The Department of Energy and the Hanford Environmental Health Foundation have not been able to agree what is owed to Hanford's former occupational medicine contractor, although it's been six months since the contract ended.

The foundation, or HEHF, has complained that the close-out process has taken too long.

DOE has gone through its routine process to determine what is appropriate for the government to pay and what is not, said Colleen French, spokeswoman for DOE's Richland office.

In October, the foundation submitted a final bill to DOE for just under $2 million. It included some previously billed items that DOE had not covered, including severance payments for HEHF employees.

"Despite the desire of both parties to quickly resolve open items, the close-out process has been time-consuming and prolonged," Lee Ashjian, chief executive of HEHF, said in a letter sent to Keith Klein, manager of DOE's Richland office, when the bill was sent.

"Consequently, our ability to discharge our close-out obligations, wind up our business affairs, and distribute our remaining assets for the benefit of the community continues to be impacted," Ashjian wrote in the letter obtained by the Herald.

Net earnings of the nonprofit corporation will be used for charitable purposes in the Tri-Cities, according to the letter.

HEHF was formed to provide occupational medicine services for Hanford and it held the contract for 38 years. It lost the last contract competition, and AdvanceMed took over occupational medicine services in June.

Only a couple of outstanding issues remain, French said.

"We've been working to evaluate their billing based on federal acquisition guidelines," and continuing to discuss issues with HEHF in frequent conversations, she said.

She declined to discuss specifics of the proposed payment, citing procurement regulations.

According to the bill HEHF sent to DOE in October, the largest amount owed was nearly $1.2 million for severance and dismissal payments to 26 employees. Ten were laid off in 2003 and the rest lost their jobs when the contract ended in June.

Some 24 of the employees were owed severance benefits under HEHF's employee benefits policy and the other two had written agreements with HEHF, according to the bill.

HEHF earlier billed DOE for $453,130 in severance payments, which DOE had not allowed.

"DOE's general policy is to leave compensation decisions to the judgment of contractors," according to the explanation included with the bill. "Disallowing severance benefits now is contrary to that policy and unfair to the terminated employees and to HEHF, who would bear the financial burden of disallowed severance payments."

In addition, the bill showed DOE declined to pay other costs submitted in March, including $6,523 for advertisements in the Tri-City Herald, $509 for public relations costs and a $16,040 performance benefit for Ashjian.

Among the issues still to be resolved are reviewing HEHF's rebilling for earlier contested costs and a request that DOE pay bid and proposal costs, French said.

HEHF spent more than $400,000 to prepare a bid for the contract that was instead won by AdvanceMed, according to the bill. That cost was not included in the bill, but HEHF asked DOE to consider paying it.

The bill shows HEHF agreed to pay 27 employees a total of $375,355 in April 2004 as a retention incentive to keep operating during the transition.

"This was done in response to the employment-seeking activity that had already begun among those key employees, due to a high level of insecurity and uncertainty created by announcements by (AdvanceMed) concerning its staffing plans," according to the bill.

HEHF was told not to bill the payments, according to the bill. Retaining employees was important to continue providing medical services and also because HEHF was undergoing a DOE inspector general investigation and another DOE quality assurance investigation, according to the bill explanation.