Feds won’t renew contract for private LANL operator

Posted: Friday, December 18, 2015 11:25 pm | Updated: 11:54 am, Sat Dec 19, 2015.

By Justin Horwath
The New Mexican

The private consortium that runs Los Alamos National Laboratory will not have its contract renewed after it ends Sept. 30, 2017, The New Mexican has learned. The consortium is currently in negotiations with the federal government that could extend the $2.2 billion annual contract beyond 2017, even as the contract is put back up for bid.

The decision not to renew the contract follows a blistering series of federal investigations and performance evaluations involving the lab’s safety record after a drum from the lab burst and leaked radiation at the Waste Isolation Pilot Plant in February 2014 near Carlsbad, shutting down the nation’s only underground nuclear repository indefinitely.

The Department of Energy notified staffers with the New Mexico congressional delegation about the decision to put the contract up for bid on Friday, according to two people familiar with the discussions who spoke on condition of anonymity.  Members of the delegation were not available for comment Friday evening.

Lab officials did not immediately return calls seeking comment Friday evening.

The lab has been run since 2006 by Los Alamos National Security, which took over operations after years of accounting scandals, security lapses and other management issues. The company is made up of a partnership between the University of California, Bechtel Corp., Babcock & Wilcox Co., URS Corp. and AECOM.

But the consortium repeatedly has run into its own problems over the past several years. In 2013, the National Nuclear Safety Administration, the arm of the Department of Energy that oversees the lab’s contract, denied LANS a one-year extension of its contract to operate the lab because it fell short of its goals for repairing and reopening some weapons facilities. Still, the NNSA awarded LANS about $52 million in performance fees, or 87 percent of the full amount possible in 2013.

Then, last December, the NNSA issued a stinging performance evaluation in the wake of the WIPP leak. In that evaluation, the lab received grades of “unsatisfactory” in key areas that cost the consortium a year on its contract and about $57 million in incentives.

The lab has received the results of its latest performance evaluation for 2015, according to an internal memo obtained byThe New Mexican. The results, though better, were not good enough to earn a “unilateral” addition of another year in what is known in the contract as an “award term.”

“While I am deeply disappointed that we did not meet NNSA’s expectations in a manner sufficient to net another year of award term, I am extremely proud of our accomplishments,” lab Director Charles F. McMillan wrote in the Thursday, Dec. 17, memo to lab employees.

In the memo, McMillan focuses on the positives and does not mention that the contract will be up for renewal, but the language underscores the gravity of the situation.

“Understandably, this news is sure to generate questions for each of you,” McMillan wrote. “Nevertheless, I once again express my deeply held belief that the Laboratory’s greatest asset continues to be its people.”

A few paragraphs later, he writes, “I am scheduling an all-employee meeting shortly after the New Year to hear and address your thoughts, concerns, and questions.”

The new evaluation is not expected to be released publicly for a few weeks. But the memo purports to show substantially better results than in 2014. The memo says the lab received high scores in four of six categories, including management of the nuclear weapons mission and its mission of reducing global nuclear security threats. But it received only a “satisfactory” in the category of “operations and infrastructure.”

The lab needed to receive better than “satisfactory” in all six categories to qualify for an additional year in its contract.

“We did not accomplish this,” McMillan wrote. He added, however, that the NNSA has offered the consortium an extension. “I will provide additional details about that at a later date after there has been more discussion between the federal government and LANS,” he wrote.

“Our federal partners,” he added, “made it clear that shortcomings in our work planning and work controls related to safety events, project performance, cybersecurity, the earned value management system (EVMS), and continued weaknesses in criticality safety all weighed heavily in the evaluation of our performance,” McMillan wrote. “These are areas we must — and will — improve going forward.”

Justin Horwath can be reached at 986-3017 or jhorwath@sfnewmexican.com.