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Sandia contract extended two years

ALBUQUERQUE, N.M. — The National Nuclear Security Administration has delayed for at least another two years a competition for the contract to manage Sandia National Laboratories.

The agency announced Monday that it will keep defense giant Lockheed Martin on the job, extending its current contract for two years with a third year possible. The move comes as the agency is in the midst of a major review of how to approach the contracts for managing its three large nuclear weapons laboratories.

With Lockheed Martin’s current contract set to expire at the end of this month, an extension of some sort had been widely expected. In a memo to Sandia staff, labs President Paul Hommert called Monday’s announcement “a positive development that offers stability for the Labs and the workforce.”

The move will allow time to consider the results of a number of congressionally mandated studies underway regarding how to manage the agency’s national laboratories, agency spokeswoman Keri Fulton said in a statement announcing the move.

Headquartered at Kirtland Air Force Base, Sandia is one of the Albuquerque metro area’s largest employers, with 10,900 people on its current payroll and an annual budget of $2.6 billion. Sandia’s primary task is research, development and maintenance of U.S. nuclear weapons, but in the past decade its workload has broadened to include a range of other missions, including a growing amount of work for the Department of Defense and U.S. intelligence agencies.

Lockheed Martin and its predecessor company, Martin Marietta, have managed Sandia since 1993. As is the case with many federal research centers, the government owns the nuclear labs and pays a private company or nonprofit organization to manage them.

In December 2011, the NNSA announced that, after nearly two decades of Lockheed Martin/Martin Marietta management, it wanted for just the second time in Sandia’s history to put the contract out for bid.

But the bidding process was repeatedly delayed, in part because of an intense internal agency discussion about how to best approach the structure of lab management contracts, said Tyler Przybylek, former chief counsel to the National Nuclear Security Administration, who now serves on one of a number of oversight panels helping the agency think about the problem.

For most of the history of the nuclear weapons program, the labs were managed by entities that did the job for little money as a national service – the University of California in the case of Los Alamos and Lawrence Livermore labs and AT&T in the case of Sandia. The 1993 bidding competition for the Sandia management contract, won by Martin Marietta, marked the first step toward a more privatized model.

That move accelerated in the 2000s, when teams led by industrial giant Bechtel and the University of California won both the Los Alamos and Livermore contract, with higher management fees and financial incentive packages as part of the bargain.

Under the current contracts, Lockheed Martin earned $25.9 million last year for managing Sandia. The Bechtel-UC Livermore partnership managing Livermore earned $41.3 million, while the Los Alamos corporate management team earned $59.3 million.

Despite Lockheed Martin’s lower fee, “Sandia is still the best run of the three labs,” Przybylek said.

Within the federal agency, there is a growing sense that the privatization has not been the success originally hoped, Przybylek said.

“There’s a lot of conversation about – well, I just call it ‘the good old days,’ ” he said.


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