In what may be a significant blow to the University of California’s hopes to continue managing the Los Alamos National Laboratory, Sen. Pete Domenici (R-N.M.) announced on April 22 that due to the management scandal at the lab, the laboratory contract should be opened up to competitive bidding.
Domenici, who chairs the Senate’s energy panel, said in a speech at Los Alamos, N.M., that he was recommending to Energy Secretary Spencer Abraham that he take “”dramatic action”” to protect the laboratory’s reputation and improve management.
“”The lab must change, and we must be vigilant as we institute these changes,”” he said. “”The laboratory’s scientific brilliance must be equal in its business management. We should no longer comfort ourselves in the false assumption that a laboratory that maintains the university traditions of intellectual freedom is therefore incapable of best-in-class business and industrial practices. We can, and must, achieve both of these ends.””
Domenici also said that he would still encourage the university to join in the competitive bidding, should the energy secretary decide to open it up.
The University of California, which has managed the New Mexico laboratory since its inception 60 years ago, has been confronting allegations of frivolous overspending and poor mechanisms for spending oversight at the lab that were first uncovered in November 2002.
UC President Richard C. Atkinson said in a statement that he welcomed Domenici’s criticisms and was thankful for his support of corrective actions taken by the university. Regardless, Atkinson said, the University of California plans on keeping its contract for the laboratory.
“”On the issue of competition, if Secretary Abraham’s decision is to compete the LANL contract, then our instinct is to compete, and to compete hard,”” he said.
Atkinson added that the final decision to compete, should the contract be open to bidding, would be up to the UC Regents and said that any further comment is “”inappropriate”” until Abraham makes his decision.
The Department of Energy is expected to make a decision on whether or not to open the lab contract up to competitive bidding by April 30.
The comments by Domenici were delivered the same day that the university was celebrating the 60th anniversary of the founding of the lab and a day after the D.O.E.’s inspector general released a report criticizing the university’s audit procedures and citing over $14 million in laboratory overcharges.
The report, released April 21, claimed that $3.7 million of meal charges and $7.4 million in travel costs were questionable. In addition, the report cited the spending of $3.5 million on an internal audit that did not meet DOE standards.
Officials at Los Alamos were quick to respond to the report, emphasizing that the period examined by the inspector general was prior to when the university began to institute changes, and that the travel and meal spending were in line with federal guidelines.
“”We must take strong exception to the conclusions of this particular report,”” said Los Alamos National Laboratory Interim Director George P. Nanos in a statement. “”We believe the laboratory’s operations related to meal and travel costs, and the operation of its audits and assessments function, are consistent with its contract. We also believe we have been consistent with the requirements of federal travel regulations and other federal requirements and guidance for allowable and unallowable costs.””
Despite the inspector general’s report, officials at Los Alamos are encouraged by what they see as acknowledgement of changes and improvements made at the lab.
“”We believe we’ve had positive feedback both from the Department of Energy and from members of Congress during the Congressional hearings,”” said Linn Tyler, a spokeswoman for the lab. “”They have noticed the changes we are making. They have said that we are moving in the right direction and they have been complimentary.””
The University of California has funded its own independent audits, and released the findings of seven reports conducted by Ernst & Young later in the day on April 21, all of which suggest changes to programs and accounting methods.
Another report, released April 10 and conducted by PricewaterhouseCoopers, the university’s audit firm, flagged only one potentially inappropriate transaction that amounted to $14,530 of a total $2.26 billion in procurement from October 2000 to September 2002.
Other potentially inappropriate transactions included the purchase of 2,461 pairs of shoes, 1,410 jackets and 6,899 bottles of hand lotion in addition to camping and hunting supplies.
In light of Domenici’s comments and the inspector general’s report, speculation has grown as to who may — if the contract is opened up — be potential bidders.
Battelle, which manages four national laboratories, may be a competitor, as may Lockheed Martin, which manages one laboratory.
The University of Texas system and the University of New Mexico are also both considered possible contenders, perhaps proposing a joint management contract as reported on April 23 in the San Francisco Chronicle.
University of Texas officials called speculation “”premature”” but said they have been following news about the lab.
“”As of right now, there hasn’t been any decision about what to do with the Energy Department — whether they’re going to take bids or not,”” said Monty Jones, a spokesman for the University of Texas.
Jones said the university’s board of regents would make the final decision.
The University of California also manages Lawrence Livermore National Laboratory and Lawrence Berkeley National Laboratory.
