ABQjournal: DOE To Take Bids for LANL Contract

April 30, 2003

DOE To Take Bids for LANL Contract
By Robert Gehrke
The Associated Press
    WASHINGTON — The Energy Department will take competitive bids for the contract to run Los Alamos National Laboratory for the first time in the nuclear weapons lab's history, after high-profile management breakdowns shook confidence in current management.
    In his announcement Wednesday, Energy Secretary Spencer Abraham recognized the value of the work done by the University of California, which has managed the lab since it was the birthplace of the atom bomb six decades ago. But he said the university bears responsibility for the management failures that have come to light recently.
    "Given that responsibility and the widespread nature of the problems uncovered at Los Alamos, I intend to open the management of Los Alamos to full competition when the contract expires," he said. The contract is due to lapse in September 2005.
    Abraham ordered a review of the contract after two fired lab investigators went public with concerns about misuse of money and lax fraud controls. It also follows other embarrassing episodes, including misplaced hard drives containing classified information and the case of Wen Ho Lee, who was investigated for mishandling nuclear weapons codes and later freed in a plea deal.
    "There has just been a pattern of classified areas that are not properly secured, employees misappropriating equipment and funds, and on and on," said Steven Aftergood, who tracks the lab for the Federation of American Scientists. "It all adds up to a pretty unflattering picture for the university."
    University of California President Richard C. Atkinson said in a statement Wednesday that his "instinct continues to be to compete — and to compete hard" to keep the lab contract.

For more information:
National Nuclear Security Administration
Site includes press release on decision and letter from Secretary Abraham
George P. Nanos statement
Linton F. Brooks statement
Richard C. Atkinson statement
Sen. Jeff Bingaman statement

    "We believe, with every fiber of our institutional being, that continued UC management is in the absolute best interests of the nation's security," Atkinson said.
    Abraham's decision is based on a report prepared by Deputy Energy Secretary Kyle McSlarrow that documented gaping holes in Los Alamos business practices.
    "The fact that there was not greater fraud and theft at Los Alamos is a tribute to the character of the vast majority of men and women working there and not to the efficacy of the management systems in place," McSlarrow wrote.
    McSlarrow's report said that, while the University of California was slow to respond, once it became engaged "its actions were broad, forceful and effective."
    Acting National Nuclear Security Administrator Linton Brooks will be responsible for developing bidding criteria. In an e-mail to Los Alamos employees Wednesday, he assured them current workers will be retained and said he plans to visit the lab on May 6 to answer questions.
    Rep. Ellen Tauscher, D-Calif., said Brooks told her Wednesday the university would be given a fair chance to compete for the contract. "But the unfortunate history of incumbents competing contracts within DOE is abysmal," she said. "Incumbents told to compete contracts always lose."
    Tauscher, whose district includes Lawrence Livermore National Laboratory, said NNSA and the Energy Department must share in the blame for Los Alamos' problems, and unless they make changes, UC's reforms won't matter.
    Other possible bidders include the University of Texas and private contractors such as Lockheed Martin Corp., which manages Sandia National Laboratories for the Energy Department.
    The lab, which occupies a sprawling 43-square mile campus in northern New Mexico, has an annual budget of $1.6 billion and employs about 7,600 people.
    The review of the contract was prompted after reports of financial abuse by several employees, equipment that was missing or unaccounted for, and the firing of two lab investigators who raised concerns about porous management.
    Two lab employees used lab money to buy hunting equipment, sunglasses, television sets, gas barbecues and other merchandise apparently unrelated to their jobs. Another used a lab charge card to try to purchase a customized Ford Mustang.
    The University of California made sweeping changes, firing or reassigning several top lab managers and instituting a series of reforms.
    The latest problems come after the 1999 investigation into Lee, a Taiwanese-born scientist who was imprisoned for nine months while under investigation.
    The next year, two computer hard drives with secret nuclear-related material disappeared, only to turn up later behind a copy machine.