March 17, 2014

ACTING NNSA CHIEF TAKES AIM AT HIGH M&O FEES

By ExchangeMonitor

Large fees for contractors managing the National Nuclear Security Administration’s nuclear weapons laboratories might be a thing of the past, acting NNSA Administrator Bruce Held said yesterday at the 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 agency 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 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.”

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