Toxic Cleanup May Cost $135 Million : Environment: Lockheed plans to bill taxpayers for work at Burbank Superfund site. Federal report reveals that tab is higher than expected.

A new federal report reveals that taxpayers could end up paying as much as $135 million to repay cleanup expenses by Lockheed Corp. at a Burbank Superfund site and on property owned by the firm.

The report by the General Accounting Office put the cost of the Burbank cleanup at about $219 million, and Lockheed’s share at up to $194 million--figures that far exceed previous estimates.

Because the company plans to bill about 70% of its costs to the Pentagon--reflecting the proportion of sales to the government--the taxpayers’ tab could be $135 million.

The report by the congressional watchdog agency said the total could be reduced by insurance payments or if more companies are found to have contributed to the pollution.

A spokesman for Lockheed--which developed the cost estimates for the GAO--declined comment Friday. “We can’t comment at this time on a report that we haven’t seen,” said Robert Slayman, director of news and information at Lockheed’s headquarters in Calabasas.

The GAO report, which also focused on Superfund cleanups by Aerojet-General Corp. near Sacramento and Boeing Co. in Washington state, is the second to be issued as part of an investigation of Defense Department reimbursement for contractors’ cleanup costs.

The earlier report, issued in July, found that Pentagon officials were unable to estimate past or future costs of paying contractors’ cleanup expenses.

The probe, requested last January by Rep. John Conyers Jr. (D-Mich.), chairman of the House Government Operations Committee, and by Rep. Barbara Boxer (D-Greenbrae), a candidate for U.S. Senate, resulted in part from a report by The Times last November that the Defense Department was becoming a key underwriter of Superfund cleanups without public debate or congressional scrutiny.

Conyers, who attacked the reimbursements as “secret bailouts” that could easily mount into the billions of dollars, said in a prepared statement that the latest report confirms his fear that “no one is really minding the store.”

Defense Department officials could not be reached for comment.

The report analyzed four Superfund sites where the three contractors are liable for cleanup: Aerojet General’s Rancho Cordoba manufacturing complex, two disposal sites formerly used by Boeing, and the Burbank Superfund site, part of a vast area of the San Fernando Valley plagued by ground-water pollution.

The report found that the government has reimbursed the three contractors about $50 million and that potential payments at the four sites alone could be “many hundreds of millions of dollars.”

“These costs--at only four of the hundreds of major cleanup sites--are just the tip of the iceberg,” Conyers said.

Since big defense contractors have been found liable for pollution at many of the country’s 1,200 Superfund sites, critics say the policy could turn Superfund from a program funded by private polluters to a giant fiscal burden for the government. Opponents say it also reduces polluters’ incentives to clean up their act.

There are no laws or regulations on cleanup costs incurred by government contractors. However, many contractors have been reimbursed under a provision of the Federal Acquisition Regulation that calls on the government to reimburse costs that are “reasonable” and “ordinary and necessary to the contractor’s business.”

This has been interpreted to include environmental cleanups, which are billed as overhead expenses in government contracts.

In defense of the policy, contractors and Pentagon officials have said that non-defense businesses also pass on costs to their customers. They say defense contractors--whose customer is the government--are merely doing the same thing.

Ground water in Burbank is polluted by chemical solvents, at least partly because of chemical use and spillage at Lockheed’s giant aviation and defense works, which the firm is planning to sell off.

A federal judge last March approved a consent decree with the Environmental Protection Agency in which Lockheed agreed to fund the lion’s share of the Burbank ground-water cleanup.

However, defense officials had forged a tentative agreement with Lockheed to repay its cleanup costs, minus insurance payments or contributions from other polluters.

In its 1991 annual report, Lockheed estimated its costs under the consent decree at $125 million--a record estimate at the time.

But that included only the cost of pumping and treating tainted ground water as provided in the consent decree. The $194 million includes the additional cost of removing chemically tainted soil on Lockheed’s property, the GAO said.

Although Aerojet and Boeing between them have received about $50 million, the report said Lockheed has not been reimbursed for work in Burbank, which is in the start-up phase.

It said the company is expected to submit its first claim for $9 million by the end of this year, and will seek reimbursement of about $6 million, or 70%. The report also said Lockheed last month began negotiations with its insurers aimed at recovering part of the expense.

The report said reimbursement decisions are made by local contracting officers who lack a uniform approach. For example, it said, contractors are not supposed to be reimbursed if pollution arose from law violations or deliberate misconduct. But it said efforts by contracting officers to determine the circumstances of the pollution “varied widely,” from extensive research to none.

Although Lockheed said “it complied with then-existing environmental laws and regulations,” the GAO said the contracting officer assigned to the firm “did not independently investigate” this claim.

The report also said that some contractors, including Boeing, have been paid a fee--or profit--on top of cleanup reimbursements because of the way the contracts were written.