LOS ALAMOS TO REPAY NNSA $10M FOR BOTCHED SECURITY PROJECT

Los Alamos National Security, LLC, has agreed to repay $10 million to the National Nuclear Security Administration to help restart a botched project to upgrade security at Los Alamos National Laboratory. The lab revealed in late September that the stalled Nuclear Materials Safeguards and Security Upgrade Project had been badly mismanaged and poorly executed, significantly delaying the effort and potentially driving up costs by tens of millions of dollars. But the agreement would appear to reduce the cost of fixing the project and lessen delays in completing the effort: according to the agreement, the NNSA will resume funding the project Dec. 14 and LANS will work with its subcontractors to restart the project “as efficiently and economically as possible.” Previous estimates had suggested the lab would not restart work on the project until the spring, but lab spokesman Fred DeSousa said that some engineering work had already begun and an “orderly rampup” would take place over the next several weeks.

In a joint statement released this week, the NNSA and LANS said the $10 million will be repaid by Dec. 17 in “non-reimbursable, non-taxpayer funds to settle project costs deemed potentially unallowable” by the NNSA. “The parties agree that with the above payment they have resolved and settled any and all allegedly unallowable costs, known and unknown, that have been incurred up to this date on the Project, with the exception of any costs that were incurred as a result of fraud or misrepresentation by LANS ‘managerial personnel’ as defined in the ‘Contract,’ “ the settlement agreement said. “This does not resolve any issues involving any costs incurred after the date of this agreement or that result from contractor performance occurring after the date of this agreement.”

New Estimate At Completion Due Dec. 10

Exactly how much the new plan will reduce the cost of fixing the project remains unclear. Under the terms of the agreement, LANS will submit a new “estimate at completion” Dec. 10. The lab said last month that it would cost $254 million to finish the project, about $41 million more than the project’s most recent price tag of $213 million, with much of the added costs attributable to maintaining added security until the upgrade is completed. According to the settlement agreement, which was obtained by NW&M Monitor, the lab also agreed to credit back to the project any funds received from subcontractors. “LANS and NNSA both recognize the missed opportunities in project execution and oversight that took place with the NMSSUP project,” LANS and NNSA said in a joint statement. “LANS conveyed an understanding of the seriousness of the situation and the value of its partnership with the government. Implementing stable improvements to our infrastructure operations is vital to maintaining a 21st century nuclear security enterprise. With this agreement, both parties are now positioned to complete this critical project as efficiently and effectively as possible.”

It won’t be clear how much more money will be needed for the project until the lab finishes a new estimate at completion, though the fact that the agreement indicates that NNSA plans to resume funding the project Dec. 14 suggests costs might not be as significant as previous estimates indicated. The NNSA has previously told Congress that it would need to submit an emergency reprogramming request to restart the program, but that process could take months to complete. NNSA could get around the need for a reprogramming if it planned to move less than $5 million, which is the threshold for Congressional approval. NW&M Monitor has learned that the agency is also contemplating moving weapons activities funds to higher priority activities like NMMSUP, which the agency believes the current Continuing Resolution funding the government allows, and could “backfill” funding with a reprogramming package down the road. The lab is using leftover project funds and a $1.1 million baseline change that was approved before the settlement agreement to fund the engineering work that has been restarted by subcontractor Burns and Roe.

Major Problems Discovered During Commissioning

The 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. It 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. In an effort to right the project, the lab brought in three new officials to oversee the project: Tyrone “Ty” Troutman, the construction functional manager for Bechtel Systems and Infrastructure; Jimmie Willman, who had served as the vice president, deputy program manager, and Business Services manager for Kwajalein Range Services, LLC; and Toby Wilson, who shifts over from LANL’s Environmental Programs Directorate. “It is my firm belief that we must meet our commitments on budget and timetables, and to quickly let the customer know when changed circumstances impact our ability to do so,” Laboratory Director Charlie McMillan said in a Dec. 5 statement. “I can’t emphasize enough the seriousness of our level of accountability and the implication of the $10 million settlement.”
—Todd Jacobson