For immediate release 5/30/06

Dramatic Declines in Federal Oversight Accompany Plans to Increase Nuclear Weapons Production

Big contractors consolidate holdings across weapons complex as management of Los Alamos passes to new hands

Contact: Greg Mello and Damon Hill, 505-265-1200

Albuquerque and Los Alamos, New Mexico – According to congressional budget documents, federal funds available for oversight of the DOE nuclear weapons and cleanup complex have declined by roughly 2/3 over a recent six-year period. 

            Facts such as these form the story line of a white paper released today by the Los Alamos Study Group, which brings together evidence to show that the role of private profit is growing to alarming proportions in the U.S. nuclear weapons industry.  Larger contracts for longer periods of time, concentrated in a small “club” of only a few key corporations all of whom do business with each other across the DOE complex in multiple and complex ways, have created a nuclear “cartel” that in effect largely controls the operation of the nuclear weapons complex, according to the Damon Hill and Greg Mello, the study’s authors. 

            The white paper, entitled “Competition – or Collusion?  Privatization and Crony Capitalism in the Nuclear Weapons Complex: Some Questions from New Mexico,” is available from the Study Group and will be posted at www.lasg.org today.

            “These are the same kind of ‘no-bid’ federal contracts, worth in some cases tens of billions of dollars, which have caused so many problems in Iraq and Afghanistan and with FEMA, said Study Group Director Mello.  “How can we expect good management from such a situation?” 

            Hill: “We have only scratched the surface in this report.  Privatization is not governance but rather erosion of governance.  To think that Bechtel and similar corporations can turn around a legacy of mismanagement at Los Alamos is to forget that they are in the business of making money – and that they themselves are hip-deep in scandals elsewhere.” 

            Highlights of today’s study include:

• Department of Energy (DOE) and National Nuclear Security Administration (NNSA) operations are almost totally privatized.  All but 6% of DOE appropriations went to contractors in FY2004.  NNSA is worse: in FY2006 at least 96% of NNSA appropriations are going to its contractors.

• Fully one half of DOE’s total budget outlays for fiscal year FY2005 went to just nine contractors.

• Four of these “top nine” contractors – Bechtel, WGI, BWXT, and UC – are partnering in Los Alamos National Security (LANS), slated to take over management of Los Alamos National Laboratory (LANL) on June 1 in a contract worth, according to DOE, $36.6 billion.

• Bechtel, WGI, and BWXT are partners in contracts collectively valued by DOE at $100 B, $74 B, and $67 B respectively.

• There is an increasing geographic focus to NNSA nuclear weapons spending – namely, New Mexico.  In FY2006, for the first time, over half of the NNSA Weapons Activities budget line is spent in or through New Mexico.

• Incredibly, NNSA plans further consolidation of its contracts, using fewer contractors integrated more tightly across the complex.  NNSA also plans to use contractors more for higher-level policy and decision-making functions, despite long-standing congressional concerns about this practice.

• Increasingly, DOE contractors are forming site-specific limited liability partnerships and “integrated management teams” which collectively could be described as “committee contracting.”  With few firms involved, this trend suggests that to a large extent financial rewards and accountability in the nuclear weapons businesses are being pooled and diffused among a small group of corporations, universities, and captive nonprofits.

• Safety is in particular risk at LANL, where both the quantity and quality of federal oversight appears to be in intentional sharp decline.  Federal oversight, not to say management, is being made subordinate to protecting the new contract and making sure it is profitable, quite likely so that the LANS partners will remain motivated and complaisant as far as the mission is concerned.  Under the new contract, LANS will increasingly define its own safety standards and judge its own compliance with them.

• The increased fees (i.e. profit) which NNSA must pay to LANS comprises a non-trivial part of the LANL site budget.  LANS must also now pay gross receipts tax, another new expense.  These and other significant new LANL costs will reduce overall funding for LANL programs by hundreds of millions of dollars – or else will be generated by deficit spending. 

• Since at least the 1998 election cycle, the principal corporations contracting with DOE/NNSA have consistently given around 2/3 of their political action committee (PAC) campaign contributions to Republican candidates.  Such political connections appear to have benefited Bechtel and WGI handsomely.  Both companies are had record profits in 2005, driven in part by lucrative government contracts. 

• Private corporate finance of facilities at nuclear weapons sites is occurring and could influence government decisions.  Private ownership places government in the position of being an obligated long-term lessee and provides a way for boosters and ideologues to avoid full congressional scrutiny prior to project initiation.

“One thing we didn’t say in our report bears mentioning here,” added Mello.  “Nuclear weapons contravene the fundamental moral and legal tenets of our society and civilization, and this fact, together with the enormous destructiveness inherent in nuclear materials and their great toxicity, are the ultimate origins of nuclear weapons management problems.  There will never be smoothly-managed, safe, and clean factories for nuclear weapons, no matter how much money is spent on them.” 

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