FFRDCs—in particular LLNL and LANL—have endured for many decades. In 2004, Congress mandated that the long-standing contracts with the University of California to manage LLNL and LANL be recompeted.1 As a result, these two M&O contracts were awarded to two independent LLCs that both include Bechtel Corporation and the University of California.2 Subsequently, a number of current and former employees of these Laboratories have expressed concerns about deterioration of morale at the Laboratories along with ongoing or potential declines in the quality of science and engineering. Many of those employees attributed those inferred trends to the new M&O contracts and contractors.

To carry out this study, the study committee met with congressional staffers, senior leadership of NNSA and the Department of Energy, staff from the NNSA site offices that serve as a vital link between NNSA and day-to-day Laboratory management, and a wide variety of former and current employees of the three Laboratories. It held site visits at each of the Laboratories, organized around panel discussions with a large number of employees at different levels, from bench scientists to senior management. The study committee controlled the agendas for all of its meetings and had final say on the list of speakers. At LANL and LLNL, the study committee also held well-advertised public sessions at which anyone was invited to speak and management was voluntarily absent. The study committee also examined past reports on the Laboratories and the language of the current contracts. Details of the study processes are included in Chapter 1 of this report.

While the new contracts at LANL and LLNL clearly produced a noticeable level of staff frustration, staff members with whom the study committee interacted continued to show a strong commitment to their work. Those who testified to the study committee about morale problems spoke primarily of the situation as it existed at the time of the contract transitions, or of the subsequent layoffs at LLNL. When the study committee examined the M&O contracts, it found very little that prescribes the management of S&E. Many of the bureaucratic frustrations raised at all levels appear to be either within the power of the Laboratories to address or driven by governance strategies above the Laboratory level: they are not traceable to the M&O contractor or the contracts themselves. It is indeed true that all three Laboratories have been under cost and funding pressure. In the case of LANL and LLNL that pressure is connected with the contract change; the costs of their re-competed contracts are significantly greater than the previous contracting arrangements. But this is due to the combined effect of increased contractor fees, pension obligations, and, in the case of LANL, a need to now pay New Mexico state taxes. Accounts that attribute the increased cost simply to award fees are not accurate. Some employees and stakeholders have been concerned that M&O contractors pursuing a fee might not act in the public interest, and this is an important issue. Therefore, the study committee discussed incentives with the three Laboratory directors and was convinced that their primary objective remains to manage the Laboratories in the public interest.

An evolution of the Laboratory missions to “national security laboratories” is well underway. The absence of nuclear testing means that experimental validation of much of the S&E performed by the Laboratories is not possible, and thereby lessening the intellectual attractiveness of the work for at least some prospective employees. The expansion of the Laboratories’ mission into new non-nuclear areas offers the prospect of increasing the Laboratories’ appeal to top-quality scientists and engineers while also serving important national security missions. Thus, the quality of S&E, being preconditioned on attracting high-quality people, depends in the long run on successfully making this transition to national security laboratories. It is for this reason that the study committee was pleased to see that, a governance charter has been established among the Departments of Energy, Homeland Security, and Defense, plus the Office of the Director of National Intelligence.3 Many of the challenges facing these agencies are synergistic

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1 U.S. Congress, H. Rpt. 108-292, Division C-Energy and Water Appropriations Act, 2005, Sec. 301, p.151, November 2004. The new M&O contractor for LANL took over in 2006, and the new contractor for LLNL began work in 2007.

2 The parent organizations of Los Alamos National Security (LANS) are the University of California, Bechtel, Babcock and Wilcox, and URS. For Lawrence Livermore National Security (LLNS), the parent organizations consist of the same four plus Battelle.

3 See Appendix A.



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