sys~e(ns. Served as Chief Program Engineer for ~he Apollo Prograra and served as Preslden~ of

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Organization

APPENDIX C TASK TEA~CHARTER 3 NO. June 27, ~989 Replaces: None

~

RocloNell IntemBtional

~conststs

of

the

folloulng:

O. C. Stbbs (Chairman)

R. Retsen~eber (Secretary)

and dlsposal of

President

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APPENDIX 0 ~(N[-RE$~fiE$ R~¢NYFLATSTASK ~ -~.$. - [nglneer~ng Sciences, U.5. Naval Academy;Ph.D -Nuc]ear ENgr'g, ~ava] Academy,plus seven years ~t~h U.$. ~eva] Nu~ear

oF~]cer was responsible For the plant qualification

of over 500

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R,S, - Aeronautical Engineering, 40 years Aerospeceexperience tn m~naglng major space systems, Served as Chtef Program Engineer for the Apollo Program and served as President OF ~ock~e11's Space 01vision. GeorgeIs currently Vtce President - Aerospace Technologies on the Corporate StaFF, He ts a systemic ~htnklng execuLlve who Is ~ell grounded tn Lhe Intricacies oF manegtngma~o£ complex systems. and

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EXHIBIT 44

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The Deputy Secretary of Energy
Washington, DC 20585 July 14, 1989

M~MORANDUM FROM: SUBJECT:

FOR:

The W.

File Henson Moore~J~ Flats _

Rockwell/Rocky

I called Sam lacobellis, President of Rockwell, on July 13th. I informed him that the request in Admiral ~ Watkins letter to Don Beall of June 15, 1989, that we were expecting a comprehensive plan in writing within 60 days from Rockwell was still expected by us. This request by Admiral Watkins had been acknowledged in the June 28th letter to the Admiral from Beall. Iacobellis again acknowledged this request and said we would be receiving that written comprehensive plan. He indicated they fully intend to comply with the June 15th letter from the Admiral. I also informed Iacobellis the pending ~ward~fe~ determination Iacobelli~agreed ~0 t~delay. cc: Secretary watkins that we were going to delay until sometime in August.

II!

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EXHIBIT 45

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1 2 3 4

UNITED STATES COURT OF FEDERAL CLAIMS

Roclc~vellInternational Corporation ) Plaintiff, )

)

)
6 7 8 9 10 I1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SIMS, SCHNEIDER& ASSOCIATES CERTIYlED SHORTHANDREPORTERS 149 PALOS VERDES BOULEVARD SUITE C REDONDO BEACH, CALIYORNIA 90277 (310) 791-4466 Reported by: Arthur M. Schneider CSRNo.4771 lacobellis, Sam 7/19/1994 (Claim) Page 1 Deposition of SamIacobellis July i9, 1994 vs. ) No. 91-1362 ) United States of America,

)

)
Defendant. )

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the phonecalls. Q Whodo you lcnow John Tuck to be? A Someonein the Washington office of the DOE. MR.KOLAR: would like to mark this as I Exhibit 111. (The above-mentioned document was markedfor identification by the Certified Shorthand Reporter, and is attached hereto.) BY MR. KOLAR: Q Exhibit I 11 is Mr. Moore's report of a telephoneconversation that he initiated to you on July 13. Do you recall that conversation? A I don't recall a conversation. Q Do you recall Mr. Moore at any time informing you that Departmentof Energy was delaying the pending award fee determination until August? A I recall upon reflection and relYeshingyesterday, that such a call did take place. Q A Whatwas said during that call? That the awardfee was going to be

delayed. I don't recall howlong or -O Do you re~all l~o~-~ou ~-espon-d~d (~ 994 (Claim)

Page 28

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that information? A Q A Q I acknowledged. Did you acquiesce or agree? Yes. Let's go ahead and markthis as

Exhibit 112. (The above-mentioned docoment was markedfor identification by the Certified ShorthandReporter, and is attached hereto.) BY MR. KOLAR: Q Before you look at that document, Mr. Iacobellis, going backto the conversation you just testified to, wasthat a conversation betweenyou and Mr. Moore, Henson Moore, and who were the participants in that conversation? A Under the nature of the previous question, I assumeit was Mr. Moore.I have no reason to believe it was not Mr. Moore.I have no recollection of anybodyelse being on the phone call. Q Whydon't you go ahead then and peruse Exhibit 112. A (Witness complies.) 0 I think if~ou l(;ok-~} th~ first 7/19/1994 (Claim)

Page 29

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conditions? A I don't recall. Wasthe next one -I am asking you. Wasthe next one the phonecall bet~veen Watkins and BealI? Q To tell you the truth, I am not sure whether there weren't others, but let mesimply ask you, do you have any recollection of Admiral Watkins telling Rockwell that he ~vouldterminate Rocb,vell if Rockwell suspended operations? A No. MR.KOLAR: me have a couple minutes to Let review what we have done so far, and I will be able to tell you. I maynot have any additional questions. MR.NEY:Whydon't we take a five-minute break. (Short recess). BY MR. KOLAR: Q I just have a couple summary questions, and I will be through. Do you have any recollection, Mr. Iacobellis, of discussing at any time in this period from June 1989 to September 1989, award fees with the Departmentof Energy? A Yes. Only to the extent in line with whatI already testified, tl:,at Zandrefre~]~ ~.,j 1994(Claim) Page 60

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memory with these letters,

that HensonMooreasked

or told me or suggested that wewould-- he was asking for a delay in the detem~inations.That's the extent of what I remember. Q That's all you remember? 6 7 8 9 10 11 12 I3 14 15 16 17 18 19 20 21 22 23 24 25 Iacobellis, Sam 7/19/1994 (Claim) Page 61 A Yes. Q I think you indicated earlier you agreedto that; is that correct? A Yes. MR.KOLAR:don't have anything else at I this time. MR.NEY: Wehave no questions.