LANL DIRECTOR: SECURITY UPGRADE PROJECT FACING $41M COST INCREASE

Lab Moves to Bring in Three Senior Bechtel Executives to Lead Project

The botched security upgrade project at Los Alamos National Laboratory is expected to cost $41 million more to finish than previously anticipated and the laboratory is bringing in three top Bechtel project officials to help complete the stalled effort, laboratory Director Charlie McMillan said this week in a memo to employees. The changes and emerging details about the incident come in response to concerns raised last month by the National Nuclear Security Administration about Phase II of the Nuclear Materials Safety and Security Upgrade Project (NMSSUP), which the lab suspended when it was revealed that major construction problems existed that would significantly delay the project and add tens of millions of dollars to its price tag. “Performance on this project has been unacceptable to me, the LANS Board of Governors, and our customer,” McMillan said in the memo. “This has damaged the Laboratory’s credibility. We must do better. As we learn more about the breakdowns that occurred, we will share lessons learned.”

McMillan said three new officials were being brought in to head up the project. Tyrone “Ty” Troutman, the construction functional manager for Bechtel Systems and Infrastructure, will serve as the NMSSUP project manager and will report directly to McMillan. Jimmie Willman, who had served as the vice president, deputy program manager, and Business Services manager for Kwajalein Range Services, LLC—a Bechtel-Lockheed Martin team that manages a missile defense test site in the Marshall Islands—will head up procurement activities on the project, and Toby Wilson will manage project controls, shifting from LANL’s Environmental Programs Directorate. NW&M Monitor also has learned that the lab plans to add two additional field engineers when construction resumes.

NNSA has promised to hold the laboratory accountable for the problems, and the agency is believed to still need to sign off on the new plan. “To echo Charlie McMillan, what happened was unacceptable,” NNSA spokesman Josh McConaha said in a statement to NW&M Monitor. “We’re continuing our work with LANS to correct the management issues that led us here, and we will come out of that process with a clear set of expectations and a clear path forward. That process will also result in a revised cost, which, as we have said previously, LANS will be held fully accountable for. We will protect the American taxpayers and ensure that the situation has been corrected.”

Lab Estimates New Price Tag at $254 Million

McMillan said the new plan would cost $254 million, up from previous estimates of $213 million, and NW&M Monitor has learned that the lab’s “estimate-at-completion” assumes that work on the project won’t resume until March 31, and would take about six months once work is back up and running. NNSA signaled to Congress last month that it will need an emergency reprogramming request to rescue the project, but it underestimated the additional costs on the project, suggesting that $21 to $25 million more would be needed. The agency has not yet formally asked Capitol Hill for any extra money. “Because we are not authorized to make this type of change in funding, the project remains in suspended status until Congress or NNSA directs us otherwise,” McMillan said.

The lab’s estimate-at-completion also appears to assume that Burns and Roe will continue with the design while Kiewit New Mexico, JB Henderson and Hensel Phelps will continue work when construction restarts. In a statement provided to NW&M Monitor, Los Alamos spokesman Fred DeSousa said that the lab was “accountable for the project. We are working with NNSA to identify the best path forward so that once funding is identified, work can proceed quickly and efficiently. We continue to seek opportunities to optimize the cost and schedule.”

McMillan: Project a ‘Top-Priority Issue’

What was supposed to be a $213 million project—the second phase of a security overhaul at the lab—was specifically designed to upgrade physical security systems, protection strategies and security requirements in the lab’s Technical Area-55 and Plutonium Facility. “The team is taking on this top-priority issue at my request,” McMillan said. “I ask that you support Ty, Jimmie, and Toby as they assemble the people, processes, and controls necessary to complete the project. Let me again stress to you that nuclear material at TA-55 remains safe and protected, just as it has during NMSSUP construction. I am convinced that, once complete, NMSSUP will give TA-55 the modern, reliable, perimeter security system it needs.”

The project was scheduled to be completed in June and up and running by January, but during commissioning of the security system officials discovered significant problems with some of the construction. The largest errors involved fiber optic cables essential to the operation of security systems that were supposed to be physically separated, but were instead routed together, and problems abounded with the perimeter lighting system and a perimeter denial system. With the project facing a significant cost overrun, Los Alamos ordered subcontractors involved in the project to stand down. NNSA, in turn, issued a pointed “demand” letter to LANL contractor Los Alamos National Security LLC Oct. 24 requesting information about the project’s problems. Included in the demand letter was a request for full disclosure of accounting on the project, documentation of the lab’s plan to hold subcontractors accountable for the problems as well as information about available funding or fee sources that could be used for the project and a demonstration that special nuclear materials continue to be protected at the lab. The lab’s response was due by Oct. 31. At the same time, the NNSA sent a forensic team to the lab the week of Oct. 29 to analyze the financial and management issues that may have created the problem and promised to hold the laboratory accountable for the cost overruns.
—Todd Jacobson