The University of California Board of Regents voted 11-1 to
approve a bid to continue its 63-year management of Los Alamos
National Laboratory in their meeting Thursday.
UC President Robert Dynes said the UC should compete for the Los
Alamos contract because of “the excellence in science that we
bring to the table, the strength of the management team we have put
together and the contribution this unique combination of players
can make to the nation.”
If the UC wins the new seven-year management contract, it could
receive an almost tenfold increase in management fees from the
Department of Energy, which owns the lab. But university officials
say the UC will continue to manage the lab under a non-profit basis
if it wins the bid and that the decision to bid for Los Alamos was
not based on the fee increase.
Regent Gary Novack was the only regent to oppose the bid, saying
at Wednesday’s meeting that the UC’s resources would be
better used for the public education system.
Involvement with the lab could potentially be harmful to the
university’s reputation and would divert resources that could
be used towards educating California students, Novack said.
In short, “the downsides outweigh the upsides,” he
said.
This is the first time the UC is facing competition for the
management contract of Los Alamos since the lab’s opening in
1943. The DOE released the bid for the lab’s next contract to
the public after a series of mismanagement problems that have
recently plagued the lab, including misplacement of discs with
classified information and misappropriation of laboratory
funds.
The final Request for Proposals released by the DOE last week
increased the next contractor’s maximum management fee to $79
million a year, most of which comes in the form of
performance-based incentives. The fee for the next contractor is
well up from the UC’s current maximum of $8.7 million a
year.
The potentially lucrative management contract and the corporate
bidders that it has attracted have raised concerns over whether the
new contractor would slight science for more profitable business
practices.
But DOE officials say that the high cap is to reward excellence
through fee incentives and that good business will not hinder, but
enable, science.
Regent Gerald Parsky said the UC is convinced that the
Department of Energy has made science the foundation of its
contract.
Dynes agreed with Parsky, saying the UC’s decisions during
the bidding process have emphasized the importance of science and
have not been based on fees.
“We have not in the past, and we will not in the future,
make money on these labs,” Dynes said.
Instead of raising revenue for the UC system, the management fee
would be used to pay off management expenses and be split amongst
the UC and its three corporate bid partners.
Keeping with traditional UC practice, any additional money the
university earns from its management contract will be put back into
the lab to be used at its director’s discretion.
“The contract is more heavily performance-based … there
is a potential that there will be more fees available for (the lab)
to use,” said Mike Anastasio, the competition team leader for
the UC’s Los Alamos bid and current director of the Lawrence
Livermore National Laboratory.
The days of a lone university managing the lab for public
service may soon be over when the UC’s current contract
expires in late September, regardless of who wins the management
contract.
Concerns over whether a research institution is capable of
managing a national lab like Los Alamos were raised in Congress
when a mistake in inventory forced a complete shutdown of
classified operations last summer. Many questioned whether the lab
would be better managed under a commercial contractor.
Two weeks before the UC Regents voted to approve a bid on the
lab, the UC announced it would team up with three corporate
partners ““ Bechtel National, BWX Technologies, Inc. and
Washington Group.
Dynes said the UC will be able to focus on science and research
at the lab, while its corporate partners will emphasize good
management and business practices.
“We have put together a breadth and depth of experience
that is unmatched in the country,” said Bechtel National
president Tom Hash.
The University of Texas, the only other academic institution
that has indicated it would compete, joined with defense and
technology giant, Lockheed Martin Corp., earlier this year. Defense
Contractor Northrop Grumman Corp. had been expected to enter a bid
but announced Thursday its decision not to bid after reviewing the
request for proposal.
The company said it “is currently evaluating other future
opportunities with the Department of Energy.”
The new contract is expected to be awarded in December and will
be for seven years with possible extensions of up to 13 years.
With reports from Sara Taylor, Bruin staff and Bruin wire
services.