Todd Jacobson
NS&D Monitor
2/14/2014
Large fees for contractors managing the National Nuclear Security Administration’s nuclear weapons laboratories may be a thing of the past, acting NNSA Administrator Bruce Held said this week at the Sixth Annual Nuclear Deterrence Summit. In response to questions at the sixth annual summit, Held called the “creeping privatization” of the national laboratories “unwise” and suggested the NNSA should move back to a “public interest model” of lab stewardship. Nearly a decade ago, the NNSA recompeted the contracts for Los Alamos and Lawrence Livermore national laboratories, awarding contracts to teams run by Bechtel and the University of California that allow the contractor to earn fees of about 3 percent of the lab’s total budget.
For Fiscal Year 2013, that meant up to $66.9 million could have been earned at Los Alamos and $47.4 million could have been earned at Livermore, compared with $26.8 million at Sandia National Laboratories. Sandia hasn’t been recompeted since the early 1990s, but Lockheed Martin’s contract to run the lab expires at the end of March and Held confirmed that an analysis was ongoing to look at how to approach the lab’s contract. “The laboratories exist to serve the public interest and not to make profit,” Held said. “That will affect our structure of the contracting mechanisms. They are legally contractors, but having lived at one of those laboratories for close to a decade, that’s not what motivates people to work there.” Held was the head of counterintelligence at Sandia National Laboratories before taking over as the head of intelligence and counterintelligence at DOE in 2009.
‘We Need Other Options’
Held suggested that future NNSA contracts should be aligned with what can improve research and science at the labs. “If what we’re trying to motivate is really scientific excellence to take on issues we can’t deal with, we need other options,” Held said. “We need to create an incentive structure that actually motivates the people who do that. I don’t think that’s a big fee.” Held said if he had his choice he’d go back to the days when AT&T managed Sandia for $1 a year. “We’re probably not going to get back to a dollar a year but we need to structure incentives that motivate what we’re trying to achieve, and I personally don’t think we’ve gotten that,” he said.
Tyler Przybylek, who headed up the Source Evaluation Board for the Los Alamos procurement and was the Source Selection Official on the Livermore procurement, said the contract was structured to reflect the job facing a contractor taking over the lab. At the time, Los Alamos in particular was reeling from a series of security and safety issues that led Congress to push for a replacement to the University of California’s sole management of the lab. The contract for Los Alamos, Przybylek said, had a descending fee structure that allowed the contractor to earn less fee as it ostensibly was able to turn things around at the lab. “We thought it was a really hard job in year one, a really hard job, but we thought it might be an easier job at year six or seven and there could be a different approach,” Przybylek said at the Nuclear Deterrence Summit.
Held wasn’t too critical of the Los Alamos and Livermore decisions, but he suggested that a change was necessary. “We tried something. We tried an experiment. We tried to do something. We didn’t know what the future was holding,” he said. “But can I say that the performance at Livermore and Los Alamos is distinctly superior to the performance at Sandia because the fees at Lawrence Livermore and Los Alamos are like three times higher than at Sandia? I can’t say that. It’s not that they’re bad but I don’t think it’s helped motivate the performance that we’re looking for. What really drives those people, you see it at Y-12 too, is national security and patriotism. Let’s motivate that.”
Lab Directors: Part of Fee Goes to Research
In a speech at the summit, Los Alamos Director Charlie McMillan noted that $18 million of fee for work at Los Alamos and Livermore goes back into research that is performed by the two labs and the University of California. He said approximately a third of that returns to the labs themselves. The two labs combined to make $100.6 million in fee during FY 2013. “The purpose of the fee is not to motivate lab scientists,” McMillan said. “That’s not why it’s there. The purpose of the fee is to attract companies that bring talents to the laboratories.”
Acting Livermore Director Bret Knapp agreed with Held that scientists weren’t driven by fee. “Scientists are driven by having good equipment, having a good place to work in,” he said. “What’s fascinating is they’re driven much more by having colleagues that are at their level of knowledge or higher in certain areas so they can continue to advance in their areas of particular study.”
