UT System prepares Los Alamos bid to manage U.S. nuclear facility

By Lindsay Ellis - September 22, 2017

The University of Texas System is pursuing what would be its biggest out-of-state contract in history as it prepares a bid to manage the Los Alamos National Laboratory, the facility responsible for the safety and reliability of the country's nuclear weapons.

A successful bid, supporters say, would give students and faculty new research opportunities and raise the UT System's national prominence. But managing the complex facility in northern New Mexico would come with significant risks, as the site has seen high-profile safety and security concerns over several decades.

Los Alamos, where the world's first atomic bomb detonated in 1945, operates with a roughly $2.5 billion budget authority this fiscal year and employs more than 11,400 people. The budget includes $1.43 billion in weapons programs and $248 million in nonproliferation.

Scattered throughout the 39-square-mile campus include high explosives and plutonium, global security operations with nonproliferation and counter-proliferation divisions and science, technology and engineering research.

Regents this week approved $4.5 million in spending to put together a bid, a process that will include finding partners potentially in business and academia, said Deputy Chancellor David Daniel, who is heading the UT System's bid effort.

Monday's vote did not totally commit the UT System to submitting a bid. Daniel said the system will not put forward a proposal if it concludes it cannot manage Los Alamos. But regents have showed enthusiasm.

"There's an incredible opportunity to showcase the UT System and to show the people and country what we can do as an institution and a state," said Jeff Hildebrand, the board's vice chairman, at a recent meeting.

It's at least the third time the UT System has expressed interest in managing the facility, and some say Chancellor William McRaven's leadership of the system could be beneficial to UT's bid. McRaven is a former U.S. Navy admiral who has promoted the system's national security work, and his contract concludes in January.

The current Los Alamos management contract ends in September 2018. Twenty-nine entities have expressed interest as of Sept. 20, with UT and the University of California as the only academic institutions.

The Department of Energy had not yet issued an official request for proposal as of Friday, but Daniel said earlier in the week that the system expected that guidance "in a matter of days or weeks."

After that document is issued, he said, UT will likely have between 30 and 60 days to submit a bid.

Texas A&M University officials did not return requests for comment on whether the institution would be interested in submitting a bid.

The University of California long managed the facility after World War II, and it reapplied for the contract in the mid-2000s in collaboration with business interests after a series of high-profile scandals. That entity, a private limited liability company called Los Alamos National Security, beat out the UT System for the contract in 2005.

To some, the award to LANS in 2005 was surprising after years of safety and security scandals, including reports of missing property, fraud and safety issues. Operations have remained rocky since the award.

The company had not always resolved "significant and long-standing nuclear safety deficiencies," according to a Department of Energy memo from July 2015. When the company could not address safety concerns, it had to suspend some activities between 2013 and 2015.

That memo also said LANS struggled to implement multiple critical nuclear safety management requirements.

Later that year, officials announced that Los Alamos's contract would not be extended after low performance, the Associated Press reported.

Los Alamos National Security referred all questions to the Department of Energy, which did not respond to a request for comment.

The lab's managers must confront security risks, which are serious, as well as political attacks against the facility, said Neal Lane, a senior fellow at Rice University's Baker Institute for Public Policy who once served on a Los Alamos review board.

"You have to feel you're a strong enough institution to handle those and manage those situations when they occur," he said.

Daniel said UT is aware of the risks that come with managing the facility, and he says the system plans to outline UT's proposed corrective steps in a response to a request for proposal. The ability to serve the U.S. and to create opportunities for students and faculty, he said, are the system's primary motivators.

Lane said the service mission is compelling for universities that can handle the serious responsibility that accompanies managing a federal weapons program. The lab's exceptional facilities would also be attractive for collaboration with a university that is managing the property, he said.

Still, some lab observers say even the best new management won't be able to rectify the facility's issues, including what they call a culture of secrecy that prevents accountability.

UT acknowledges the issues the facility faces but says it can take on the enterprise. Daniel said in an interview that between eight universities and six health institutions, the UT System has an $18 billion operating budget with institutions that routinely manage complex safety issues.

"There is a reputational risk if we fail to operate the lab in an excellent way," he said. "That's why we are focusing our attention on strategy, on people and on partners that will give us a high level of confidence that we can oversee the management of the lab effectively."

McRaven's national security expertise will also be "extremely helpful" as UT competes for the bid, Daniel said, adding that McRaven as a leader stays focused on mission.

Energy Secretary Rick Perry's ties to Texas may also benefit a potential UT System bid, said Greg Mello, who directs the Los Alamos Study Group, which monitors nuclear laboratories and favors nuclear disarmament. Mello characterized the contracting process as a "competition of resumes."

Similar speculation arose during UT's last bid, when former President George W. Bush held office.

Lane said, however, that scrutiny on objectivity is high for large-scale federal bids.

"I would have to assume that the competition is going to be straight and fair, and not influenced by those kinds of connections," he said.

Two Los Alamos observers who have criticized historical operations said the UT System has a fair chance to earn the facility's contract. Many entities that have shown interest in the facility are corporate, and the UT System as a manager could convey prestige, they said.

Neither expected UT to be able to fully solve the facility's problems, though.

Challenges at Los Alamos stem from its remote geographical location, mission, corporate influence and culture of secrecy, said Mello.

The reputational challenge, he said, "has roots deeper than any change of management."

Corporate influence within a management entity can create a culture too focused on profits, said Glenn Walp, a former lab investigator who uncovered millions of dollars of missing equipment and financial abuses. But it would be very difficult for a university to manage facility and production operations without corporate involvement, he said.

"It's all about the money," he said. "The contract is very lucrative. ... It's not just about hoo-rah and hoo-ray for the American flag."

Many national labs are managed by more than one entity, Daniel said, and it would be "typical" to bring in a small group of partners, including business interests. He said he could not estimate how much research money would benefit the university system.

The UT System's last bid for the facility saw some protest from anti-nuclear activists, and Daniel said he expected some push back, though he had not yet heard of any. He said UT sees no disconnect between its mission and the maintenance of nuclear weapons.

"Our national posture, our leaders and our nation have chosen to maintain a nuclear deterrence," he said. "We have to respect the rule of law and governance in my view and be a part of that if called upon."