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Report: Sandia Labs misused federal contract funds

sandiaSANTA FE, N.M. — Managers at one of the nation’s premier federal laboratories improperly used taxpayer funds to influence members of Congress and other officials as part of an effort to extend the lab’s $2.4 billion management contract, the U.S. Department of Energy’s Office of Inspector General said in a report Wednesday.

A review of documents determined that Sandia National Laboratories formed a team and worked with consultants beginning in 2009 to develop a plan for securing a contract extension without having to go through a competitive process.

That plan called for lobbying Congress, trying to influence key advisers to then-Energy Secretary Steven Chu and reaching out to a former director of the National Nuclear Security Administration and former New Mexico Gov. Bill Richardson, a Democrat who led the Energy Department under the Clinton administration.

One consultant suggested the lab’s message to decision-makers should be that competition was not in the best interest of the government.

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“We believe that the use of federal funds for the development of a plan to influence members of Congress and federal officials to, in essence, prevent competition was inexplicable and unjustified,” the inspector general said in its report.

The use of contract funds for lobbying efforts was a violation of federal codes as well as provisions in the contract itself, according to investigators.

In response to the findings released Wednesday, NNSA Administrator Frank Klotz noted that Sandia already reimbursed the agency more than $226,000 for fees paid to a consulting company run by Heather Wilson, a former New Mexico congresswoman. The payments to Wilson’s company were first outlined by the inspector general last year.

Klotz also said a team will be conducting a review of salaries paid to lab employees and fees paid by the lab to other consultants who participated in the lobbying efforts. NNSA plans to recover the costs that were inappropriate, he said.

Klotz said the agency is committed to ensuring something like this doesn’t happen again.

According to the inspector general, the lab was aware of problems with using federal funds for such purposes. In 2004, Sandia’s own legal counsel said the lab should be careful to avoid even the suspicion that it was helping when it came to matters of management competition.

The documentation reviewed by the inspector general also indicates the lab had taken similar actions and used operating costs to secure contract extensions in 1998 and 2003.

The lab is managed by Sandia Corp., a subsidiary of Lockheed Martin Corp.

“We recognize that LMC, as a for-profit entity, has a corporate interest in the future of the SNL contract,” the inspector general office stated. “However, the use of federal funds to advance that interest through actions designed to encourage a noncompetitive contract extension was, in our view, prohibited by Sandia Corp.’s contract and federal law and regulations.”

The report includes a set of recommendations, and Sandia officials said Wednesday they will continue to cooperate with the inspector general.

“Sandia has had a longstanding and close relationship with the DOE given the nature of our national security mission. Sandia is confident that the company and the DOE will be able to resolve these issues,” the lab said in a statement.

 

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