Wednesday, March 30, 2005

Lockheed Martin Rejoins Lab Contest

Albuquerque Journal North
Wednesday, March 30, 2005

Lockheed Martin Rejoins Lab Contest

By Adam Rankin
Journal Staff Writer

Defense contractor Lockheed Martin announced on Tuesday that it is rejoining the competition to run Los Alamos National Laboratory, with its $2 billion nuclear weapons budget, after the Department of Energy made changes to the bidding criteria.

Lockheed, which manages Sandia National Laboratories in Albuquerque and Britain's Atomic Weapons Establishment in London, among other government contracts, had previously withdrawn from the competition in early August, citing concerns that a LANL bid would be too expensive.

"Our business people said it just wasn't a good business decision," explained Lockheed spokesman Don Carson.

At the time, Lockheed was widely viewed as a front-runner to manage or co-manage LANL in a partnership with a large research university.

Then-Energy Secretary Spencer Abraham decided in April 2003 to put the LANL contract up for competitive bid following a series of management failures by the University of California, the lab's current manager. The university's contract to manage LANL expires at the end of September.

Carson said Lockheed officials changed their minds about competing for LANL's contract after reviewing changes made to the proposed contract in February by the Department of Energy and the National Nuclear Security Administration.

"Our people look at Los Alamos as one of the national treasures," he said.

"Lockheed Martin didn't think the contract was structured to make it successful, they didn't think they could bring in the resources and people enough to make the contract successful," Carson said. "With the new contract they feel that they can."

The two primary factors that swayed Lockheed's decision were DOE's move to require a stand-alone pension plan and the creation of a separate corporate entity to directly manage the lab, he said.

"Those are the things that made Lockheed Martin go back and look at the contract," Carson said, adding that the changes made the competition more fair and open.

DOE and NNSA received numerous comments in December and January from interested bidders concerned that liabilities associated with running the nation's largest nuclear weapons research facility outweighed the benefits.

Rep. David Hobson, R-Ohio, wrote Energy Secretary Sam Bodman in February to say the original contract competition seemed to favor LANL's current manager, the University of California, which has operated the laboratory since 1943.

He specifically cited the university's well-funded pension plan, which competitors would have to match, because the pension is "disproportionately generous compared to any other government contract."

Hobson wrote that bidders should be given the "financial flexibility to propose the most competitive" benefits packages for their proposal.

In response to concerns, DOE lengthened the contract term from five years to seven, increased the potential management fee from a proposed $30 million to $60 million— about seven times the $8 million management fee that the University of California currently receives— and proposed requiring a stand-alone pension plan.

DOE and NNSA made the changes to encourage competition after several top bidders backed out, including Lockheed, Battelle Memorial Institute, the University of Texas and Texas A&M University.
Lockheed's Carson said the increase in the management fee was also one of the factors that prompted the company to rejoin the contract competition.

Prior to withdrawing from the competition, Lockheed had been in talks with the University of California about forming a partnership to compete for LANL.

Carson said the company is once again considering potential partners.

Judging by how often they browse this blog, Boeing ( is also interested.
By that measure, so is Honeywell. Come to think of it, so is DOE HQ, DOE Nevada, DOE Albuquerque Office and somebody in the US Department of State. Oh, and UCOP.

Well, there is this to be said about having Lockheed Martin as the contractor -- judging from their success at Sandia they could probably get us back out of the national spotlight and improve our relationship with the DoE and Congress, and then we might survive and even get to go back to doing some research. Unlike some of the other contenders, Lockhhed Martin does know how to run a lab successfully, and even how to run a nuclear weapons program (they manage the UK one, and did it well enough to recently get an uncontested 25 year extension to their contract)
Ye$$$$... We are such a national Trea$$$ure...

How about we recommend that since Rep. Hobson is in a government job that HIS retirement benfits be carved out and reduced by a factor of 3x as he is in public service. After all, he should volunteer some of his time just to serve his country. What do you others think...
So who believed Lockheed Martin was out of the bidding process in the first place? I am sure they, and others, bowed out in order to get the management fee up to something they could buy a few corporate jets with. Gee, isn't it wonderful how much the public saves by outsourcing?
LockMart is the company of choice: They know how to hide security and safety incidents, and they can either lie about them or insert them into the news stream at ideal times, as in the case of Sandia.

LANL needs PROFESSIONAL management.
So who will LM team up with on the academic side, if anyone?

1) UC - Unclear they want to be anything but the lead. Plus UC makes it sound like they might already be hooked up with others.

Willing to team with NM Consortium if they win contract.

Big academic rep.

Runs LANL, LBNL, and LLNL.

2) The NM Consortium - Would be willing to be subordinate.

Willing to team with several from a large group of suitors.

Probably not enough there in terms of academic rep with all being Tier 3 schools.

No large scale management contracts.

3) MIT - They seem to be willing to take a subordinate role as they did at INL.

Willing to form an alliance with Idaho's 3 research schools - not listed on main INL page, but assume Univ of Idaho (Tier 3), Idaho State Univ (Tier 4), Boise State (Tier 3 in Masters as highest degree). Seems plausible they would be willing to team with NM Consortium.

Big academic rep.

Runs Lincoln Lab and has role in INL.

4) Other???
So we'd be relegated to rural Sandia-North status? Lock-Mart could run two labs with the same top management team. Sounds like a great cost-saving, er..., profitable arrangement to me.
Frankly, I am fed up with UC mis-management and 'passivity', as UCOP's representative Birely labeled it yesterday in the ADSR meeting. I'm glad there will be serious competitors for the Lab contract. Perhaps I am hopelessly naive and idealistic, but I think the competition will lead to better Lab management, which all LANL stakeholders desperately need. I pray it is an honest competition decided on the merits, not on the politics. Even if UC manages to overcome the awful legacy of the last few years and win the race, the competition may make them better managers than if the contract had not been competed. More of the same UC mismanagement would be intolerable. Let the best team win!
With Lockheed Martin, the champion has entered the ring. If UC has any interest in really competing for this place, UCOPs Foley and LANL's Nanos have both got to go and go fast. Otherwise, UC will be yesterday's news.
I read in the Santa Fe New Mexican a AP article regarding the Lockheed bid. One of the main reasons LM decided to bid was the Pension plan. LM spokesman Don Carson stated "The high cost of the UC plan was one of the reasons Lockheed Martin originally decided not to bid". As we know the RFP was changed to allow a separate plan for LANL. I have friends at Sandia and am told that the pension plan there stinks.
The 6:49 AM post commented on the Sandia pension plan. Check it out at:

Judge for yourself.

My take on this is that the Sandia pension plan is not comparable to LANL's present plan.
The judgement is - The pension plan is a substandard matching 401K. Lets face it folks. If Lockheed gets the contract and you want to stay employed then all your vested UC funds will get transferred to the Lockheed plan. No way for me. I will retire with UCRP.
Ditto what 8:21 AM said. Outta here after 20 years.
8:21 appears to be mistaken; while Sandia has a 401(k) matching program, it is supplementary, like UC's 403(b) at LANL.

Sandia has a pension program in addition, discussed at:

Whether it's comparable or not is another question.

In the big picture, I think I would prefer working for a compentently managed organization that backs up its employees and institution in the face of stupid bureaucrats and politicians, than what we have now. The pension is really nice, but it can't cover for years of working in misery, fear and stagnation.
Like someone said here earlier, LockMart is good at hiding errors. They can call staff in on the carpet, but they can sweep lots under it, too.
One of the reasons that Nanos, and many other retired military folks, love to come to, and screw up, LANL is the "double dipping" opportunity. Spending 10 years at LANL, from 50 to 60, yields 25% of your base. What a plum. The Sandia plan offers no such bait. It is clear that the re-treads gain a lot from this arrangement; but what do LANL, and the taxpayers, gain? The military is not known for their science, or management. Mostly, these ex officers are hired to lobby with their buddies who are still in the military, who will look for soft billets in their turn. This rather smells of corruption, doesn't it?
Can we imagine UC hiring all these retired officers for the campuses? Hardly! Admiral Foley, of UCOP, doesn't count... he's part of lab "oversight", or should we say lab "cover up".
Interesting that John Birely referred to UC "passivity" toward the Lab management. As four different UC Academic Senate reports , going back to the 1970 Zinner Report, have found; the UC "management" is a fraud, a pretense.
You can find the Zinner Report, and others, in the Study Center. The current Lab Admin Office, at UCOP, of which John is part, is a continuing fraud. They are a lobby, not a management team.
There has been no UC "management" at LANL for 63 years, simply a pretense. Given that management is capable of making a positive contribution to an organization, perhaps its time to try some at LANL. Its unclear that UC even understands the concept.
I think the Sandia pension plan is irrelevant. At least at the start, L-M will be required to continue the same factors that UC currently has.
Don't know where you got that impression 10:13. By all means, please point out where you did.
I have to agree with the 9:07 post. UC has a great retirement system, but it's not worth it to spend years in a crappy work environment. UC has consistently demonstrated poor management. Imagine what would happen if the CEO of a real company stood the place down over a "culture problem." The board of directors would immediately fire the person, which is what UC should have done.
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