billion from DOE for activities involving S&E.34 Each laboratory also received funds from other federal agencies for work for others. In any case, the increase in fee—about $35 million additional in FY11, according to the Livermore Site Office manager, who also said that 30 percent of the fee is fixed and 70 percent is linked to performance—is a small fraction of the total operating budget of the laboratories and not likely to be the dominant cause of financial changes at the laboratories, contrary to some narratives.

Following competition, the contracts for LANL and LLNL were awarded to two separate Limited Liability Corporations (LLCs). The parent corporations of Los Alamos National Security are the University of California, Bechtel, Babcock and Wilcox, and URS Corporation. The same four, plus Battelle Memorial Institute, are the parents of Lawrence Livermore National Security.

At all three laboratory site visits, and at other open study committee meetings, the study committee heard presentations and discussions of management-related matters that make the conduct of science and engineering more difficult, or at least have the potential to do so. Some presenters (and others) attribute these problems at LANL and LLNL to the new contract. The study committee noted that many of the most significant problems are common to all three laboratories, and for that and other reasons concluded that such problems are not the result of the contract changes (see Chapter 4). In fact, the Livermore Site Office reported to the study committee that at LLNL increased fees and pension costs were offset significantly by reduced costs of government contributions to the University of California pension system under the new contract arrangements.5

Some laboratory S&E staff, and former staff and managers have voiced strong concern that the increased fees have and/or will influence management decisions in a way that may be deleterious to the quality of S&E. However, when the study committee asked for details of specific deleterious effects, it did not receive any. When the study committee examined the M&O contracts, it found very little that prescribes the management of S&E. During its site visits with dozens of scientists and engineers at all levels of the three laboratories, the study committee asked again for specific illustrations of such problems but did not receive any data suggesting that the contractor fees are affecting management decisions with respect to S&E. Because this is an important issue that merits continued vigilance, the study committee discussed incentives at length with the three laboratory directors. The study committee was convinced that their primary objective remains to manage the laboratories in the public interest. This view was also asserted by NNSA senior management, who told the study committee that the pursuit of incentive award fee was not a significant motivator for the laboratories.

The study committee concluded, though, that there are serious management issues. It is concerned that the overall management relationship between NNSA and its national security laboratories is becoming dysfunctional. In part, increasing government focus on the details of both operations and technical work is a symptom of declining trust (by government) of laboratory managers and S&E staff, and contributes to increasing aversion to risk in the conduct of S&E. An increasing amount of the available time of both laboratory managers and S&E staff is spent on details of operational and administrative matters—such as gathering approvals to work at home, to remove laboratory computers from the premises, to purchase office supplies and to bring uncleared visitors into the laboratory - thus reducing time available for mission science and engineering. If left unaddressed, this will erode scientific initiative. The study committee also shares the concern, voiced by several presenters at study committee meetings, that these trends and problems may lead to a decline in experimental work. (See more discussion of these matters in Chapter 4.)

Despite hearing concerns about conditions at the labs,6 the study committee did not find increased turnover of the S&E staff apart from the reduction in force at LLNL after the change in contract. A LANL

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3 See FY2012 DOE Budget Justification; http://www.mbe.doe.gov/crorg/cf30.htm#Justifications.

4 Funds were also received from DOE for environmental cleanup.

5 Private communication to the study director. The savings were to the government, and not shared by the laboratory, because they were matters under the government contract with University of California.

6 This includes, but is by no means limited to, candid statements to the committee at laboratory visits and elsewhere. There have been blogs (see “LLNL: The True Story” at http://llnlthetruestory.blogspot.com/; “LANL:



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