Los Alamos Job Opened to Bidding

Citing “systemic management failures” by the University of California, the U.S. Energy Department announced Wednesday that it will for the first time hold an open competition for the contract to run Los Alamos National Laboratory when the university’s current deal expires in 2005.

But Energy Secretary Spencer Abraham said he has decided not to break UC’s contract immediately, because it could cause significant disruption at the nation’s premier nuclear weapons design center. Also, he said the university has taken “vigorous action” since December to correct its management and business failings.

The decision follows months of allegations and revelations of theft, fraud, security lapses and lax oversight at the New Mexico laboratory, which UC has managed -- without competition -- since the dawn of the nuclear age.

And it left some experts wondering if there were many other institutions able and willing -- whether alone or jointly -- to offer themselves as alternatives to run the sprawling lab.

“On the up side for a university, there is prestige and an intellectual broadening of the faculty and student body,” said Charles Herzfeld, a defense consultant and former chairman of the Pentagon’s nuclear weapons council. “The downside is: It is a lot of trouble with a huge amount of paperwork.”

UC President Richard Atkinson, while disappointed, said in a statement Wednesday that he appreciated Abraham’s decision not to sever the current contract and that he wants the university to compete for the next one.

But Atkinson, who will step down as president of the public university system this fall, said he questions whether the university should enter a competitive bidding process for the lab it has managed exclusively for the government since 1943.

“We believe, with every fiber of our institutional being, that continued UC management is in the absolute best interests of the nation’s security,” he said. “However, there is another question at stake -- and that is whether the university should compete. The answer to that is less clear.”

He and other UC officials said that the decision ultimately will be up to the UC regents but that they are concerned about the potential costs -- estimated at millions of dollars -- and expertise needed to compete for the contract.

Atkinson was en route Wednesday to Washington, where he is scheduled to testify today at a congressional hearing on Los Alamos. He could not be reached for further comment.

Abraham’s decision follows a series of embarrassing revelations about lax business practices, credit card abuse and equipment theft at Los Alamos. The problems flared into public view last fall after two investigators, Glenn Walp and Steven Doran, who had been hired by the lab to look into the allegations, were fired and went public with claims that the dismissals were part of a cover-up.

Since then, in one report after another, Los Alamos and the university have been criticized for an employee purchasing scheme resulting in theft of $300,000, a failure to account for $1.3-million worth of equipment, from computers to a forklift, and the mishandling of plutonium, among other issues.

The lab’s reputation had been sullied earlier by other lapses, including the indictment in 1999 of scientist Wen Ho Lee on a security violation and the mysterious disappearance the next year of two classified computer hard drives. The drives later turned up behind a copy machine. Lee, who was accused of leaking nuclear secrets to China, pleaded guilty to a count of mishandling nuclear data.

But the report also said that the National Nuclear Security Administration, which oversees the lab for the Energy Department, bore some responsibility.

“There is no question that we should have detected these problems, the systemic issues, sooner,” a senior department official said Wednesday, on condition of anonymity. “Clearly, we need to improve.”

Rep. Ellen O. Tauscher (D-Pleasanton) agreed, citing an Energy Department report in December that gave UC excellent marks for running the laboratory at the same time the agency was launching investigations. “Obviously, there was an atmosphere at the Department of Energy and [National Nuclear Security Administration] that was incompetent and that did not protect the interests of the American people,” Tauscher said Wednesday.

Abraham’s decision was welcomed by Walp and Doran, the former security officers whose charges of wrongdoing helped trigger the investigation. The men, who have been rehired by the university, said they were proud of their role. “I commend the secretary on his courage in making this decision, and I’m just elated,” Walp said.

Leaders of the congressional panels probing the lab’s problems also expressed satisfaction.

“For far too long, the management of this lab by the University of California has operated with no accountability for the problems that have occurred on its watch,” Reps. Billy Tauzin (R-La.) and James Greenwood (R-Pa.) said in a statement. “The idea that UC is entitled to the contract by some divine birthright is absurd.”

Energy Department officials said they hope to have the contract criteria worked out by year’s end and a request for proposals out by next year.

The decision does not, at least immediately, affect management of Lawrence Livermore National Laboratory in the Bay Area, another nuclear weapons center run by UC. The Livermore lab is under a separate but nearly identical contract, which also expires in September 2005. Department officials said a decision on open bidding for the Livermore contract is likely to be made next year.

UC officials say that although the contract is prestigious it does not come with significant financial benefits. UC spokesman Michael Reese said the university receives reimbursement of about $8 million a year for its costs at Los Alamos, along with about $7 million annually in “performance fees” that are returned to the lab, most of it involving research collaborations.

Universities and defense contractors mentioned as possible competitors for Los Alamos reacted cautiously. The University of Texas, whose political connections to the Bush administration have been cited as evidence of a likely bid, said it has followed developments on the topic “with great interest” and is eager to see details of the contract.

But Monty Jones, a university spokesman, also said the Austin campus’ ties in Washington “didn’t help us much with Sandia,” the nuclear research lab in Albuquerque. The Texas university lost out to Lockheed Martin Corp. last year in a competition to run that facility.

The University of New Mexico was noncommittal about Los Alamos. Its president, F. Chris Garcia, released a statement saying the school has “an excellent working relationship” with the facility “that will continue no matter who manages the laboratory in the future.”

A Lockheed Martin spokeswoman said the company has not decided about bidding on the Los Alamos contract but has “an incredible amount of experience,” given its Sandia contract.

Times staff writer Ralph Vartabedian contributed to this report.