A history of innovation and dysfunction at Los Alamos National Laboratory

photo: LANL, 2005

Posted: Saturday, January 2, 2016 10:15 pm | Updated: 10:21 am, Sun Jan 3, 2016.

By Staci Matlock
The New Mexican

On May 3, an electrical accident at a Los Alamos National Laboratory substation injured nine workers, burning one of them so severely he was hospitalized for more than a month.

Federal officials in December cited the incident as a “significant failure” on the part of the contractor charged with managing the nuclear weapons repository and research facility. The contractor — Los Alamos National Security — lost $7.2 million in federal performance fees because of the accident.

The incident also might have been the final straw that cost LANS — a consortium in which the University of California and Bechtel Corp. are the primary players — the lucrative $2.2 billion-a-year contract to manage the lab that it has held for nearly a decade.

The electrical accident was the latest in a string of problems for LANS that include injured workers, improperly handled hazardous waste, missing enriched uranium, stolen tools and the public release of classified documents. The most costly incident occurred in 2014, when a container of radioactive waste repackaged at the lab later ruptured in the nation’s only underground nuclear waste repository, contaminating workers and costing hundreds of millions of taxpayer dollars to clean up.

Federal officials told Congress in December that they will put the LANL contract up for competitive bid for only the second time since the lab opened in 1943. The current LANS contract ends Sept 30, 2017.

Investigators say the problems stem from repeated management weaknesses, the kind that were supposed to get fixed when the Department of Energy turned to private industry in 2006 to oversee the lab. It was the first time the federal government had put the lab’s management up for bid, with the idea that a for-profit model, operating under an incentives-based contract, would fix the problems that haunted the nonprofit University of California, which had run the lab since World War II.

So what happened?

Bechtel and UC defend their record at the lab, saying great scientific achievements and a reduced number of “reportable” accidents overall occurred during their tenure. The good gets lost in all the bad press over their mistakes, they say.

But experts, watchdog groups and former lab employees point to an array of problems, from a clash of cultures between the regimented and profit-driven Bechtel and the languorous, research-oriented university; to incentives that may have induced contractors to put a premium on meeting deadlines despite safety risks; to a mix of shoddy accountability and micromanagement on the part of the federal government.

Identifying what went wrong, and why the lab has proven so difficult to manage, will play an important role for the Department of Energy as it seeks out new managers to run the lab.

“DOE needs to find a solution that ensures LANL is operated safely and efficiently to maximize the excellent work it does and ensure that it carries out its core missions,” said Sen. Tom Udall, D-N.M., a longtime lab supporter. “My only requirement is that DOE runs a strong, transparent contracting process.”

Challenges at the lab

Managing Los Alamos National Laboratory is complex. The lab contractor is tasked by the Department of Energy with safeguarding and maintaining the nation’s nuclear weapons stockpile. Nuclear research automatically entails national security challenges. In addition, the lab has hundreds of top-notch scientists researching space exploration, renewable energy, medicine and climate change. Many lab facilities are old, antiquated and expensive to operate. The lab also has to deal with hundreds of hazardous waste dumps and a plume of chromium threatening groundwater. It has thousands of employees and subcontractors to oversee. And the lab’s original mission has changed from designing weapons of mass destruction to maintaining existing ones and preventing an escalation of nuclear arms.

But managing the nuclear lab is what LANS was paid billions a year in taxpayer dollars to do.

Udall said the Department of Energy must hold the contractors accountable. “The lab strengthens our economy by providing quality jobs. Its scientists perform world-class research, and the lab delivers critical engineering, scientific and technical support to the Nuclear Weapons Complex, and nations around the world,” Udall said. “The work is very complex, and overall the safety record may be good, but this is a field with a zero tolerance for mistakes.”

Mistakes, though, keep happening.

A lab’s nuclear mission

Doug Roberts
photo: John Arnold, Journal staff writer

After World War II ended, the lab’s primary mission remained building and testing weapons during the Cold War.

The University of California managed the lab for the federal government. This government-owned, contractor-operated setup, known as GOCO, “was deliberate, it was innovative, it was successful,” former lab director Siegfried Hecker, a plutonium scientist, told a congressional committee in 2003. “The government’s interest in accomplishing high-risk research at minimum cost was served by the university’s commitment to public service with no profit or fee.”

The research led to important discoveries in other disciplines, from new rocket-propulsion systems to better X-ray technology. The lab’s research also left behind a legacy of hazardous pollution in the soil and water around Los Alamos, as well as allegations that workers suffered from exposure to radiation.

For Northern New Mexico, the lab became a critical source of jobs long before there were pueblo-run casinos. Lab jobs gave many families economic security and opportunities they otherwise would have lacked.

Some say the lab became too important economically for New Mexico to let it go away. Gross receipts taxes from lab operations contribute upward of $40 million a year to Los Alamos County and around $100 million to the state’s coffers, according to finance experts.

Whatever New Mexicans’ misgivings about having a nuclear weapons lab in their backyard, they have looked the other way to keep their paychecks. “One of the names that Los Alamos has is ‘Northern New Mexico’s welfare system,’ ” said Doug Roberts, who worked for years with the lab’s supercomputing team and started a popular blog during a period of turmoil at LANL.

Problems mount

Throughout the 1980s and 1990s, there were multiple reports of scientists or staff harassed or fired for expressing concerns about lab management. In addition, evidence of extensive contamination from more than a thousand legacy waste dump sites mounted.

Hecker, who managed the lab from 1986 to 1997, told the Senate Energy Committee that the Department of Energy responded to increased criticism of the lab with more rules and new orders. Responsibilities at the lab blurred “with more of the operational decisions actually being made by federal employees, but more of the accountability and the liability being shifted to the contractors.”

In 1999, things begin to truly unravel at the lab. A longtime scientist of Chinese descent, Wen Ho Lee, was fired and later arrested on dozens of felony charges, attracting national attention. Lee eventually pleaded guilty to one count of mishandling classified information in a plea deal and was released by a judge who apologized to the scientist for how he had been treated.

Then in 2000, as the Cerro Grande Fire raged through Los Alamos, burning homes and threatening lab property, two hard drives with classified nuclear information disappeared. They turned up later, stashed behind a copy machine. But the fallout reached all the way to Congress.

Facing new scrutiny from the Department of Energy, more allegations of mishandled documents and millions of dollars worth of missing equipment, the University of California hired Glen Walp, former chief of the Arizona Capitol Police and a state police officer, and another longtime security expert, Steve Doran, to investigate. Within months, they were fired after finding evidence that misappropriated lab funds were used to buy everything from personal computers to a sporty $30,000 Ford Mustang.

“When I went there, it was right after 9/11, and I thought I was joining the ranks of the elite,” Walp said. “To the converse, not the scientists, but the operators and administration were highly dysfunctional. They tried to cover up everything. They didn’t really deny that.”

“UC lab administrators played the game that they didn’t know what was going on,” said Walp, who received $930,000 in a settlement from the Department of Energy after he was fired. “There is no way they didn’t know what was going on. They knew there was classified material that was in jeopardy.”

Two of the men Walp and Doran investigated pleaded guilty to conspiracy and mail fraud in a scheme to steal thousands of dollars worth of lab merchandise. “Once it was found that everything we had said was true and then some, and the lab knew they were facing a wrongful termination lawsuit, they offered us jobs,” Doran said.

Doran’s impression of UC administrators at the time: “It was an incestuous place,” he said, noting top-level brass caught doing something wrong were simply shipped off to work elsewhere for the contractor.

Hecker, meanwhile, told the Senate committee that additional security measures put in place “were not well thought out and could have disastrous long-term consequences.”

In addition, Hecker said, “DOE oversight has evolved over the years to become so intrusive and counterproductive that it has diminished our scientific quality and productivity.”

Turmoil rocks the lab

In 2004, as the Department of Energy was looking for a new contractor to run LANL, then-Director Pete Nanos shut down the lab for seven months. Nanos cited safety and security violations, including two classified discs that went missing and an intern injured by a laser. Staff were ordered to tell anyone who called about lab programs, including vendors, that they weren’t at liberty to talk due to the shutdown.

Roberts and other employees thought the action extreme and unnecessary. Two scientists were fired over the missing discs, which it later turned out didn’t exist at all. Roberts launched a blog called LANL: The Real Story in December 2004, which soon drew national attention and an outpouring from other angry lab scientists and employees pointing out problems at the lab.

Roberts said recently that the lab back then cared little for non-nuclear research. Scientists pursuing other work, including supercomputing, sought out their own funding, but had to fight lab management or go around them to do so. Only in the last decade, as the nuclear weapons design mission of LANL waned, has the lab management fully embraced the “other” science going on at the lab, he said.

A senior Energy Department official blamed “university failures, our failures and cultural failures as the three root causes” of problems at the lab.

A U.S. House report in 2004 recognized the lab’s changing nuclear mission and tension with the National Nuclear Security Administration, a division set up within the Department of Energy to oversee the nation’s nuclear weapons and nonproliferation programs. “In the absence of a Cold War between nuclear-armed superpowers, the importance of nuclear weapons to the war fighters in the Pentagon has steadily diminished,” the committee said.

While nuclear labs like LANL needed to keep nuclear weapons design central to their mission to justify their ever larger budgets, the committee’s priorities were on securing and maintaining the existing nuclear stockpile.

“The Department’s obsession with launching a new round of nuclear weapons development runs counter to those priorities,” the committee’s report said.

Meanwhile, as the lab contract went up for bid, Hecker and others advocated for bringing private industry in to help manage operations. The stage was set for turning nuclear weapons programs over to private interests.

A new (plus old) contractor

People familiar with problems at the lab were shocked when the University of California was once again a prime beneficiary of the new contract along with Bechtel Corp. “I was surprised they would even allow UC to bid on the contract after all of the failures,” said Walp, who published a book in 2010 called Implosion at Los Alamos: How Crime, Corruption and Cover-Ups Jeopardize America’s Nuclear Weapons Secrets.

“They commit violations and they get their hand slapped,” Walp said. “When they are fined, it doesn’t come from them, it comes from the American taxpayer.”

Others say it was really no surprise that UC ended up with the contract, as the university’s involvement was backed by powerhouse Bechtel and then-Sen. Pete Domenici, New Mexico’s powerful senior U.S. senator, who chaired the Committee on Energy and Natural Resources at the time. A former head of Bechtel Corp., Riley Bechtel, was an adviser to the UC chancellor, and another executive sat on the UC Board of Regents.

The new performance-based contract offered the winner a chance to earn up to $79 million a year in incentive fees for avoiding the kinds of safety and management lapses that plagued UC. It also allowed the consortium to win additional contract years unilaterally by meeting performance objectives. Poor performance would mean less money.

“This means somebody is really in charge of management,” Domenici said at the time. “I can’t imagine that we’ll have business as usual if we’re talking about safety problems, security problems.”

Putting the lab in the hands of a for-profit consortium — as opposed to the nonprofit university — also meant an additional $50 million in gross receipt taxes for the state, according to lab officials at the time.

Author and investigative reporter Sally Denton lays out how UC partnered with Bechtel to get the contract in her new book, The Profiteers: Bechtel and the Men Who Built the World, (Simon and Schuster, 2016). By 2007, the Department of Energy was already highly privatized, with the agency using 94 percent of its budget to pay private contractors. Bechtel was one of the top beneficiaries, Denton writes.

Others had foreboding. “Placing nuclear weapons design and maintenance … in the hands of private business takes the outsourcing of government services to a new extreme,” one nuclear expert told Denton.

Since the underlying management structure didn’t really change when Bechtel came on board, neither did the problems, say former lab employees and some familiar with the current contract. Chuck Montaño, who worked for 32 years at Los Alamos National Laboratory as an investigator, said he views the University of California as the root of the ongoing problems in Los Alamos.

Montaño and Roberts said that once the LANS consortium took over management, the costs and overhead of running the lab increased dramatically. The management fee increased from $8 million in 2005 to $80 million by 2010. The number of upper-level managers making more than $200,000 a year tripled.

“LANS increased operating costs for LANL operations dramatically, largely to accommodate the three industrial partners that were now part of the lab’s oversight effort,” said Montaño, who has written about the expenses in his new book, Los Alamos: Secret Colony, Hidden Truths.

Even within the consortium there were problems, due to differing cultures. The University of California has a world-renowned reputation for its scientific research and development. Bechtel is a mega-construction company known for building dams, bridges, pipeline and mines around the world.

One deals with experimentation, failures, iterations and incremental steps forward. The other deals with milestones, timelines and set outcomes. “When you join a culture of managing and meeting milestones to a culture of research and development, there can be friction,” said one person familiar with lab operations and the LANS contract, who was not authorized to speak officially.

In the summer of 2103, workers trying to meet a June 2014 deadline to remove thousands of barrels of nuclear waste from the lab came across a batch of waste that was extraordinarily acidic, making it unsafe for shipping. The lab’s guidelines called for work to shut down while the batch underwent a rigid set of reviews to determine how to treat it, a time-consuming process that would have jeopardized the lab’s goal of meeting the deadline, an important performance measure in helping it secure and extend its $2.2 billion annual contract.

Instead, the lab and its various contractors took shortcuts in treating the acidic nuclear waste, adding neutralizer and a wheat-based organic kitty litter to absorb excess liquid. The combination turned the waste into a potential bomb that one lab chemist later characterized as similar to plastic explosives.

The lab then shipped a 55-gallon drum of the volatile material 330 miles to the Waste Isolation Pilot Plant, an underground nuclear waste dump near Carlsbad. In February 2014, the drum burst open underground, exposing more than 20 workers to radioactive contamination and shutting down the plant indefinitely. Investigators later found that a series of poor record keeping, lax oversight, a critical typo in a waste handling procedure and managers who ignored warnings from workers had led to the disaster. The Department of Energy reduced the performance fees LANS would have received by $57 million.

Two more federal reports ripped into lab management last year. One by the Energy Department’s inspector general found “significant and long-standing nuclear safety deficiencies,” including steps to prevent plutonium and other radioactive materials from nuclear explosion.

Another federal inspector general report found the person in charge of classifying and protecting information had failed to do so and failed to report security breaches. In addition, “despite acknowledging that they had received complaints from employees, we found that LANS management officials had not taken action to investigate or resolve alleged violations by the LANL Classification Officer,” an investigator wrote in a memo.

Then on Christmas Eve, the lab self-reported more than 400 violations of its state hazardous waste permit, including mislabeling drums that contained dangerous chemicals and potentially fatal toxins. The number of hazardous waste permit violations reported by lab and National Nuclear Security Administration investigators was 76 in fiscal year 2014 and 14 in 2012.

The LANS contract to manage the lab has a “four strikes, you’re out” provision, yanking the agreement if the contractor fails four times to win an additional year award term because of poor performance. The lab lost the first award term in 2013 due to operations and management problems. It lost two additional years of the contract in 2014 due to the accident at WIPP and lost the fourth award in December for failing to meet operations and infrastructure standards.

The University of California and Bechtel aren’t publicly backing down from their belief that more good than bad has happened under their tenure and that any problems can be resolved. “The University of California is proud of our scientific and technological partnership with Los Alamos National Laboratory and we remain committed to the future of the lab and its long-term health and vitality,” UC spokesman Chris Harrington said. “While the recent performance review by the federal government highlights areas for improvement, UC and our partners are actively working with the lab and its management team to address these areas and to move forward.”

Fred DeSousa, a spokesman for Bechtel Corp., said, “The approach that teamed industry best practices with longtime leaders in academia has resulted in dramatic improvements in worker safety, information security and business efficiencies while maintaining or improving the lab’s world-class standing as a premier institution of research, development and national security science.”

Udall said the lab overall has scored well in performance reviews for its science and its core mission to protect the nation’s nuclear weapons stockpile. But “there have been persistent, serious mistakes,” Udall said in an email.

What’s next?

It is too early to know what the Department of Energy will expect from the new contractor or whether the UC and Bechtel-led consortium will enter the race.

Former U.S. Sens. Domenici and Jeff Bingaman of New Mexico were the lab’s champions in Congress for decades. Current U.S. Sens. Udall and Martin Heinrich, along with U.S. Rep. Ben Ray Luján of New Mexico’s 3rd Congressional District, which includes Los Alamos, continue to support the lab, despite its problems.

“Los Alamos National Laboratory employs some of the best and brightest minds in the country whose contributions are indispensable to our national security. The lab also strengthens our economy by providing quality jobs, and we will always fight to protect its mission,” the lawmakers said in a joint statement earlier this month.

George Anastas, a nuclear engineer and health physicist in Albuquerque, said some simple steps would help the lab. The facility should require employees and subcontractors to not only go through training in safely handling hazardous materials, but test them every year, he told the Defense Nuclear Facilities Safety Board, an oversight panel appointed by the president, earlier this year. A minimum score should be required to stay in their positions, he said.

In addition, he recommended hiring retired brass from the Naval Nuclear Propulsion Program to manage the lab. “They set up and follow procedures. Screw up once, and you get your backside handed to you. Screw up twice, and you’re gone,” Anastas said.

Longtime nuclear watchdog Greg Mello of the Los Alamos Study Group, a former state environmental inspector, doubts anyone can solve the problems at LANL. “The problems lie deeper than any private contractor could fix,” Mello wrote recently.

At the heart of the matter is that the lab contract isn’t what the contractors really care about, Mello and others say. “These companies are in there to make vast amounts of money and to gain power over government,” Mello said. “By doing this for the DOE, it gives Bechtel intellectual property and access to government officials. The real money is down the line.”

A big question is: Should Los Alamos National Laboratory remain open at all and with what mission?

Udall earlier this year said the lab is vital for producing plutonium pits used in nuclear weapon triggers, but even the senator questions whether the pits are necessary to maintain the stockpile of aging nuclear weapons. The lab has produced the only new plutonium pits since Rocky Mountain Flats closed in 1989, and ramping up pit production at LANL is part of the federal budget.

Roberts and others argue that taxpayer dollars spent at the lab would be better spent elsewhere. The Pantex Plant in Texas already handles nuclear arsenal maintenance, including taking apart and refurbishing plutonium pits, Roberts said. Non-nuclear research can be done more easily and cheaper at other facilities, such as the Lawrence Livermore National Laboratory in California. The only reasons to keep LANL going are to provide jobs in Northern New Mexico and to pad the pockets of private companies and UC, Roberts said.

“Why do we need both Lawrence Livermore and Los Alamos?” Roberts asked. “What is the lab’s mission, and could it be done somewhere else better?”

Contact Staci Matlock at 986-3055 or smatlock@sfnewmexican.com.