Saturday, October 08, 2005

Privatizing Los Alamos National Laboratory

Brad and I agree on all points except one: that the idea of privatizing Los Alamos National Laboratory is a "benighted" one. I say this because it is obvious to anyone who has taken a careful look at operations at LANL that the University of California has done a miserable job of managing the facility for quite some time. The events of the past year only underscore this point.

Given this, what other options exist to turn LANL into a professionally-managed operation? Find another university to run the place? That was rhetorical, of course. Universities simply are not efficient managers of anything but universities, and usually not even then.

The only choice available to those of us who wish to help dig LANL out of the hole that it has dug itself into is to get a professional management team installed, and industry is the only place you have any hope of finding one of those.

That said, I agree with Brad's assessment that the Lockmart-led Los Alamos Alliance looks to be the hands down favorite. The indicators of this are everywhere, not the least of which is in how the two LLC's chose to locate and operate their storefront operations.

--Doug

Comments:
Well, the only thing that would be worse than leaving things the way they are, spiraling down the toilet, would be to turn LANL over to the people who are REALLY responsible for the troubles of the last 7-8 years--DOE (or NNSA, created by St. Pete) and its masters, the US Congress (both of whose intellectual style of governance reminds me of Wodehouse's upper-class British twit, Bertie Wooster).

We'll see what things look like in three years. Maybe we, like the folks at Sandia, will feel that the LockMart takeover wasn't so bad, after all. And just as a reminder, UC won't be running LANL any more, no matter what.

I do believe that if the new contractor has no connection to UC whatsoever, LANL may have two or three years of quiet, during which time we won't be kicked around like a political football, and science at the Lab may well have a chance to recover.

-Brad
 
I agree with Doug. Having worked in both academic and commercial environments, I have found commercial environments to generally be better run. That’s not especially surprising, because commercial enterprises have strong market incentives to run things well, while academic environments have strong incentives in other directions, not always conducive to efficient operation.

That’s not to say there aren’t exceptions, both ways. But in this case, with the recent history of LANL and Sandia as roughly equivalent side-by-side comparisons, I would expect a “privatized” LANL to run better, with less disruption. Of course, the ultimate boss here is a government agency with its own unique incentives, and that always adds other factors.

I can’t speak for Bechtel, but as a recent retiree from Lockheed Martin I can tell you that LM generally does things the right way and uses its people well, and it does so because it is smart enough to recognize that people’s skills and experience are its most important asset, and if they are not well treated, those same people can pick up any day and go work for a competitor instead. In a commercial environment that is a powerful incentive for a company.
 
OK! Bill Godwin, but earlier posts show that LockMart has eliminated its defined benefit pension plan. While LANL may be able to attract the C students from the University of Phoenix that populate the DOE with their crappy pension plan, those of us that have an option are not going to come to LANL (or Sandia) for poor benefits.
 
I wish people would get over loss of the pension plan. Defined Benefits are history. It's not nice, but that's the way it goes.

In the same article that described Lockmart's move to a defined contribution plan, you could see the statistic: less than 10% of US corporations are doing defined benefits plans, and that number is going to get smaller. The two-tier pension plan is now a fact of life, and the set of employees getting the nice plans is going to shrink, now, year by year.

So, I wonder, where are all these people going to go, who don't like the pension plan Lockmart offers? Where are all these wonderful places for PhDs that offer a defined benefits plan? Anybody care to make a list? I doubt very much that there are enough job slots out there to soak up all our PhDs, even just the "A students".

I realize it was nice, in the world my parents lived in, with their defined benefits plans. Those plans are history, along with lifetime employment, union wage jobs, and the other nice features of mid-20th-century corporate America. We're just going to have to accept it and move on.
 
Tom Hook, I suggest you look at the LM/UT FAQ Doug posted earlier. It clearly states that if the LM/UT teasm wins the contract, they are bound on pensions by the RFP requirements (substantially equivalant), and not by LM's policy in the rest of the company.

Of course "substantially equivalent" probably does not mean "exactly the same", whichever team wins, and the DoE will be the final judge. But LM has made it clear that LALN would have (must have, by the terms of the RFP) a separate pension policy from the rest of the company.

Ron's point, above is also valid. You had an obscenely generous pension plan by the standards of the rest of the world -- and it was nice while you had it, but all good things eventually come to an end.......
 
Bill Godwin is correct in that we have an "obscenely generous pension plan by the standards of the rest of the world."

BUT, remember that there have been no contributions by employees or DOE to the UCRS in over 20 years. The pension plan portfolio has been sufficiently well-managed that it has been self-funded. In fact, on a number of occasions (roughly every five years), the UCRS pension fund was over-funded and money was sent to the accounts of active employees.

With the new contractor, this will, of course change. There will no doubt be cost to both employees and to the DOE.
 
Goodwin's comments are all too often repeated: obscenely generous pension plan. This is used to imply that UC and LANL are spoiled, and some how have ripped off the tax payer with this pension plan. DOE has not had to contribute to the plan for 2 decades, and has saved NNSA millions of dollars. Are the LANL employees upset that they are lossing this plan? Of course, and it is not that they are spoiled -- it is a product of the oversight by UC.

UC failed in many ways, but they also contributed mightly to many of the things that are LANL. The diverse work force (foreign nationals), the academic reach of the LDRD program, supporting the world's finest digital library (no where else in the complex is a research library considered something important), and suport for "pushing" NNSA (and previous successers) for broad based science programs. LANL has lead the way in defining "national security" broadly. I find it ironic Brad Lee Holian praises Paul Robinson and LM for talking about expanding the definition of national security to "the understanding and protection of the country's infrastructure, the technology of energy conservation and reducing dependence upon imported oil, computer simulations of climate modeling, epidemics, and terrorism, and a host of other problems that loom on our country's and the world's horizon". We already do this at LANL, in no small part through support of UC.
 
"I find it ironic Brad Lee Holian praises Paul Robinson and LM for talking about expanding the definition of national security to "the understanding and protection of the country's infrastructure, the technology of energy conservation and reducing dependence upon imported oil, computer simulations of climate modeling, epidemics, and terrorism, and a host of other problems that loom on our country's and the world's horizon". We already do this at LANL, in no small part through support of UC."


I agree with w76 that "we already do this" at LANL. I disagree that it is done through any support from UC. My group went out and cultured a set of outside sponsors over a 15 year period to do work of this type in spite of LANL management, not with any support from them. UC was nowhere in sight throughout this process. We eventually ended up bringing in ~$100M from sponsors like the US DOT, DHS, NIH, and a variety of other non-DOE sponsors. Some of those sponsors subsequently walked, taking their money with them as a result of the shutdown. That we can fullly attribute to UC.

--Doug
 
Well, a LANL retiree told me yesterday that his pension benefit exceeds his last year’s take home pay when he was working. He actually made money by retiring. Most of us would think that was an exceptionally generous pension.

I certainly don’t mean to imply that LANL retirees are ripping off the public, but do spend a moment thinking about where all those billions in the pension fund came from originally. The UC treasurer certainly managed it exceptionally well (about 17% annual growth over the long term), but much of the original investment came, one way or another, from taxpayers dollars (mostly California taxpayers), aided in addition by the tax shelter under which UC operates. Its pretty hard for anyone else to match that.
 
Doug, do not interpret my support of the UC culture as support for the disastrous reign of Nanos. Although we probably never know why Nanos was selected, and if it was Headquarters that pushed his appointment, or just stupidity by Foley, it is clear that Nanos was a terrible choice for LANL director. As such, clearly the buck stops at the doorstep of UCOP, and Nanos is their fault. However, I take exception with your characterization that UC “was not where in sight” when CCS-5 went out and “sold” the capability of large scale computer simulations for socio-technical systems. It was the nature of the UC management to support science and a broad definition of national security. Sure, the lab management did not shower monies on CCS to build the portfolio, but it did oversee 3 LDRD projects that included the discipline. It may be frustrating to LANL staff that we are “expensive” with a high G&A rate and facilities tax, but a significant portion of that is associated with being a national security lab. Interestingly enough, the fully burdened staff member at SNL is within 2 percent of the cost of a staff member at LANL. This is despite all the obvious mismanagement by LANL on things like EP.

I know we will not agree on the depths of culture that UC brought (or brings) to LANL, but I believe it is at the very core of who we are. I want to see this preserved in the new LANL. I don’t see it at SNL, where Robinson has set the direction for a decade.
 
Well said, w76. However, we do disagree on the value that UC brings to LANL. I see them as an absentee landlord at best, and an inertia-ridden body incapable of making appropriate management decisions at worst. Whatever successes and failures we have experienced at LANL in past years were a result of the efforts (or lack thereof) of LANL managers and LANL employees. UC contributed a fine benefits program and in-state tuition rates for children of LANL staff, but little else.

I believe the very core of who we are is embodied in the people who work at LANL, and with the exception of the director, none of those people are UC.

--Doug
 
Bill Goodwin's comments about LANL's "obscenely generous pension plan"
struck me as a strange thing to say. It should be remembered that the
generosity of this plan is largely a function of the fantastic rise of
the stock market during the last twenty years. Neither DOE nor the
LANL employees have had to contribute anything for many years, thanks in
large part to a rising market and the financial wisdom of UC investors.

Complaining, as Bill does, about the obscenity of the UC pension would be
akin to me complaining that Bill has made some undeserved windfall by owning
his home during the last few years. Care to give up any of those "obscene
housing profits", Bill?

Obscenity is in the eye of the beholder. What may look obscene to Bill
looks beautiful to me. Of course, Bill, as a former LM employee, may
be stuck with receiving the paltry benefits of the LM pension. Much
of this pension may be built upon LM stock, which was a real "dog" during
most of the 90's (but has been very profitable in the last few years!).
 
Fair enough. I’ll rescind the word “obscene” then. But some of the postings on this blog about the pension plan remind me a bit of Kenneth Lay’s wife going on TV a few days after Enron collapsed to complain that they too had been hurt, and were down to only two houses and three servants. I can certainly understand why current LANL staff are upset that their pensions might be cut a bit, but don’t expect much sympathy from the rest of the nation, most of whom don’t have any pension plan at all, and certainly nothing anywhere near as generous as LANL’s.
 
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