Saturday, November 19, 2005

LANL Deal May Mean Windfall

By John Arnold
Journal Staff Writer

The pending change in management of Los Alamos National Laboratory will mean money in the bank for the state of New Mexico— as much as $65 million more.

Unlike the lab's current nonprofit manager, the University of California, the new contractor will likely be subject to the state's gross receipts tax, according to Kelly O'Donnell, state Taxation and Revenue Department tax policy director.

The department estimates the new lab manager— to be announced on or around Dec. 1— would generate an additional $65 million in gross receipts taxes for the state's general fund.

Under the state's tax laws, nonprofit organizations are exempt from paying taxes on gross revenues— in the lab's case, federal money to run LANL. The two teams competing for the $2.2 billion contract include both for-profit and nonprofit entities. The University of California is partnering with Bechtel Corp., while the University of Texas is teaming up with Lockheed-Martin.

[...]

Full Story


Comments:
One more example of UC/Bechtel's gross incompetence:

"The gross receipts tax will be paid. That's understood," said UT/Lockheed spokesman Rod Geer. "Gross receipts tax being paid does not necessarily tie to a reduction in workforce."
A UC/Bechtel spokesman said he didn't have enough information to comment.
 
LANS (UC/Bechtel) is well aware of the gross receipts tax issue, as would any bidder for the contract. The question to LANS was probably about a RIF, and that is the question that was asked to LAA. LAA chose to answer the question with a very DOE like phrase not necessarily (notice the similarly to “substantially equivalent”). Snake Lips may despise UC, but the answer on gross receipts tax by LANS is not a sign of gross incompetence. The fact is that all the terms of competition and privatization are coming home to roost. The gross receipts tax, employer contributions to retirement programs, etc. means that at least 200 million new dollars will have to come out of LANL program. When SNL was taken over by LM in the 90s the DOE saw fit to include a line item for the GRT. DOE also vowed never to do that again, and now new contractor for LANL is struck with an economic model that potentially unviable.

There are many more “jewels” that the contract change will drop on LANL. Either LAA or LANS will have to deal with them, and they are not the “fault” of UC. UC is responsible for some huge problems at LANL, including the selection of a vile egomaniac as director in 2003. But, UC is not responsible for the incompetence of DOE.
 
W76 spouted:

"There are many more “jewels” that the contract change will drop on LANL. Either LAA or LANS will have to deal with them, and they are not the “fault” of UC. UC is responsible for some huge problems at LANL, including the selection of a vile egomaniac as director in 2003."

No, W76, our current state cannot be blamed on UC.

Unless of course, you attribute the fact that the contract was put up for bid due to UC having demonstrated to everybody's complete satisfaction that they were no longer capable of running LANL.

In which case, we can safely blame UC for the state in which we presently find ourselves.
 
So, why is paying the GRT a bad thing. Failure to pay it seems to be subsidy to the Federal Government by one of the poorest states. If not for heavy LANL lobbying (illegal by the way) of the state legislature, the GRT would have been collected a long time ago. Sandia pays the GRT and they get along just fine.

The issue should be; how to allocate the money. It would be wonderful if we could use most of it to improve the schools in Northern New Mexico. If this isn't addressed the GRT may just disappear into the general corruption at the Legislature.
 
lucky is misguided with respect to spending money on schools. There is little correlation with spending money and pupil achievement. That is the big lie of the NEA. The primary correlation for student achievement is parental interest and participation. As long as education is denigrated and kids drop out (44% drop out rate in the Santa Fe Public High Schools) in Northern New Mexico, there will be no improvement. If the parents don't care, then neither will the students. Paying higher salaries to the same teachers will have no effect on student performance.
 
w76, you said, "When SNL was taken over by LM in the 90s the DOE saw fit to include a line item for the GRT. DOE also vowed never to do that again, and now new contractor for LANL is struck with an economic model that potentially unviable."

Assuming you meant nonviable, I disagree. The model will be workable. The contractor will include the award fee, NM GRT, pension contributions, etc., as costs of doing business.

Including those costs, they will calculate how much it costs per FTE, and plan workscope based on available funding. If the cost per FTE x # of FTEs exceeds the available funding, then decisions will have to be made. Either the cost/FTE will be reduced, the number of FTEs will be reduced, or the funding will be increased.
 
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